As part of our continued commitment to addressing social responsibility in our supply chain,we have built in an evaluation of our key suppliers’ social performance in our current environmental evaluation to determine what role we can play in improving our suppliers’ performance in this area.

We began by exploring how we could live up to our social responsibility. Since we support the UN Universal Declaration of Human Rights, and the UN Global Compact, human and labour rights were used as the guiding principles for our evaluation of social performance. We apply these basic rights in evaluating suppliers, regardless of where they operate, and a questionnaire regarding these issues was sent to key suppliers in early 2002. This questionnaire improved and incorporated an environmental evaluation of suppliers’ performance that had already been running for a few years. Besides envionmental issues it covers:

• Wages and benefits
• Working hours
• Health and safety
• Child labour
• Forced labour
• Freedom of association and collective bargaining
• Discrimination/equal opportunities
• Disciplinary measures
• Privacy

To launch the programme, we conducted workshops in 2001 with suppliers from Denmark, Germany, Sweden, France, Mexico, India and Japan. The purpose was to consult key suppliers as well as external experts on formulating our approach to assessing social performance in the supply chain.

We have also trained some 100 employees, primarily purchasers, who are directly involved in the programme on the issues and dilemmas involved in social responsibility. The participation at these sessions and strong management commitment has fueled incentive for the programme.

Our target was to evaluate 90% of key raw material suppliers and a range of key suppliers in service and engineering on environmental and social performance by the end of 2002. We reached the target and managed to evaluate 300 key suppliers.

The vast majority of our suppliers have responded very positively to the initiative and delivered satisfactory information on the management of their environmental impact and their position on core labour and human rights.

As of 2002 all new contracts with suppliers include a clause stating the mutual commitment to the UN Universal Declaration of Human Rights, the International Labour Organisation (ILO) Conventions and the International Chamber of Commerce’s (ICC) Business Charter for Sustainable Development.

The supplier must promptly report inconsistencies
with these principles to Novo Nordisk.

Besides better understanding the risks in our supply chain, we believe that the evaluation will improve social and environmental standards among our suppliers.

A small group of suppliers has been unsure about why we are asking these questions, and what kind of information we expect to get from them. In most cases, a talk or a meeting is enough to promote the understanding needed to complete the questionnaire, and to transform initial doubt into a clear position on the issues. This is the starting point of a dialogue based on trust between Novo Nordisk and its suppliers.

Only a few of our key suppliers have been reluctant to answer the questionnaires, but we will engage in dialogue in each of these cases and ensure that our requirements are met.
We aim to eliminate the risk of having suppliers in our supply chain that do not live up to basic human rights. We have established an internal committee with high-level managers, social, environmental and supply chain experts who decide on actions in case of serious violations of the issues. We found no such cases in the first evaluation round.

In the beginning of 2003 we will assess the first year of evaluating suppliers on both social and environmental performance. The experience gained will be integrated in the planned roll-out of the programme to partners and collaborators of our research and development and to our production affiliates in China, South Africa and Brazil.

We expect to use the same approach as in 2002 with minor adjustments to the questionnaire; however, we recognise that the self-evaluation cannot stand alone. Therefore we will build the evaluation of key suppliers’ environmental performance and
observance of human and labour rights into our audit system, starting in 2003.