INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

Seminar 2:
Novo Nordisk: A Commitment to Sustainability
Adapted from a case study by Robert Eccles and Michael Krzus

In mid-December 2010, John Elkington, co-founder and Executive Chairman of Volans

Ventures1, sat with a visitor in his London office and told the story of how he came to know
Novo Nordisk, a Danish pharmaceutical company. Few people outside of Novo Nordisk had a
longer relationship with the company and a deeper understanding of its culture than
Elkington.
One year after founding SustainAbility2 with Julia Hailes in 1987, The Green Consumer
Guide: From Shampoo to Champagne-High Street Shopping for a better environment, written
by Elkington and Hailes, was published. Among other things, the book identified enzymes,
and particularly those produced by genetic modification of microorganisms, as a big issue
with environmentalists. Novo Nordisk, because it had an enzymes production business, was
affected when large detergent companies such as Lever Brothers, Procter & Gamble, and
Henkel started to review the use of enzymes in their detergents.
In 1989, Elkington was invited to visit Novo Nordisks corporate headquarters in Bagsvaerd,
Denmark, by two Novo Nordisk executives who heard him speak in London. During the
ensuing meeting, CEO Mads Ovlisen explained that Novo Nordisk was a company that, in his
opinion, was doing the right thing with respect to enzymes. However, Ovlisen, believed it was
very clear that parts of society saw the enzyme story rather differently.
Novo Nordisks sensitivity to concerns about enzymes dated back to an incident in 1969.
According to an article published in a medical journal, workers at a British detergent factory
developed an allergy, after inhaling concentrated enzyme dust. The article led to fears in the
U.S. that consumers might also develop allergies and this attracted the attention of Ralph
Nader, who launched a campaign against enzymes in detergents. A campaign by Nader and
NGOs influenced public opinion and the companys sales. From 1969 to 1971, Novos
revenue dropped by about 50 percent, plunging from 500 million to 250 million Danish
kroner. As a result, about 400 Danish employees lost their jobs3. Lise Kingo, Executive Vice
President and Chief of Staffs, explained that the lesson is burned into Novo Nordisks
institutional memory, When someone is worried about what you do and you do nothing in
response, you lose your reputation, your brand and your value.
Ovlisen asked Elkington if he would have an interest in performing an environmental audit of
Novo Nordisk and added that he would open op the company, permitting Elkington to go
1

Volans is a for-profit company (part think-tank, part consultancy and part broker) based in London and
Singapore that works with entrepreneurs, businesses, investors and governments to develop and scale innovative
solutions to financial, social and environmental challenges
2
SustainAbulity is a think tank and strategy consultancy. Today, Elkington is a non-executive director.
3
Novo
Nordisk,
History
Novo
Nordisk
A/S
2010
www.novonordisk.com/images/about_us/history/history_uk pdf, accesed December 2011

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

anywhere and talk to anyone. Elkington and SustainAbility did exactly that and at the end of
that process it was suggested that Novo Nordisk not only engage stakeholders in a structural
manner, but also start reporting on environmental and social issues. In 1991, SustainAbility
facilitated the first of a series of annual stakeholder meetings of about 12 to 15 organizations,
including Green Alliance (UK)4, NOAH5, Norwegian Society for the Protection of Nature6
and the Danish Society for the Conservation of Nature.7
In 1992, Novo Nordisk became the first Danish company to publish an environmental report.
The decision created controversy as some argued that the report would put the company at a
competitive disadvantage. Objections were overcome when, as Kingo explained, executives
accepted that even though there might be some competition risk, Novo Nordisk could not be
considered credible and trustworthy without a transparent environmental report.

