Novo Nordisk has become the first pharmaceutical company in the world to publish an environmental profit and loss account so that it can further integrate sustainability into its core business – the analysis shows that the environmental impacts of Novo Nordisk’s business cost €223m in 2011.
The EP&L, which was developed in partnership with natural capital analysts Trucost, has an extensive section dedicated to both direct and indirect water costs at Novo Nordisk. The pharmaceutical company has made a systematic effort to quantify its water impacts throughout its supply chain.
Novo Nordisk, which is best known for making insulin to treat diabetes, has a well-established sustainability strategy through which it measures, manages and reports its environmental impacts. The EP&L takes this to the next level by putting a financial value on these impacts so that their significance can be easily understood and managed alongside other business issues.
An Environmental Profit and Loss Account (E P&L) is an effort to account, in financial terms, for the Ecosystem Services upon which a company and its entire value chain rely. Although it is difficult to place universal monetary values on fundamental services such as fresh water, clean air, biodiversity and land, a monetary value allows for direct comparison between the E P&L and the regular Profit and Loss Account, which shows the company´s net earnings.
Trucost’s analysis shows that the environmental impacts of Novo Nordisk’s business cost €223m in 2011. However, Novo Nordisk’s own operations were responsible for only 13% of these costs. Three quarters came from supply chain impacts such as greenhouse gases released from agricultural production of maize to make glucose, the main ingredient in insulin.
A significant benefit of the EP&L approach is that it provides a single metric to compare the relative scale of all environmental impacts across company operations, supply chains and product portfolios.
Susanne Stormer, vice president for corporate sustainability at Novo Nordisk, said:
“We have learned a lot from calculating the EP&L for Novo Nordisk. It has given the organisation valuable insights into the value of the externalities related to purchases in our supply chain and use at our production sites. We look forward to the continued deliberation on how the EP&L methodology can be used to inform decision-making."
The results of the EP&L will now be used by Novo Nordisk to ensure its sustainability strategy is focused on the most costly environmental ‘hotspots’ in its business enabling the company to reduce operational and supply chain risks from volatile energy and raw materials prices, natural resource scarcity and regulatory costs – including water.
The EP&L was commissioned by the Danish environment protection agency in response to global sportswear brand PUMA’s call for contributions to develop the EP&L methodology. PUMA published the published the first-ever EP&L in 2012 which was also powered by Trucost’s analysis. Other partners in the project were NIRAS and 2.-0 LCA consultants.
Richard Mattison, chief executive, Trucost, said:
“Novo Nordisk has shown that companies increasingly understand that creating long-term financial value depends on conserving and enhancing natural capital. Incorporating an EP&L into financial accounting provides a clear view of environmental risks and opportunities in a way that everyone in a company, from board members and financial managers to supply chain managers and product decision makers, can understand and act on.”
Click here to download the Novo Nordisk EP & L
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