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