From the research and development of life-saving drugs to the provision basic sanitation products, the pharmaceutical industry underpins virtually every crucial aspect of healthy modern life across the globe. In most cases, companies within the industry were established with what could be described as one common, philanthropic goal: to enhance human life.
The bottom line, however, is that like any other businesses, pharmaceutical companies are always watching the bottom line and are beholden to delivering to their shareholders. And like other industries, the pharmaceutical industry has not been impervious to the go-go greed of the eighties and nineties that caused a slip in ethical standards.
In response, over the last six years the FBI has doubled its budget for investigations into fraud within the healthcare industry. The Health & Human Services Office of the Inspector General increased its budget for fraud enforcement last year by 22 percent. This, combined with the ethical debate over trade-related aspects of intellectual property, has put the pharmaceutical industry under ethics-related pressure perhaps more intensively than any other.
Over recent years, the focus of the media and subsequent public pressure has prompted a handful of pharmaceutical companies to produce social reports of varying standards. Although several companies have begun actively engaging with their stakeholders and are investing in changes aimed at their overall social performance, the industry-wide picture reveals these companies to be the exception to the rule. In several cases, the quality of reports suggests that some companies are simply paying lip service to the demands of their stakeholders.
Comparing report cards
While only a limited number of pharmaceutical companies actually produce reports, a useful indicator of the industry’s position on CR is to examine the approach taken by three pharmaceutical companies whose market share, specialisation and level of commitment to corporate responsibility vary widely.
GlaxoSmithKline (GSK) currently generates the second-highest revenue in the pharmaceutical industry. GSK specialises in prescription medicines, vaccines, over-the-counter medicines, oral care and nutritional healthcare products. It was recently recognised by Deloitte and Touche as being as one of the top three social reporters within the industry.
Novo Nordisk, a much smaller company with the 26th highest revenue in the industry, specialises in treatments for diabetes and has been widely acknowledged as a cross-industry leader for its well-embedded CR practice.
Abbott Laboratories, founded over 100 years ago, now enjoys the 13th highest revenue within the pharmaceutical industry. Abbott specialises in pharmaceuticals, nutritionals, hospital products and diagnostics. The company produced its first CR report in 2002.
Why face up to the responsibilities?
“GSK doesn’t view corporate responsibility as a standalone issue,” stresses Julia King, GSK’s head of CSR coordination and reporting, when questioned on the company’s motivation for addressing and embedding corporate social responsibility into its wide-ranging operations. GSK’s preferential pricing programmes have been in place for over 20 years and the company operates a range of well-established community programmes.
Julia King explains that the primary motivation for the company to produce reports has been to publicly illustrate the extent to which CR is already embedded in GSK’s day-to-day operations.
Novo Nordisk, a Danish company, cites the Scandinavian political and social environment for its early integration of corporate responsibility and environmental policies. Denmark’s first environmental regulation was introduced in 1975. The same year, Novo Nordisk established its first environmental department and laid out its first internal environmental policy.
Lisa Kingo, executive vice president of stakeholder relations for Novo Nordisk, explains that Novo Nordisk’s environmental and social policies have been formed largely via discourse with external stakeholders. She adds that it was members of the public and NGOs who brought the company’s attention to many of the issues that are addressed today.
One of the main turning points for the company occurred as early as 1975, when a US-based public pressure group and the well-known author and co-founder of SustainAbility John Elkington turned the spotlight on Novo Nordisk, criticising the company for using detergent enzymes in certain products. The company promptly invited John Elkington to visit its production plant in Denmark and thereafter began to entrench a firm policy of stakeholder dialogue and engagement.
Abbott Laboratories only recently directly addressed the need for a company-wide corporate responsibility initiative. Since the installation of a dedicated CR team in 2002, headed up by Reeta Roy, the company’s divisional vice president for global citizenship and policy, Abbott’s CR honeymoon period has produced some promising commitments to further improving its social record. In 2002 the company also produced its first social report.
How best to tackle the issues
According to Julia King, no single pressure group, NGO or citizen has individually had a direct impact on GSK’s CR strategy. Rather, the company’s approach to strategy development is to listen to suggestions from stakeholders with a specialist knowledge, consult widely and then address what the company decides are the most pressing concerns.
GSK has partnered with a range of governmental and non-governmental organisations to address issues in the developing world such as malaria, lymphatic filariasis (elephantiasis) and HIV/AIDS (including pricing schemes, drug distribution and clinical drug trials).
