Novartis: The Environmental Impact of Novartis Along Global Supply Chains

As part of the Novartis Financial, Environmental and Social impact valuation, Novartis analyzed the total environmental impact of its business activities along the upstream global supply chain with respect to selected environmental indicators. The objective was to obtain a comprehensive picture of the environmental impacts triggered by Novartis to effectively monitor environmental risks and opportunities in different geographical and operational areas. Achieving this goal required both an in-depth analysis and a broad scope. With the customized approach Novartis chose, critical hotspots could be identified and analyzed by region of operation, business activity, commodity class, and country of impact.

Novartis strives to achieve major progress in alignment with the UN Sustainable Development Goal 12 (Sustainable consumption and production), SDG 7 (Clean energy) and SDG 6 (Clean water and sanitation) by quantifying its environmental footprint. SDG 12 emphasizes the need for a systematic approach among actors in the supply chain, from producer to final consumer. The model followed a more holistic approach as compared to the scope of current sustainability standards: For example, it includes the impact of households supported through wages and salaries paid by Novartis and through wages and salaries paid by vendors for the production of goods and the provision of services for Novartis.

Natural Capital Protocol used
  • No, but aligns with the Protocol’s framework
Natural Capital Issues
  • Biodiversity & Ecosystem Services
  • Climate & Air Emissions
  • Water
Organizational Focus
  • Corporate
Valuation Type
  • Monetary
  • Quantitative
Geographical Scope
Value Chain Boundary
  • Upstream
  • Healthcare

Key findings

Quantifying and monetizing its environmental impact provided Novartis with actionable insights. The company obtained a complete picture of its environmental impact along its global supply chains and greatly enhanced its transparency by eliminating environmental blind spots and exposing potentially undetected risks. The level of detail provided by the analysis allowed Novartis to gather precise information and to use it in the dialog with specific stakeholders, e.g., when communicating and collaborating with suppliers on environmental issues.

The analysis gave valuable answers to questions such as:

  • Which Novartis countries cause the highest CO2 emissions, air emissions and water consumption in their upstream supply chain?
  • How is this impact distributed among the different sectors of purchased goods and services?
  • Which (operational) areas have the biggest potentials?
  • Which impacts occur along the supply chain, and at which stages?
  • Which impacts occur in which countries?

By providing answers to these questions, the analysis

  • Allowed Novartis to consider the potential cost of carbon and of water, as well as their corresponding financial risks,
  • Improved internal management practices,
  • Complemented Novartis environmental management systems according to ISO 14001 and EMAS by providing relevant insights on the areas where environmental management efforts can have the greatest impact,
  • Complemented Novartis responsible supply chain management by revealing hot spots within the supply chain as well as the potentially eco-friendliest suppliers, and
  • Enhances the understanding of the role and necessity of partnerships and system considerations also for environmental matters.

Novartis is implementing these learnings throughout its organization and intends to follow up with key suppliers to realize performance improvements in specific areas.

More information

Contact: Sonja Haut, FES Impact Valuation at Novartis, and Dr. Marcus Cramer, Head of Impact Analysis at WifOR

Reference: N. Benke, R. Scholz, N. Albu, M. Cramer, D.A. Ostwald, S. Haut, D. Kessler, The Environmental Impact of Novartis Along Global Supply Chains, Basel/Berlin/Darmstadt, July 2018.

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