Business ethics

Business ethics concerns the various moral or ethical issues that can arise in a business setting and the special duties or obligations that apply to those engaged in commercial activity. It involves examining business activities and asking the question, "Is the conduct ethically right or wrong?"

Business is increasingly being required by various stakeholders to demonstrate that it operates with high ethical standards. The reputation of the pharmaceutical industry in particular has been damaged in a range of court cases and media highlights in which companies have been accused of corrupt behaviour. Public opinion surveys in many countries indicate that trust in the pharmaceutical industry is at an all-time low.

Bribery and corruption, one aspect of business ethics, is costly to both business and society. In addition to potential civil or criminal penalties if a company has allegedly engaged in such conduct, bribery and corruption damages company integrity, degrades the business environment and fails to create enduring competitive advantage. Bribery and corruption hinders democracy by encouraging privileges for some and not others and unduly influencing decisions regarding economic or social development.

In recognition of the fact that bribery and corruption has no place in well-functioning democracies, a raft of international requirements is calling governments and business to account for their conduct. Among them is the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions and the UN Convention against Corruption, the first legally binding global convention to fight corruption.

Novo Nordisk strongly supports high ethical standards in business. The Novo Nordisk Way of Management is the framework for how the company does business. It includes the Charter, which requires employees to be accountable, responsible, open and honest, and the commitment to the UN Global Compact. Managers are required to ensure that employees satisfy relevant laws, regulations and group commitments. Policies within the legal and purchasing areas also require ethical responsibilities. The company's vision declares that “Decency is what counts”. Novo Nordisk is also a member of the Global Compact, which includes among its 10 principles that “Business should combat corruption in all its forms, including extortion and bribery”.

Given heightened stakeholder expectations regarding ethical standards, Novo Nordisk decided to review whether its existing management framework provided sufficient guidance and clarity on business ethics for employees. The company worked with Transparency International to learn more about the issues and society's expectations in general, and pharmaceutical companies in particular, since the sector is under close scrutiny by NGOs and other stakeholders.

Novo Nordisk's conclusion was that a more direct approach to business ethics, and bribery and corruption in particular, was required in order to provide firm guidance for employees who operate in a high-pressure, competitive environment and may encounter difficult situations in which the proper ethical conduct might not be crystal-clear.

Novo Nordisk believes that it benefits by having a more systematic approach to ensuring high ethical standards. This includes:

• Better capability to live up to the company's vision and values
• More attractive employer
• Enhanced reputation
• Greater investor confidence
• Preferred partner

The following section describes the actions Novo Nordisk has taken to step up its commitment to business ethics.

In 2005 the company supplemented the Novo Nordisk Way of Management with a business ethics policy, three new operating procedures, a company-wide training programme and a mechanism for employees to share concerns. These are described below.

The policy states:
"In Novo Nordisk we will conduct our business according to a high ethical standard, living our values and protecting Novo Nordisk's reputation".

"This means that we will:

• Adhere to the principles of the UN Convention against Corruption 
• Conduct business with integrity, honesty and professionalism 
• Work against bribery in any form"

• Business ethics - dealing with conflict of interest, bribery, facilitation payments, donations, gifts, commission fees for local distributors, and interaction with suppliers
• Promotion of pharmaceutical products - covering interaction with public officials and healthcare professionals
• Novo Nordisk contracts with marketing consultants, agents etc concerning legal compliance, due diligence and audits, contracts and fees for services, deliverables and payments, and accounting, documentation and deviations.

The procedures make clear how Novo Nordisk employees should act to preserve ethical standards. This includes a prohibition on political contributions and limitations on entertainment of customers. It also states that employees can never offer anything of value to a public official for the purpose of obtaining an improper benefit for Novo Nordisk. Offering compensation to healthcare professionals for time spent simply attending symposia or congresses is also not allowed.

The policy and procedures are endorsed by the Executive Management and Board of Directors of Novo Nordisk.

See the Business Ethics policy and three procedures.

It is the responsibility of all managers to communicate the new procedures to employees, promote business ethics and lead by example. Training in the policy and procedures therefore began in January 2006. This includes mandatory e-learning for all managers worldwide. Furthermore, all top management groups in the markets, international marketing and strategic sourcing will run customised workshops during 2006 discussing business ethics within their area in detail.

In addition to the training, advice on specific situations is available to employees through the Corporate Legal function, concern can be raised through the Audit Committee, and the Group Internal Audit and the facilitation function will audit the implementation of business ethics. Furthermore, the commitment to business ethics is incorporated in the company's Balanced Scorecard.

Preventing anti-competitive behaviour
Compliance with EU Competition Law is ensured via procedures in the Quality Management system. To facilitate better understanding of the procedures and rules in these areas, Corporate Legal has developed an E-learning programme that all employees to whom this is relevant must complete.

The training programme has three modules: Anti-competitive behaviour, illegal unilateral behaviour and formation of illegal agreements and on the spot investigations.

This page has been assessed by PricewaterhouseCoopers as part of its assessment of Novo Nordisk’s statement that it reports ‘in accordance’ with GRI. Please refer to Audit and assurance for a full description of the nature of assurance offered.