Joe Jimenez, CEO of pharmaceutical multinational Novartis, speaks to Ethical Corporation about corporate innovation and the importance of a sustainable business approach

How do you link sustainability and corporate responsibility to your business strategy? You do a lot of good work, but how do you mainstream it in the business?

Corporate responsibility has always been and will continue to be a core part of our business strategy. We focus our corporate responsibility efforts in two areas: expanding access to healthcare and doing business responsibly. We’re applying our expertise in science and innovation – for example our new malaria compound KAE609.

We are also pioneering new, sustainable business models, such as our social ventures initiatives, to help improve quality of life for those with limited resources. We are committed to carrying out our commercial activities with integrity and do so by upholding the highest ethical standards. We also aim to conserve natural resources and limit our impact on the environment. We’re reinforcing our efforts by integrating and aligning our corporate responsibility activities across the company with targets and metrics we report in our annual report.

Investors care; investors don't care. We hear conflicting views. Which stakeholders tell you they do care about sustainability and corporate responsibility, and how do they demonstrate this?

We live in a global economy where corporate responsibility is not just a “nice to have” – it’s an expectation. Our customers expect it, our patients expect it, our associates expect it, and increasingly, our investors are expecting it. There’s growing evidence that links corporate responsibility and sustainability activities to positive business performance.

Despite the current challenging economic environment where long-term projects can be the first to get cut, nearly a third of multinational companies are saying that sustainability is critical to their ability to do business. Corporate responsibility is more than just the right thing to do – it also makes good business sense.

How has John Ruggie’s business and human rights framework changed how you do business?

The Guiding Principles and other frameworks championed by the UN such as the Global Compact have helped shape corporate thinking and behaviour. They give us a foundation that is aligned with our values and they help us sustain a culture that both furthers business growth and protects and promotes human rights.

We make a point to continuously review our policies and our conduct to make sure we’re doing our part – and we’re making good progress. For example, we were able to secure a living wage for all Novartis associates [employees] around the world, making us one of the first companies to do so.

How do you make sure intrapreneurial sustainability and corporate responsibility projects become real business lines? Can you give us examples of how you seek out internal innovation?

We try to foster a culture of innovation and creativity, and this includes how we continue to improve as a more responsible and sustainable company. To encourage idea-sharing, we recently held our first company-wide digital global brainstorm where associates discussed topics that are important to our business, including corporate responsibility.

One of the questions raised was, “We’re reaching 1.2 billion patients each year with Novartis products, but many people still don’t have access to quality healthcare. How can we help?” We heard from associates around the globe who offered ideas on everything from leveraging mobile to improve access to creative ways to improve distribution in remote areas.

Are companies going to have to become much more vocal – and take action – on public policy issues in the coming years than in the past?

Healthcare costs have grown faster than GDP for 50 years, and at the same time demand for healthcare globally is rising. As a result, governments and other payers are aiming to cut spending by shifting their resources to solutions that deliver the most cost-effective real world outcomes.

Part of the solution is policy reform, but another important piece is for the private sector to develop new commercial models that focus on delivering positive patient outcomes, instead of just focusing on the transaction of selling a medicine. We’re applying new approaches such as risk-sharing pricing models which link payment to patient outcomes as a result of treatment.

We also have integrated care programmes which use a broader and more holistic model that consider solutions “beyond the pill” to improve overall health, such as physical rehabilitation and medical counselling. And Novartis’ social ventures are unique business models that help expand healthcare access in the developing world.

We work with local governments, non-profit organisations and others to help improve local infrastructure, strengthen distribution channels and build local capabilities while still making a profit. This ensures the sustainability of this approach.

Novartis: fast facts (2013)

• Net sales: $57.9bn
• Net income: $9.3bn
• R&D spend: $9.9bn
• Employees: 135,000
• Medicines reach 1.2 billon people annually

business strategy  CEO  CEO interview  corporate innovation  Leadership  Novartis  pharmaceutical  sustainable business