Novo Nordisk
Novo Nordisk was a global healthcare company with almost 90 years of innovation and
leadership in diabetes care. The company was created in 1989 through a merger of two
Danish companies, Novo Industry A/S and Nordisk Gentofte A/S. In 2011, the company
employed approximately 31,300 people in 74 countries, with about 44% of the employees
located in Denmark.
The company pioneered many breakthroughs in diabetes care and was the market leader with
51% of the total insulin market. In 2010 sales related to diabetes care products were
approximately $8.2 billion and the company had total sales of approximately $10.9 billion
(see Annual report for the 2010 financial and nonfinancial performance summary pag. 0).
Novo Nordisk was also a leader in haemophilia management, growth hormone therapy, and
hormone replacement therapy. In addition, the company leveraged its protein expertise to
diversify its pipeline of products and initiated clinical trials targeting chronic inflammatory
diseases.
Innovation was no limited to the companys production and research and development.
Stakeholder engagement was a systematic, decades-old process. The company believed their
outreach efforts built trust, provided a basis for establishing common ground on tough issues,
and helped inform executives about emerging trends with the potential to affect the business.
The stakeholder engagement process was not static. Difficult issues, such as how to ensure
equal access to health or how to approach stem cell research, were presented as interactive
challenge on the companys website. The website also presented games which simulated
business ethics, climate change, and economics and health challenges and dilemmas (see
website for interactive games).

Green Alliance is a London-based environmental think tank. It was founded in 1979. Green Alliance,
http://www.green-alliance.org.uk/home/, accessed October 2011.
5
NOAH is a non-profit, non-governmental environmental organization. NOAH is the Danish member of Friends
of the Earth. NOAH, http://www.noah.dk./english html, accessed October 2011.
6
Norwegian Society for the Protection of Nature is the Norwegian member of Friends of the Earth. It was
founded in 1914 and is Norways oldest environmental protection organization. Norwegian Society for the
Protection of Nature, http://www.natrurvernforbundet.no/English/, accessed October 2011.
7
Danish Society for Nature Conservation, founded in 1911, is the largest nature conservation and environmental
organization in Denmark. Danish Society for Nature Conservation, http://www.dn.dk/Default.aspx?ID=4592,
accessed October 2011.

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

The company provided financial and nonfinancial information and date in one inclusive
report, which could be downloaded as a PDF document or viewed as an online report with
the ability to browse those sections a reader deemed most relevant to his or her interests. In
addition, the online version of the report was supplemented by additional background, context
and data.
Since 2004, Novo Nordisks annual report included not only a statement of nonfinancial
information, but also explanatory notes to the nonfinancial statements (see Annual report
page 15 for statements of social and environmental performance). PricewaterhouseCoopers
provided negative assurance on nonfinancial information a statement that nothing came to
their attention that there were material misstatements in the non financial information using
International Standard on Assurance Engagements 3000 (see Annual report page 111 for
PwCs assurance report on nonfinancial information).

Capital Structure
Novo Nordisk had an unusual ownership structure for a public company. The company and
Novozymes, a sister entity, were part of the Novo Group, a family of independent companies
with a common history. The holding company of the Novo Group was Novo A/S, a Danish
limited liability company, which was 100% owned by the Novo Nordisk Foundation, a selfgoverning and self-owned organization whose main purposes were to be a stable base for the
business and research activities of the subsidiaries of Novo A/S, and to support medical
research and other scientific, humanitarian and social objectives.
The original business, Novo Industri and Nordisk Gentofte, dated back to the early 1920s and
in the course of time both underwent structural changes. In the 1950s the owners of the Novo
Industri transferred their ownership to a foundation that retained its control through A shares
at the initial public offering (IPO) in the early 1970s. Nordisk Gentofte was established as a
foundation, but in the 1980s the operating business was made a subsidiary and the foundation
retained control through A shares at the IPO in 1984. In 1989, when the two companies
merged, consequently so did the two foundations.
This capital structure was the result of a demerger in 2000, in which the health care and the
enzymes businesses became separately listed legal entities Novo Nordisk A/S and Novozymes
A/S. The demerger was viewed as necessary and evolutionary because differences between
the health care and enzymes lines of business had widened. The two lines of business
operated in different markets, had different business cycles, and different investment
requirements.
According to the Demerger document, the demerger of the enzymes business from Novo
Nordisk is viewed as the right way to address the different business needs of the two
companies and to unlock the potential values of the businesses. The demerger will make it
possible for both companies to independently pursue the strategy and actions related to their
respective fields of operation, adding benefits to the businesses and their customers,
shareholders and employees. At the same time, both companies will remain part of the Novo
Group, sharing and benefiting from the governance principles that have established Novo
Nordisk as the enterprise it is today.

