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Social Entrepreneurship: Novo Nordisk Monitors Progress with Its Triple Bottom Line

While some companies simply talk about operating in a more socially and environmentally conscious manner, others put this philosophy into action. Headquartered in Denmark, Novo Nordisk is a leading global provider of diabetes care solutions. The firm follows a triple bottom line (TBL: economic, societal, and environmental) strategy, meaning decisions are based on the belief that “a healthy economy, environment, and society are fundamental to long-term business success.” Novo Nordisk’s goal is to operate its business so that diabetes solutions benefit both the business and patients, while meeting societal expectations in the process. To ensure that the TBL philosophy would stick, Novo Nordisk took the uncommon step of incorporating it into its company bylaws. In addition to standard financial performance measures, Novo Nordisk monitors multiple short- and long-term goals within the social and environmental areas. The 2018 Annual Report highlights not just the company’s economic performance, but its social and environmental performance as well. Novo Nordisk is therefore breaking with traditional profit only business models by setting and monitoring meaningful social and environmental goals. The TBL model seems to be working. Over 29 million diabetes patients received treatment using Novo Nordisk’s diabetes drugs and products in 2018, which generated $5.8 billion in net profits. The company is positioned to perform well financially while continuing to make a significant, multilevel impact in social and environmental spheres as well.

Why do you think more companies do not incorporate a TBL philosophy into their bylaws?

1. A new approach is needed. As business leaders, measurement is hard-wired into the culture of capitalism; we have daily check-ins, weekly metrics, monthly assessments, and annual reports. But when it comes to people and the planet, how can we calculate the impact our business has on both?
2. Environmentally, a business should ideally know the quantifiable effect of its carbon emissions, electricity consumption, waste output, biodiversity impact, and habitat destruction. And, in the true definition of the model, these metrics will need to be as specific, measurable, and actionable as any other within your business.
3. How best to integrate these triple-markers across a business in a meaningful way?

• Some suggest that a common unit of measurement is the only way, with money — the current standard global unit of worth — as the answer. But this naturally raises its challenges; how can we truly cost and control the financial worth of human and environmental capital?

4. The measurement of TBL is complex. The measurement systems a company uses to measure intangible assets such as loyalty or reputation can be hazy, and it is a challenge to link changes in these areas to separate activities in the short term.

5. In addition, the objectivity and reliability of the values obtained through measurement is doubtful. More attention should be paid not only to ‘how to measure’ but also to ‘how reliable are the values once obtained.’

Assume you want your employer to consider adopting a TBL philosophy. How would you pitch the idea? With whom would you speak?

1. TBL thinking should be applied to strategic decision-making in every aspect of your business. As such, it requires both buy-in and action from stakeholders at all levels — from suppliers to the shop floor.

• Practically, departmental heads and executives will need to ensure that all measures of success are tied to the overarching people-planet-profit objectives.
• On a truly granular level, personal performance and employee development goals will also need to be reassessed in confluence with the new sustainability criteria.

2. A triple bottom-line framework works best when embraced as a new operating system, rather than as a patch add-on.

3. The annual report should openly detail company performance along all three lines: financial, environmental, and social. Speak with the CFO about how to go about it.

4. Include TBL in the strategic vision of the company. Speak with the CEO about it. (E.g., Dell’s ‘Legacy of Good’ program — which outlined its strategic vision for the year 2020 — appears to be principally on track with its goals, having already managed to divert 99% of total manufacturing waste from landfill and reached 74% of their goal to provide 5 million cumulative hours of community service via paid volunteer opportunities for employees.)

5. Be a part of the B-Corp-certified companies, all of which are broadly configured around TBL principles. Speak with the Regulatory Affairs president on how to achieve this certification.

Sources:

1. Rudowski, E. (2021, December 7). Triple bottom lines: what are they, how to implement them and . . . should you? Medium. https://medium.com/firm-ethics/triple-bottom-lines-what-are-they-how-to-implement-them-and-should-you-d083dc9186e3
2. Sridhar, K., Jones, G. The three fundamental criticisms of the Triple Bottom Line approach: An empirical study to link sustainability reports in companies based in the Asia-Pacific region and TBL shortcomings. Asian J Bus Ethics 2, 91–111 (2013). https://doi.org/10.1007/s13520-012-0019-3