Social, environmental and economic (SEE) impact valuation

Any business activity has intended and unintended impacts – positive as well as negative. Impact valuation is an emerging discipline that seeks to measure the effects of companies on people’s wellbeing and the environment. Novartis is pioneering an approach called social, environmental and economic (SEE) impact valuation that aims to show the positive impact we bring to countries, health systems and individuals, balanced by the negative impact of our operations on the environment and other areas. Expressing these impacts in monetary terms makes them transparent and comparable for stakeholders. Currently impact valuation results are available globally with specific data sets for 190 countries across SEE impact dimensions. 

SEE impact valuation indicators are based on the Novartis materiality assessment, which assesses stakeholders’ views of the impact Novartis creates on society and the environment, as well as the potential impact of externals trends on our business.

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Novartis social impact valuation

The social dimension of the Novartis SEE impact valuation approach covers two main parts: the social impact of our medicines and the human capital impact.

Novartis has developed a methodology together with the WifOR Institute that captures the social impact of our medicines. The first component is a quantification of the health benefits resulting from patients being treated with our medicines, where we attribute the incremental benefit in relation to the current standard of care. The second component is the monetization of the paid and unpaid time of healthier people expressed through the resulting contribution to gross domestic product (GDP). The total social impact is the sum of the direct, indirect, and induced effects of paid activities as well as the direct effect of unpaid work activities. 

The human capital part comprises the impact valuation of living wages, employee development, occupational health, and safety as well as human rights in the supply chain. 

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Novartis environmental impact valuation

The environmental dimension of the Novartis SEE impact valuation approach quantifies and monetizes greenhouse gas emissions (including carbon sink projects), air emissions, water footprint and pollution, waste as well as land use over the direct, indirect, and induced effects. Additionally, our share of the pharmaceuticals in the environment (PiE) gets captured as the downstream effect.  

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Novartis economic impact valuation

Following the methodology of national accounts, the economic impact quantifies the GDP contribution achieved by business activities related to own operations as well as along our supply chain (indirect and induced effects). Additionally, this section quantifies the employment generated through our direct activities and along the supply chain (indirect and induced effects).

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Philanthropy

Through our donation programs, Novartis supports LMICs in their efforts to treat patients for neglected diseases or life-threatening conditions, and to provide medicines in areas impacted by the COVID-19 pandemic, natural disasters and extreme poverty. All our product donations comply with the WHO Checklist and the requirements set forth in the WHO Guidelines for Medicine Donations. Most of our emergency relief donations are granted by our Sandoz division, which makes product donations through its Grants, Donations and Sponsoring process. Grants in the form of product donations are in-kind contributions (Sandoz products) given to healthcare organizations and patient associations. In addition, for over 40 years through the Novartis Foundation, we have helped improve the health of low-income populations. Novartis also engages in various initiatives and projects in humanitarian emergency relief, social affairs and the fostering of culture and sports.

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Other information

  • Philanthropic Contributions1
     
    Type of philanthropic contribution  FY 2021 (USD millions)
    Cash contributions  3.4
    Employee volunteering during paid working hours  6.2
    Product donations  4024.72
    Management costs3 65.7

Tax disclosures

Novartis views tax as a core part of our contribution to society. Governance of tax matters is overseen by the Board of Directors. Where appropriate, tax risks are escalated to the Board for review and tax decisions are presented to the Board for endorsement

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  1. The philanthropic contributions table follows definitions and methodology from S&P Global Corporate Sustainability Assessment
  2. This includes USD 4 billion which was provided in free medicines to more than 127 000 patients by the Novartis Patient Assistance Foundation in 2021. 
  3. Costs associated with managing philanthropic programs, such as employee salaries and administrative costs. Also includes payments to partners to support the management of collaborative philanthropic programs.