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

Shareholders approved the demerger at an extraordinary general meeting on November 13,

2000.
Novo Nordisks share capital was divided into A shares and B shares (see Annual report
page 76 for a summary of share capital). A shares were not listed and all of them were held by
Novo A/S, which also held some B shares. According to the Articles of Association of the
Foundation, the A shares could not be divested by Novo A/S or the Foundation. The B shares
were traded on the NASDAQ OMX Copenhagen Stock Exchange and in the form of ADRs
on the New York Stock Exchange.
A shares and B shares each had different voting rights. The A shares had 1,000 votes for each
Danish Krone of the A share capital and the B shares had 100 votes for each Danish Krone of
the B share capital. All of the A shares of the Company were held by Novo A/S, a whollyowned subsidiary of the Novo Nordisk Foundation (the Foundation).

The Novo Nordisk Way

The Novo Nordisk Way was the foundation of the value-based management system at Novo
Nordisk. Its origins could be traced back to the founding of the predecessor companies during
the 1920s, and while the wording had been updated from time to time, the essence had
remained the same.
Kurt Anker Nielsen, former Chief Financial Officer and current Chairman of the Audit
Committee described the essence of the Novo Nordisk Way:
I was hired in 1974 when the company was to be listed on the Copenhagen Stock Exchange
and one of the companys basic principles was to conduct the business of Novo with high
ethical standards. In those days we all asked, What does high ethical standards mean? So
we asked the guy who wrote it, Mads Ovlisen, who later became the CEO of the company. He
said: Basically, what I mean is behave decently. Dont ever do to somebody else what you
dont want them to do to you, whether its a company or a person. Thats the way we should
conduct our business. And thats that way weve tried to conduct the business ever since.
One section of both the online and print versions of the 2010 annual report was dedicated to
the Novo Nordisk Way.
In 1923, our Danish founders began a journey to change diabetes. Today, we number
thousands of employees across the world with the passion, the skills, and the commitment to
continue this journey to prevent, treat, and ultimately cure diabetes. Our ambition is to
strengthen our leadership in diabetes.

We aspire to change possibilities in haemophilia and other serious chronic conditions

where we can make a difference.

Our key contribution is to discover and develop innovative biological medicines and
make them accessible to patients throughout the world.

Growing our business and delivering competitive financial results is what allows us to
help patients live better lives, offer an attractive return to our shareholders and
contribute to our communities.
4

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

Our business philosophy is one of balancing financial, social and environmental

considerations we call it Triple Bottom Line.

We are open and honest, ambitious and accountable, and treat everyone with respect.

We offer opportunities for our people to realize their potential.

We never compromise on quality and business ethics.

Every day we must make difficult choices, always keeping in mind what is best for patients,
our employees and our shareholders in the long run. Its the Novo Nordisk Way.
Mogens Thorsager Jensen, Senior Facilitator in Business Assurance and former Head of
Investor relations (2004-2009), believed The Novo Nordisk Way communicated those
elements required for a strong and durable business model:
Look at the totality of what we do. We do so many good things, first and foremost, for our
shareholders. Look at the appreciation of the stock price; since demerger in November 2000,
it has more than quadrupled, which, by itself, is second to none within our peer group within
that time frame. Our corporate DNA is focused on delivering shareholder value, but we also
realize we can only deliver shareholder value consistently, on a multi-year time frame, if we
do it in an ethically, environmentally, and socially responsible way.

