The Center for Human Resource Management Studies at FDU- MadisonFall 2001 Breakfast Series: The Center for Human Resource Management Studies at FDU- Madison Fall 2001 Breakfast Series Jim Thomas Executive Director, HSE Novartis Corporation September 21, 2001 Global Issues Around Sustainable Development


Slide2: Novartis Corporation A World Leader in Healthcare Our Purpose We want to discover, develop and successfully market innovative products to cure diseases, to ease suffering and to enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company.


Slide3: Recent Novartis Publicity


Gleevec - Breakthrough Leukemia Drug: Gleevec - Breakthrough Leukemia Drug Oral cancer drug for chronic myeloid leukemia In clinical trials, nearly 90% of patients had their white blood cell counts return to normal Priority review by FDA allowed this to be the fastest time to market of any cancer treatment Novartis has put in place a comprehensive patient assistance program, which insures that uninsured, indigent patients are not denied therapy for economic reasons


Novartis in the US: Novartis in the US Novartis Pharmaceuticals Corporation — branded pharmaceuticals Novartis Consumer Health, Inc. — over-the-counter medications, medical nutrition products, Gerber baby foods and baby care products, and functional foods Geneva Pharmaceuticals, Inc. — generic pharmaceuticals CIBA Vision Corporation — contact lenses, lens care and ophthalmic surgical products Novartis Animal Health US, Inc. — companion animal care products Headquarters in New York City Approximately 15,000 employees US accounts for more than one-third of worldwide sales.


Slide6: Novartis Corporation A World Leader in Healthcare Aspirations …. In addition, we want to contribute to society through our economic contribution, through the positive environmental and social benefits of our products, and through open dialogue with our stakeholders. Also: We integrate HSE standards and policies into our business strategies to add value to the enterprise, to manage risks, to enhance the reputation of the company and to illustrate our commitment to sustainable development. Source: Novartis - Purpose, Aspirations & Mgmt. Principles, June 2000


Main Issue - Globalization : Main Issue - Globalization KEY FINDINGS Of the 100 largest economies in the world, 51 are corporations; (based on a comparison of corporate sales and country GDPs). The Top 200 corporations’ combined sales are bigger than the combined economies of all countries minus the biggest 10. The Top 200s’ combined sales are 18 times the size of the combined annual income of the 1.2 billion people (24 percent of the total world population) living in “severe” poverty. General Motors - the world’s biggest corporation is ranked 23rd and is bigger than the economies of Denmark, Norway, Poland or Saudi Arabia. Source: “Top 200 - The Rise of Corporate Global Power” by Sarah Anderson and John Cavanagh (Institute for Policy Studies - 12/2000


Public Opinion Survey on Credibility of Organizations: Public Opinion Survey on Credibility of Organizations Conducted by Strategy One, a unit of Edelman Public Relations Worldwide & published to coincide with the one year anniversary of the WTO meeting in Seattle Found that NGOs are trusted nearly two to one to “do what is right” as compared to governments, media or corporations. NGOs such as Amnesty International, Greenpeace, & WWF have more credibility than Ford, Microsoft or Nike. Of US respondents: 80% view Greenpeace as highly effective 78% view Amnesty International as highly effective only 11% see governments or companies as “making the world a better place”


John Elkington -CEO of SustainAbility : John Elkington -CEO of SustainAbility “The speed of globalization often means that companies are moving ahead of the ability of current governance systems to monitor and police. Companies will be expected to fill at least some of the gap.” Quote from the Novartis Health, Safety Environment Report 2000: Sustainability and the UN Global Compact


Kofi Annan and the UN Global Compact: Kofi Annan and the UN Global Compact Kofi Annan, UN Secretary General “…let’s choose to unite the powers of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of the next generations…”


The UN Global Compact: The UN Global Compact The nine Principles of the UN Global Compact cover topics in: Human Rights Labour Practices Environmental Protection rooted in the Universal Declaration of Human Rights, the ILO Core Labour Standards, and the Rio Principles on the Environment


The UN Global Compact: The UN Global Compact Human Rights: 1. Support and respect the protection of human rights within the sphere of our influence. 2. Ensure that our own operations are not complicit in human rights abuses.


