Enforcing integrity standards

Ensuring that our standards of ethical business conduct are put into practice is achieved through an integrated approach to decision-making, the establishment of a system for handling complaints and through our ongoing monitoring and reporting procedures.

 

Decision-making

Ethical considerations are an integral part of decision-making at Novartis. Business integrity is embedded into our performance appraisal system. We conduct product stewardship reviews to proactively manage
product-related risks and ensure that decisions related to our products conform to our business integrity standards.

Through the global Integrity & Compliance organization, we have a system in place for managing any potential conflicts of interest that may arise. In country organizations, Compliance Committees review grants and promotional activities prior to approval to ensure that these are in line with Novartis standards.

In a global company like Novartis, the integrity and compliance process also extends to our wider sphere of influence, including the supply chain.

Read more about how we ensure high ethical standards through our approach to third party management

 

Complaints handling

We support an open culture in which employees are required to report violations and are protected from retaliation or penalties. We believe this is key to deterring and preventing misconduct, and provides associates with the confidence that action is taken. Violation of Novartis standards may result in disciplinary action, including dismissal.

In 2005, we established the Business Practices Office to provide the company with a formalized system for dealing with complaints of actual or suspected cases of misconduct. The Business Practices Office offers employees and external stakeholders a channel through which grievances and allegations can be submitted, without fear of reprisal or penalty. All complaints are investigated and substantiated cases are brought up to management so that appropriate action can be taken.

The Business Practices Officer (BPO) provides a rich source of information in order to identify trends, document lessons learned and propose process changes or new training courses to prevent misconduct in the future.

As part of our commitment to foster an open culture, processes guaranteeing confidentiality and non-retaliation have been implemented to help employees report allegations of misconduct. Integrity telephone lines have been introduced in 70 countries granting employees the option of reporting allegations in 51 languages. Confidential messages can be left for the BPO, who endeavors to respond within 72 hours. The BPO generally aims to turn around each case within 8 weeks.

In 2008 a system for web reporting was introduced to further facilitate the reach of persons who wish to report misconduct.

During 2008, the BPO received 884 complaints that became investigations. A slight decrease in investigations in the United States was noted during 2008 with an increase in cases being reported in Latin America, Asia, Africa and Australia.

To date, 390 of the complaints reported last year have been fully investigated and 231 complaints fully or partly substantiated. Employment contracts of 162 associates were discontinued last year while 66 warning letters were issued and appropriate training undertaken to improve behavior.

Amongst the challenges we have encountered in setting up the Business Practices Office, is the difficulty of coordinating a unified approach to sanctions across different business units in different geographical and cultural settings.

The Business Practices Officer (BPO) can be contacted by email at:

business.practicesofficer@novartis.com

 

Monitoring

Monitoring is an essential aspect for ensuring that our integrity standards are being implemented effectively. In the first instance, local management is required to undertake self-assessment monitoring of how effectively key initiatives, such as our Promotional Practices Policy, have been applied. We also conduct an annual associate survey to measure the ethical climate across the company. These monitoring activities are backed up by Internal Audit and third-party external assurance, who are responsible for monitoring whether appropriate management processes are in place and whether our integrity standards have been adhered to.

The Enterprise Risk Management function within Novartis also carries out periodic compliance risk assessments, which help to monitor implementation of our policies and values. The overall Integrity & Compliance program is regularly benchmarked with other companies. In addition, the program was subject to external assurance by PriceWaterhouseCoopers, which provided confidence in its implementation status, but confirmed the need for more face-to-face training.

 

Reporting

The Executive Committee and management teams are regularly updated on integrity and compliance topics. In order to highlight that the integrity standards are enforced, anonymous cases of misconduct are made available on the Intranet for associates.

At the end of each year the Executive Committee of Novartis and the members of all local management teams worldwide are requested to submit a statement certifying compliance with our policies and codes. The information supplied by Novartis Integrity & Compliance Officers worldwide throughout the year is compiled into an annual report and submitted to the Audit and Compliance Committee of the Board of Directors. Both the implementation and effectiveness of our Integrity & Compliance program are discussed in this report, along with key achievements and challenges.

The Annual Report includes a chapter on business conduct and the implementation of the Integrity & Compliance Program. We also issue a yearly UN Global Compact Communication on Progress, GRI report as well as an online and printed Corporate Citizenship review.

 

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