GSK has produced two social reports as well as a separate yearly report Facing the Challenge that outlines the company’s R&D projects and contribution to improving healthcare in the developing world.
GSK’s stakeholders (who are not directly addressed in either social report) are directly “engaged” on a two-yearly basis through what is called a “Town Hall” meeting, a 1.5 hour Q&A session where employees and members of the public can direct questions directly to senior management. GSK also has a call centre for customer care. The company’s top 30 investors (none of which is an NGO) are consulted on a weekly, one-to-one basis.
Novo Nordisk believes that a high degree of transparency and on-going stakeholder dialogue both help the company develop solutions to ethical, social and environmental issues. The company is convinced that this approach has improved its overall performance and will continue to have a positive long-term impact on the financial bottom line and on its long-term market position.
Novo Nordisk’s strategy for corporate responsibility rests on a three-tiered approach. First, commitments are defined via a corporate governance structure.
Second, the company keeps abreast of emerging issues and concerns via on-going stakeholder engagement. Third, target-setting and systematic follow-up procedures help ensure continuous improvement and exchange of better practices in the organisation.
Each year, short-term targets are defined in a corporate “balanced scorecard” and subsequently carried over into relevant units’ individual scorecards. For each target, a responsible manager is identified, and through inclusion in balanced scorecards at corporate and unit levels, internal procedures are put in place to ensure systematic follow-up and reporting.
“Transparency, our sustainability agenda, environmental performance, human rights, economic footprint, extensive stakeholder dialogue, employee involvement – all of these are of paramount importance to Novo Nordisk because they form an integral part of our long-term strategy,” explains Ms Kingo.
Abbott has established domestic and international policy committees that meet regularly throughout the year, each led by executives reporting to senior management. The committee members include senior management from the company’s pharmaceutical products division, government affairs, public affairs and the global citizenship and policy function.
The purpose of the global citizenship and policy function has been to promote dialogue with internal and external stakeholders, to engage senior management in identifying key issues and priorities and to work across the company to embed policies and programmes.
Throughout 2002, Abbott’s global citizenship policy function carried an internal assessment that involved interviews with senior management. A cross-functional working group was formed to determine the meaning of corporate responsibility, what CR means to management and what data needs to be collected to verify that progress is being made.
Abbott has made a concerted effort to engage its stakeholders, who it identifies as being patients, health care authorities and decision makers. Over the course of 2002, the company carried out a series of workshops, one-on-one sessions, focus group discussions and advocacy efforts.
Where the buck stops
Approaches to managing CR programmes are always diverse and often very creative. The approaches currently taken by GSK, Novo Nordisk and Abbott provide no exception to this.
Unlike many organisations that practice CR, GSK has no central CR team. Instead, Julia King coordinates the overall CR strategy and reporting, as well as coordinating a cross-functional team comprising representatives of key business areas who liaise directly with her. The cross-functional team is coordinated via email.
Ms King arranges necessary meetings and assists in the development of relevant strategies. As a general rule, the cross-functional team physically meets on a quarterly basis to collaborate on any findings and to report any progress. Ms King transmits the findings and progress of the cross-functional team to the CEO, the GSK board and the CSR committee.
According to CEO Jean-Pierre Garnier, “The CSR committee, which is comprised of four non-executive directors of GSK, advises the board on social, ethical and environmental issues that have the potential to seriously impact GSK’s business and reputation.”
GSK’s aim is to balance the desires of the company’s stakeholders for greater transparency about its operations with the reality and costs of running the business.
Novo Nordisk’s approach differs quite broadly from GSK’s. In 2001 Novo Nordisk identified a set of triple bottom line indicators to serve two purposes. Twenty indicators are applied as a management tool, enabling the company to measure progress against targets in its balanced scorecard. The indicators illustrate the company’s performance in areas where it is considered to have a significant impact on the environment, people and societies.
The CR policy at Novo Nordisk begins at the top echelon and is filtered down from the executive management group, which includes the CEO, the CFO, the CSO (corporate scientific officer), the COO and Lisa Kingo, who is responsible for stakeholder relations and sustainability as well as internal and external CR communications.
Novo Nordisk expects its charter and policies to be embodied by every individual employee in his or her actions. The particular responsibility for keeping the company’s actions attuned to stakeholders’ demands lies with the board of directors, executive management and cross-organisational committees.
Three committees, each chaired by a member of executive management, have specific responsibilities for sustainable development. These include the environment and bioethics committee, the social and industrial relations committee and the health policy committee.
