Identifying and taking action on what matters most
We recognize that our activities – and the way we carry them out – have impacts that reach well beyond our financial performance. In order to remain successful in the long term, we need to engage in societal discourse and find ways to align our broader business performance and both our positive and negative societal impact with the expectations of our shareholders, our stakeholders and society at large. To achieve this, a thorough and deep understanding of the environmental, social and governance (ESG) topics that matter most to these groups is essential. Understanding their views on the social, economic, environmental (SEE) and governance topics affecting Novartis will enable us to better address their concerns, exchange constructively on dilemmas and, in the end, better manage our business.
To help define the most important ESG issues for Novartis, we conduct global materiality assessments every four years; with reviews every two years. Our materiality assessment helps us understand the issues that matter most to our internal and external stakeholders; how our economic, social and environmental impacts are perceived along our value chain; and how they translate today and in the future into associated risks and opportunities for our company. It enables us to capture our impacts in a non-financial manner, helps us prioritize impacts on which to focus, and informs our strategic thinking.
In 2021, we completed our most recent materiality assessment. To enhance the value of the recent assessment, we have updated the methodology and significantly increased the number of stakeholders participating in the assessment. For example, all Novartis employees were given the opportunity to provide input regarding the materiality of certain topics; while previously only managers were surveyed. We have also implemented a double materiality approach that is unique from past assessments. With this concept, we are not only exploring the impact that Novartis has on stakeholders vis-à-vis social, environmental, or economic issues, but also the impact that external ESG trends and developments (such as climate change) have on the business of Novartis.
Internal and external stakeholders ranked eight important clusters that Novartis is impacting on an economic, societal, and environmental basis. The initial results further confirm results from previous years with the top 4 clusters being:
- Patient Health and Safety;
- Access to Healthcare;
- Innovation; and
- Ethical Business Practices.
These results along with additional findings will ultimately guide our Annual Strategy Review; the Enterprise Risk Management process; country strategies via local materiality analyses; and our long-term strategies via scenario analyses.
In alignment with the global methodology, we also aim to facilitate country assessments. During the last materiality assessment cycle we completed assessments in Greece, Italy, Mexico, Portugal, sub-Saharan Africa (Angola, Ivory Coast, Kenya and Nigeria) and Turkey. Based on the materiality assessment 2021, we have ongoing or planned assessments in the United States, Brazil, Latin America & Canada, Malaysia and Philippines.