The UN Global Compact: The UN Global Compact Labor Standards: 3. Freedom of associations and the effective recognition to collective bargaining. 4. Elimination of all forms of forced and compulsory labour. 5. Effective abolition of child labour. 6. Elimination of discrimination in respect of employment and occupation.


The UN Global Compact: The UN Global Compact Environment: 7. Support a precautionary approach to environmental challenges. 8. Undertake initiatives to promote greater environmental responsibility. 9. Encourage the development and diffusion of environmentally friendly technologies.


Slide15: Dr. Dan Vasella Novartis’ Commitment to the UN Global Compact


Eco-Indicator 95 Units: Eco-Indicator 95 Units Greenhouse Effect (global warming) – Occurs when heat by the sun is trapped in the earth’s atmosphere by “greenhouse gases”such as CO2, methanes, chlorofluorocarbons (CFCs and H-CFCs) and nitrous oxide. Summer Smog – Caused by the reaction of sunlight with VOCs and NOx from industrial and non-industrial sources. Winter Smog – Caused by SO2 and particulates. Acidification – Generation of acids in the atmosphere caused by the NOx and SO2 emissions from burning fossil fuels. Acids are either deposited directly onto the earth’s surface or fall as acid rain. Eutrophication – Overfertilization of aquatic ecosystems caused by nitrate and phosphate run-offs. NOx air emissions are also a contributor. Heavy Metals – Poisonous to human beings and ecosystems.


Benchmarking HSE Data: Benchmarking HSE Data This graph shows Novartis’ HSE performance in comparison to other pharmaceutical companies (based on 1999 data).


Novartis Environmental Activities: Novartis Environmental Activities Gerber Water Team has implemented projects that saved 67.5 million gallons in 2000 Gerber has dedicated 20 acres of its farm as a nesting ground for ring-necked pheasants (joint effort with USFW & Pheasants Forever)


Novartis’ Efforts in CSR: Novartis’ Efforts in CSR Novartis has signed two Memorandums of Understanding with WHO - one to provide free treatment for all leprosy patients in the world until the disease has been eliminated from every country; the other to provide Coartem, our oral fixed combination anti-malarial product effective against drug resistant malaria at cost The Novartis Foundation for Sustainable Development has been active for 20 years in development policy and assistance programs


Innovest Comparison of Pharma Industry : Innovest Comparison of Pharma Industry Source - Innovest Report - The Pharmaceutical Industry May 2000 TOP HALF Bottom Half SPREAD


Slide21: Dow Jones Sustainability Index


Novartis’ Ratings by External Groups: Novartis’ Ratings by External Groups


Future Plans: Future Plans


Novartis Policy on Corporate Citizenship: Novartis Policy on Corporate Citizenship The Novartis Policy on Corporate Citizenship expands the current HSE Policy to include all aspects of the Global Compact. It is consistent with the Novartis purpose, aspiration, and strategy documents. It represents a Global Policy Statement that will need to be complemented by practical Guidelines (e.g. regarding third parties, human rights, labor relations, animal rights), Guidance Notes, Audit Checklists and Position Statements (e.g. access to treatment, animal rights). Compliance with the Policy will be audited similarly to the current practice in HSE


Implementation: Implementation Steering Committee 13 members (3 executive Committee, all 5 business Sectors, SEA, LATAM, Functions: Legal/SD, Human Resources, Communication, HSE, Novartis Foundation for Sustainable Development, international coordination) working groups (members from functions, business Sectors) human rights ( child labor, industry context) labor standards (minimum wages, trade union status) environment (precautionary approach, 3rd parties) 3rd party issues (marketing practices, suppliers, contractors) Pharma (access, patents/biodiversity, organ “market”, genetic testing) Nutrition Eye-care Communication (internal/external)


Internal Launch: Internal Launch Fall 2001 Distribute Corporate Citizenship Policy with explanatory letter from Chairman & CEO 4Q 2001 - 1Q 2002 Conduct regional management workshops January - December 2002 Sectorial launches Ongoing Global Compact intranet site and internal media