Valuing our impact

While the understanding of long-term value creation is still evolving, there is increasing interest in the topic among key stakeholders. Part of our work entails engagement and dialogue to foster a better understanding of the concept and contextualize impact valuation within broader health economic considerations.

In December, we hosted our annual Co-Creating Impact Summit with external and internal speakers. To make the experience engaging and interactive, we also held a virtual exhibition to enable participants to explore the building blocks of our impact valuation roadmap and discover and discuss inspiring best practices.

We continue to work with partners to publish studies that, for example, help measure the social impact of disease burden or preventive interventions in averting negative health impacts and environmental damage (see the appendix in section "Measuring and valuing our impact"). Our current research covers an array of topics, including social risk in the supply chain, the social impact of pediatric formulations, and environmental footprints of products.

For impact valuation to be transformational, standard setters and policies need to embrace it. To this end, we continue to drive impact valuation standardization through the Value Balancing Alliance (VBA), of which Novartis is a founding member. In 2020, we piloted the alliance’s first impact valuation indicators meant to measure and disclose the environmental, human, social and economic value companies provide to society. Overall, we found the indicators consistent with our approach except for the environmental impact of land use and of waste in the supply chain, which we did not cover previously but have now added. The social dimension of the indicators in the VBA model could be strengthened by including the social impact of our medicines and particularly of living wages.

We continue to refine our approach, now called Novartis social, environmental and economic (SEE) impact valuation, to prioritize the social impact of our medicines. In 2020, more than 20 Novartis country organizations – including, for the first time, the UK and Spain – drew on local impact valuation results to derive insights and engage with stakeholders. In total, data is now available for 189 countries, including our own operations and supply chain. We also conducted pilots using forecasted impact valuation results for both Novartis operations and our supply chain.

Overall, in 2019, our activities contributed USD 90.4 billion to global gross domestic product (GDP), as well as an estimated 974 000 jobs, including those held by our own employees. In addition, our human capital impact – including employee development, occupational safety and living wages – was valued at USD 1.9 billion, with USD 2.2 billion coming from the social impact of living wages in our own operations and the entire supply chain, USD 1.5 billion coming from employee development, and a negative USD 1.8 billion coming from occupational safety. At the same time, we are taking steps to minimize our negative environmental impact, as measured by the carbon, other air emissions, water and waste impacts of our own operations and supply chain, which were valued at USD 6.5 billion. The overall social impact of our portfolio, including Innovative Medicines and Sandoz products in 132 countries, amounted to USD 219 billion in 2019. More information on our impacts in Switzerland is available in the Novartis in Society Switzerland report, which will be published in February 2021 on novartis.ch.