Integrated Reporting at Novo Nordisk

In 1994, Novo Nordisk became the first company in Denmark, and one of the first in the
world, to publish an environmental report. Five years later, the company published its first
social report. In 2004, Novo Nordisk became the third company8 to publish an integrated
financial, environmental and social report.
In March 2004, the companys articles of association were amended to specify that one of the
companys objectives was to strive to conduct its activities in a financially, environmentally
and socially responsible way. Nielsen provided a few thoughts on why Novo Nordisk
adopted a triple bottom line approach to managing the company:
We have never said that we are conducting our business in accordance with the triple bottom
line for other reasons than good business reasons. What does good business reasons mean?
It means to preserve your license to operate. We want to make sure that customers value our
products and continue to buy them. We want to make sure the neighbours will not close down
our factories, that society will not say no to the development of new products, and so on. We
think we can best do that by being open and honest, and explaining what were doing. Thats
the best way we can develop new products.
Kingo added, Our reporting is a reflection of who we are. We believe that successful
companies find a way to balance demands for profitability with the needs of society. Our
decision making integrates the profit motive with our concerns for people and the
environment.
8

Novozymes, a sister company of Novo Nordisk, published a integrated report in 2002 and Natura Cosmetics of
Brazil published an integrated report in 2004.

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

When asked about applying the triple bottom line approach to corporate reporting, Chief
Financial Officer Jesper Brandgaard responded: I think Ive always seen integrated reporting
as a given at Novo Nordisk. Its part of our philosophy, so it never occurred to me that I had
the option to say: This is something that we ought to do or What is the consequence if we do it
or if we dont? Its in our heritage. Its the way everyone believed the company should be run
when I joined it some 12 years ago. The challenge has been to convert that philosophy into
what makes sense in terms of our reporting.
Despite Brandgaards commitment to integrated reporting, difficulties arose in applying triple
bottom line thinking to the realities of corporate reporting. One difficulty was based on
differences in the mindsets of people who were sustainability experts and those in the
accounting and finance groups.
Bjorn Mogensen, Vice President Corporate Accounting and Tax Services, described the
integrated reporting process as a cultural challenge. Approximately 45 people worked for
Mogensen, with about half of them coming from one of the Big Four accounting firms.
Everyone in the department has basically the same background. They share a common
approach about how to work, how you do things, how you prepare things, how you plan, said
Mogensen. Because Novo Nordisk was required to comply with the internal control reporting
requirements of the U.S. Sarbanes-Oxley Act of 2002, Mogensen and his staff shared an
understanding about the needs for robust controls, processes and systems to ensure data
quality. From an accounting and finance perspective, sustainability and other nonfinancial
information generated by systems that were not Sarbanes-Oxley compliant did not belong in
the annual report.
Cora Olsen, Nonfinancial Data Manager, addressed the culture gap from her perspective.It
was a challenge to implement internal control processes. In finance and accounting, data
were subject to preventive and detective controls. This thinking was not prevalent amongst
groups compiling nonfinancial data. Preparers of nonfinancial information asked whether they
had done something wrong when subjected to the same reviews. Some people wondered why
their work was no longer trusted. Early on, said Olsen, it [internal control questionnaires
and processes] was a difficult sell. People saw it as extra work.
Another cultural dilemma was posed by differences in determining materiality for financial
and nonfinancial information. Financial materiality is often defined as a percentage of income
before taxes or as a percentage of an account balance. Olsen expressed her uncertainty about
how to define materiality for nonfinancial information by asking, How do you define whats
a tolerable error, how do you set up controls so you mitigate risks below a certain level? In the
financial world, you generally have a fixed amount, but how do you define materiality for the
other information-rate of employee absences or for CO2 emissions?
Mogensen and Olsen agreed these two different internal cultures had tried to work things out.
This was reflected in the assignment of a Sarbanes-Oxley controls specialist to work with the
Triple Bottom Line Management team. Olsen commented on the 2010 reporting process,
People are starting to come around this year. They signed off on information locally and
there were fewer errors.