Lisa Kingo heads a total of 27 staff that work with her to ensure that sustainability strategies are communicated and pushed forward effectively. The team views itself as ‘change agents’, responsible for spotting new trends and methods of achieving goals, creating new platforms for sustainability issues and pushing the sustainable agenda forward, both internally and externally.
Reeta Roy is responsible for leading Abbott’s citizenship agenda, creating policy positions and managing stakeholder engagement. On the heels of TAP Pharmaceuticals’ (a joint venture between Abbott and Takeda Chemical Industries) indictment for defrauding Medicare and Medicaid programmes by illegally marketing the prostate cancer drug Lupron in 2001, Abbott was stung again in 2003 when its subsidiary Ross Products was indicted for fraudulent sales of medical equipment. Recognising a need for greater accountability within Abbott Laboratories and its subsidiaries, Abbott responded promptly by revising and launching a number of new programmes within the company’s Office of Ethics and Compliance, which was originally established in 2000.
The Office of Ethics and Compliance administers Abbott’s policies guiding the company’s business behaviour and develops strategies and programmes for strengthening compliance policies across the company. Six divisions of Abbott have their own ethics and compliance officers, who report to the chief ethics and compliance officer. The chief ethics and compliance officer prepares periodic status reports for Abbott’s board of directors and reports regularly to a business conduct committee comprised of senior management.
During 2002, the office established a compliance risk auditing function within the company’s corporate internal audit, along with an ethics and compliance webpage on the Abbott global intranet system to improve access to news updates and to corporate and divisional ethics and compliance policies and procedures. In addition, an electronic programme was developed to focus resources in order to cross check the US employee population against the exclusion/debarment databases of the US Office of the Inspector General’s Department of Health and Human Services, the US General Services Administration and the US Food and Drug Administration.
CR: a success story?
Although GSK cannot outline any successes directly attributable to a CR policy, given that the company does not view CR as a standalone issue, Ms King suggests that any successes are embodied within the overall performance of the company.
Lisa Kingo provides four examples of the positive impact of Novo Nordisk’s social and environmental policies. She states that the company’s policies and ethics have enabled it to attract and retain highly valued employees. She notes that employees continually place Novo Nordisk’s position on sustainable development among the top three reasons why they want to work for the company – an important factor given that the industry is knowledge-based. And she states that highly qualified professionals choose Novo Nordisk over bigger pharmaceutical companies on account of the core values of the company.
Another positive result is that investors and analysts are now evaluating Novo Nordisk from the triple bottom line approach (financial, environmental and social performance), which is improving the company’s ranking in sustainability indices.
Finally, she cites the company’s level of credibility in the eyes of stakeholders and the subsequent level of trust. “Trust is extremely important in this industry. It gives you the freedom to innovate and operate. It is very difficult to innovate and operate when you have consumers, government bodies and NGOs attacking your products and your corporate practice,” explains Ms Kingo. Novo Nordisk clearly identifies the three most important stakeholder groups that it strives to engage: people with diabetes, the company’s employees and the broad spectrum of civil society engaged in the debate on issues affecting its business.
Like Novo Nordisk, Abbott Laboratories has also made a concerted effort to engage its stakeholders, who it identifies as patients, health care authorities and decision makers. Over the course of 2002, the company carried out a series of workshops, one-on-one and focus group discussions and advocacy efforts.
One of the positive results the company has already experienced through stakeholder dialogue has been a mutual increase in understanding. One example is where Abbott engaged in dialogue with Catholic Healthcare West, a religious group that requested that the company develop ethical criteria to guide the company’s decisions regarding patent extensions. The stakeholder group withdrew its resolution after extensive discussion on the issue.
Reeta Roy, who heads up the Global Citizenship team at Abbott Laboratories, commented that each party was able to gain a much greater insight into the others’ perspective and that Abbott learned a considerable amount about the ethical argument for patent relaxation. She acknowledged that, so far, there has been a fair balance between what the company is doing and what it is learning to do.
One CR exercise that promises to show tangible results has been a combined effort with faculty members from Carnegie Mellon University, who evaluated Abbott’s public reporting on toxics release inventories of its plants under ‘community right-to-know’ regulations. The company has indicated that it will use the results of this work to prioritise performance improvement and risk management initiatives in the future. Abbott is also participating in a study that is currently being carried out by Carnegie Mellon to enhance existing environmental management systems and their support of organisational decisions.
