Chief Sustainability Advisor, Vice President, Novo Nordisk
Some say annual reporting is nothing but history writing. I’d say, they don’t know how right they are. In fact, writing annual reports can make history. That was the case for Novo Nordisk.
At the Annual General Meeting in 2004, the Novo Nordisk Board of Directors proposed a few updates to the company bylaws, the Articles of Association. One of these was to add a sentence to the section on purpose: ‘The Company strives to conduct its activities in a financially, environmentally, and socially responsible way.’ With that, they wanted to send a clear and strong message to the market that this is how we do business, and to reemphasize that this holistic perspective is intended to ensure that all decisions made must weigh short-term gains against long term impacts.
Fifteen words that made a world of difference. Most importantly, they stick. Just like it took a majority vote to adopt, which was relatively easy given the company’s ownership structure, it would take a majority vote to denounce, which for the very same reason is unlikely to happen. They were also instrumental for what became a pivot to centre stage in the world of corporate reporting. If this is how we do business, it must define how we report on performance and position for the future. Our first integrated report saw the light of day.
Frankly, it wasn’t an integrated report, defined by current standards, but it was one inclusive document capturing the financial, social and environmental performance during the year 2004. A combined financial and sustainability report, built on the backbone of financial reporting as per IFRS standards, but with a much more interesting narrative management report. Which made Novo Nordisk an early mover in the nascent discipline of integrated reporting. I called it a beta version. Some loved it and complimented our courage. Others were more sceptical. But we stuck with it, refined it and worked to make the reporting format more robust and recognizable. Our objective was clear: to enhance stakeholders’ evaluation of the company by providing in one place the accounts for the company’s financial and non-financial performance.
Fast forward to 2009, when we found ourselves invited to join international leaders in what became the IIRC. In the Working Group we rolled up our sleeves, wrestled with definitions of materiality, intended audience, principles and content elements until in 2011 we could proudly launch the <IR> Discussion Paper and eventually the final framework.
In parallel, we had embarked on the next phase: To bring the quality of data reported in our social and environmental statements on par with financial data, with the goal to achieve credibility and reliability. It proved to be a long stretch towards a moving target, but worth every drop of sweat as the effort to break the mould earned us a great deal of respect among internal and external stakeholders. And we learned the ropes from financial accounting and built robust processes that are now ingrained in Novo Nordisk’s reporting cycle.
The job wasn’t finished yet. Our self-taught report format was praised by users, but we wanted its contents to be consistent with the <IR> framework. In 2016 that mission was accomplished, and our Management could confidently sign a statement declaring that ‘The Annual Report has been prepared in accordance with the International Integrated Reporting Framework’. With a concise, cohesive and consistent storyline on how the company creates value over time – to stakeholders and to shareholders. It can be done. And, importantly, it is a meaningful and value-creating effort; institutionalised internally, yet never a routine. Each new year, each new reporting cycle brings opportunities for incremental innovation – or radical new ideas.
All the time, to me the end game was in sight: What we need is a corporate reporting framework that enables users to assess the extent to which the organization is sustainable. One that accounts for impacts, positive and adverse, in a balanced way, and how the organization creates value over time, including financials. We know what it takes. And I believe we’ve got what it takes.
So, here we are: Partners in crime. Members of an inspiring community of practice. Holders of the keys to the future of corporate reporting. It’s been a rich learning journey; memorable and rewarding, and I and the team are thankful for the opportunity. But we’re not quite there yet. Let’s get down to business.