The Blueprint for Change Programme

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

In April 2010, Novo Nordisk launched The Blueprint for Change Programme. The purpose
was to facilitate stakeholder engagement and communicate how the company delivered value
to business and society. The first two blueprints in the series were the climate change
challenge and the changing diabetes in China.
The climate change challenge captured a story that began when two separate initiatives, Novo
Nordisks environmental strategy and the World Wildlife Federations (WWF) Climate
Savers Programme converged.
In 2003, climate change emerged as a focal point of Novo Nordisks environmental strategy.
The production of insulin products is energy intensive, which drove management concerns
about the future availability of energy. If the company could not get energy, it could not
produce its products. A second major concern was less tangible. Novo Nordisk saw itself as a
responsible business and therefore obligated to act on the risk of climate change.
The specifics of the companys climate strategy were sharpened when, in 2004, negotiations
with the WWF Climate Savers Programme began. Companies that joined the Climate Savers
Programme made a commitment to significant reductions in carbon emissions. The initiative
not only facilitated information exchange between participating companies, but also provided
the WWF with business voices speaking in favour of substantive actions to deal with climate
change. Under the terms of the agreement, Novo Nordisk made a public commitment to
reduce CO2 emissions from global production by an absolute 10% from 2004 to 2014. In light
of the projected significant growth in production capacity, the companys absolute reduction
target represented a relative reduction of approximately 65% and required a decoupling of
business growth and growth in CO2 emissions. The commitment covered an insulin
production site in Kalundborg, Denmark; filling plants in France, Brazil and the U.S.; device
production in Denmark and China, and a packing facility in Japan.
There were three elements in achieving the targeted reduction of carbon emissions:
(1) cLEAN. Novo Nordisks version of the LEAN production philosophy, because
more efficient production processes reduced carbon emissions.
(2) General energy savings initiatives in all the production sites.
(3) Conversion to renewable energy, which was the most challenging because one of
the criteria with Climate Savers was that it had to be additional renewable energy.
In other words, something that expanded the availability of renewable energy, not
just something that was already there.
Novo Nordisks the climate change challenge included a look back at the first five years of
climate action initiatives. Value creation was grouped into two categories, Value to
business and Value to society, both of which are summarized below.
Among the benefits described as creating value for Novo Nordisk were:

Since 2004, the energy savings have realized a total of $24 million in cost savings
corresponding to a 10% reduction in global energy consumption.

Half of all energy saving projects is paid back in less than one year with an average
pay-back period of 1.9 years.

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

The energy savings conducted from 2004-2009 will continue to yield annual cost
savings of approximately $8 million USD in the future

Intangible value of future risk mitigation, employee engagement, trust and reputation.

Some of the benefits cited to society were:

28,000 tons CO2 reduction achieved by the end of 2009 through the energy savings
program equivalent to around 4,500 fewer cars on the road every year.

At the end of 2009, an additional 50,000 tons CO2 reduction had been achieved
through sourcing of wind power equivalent to talking a further 8,000 cars off the road
every year.

Novo Nordisks partnership with DONG Energy, one of the leading energy groups in
Northern Europe, helped to drive construction of the worlds largest offshore wind
farm, which supplied power equivalent to the annual electricity consumption of
200,000 households.

The Novo Nordisk/DONG Energy renewable energy partnership model was the
catalyst for over 30 similar agreements with Danish municipalities and businesses.

When asked to explain the rationale for the climate change blueprint and the blueprint series
as a whole, Susanne Stormer, Vice President Triple Bottom Line Management said: We
wanted to develop a business case format for describing the triple bottom line approach to
doing business and how its benefiting the business and how its benefiting society.

