Thursday, December 19, 2019
Novartis Goes Deep with Industry-leading ESG Materiality Assessment
Many companies have conducted materiality assessments to understand the issues most important to their business and stakeholders. But, as I heard during a webinar last week sponsored by SustainAbility, the Swiss pharmaceutical giant Novartis has taken a much different, deeper approach. The webinar was the fifth in a series to explore how Novartis conducts and uses its materiality assessments. All are available on the SustainAbility site.
In this week’s blog, I highlight Novartis’ materiality assessment process and share perspectives from Denise Weger, Senior Manager Strategic Initiatives Global Health & Corporate Responsibility, at the biopharma company. For Denise, a materiality assessment is a starting point that can inform the company’s decision making and transform how it does business.
Novartis conducted its third full materiality assessment in 2017. Denise explained that the company started with basic desk research to understand trends and issues, then looked at peer reports, risk reports, guidelines such as those published by the OECD, and internal documents. In addition, they considered the UN Sustainable Development Goals (SDGs) – with SDG #3 Good Health and Wellbeing being the focus indicator -- to better understand issues of importance.
During their most recent assessment, the company identified more than 100 topics relevant to Novartis and its stakeholders, which it went on to consolidate into the 30 “most-important” topics in eight issue clusters. The clusters were than ranked by internal and external stakeholders based on impact on and performance of Novartis.
At the issue cluster level, stakeholders indicated the following four clusters as most material:
· Access to Healthcare
· Patient Health & Safety
· Ethical Business Practices
One of the aspects I find most comprehensive and innovative about Novartis’ process is how it displays the assessment results, not in the typical plot chart format but in a circular polar chart (see page 16 of their report). The chart’s inner circle reflects the eight issue clusters; the middle circle indicate topics with significant differences in perception between internal and external stakeholders (based on survey responses); and the outer circles represent the 30 individual topics. The relative importance of each topic is indicated by the height of the column. So, for example, for the Patient Health & Safety cluster, the three topics most important to stakeholders were pharmacovigilance, safety profile & quality of drugs; counterfeit medicines; and health education & prevention. You can tell from the chart that these three topics were seen as important by both internal and external stakeholders with no significant difference in perception. And, from the height of the topic columns, it’s clear that pharmacovigilance, safety profile & quality of drugs is seen as the most important of the three.
According to Denise, one of the most added-value aspects of their materiality assessment was the engagement with stakeholders. Their methodology also allows the company to break down results by stakeholder group to show what is important to each. Denise cautions that if a company is not truly open to having this dialogue it will impact how they view and perceive the material issues they are facing.
Beyond its global assessment, the company has rolled out an assessment process to local country offices and provides guidance through a local country tool kit. Novartis says local assessments will help the company identify and understand regional differences and help country organizations define strategic areas of focus. To date, local teams in Turkey, Greece and Portugal have completed assessments, which, Denise said, will feed into the company’s global assessment as well. Next up, she said, will be assessments in Latin American countries.
The company has published a detailed report on their materiality assessment process and results on its website, and plans to publish in January a tool kit that other companies can use to conduct materiality assessments at the country level. Denis says the idea is to establish a practitioners’ exchange and also gather feedback for improvements.
I, for one, am looking forward to seeing it!
Happy holidays everyone. I hope you have enjoyed my blog in 2019 and I appreciate all the feedback I have received – keep it coming! I’ll be back with my next blog in the new year!