Measuring and valuing our impact

Impact valuation is an emerging discipline that seeks to measure the positive and negative effects of companies on society. Novartis is pioneering an approach called social, environmental and economic (SEE) impact valuation that aims to show the positive impact we bring to countries, health systems and individuals, balanced by the negative impact of our operations on the environment and other areas. Expressing these impacts in monetary terms makes them transparent and comparable for stakeholders.

Our latest SEE impact valuation figures for 2020 take into account the social impact of our Innovative Medicines and Sandoz product portfolio in 131 countries. We also assessed our impact on living wages and employee development in our own operations and in our supply chain, as well as our contributions to gross domestic product and employment in the countries in which we operate.

At the same time, we measured the negative impact of our business on occupational safety – both in our own operations and across our supply chain – as well as the negative impact of carbon and other greenhouse gas emissions, land use, water use and waste. Minimizing risks associated with third parties in our supply chain and improving environmental sustainability are key parts of our strategy and operating model. For more information, please see the section “Embrace operational excellence.”

While impact valuation methodology is still evolving, our efforts are based on current leading approaches. For example, we engage with WifOR, an independent economic research institute, to calculate the social impact of our medicines, our direct GDP contribution, and our indirect and induced environmental and economic impacts. We are also a founding member of the Value Balancing Alliance (VBA), a nonprofit organization that aims to create a standard for measuring and disclosing the value companies provide to society. With the exception of the social impact of our medicines, which is specific to our industry, all other reported impact indicators are subject to standardization through the VBA.

We first applied our impact valuation methodology in 2016. Since then, we have further developed the approach and expanded its scope. SEE impact valuation results have been used by Novartis teams for stakeholder engagement and business decision-making.

We also engage with stakeholders to raise awareness of impact valuation and promote standardization. In 2021, we hosted our fourth annual Co-Creating Impact Summit with more than 1 800 participants from academia, industry, the investment community and other areas.

For more information on the Co-Creating Impact Summit and impact valuation methodology, please see www.cci-summit.com

Novartis social, environmental and economic impact in 20201

Indicator

Results2

Remarks

Social

 

 

Living wages

USD 1.8 bn

Own operations USD 1.1 bn, indirect USD 0.7 bn

Employee development

USD 1.5 bn

Own operations USD 76 m, indirect USD 0.7 bn, induced USD 0.8 bn

Occupational safety3

-USD 3.8 bn

Own operations -USD 2 m, indirect -USD 1.8 bn, induced -USD 2.0 bn

Other human capital impacts

 

Employee well-being, voluntary turnover, human rights beyond living wages not valued in 2020

Medicines

USD 242 bn

Based on 68 Innovative Medicines brands and 71 Sandoz products in 131 countries

Environmental

 

 

Climate, energy and air pollution

-USD 4.7 bn

Own operations USD 138 m, indirect USD 1.7 bn, induced USD 2.8 bn

Water and waste

-USD 1.0 bn

Own operations USD 69 m, indirect USD 305 m, induced USD 433 m, downstream USD 153 m

Land use

-USD 2.0 bn

Own operations USD 43 000, indirect USD 308 m, induced USD 1.7 bn

Other environmental impacts

 

Biodiversity not valued in 2020

Economic

 

 

GDP contribution

USD 87.4 bn

Own operations USD 49.7 bn, indirect USD 17.0 bn, induced USD 20.6 bn

Employment

957 433 FTEs

Own operations 105 794 FTEs, indirect 342 000 FTEs, induced 510 000 FTEs

Economic inefficiencies

 

Not valued in 2020 - no methodology available

Total taxes

 

Not valued globally in 2020

1

2021 figures will become available in May 2022 and will be published in our 2022 report.

2

Our methodology is based on leading approaches, including WifOR (social impact of medicines, direct GDP contribution, indirect and induced environmental and economic impacts), Valuing Nature (social impact of wages and salaries), VBA (employee development, occupational safety, waste, land use) and Impact Valuation Roundtable (general approach).

3

Higher than in 2019, primarily due to a change in the third-party database used for occupational diseases in the supply chain