The Investor Perspective

The integration of financial and sustainability reporting had been often described as the Holy
Grail of corporate disclosure ever since John Elkington9 coined the term triple bottom line
in 1997. Just as integrated reporting presented challenges to companies wanting to adopt the
practice, it also created challenges for investors regarding how to use this information.
In addition to socially responsible investment (SRI) funds, other asset owners and managers
had began to engage companies on environmental, social and governance (ESG) issues
believed to be material to shareholder value. They were doing so from both a risk mitigation
and an opportunity perspective.
When asked about the usefulness of integrated reporting in investment analyses, Claudia
Wearmouth, a Senior Analyst for Governance and Sustainable Investment at F&C Asset
Management10 (F&C) expressed the belief that corporate annual reports were a good place for
9

Elkington, John, Cannibals with Forks: The Triple Bottom Line of 21st Century Business, (Capstone
Publishing: Oxford, hardback 1997, paperback 1999)
10
Established in 1868, F&C Asset Management operated from offices in eleven countries and had over 3 million
customers. F&C managed assets in excess of 100 billion pounds for a combination of insurance clients,
institutional investors, and private individuals. F&C applied a responsible engagement overlay in managing its
own and client assets, which meant that they engaged on environmental, social, and governance (ESG) issues
believed to be material to shareholder value, either from a risk or an opportunities perspective. F&C engaged

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

ESG information because annual reports attracted a broader audience than sustainability
reports. However, Wearmouth added, Even though wed welcome more robust ESG
disclosures in an annual report, sustainability reports are often better places for more detailed
reporting and narrative on performance patterns.
Wearmouth believed sustainability issues could be better fleshed out in the integrated report,
even though Novo Nordisk generally provided more detailed information on its website than
what was contained in the report itself. For example, said Wearmouth, supply chain
auditing and management isnt described in the same level of detail in the integrated report as
it is on the website.
My-Linh Ngo, Associate Director for SRI Research at Henderson Global Investors11 provided
another perspective on the usefulness of an integrated report for investors. She believed the
way Novo Nordisk had chosen to report on ESG integrated into its annual financial reports
demonstrated that the company genuinely considered these issues to be important and
material to the financial success. Novo Nordisk started off with reporting on ESG issues
separately from its financial reporting, said Ngo, adding, however, the way in which they
have evolved this to be integrated is a clear illustration of their journey and continuing
commitment to actually address ESG issues and implement this into the business. ESG is
actually part of who they are and what they do, rather than a bolt-on process. She also
praised the overall depth and quality of their public reporting on the ESG issues, whether in
the annual report or on the website.
For Miguel Nogales, a Partner at Generation Investment Management12, nonfinancial
information provided in an integrated report was critical to his ability to understand Novo
Nordisks real risks and uncertainties. For example, Nogales wanted to better understand,
Novo Nordisks unit cost for production of insulin because of risks posed by low-cost
competition from India and other countries. Now, theyre never going to disclose that [cost]
information, and they shouldnt. Its highly proprietary, says Nogales. So I track emissions
data and the carbon intensity of their production. Even though he acknowledged that Novo
Nordisk was not a big emitter compared to utilities and industrial production facilities, I
track that data because it gives me a window into the efficiency of their production,
explained Nogales who the added, Novo Nordisks ability to do more while using less waste,
less water, less CO2 provide an indirect view of how good they are at lowering their
production costs. This is an example of the link between good business practices and
sustainability.
Ngo explained that in analyzing companies for the SRI funds, she tented to look at a range of
sustainability issues with a hard focus on those that, in her opinion, were particularly material
with about 6,000 companies a year on ESG issues. A dedicated 18-person ESG team worked closely with the
investment management side.
11
Henderson Global Investors (Henderson) was established in 1934. The company served institutional, retail
and high network clients and provided a broad range of asset classes, including equities, fixed income, property,
and private equity. With its principal place of business in London, Henderson was one of Europes largest
investment managers, with about 72.2 billion pounds assets under management (as of June 30, 2011) and
employed over 1,000 people worldwide. Henderson had been managing Sustainable & Responsible Investment
funds since 1977, and had 790 million pounds managed on an SRI basis.
12
Generation Investment Management was an independent, private, owner-managed partnership with offices in
London, New York and Sydney. The firm was co-founded in 2004 by Al Gore and David Blood. The Generation
team was comprised of 45 people from 16 countries. The investment team brought together experienced
investment analysts and leaders from the sustainability research field. Generation had 21 investment
professionals with over 150 years of combined investment experience.

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

and would actually move the companys share price. She speculated that the practice of
integrated reporting in itself might force companies to be more disciplined when presenting
the case about how sustainability impacted their business. Said Ngo, I think integrated
reporting makes companies think a bit more strategically about what they can claim and how
they can back this up, as the legal and compliance process for approving financial reports is
currently more rigorous than for sustainability reporting. I can see this in what Novo has tried
to do in terms of its triple bottom line analysis. She also felt companies gained an additional
benefit by doing so, I think integrated reporting helps bring sustainability information to a
critical stakeholder group, the investors, who if they are not SRI investors, are traditionally
not used to looking at these issues.
Ngo suggested that integrated reporting could help conventional investors gain exposure,
awareness and understanding of sustainability issues through a less more closely aligned with
how they see and analyze companies. For example, while pharmaceutical analysts tended to
focus on a companys product pipeline and existing product portofolio as a basis for assessing
its investment attractiveness, integrated reporting could help an analyst gain insights into
whether the companys culture and ethics policies were geared toward developing safe
products and products that added value. Ngo argued that, If it is in that direction, then maybe
the product and company is likely to be more successful in the long-run as it will be providing
drugs society will pay for, and be a company that is trusted and attracts the best talent.
Asked whether there was a connection between Novo Nordisks disclosure of nonfinancial
information in their integrated report, and the companys overall performance, Nogales
explained that from a stock-price perspective, Novo Nordisk did not receive a premium
because they won corporate reporting awards. People wont pay half a point more of P/E
multiple for that, said Nogales, adding, Thats been the thesis people in the sustainability
area have had for a long time and its just false incorrect in my view. But my strong view is
that Novos approach to integrated reporting has helped them make better decisions over time,
hire better people and have a stronger culture. This has ultimately led to a better earnings
performance which has been rewarding for shareholders.

The future of Integrated Reporting at Novo Nordisk

When Brandgaard discussed the future of corporate reporting, he began with the rhetorical
question of whether there would be a printed report in the future. Allowing for a paper report
for the foreseeable future Brandgaard envisioned a shorter annual report. Brandgaard
explained:Notes and tables are what I would call documentation and take up too much of the
primary communication. Of course, well have them available in a transparent form. Well
also have even more five-years-fully comparative [financial and nonfinancial] information
and we will have more meaningful measures for the social and the environmental front.
Nielsen also envisioned a brave new world of corporate reporting:
I think first and foremost many more of different chapters and different areas that are
covered by integrated reporting will be subject to control by a third party; not only auditors,
but others as well in different areas of the business. I think it will be based on the Internet.
Integrated reports will be a home page where an individual outside the company the
individual stakeholder can go in and pick exactly which kind of data he or she would like to
see and go into great depth. A person wont have to go through all of the notes to the financial

10

INTEGRATED REPORTING

ASSIST. PROF. DUMITRU MADALINA

statements when hes an NGO who is only interested in how many animals were using for
our lab testing. On top of the whole thing, therell only be a small printout, which is used as a
kind of annual brochure just to give the overall grasp of the company: What results did it
achieve last year or maybe last three or four years and in which areas didnt they achieve their
objectives?
This was all consistent with Elkingtons view that Novo Nordisk wanted to differentiate itself
from the rest of their world. They feel they are ahead of the others and they want to maintain
that, said Elkington, who also mused that this may leave investors and other consumers of
information wondering whether they can keep up with Novo Nordisks appetite for change.

11