Taking on Goliath: a handful of HIV policies
GSK supports 29 HIV trial clinics, which assess the use of anti-retroviral therapy for treatment and prevention of mother-to-child transmission in resource-poor settings. The company provides cost-price (90 US cents/day) anti-retroviral drugs in a total of 63 countries.
The Masoyi home-based care project is a three-year programme run by the AIDS Care Training and Support Initiative (ACTSI) that GSK has invested in. The aim is to establish a cost-effective model of care that can be implemented elsewhere in Africa.
GSK has granted one voluntary licence for the manufacturing and sale of generic versions of three of its patented anti-retroviral drugs, AZT, 3TC and Combivir, to South African drug maker Aspen Pharmacare. The licence was granted in October 2001. To date, however, Aspen has yet to produce generic versions of any of the three drugs.
AIDS patients are highly susceptible to contracting type-2 diabetes. As a result, Novo Nordisk has committed itself to providing preferentially priced diabetes drugs in the 49 less developed countries (LDCs, as defined by the United Nations) at prices that do not exceed 20 percent of the average price in the industrialised countries of North America, Europe and Japan. Novo Nordisk strongly supports the need for patents and protection of intellectual property rights.
In 2000, Novo Nordisk launched a national diabetes programme to promote and enhance the development and implementation of healthcare infrastructures in poorer countries. As a result of workshops that took place throughout 2001 and 2002, 34 of 60 of Novo Nordisk’s international affiliate companies made a plan for a national diabetes programme in their country. These plans were devised with significant input from healthcare professionals, patient organisations, government and other relevant stakeholders.
In mid-2002, Abbott committed to donating around 20 million “Determine HIV” rapid tests over the next five years. The programme aims to prevent mother-to-child transmission in 68 developing countries, reducing the price of Norvir and Kaletra to US$500 per year per patient.
Abbott and the Abbott Laboratories Fund invested nearly US$20 million in global HIV programs in 2002 and expect to invest a total of US$100 million by 2007. Corporate and philanthropic funding, product donations and employee volunteerism were utilised to support local stakeholder objectives and leverage local resources.
Abbott supports programmes in Tanzania, Burkina Faso, Romania and India that address health care services and infrastructure, voluntary HIV counselling and testing, education and basic community needs, such as clean water. In 2002, Abbott and its “Step Forward” partners strengthened local systems of care and delivered services to 90,000 AIDS orphans and vulnerable children.
Abbott does not allow any other company to produce generic versions of its drugs.
Are employees in the picture?
Arguably one of the most crucial aspects of implementing CR policies is to ensure that the employees who make the company are delivering on the policies one hundred percent. To embed such a culture requires the commitment of senior management, excellent communication throughout the organisation and continuing employee involvement in terms of living, contributing to and evolving the socially responsible company culture. Many companies have yet to achieve this state, but the current approaches to embedding a CR are generally quite creative.
GSK hosts an internal intranet called ‘myGSK’ on which all company and industry news and company programmes, policies and procedures initiatives are updated throughout each day. This website also hosts a homepage for CEO Jean-Pierre Garnier. Employees are able put questions directly to the CEO via this homepage and around 80-100 questions are responded to each month.
A company magazine titled Spirit is used to communicate GSK’s CR policies and initiatives. Spirit is distributed to all GSK employees around the world four times a year, either in hard copy or via the Internet.
In 2002 GSK carried out a survey on over 10,000 of its managers to assess how well the spirit and culture of the company, defined as “performance with integrity” had been adopted so far. The company will carry out a second survey in 2003.
Novo Nordisk carries out constant and systematic follow-ups on employee performance. The company places an emphasis on recognition of good results and actively encourages teamwork, personal accountability, the ability to capitalise on collective strengths and sharing better practice.
Novo Nordisk carried out employee surveys over 2001 and 2002 to determine how employees perceive the company’s commitment to its social and sustainable agenda. Initially the survey eVoice 2001 was mandatory and was conducted to assess how employees think about the company, their job and their development opportunities. The goal was to follow up on the findings through mandatory surveys. However, it was later decided that the eVoice survey in 2002 was not to be mandatory. In 2003 the company will again carry out a company-wide climate survey.
“DAWN” (Diabetes Attitudes, Wishes and Needs), one of Novo Nordisk’s major initiatives, addresses the perceptions and attitudes of more than 5,000 people with diabetes and nearly 4,000 healthcare professionals in a total of 13 countries. The company believes that in order to deliver on its promise of “being there” for people with diabetes, all of its employees need to understand the key messages of DAWN. In 2002, at least 80 percent of all employees had some form of dialogue with people with diabetes.
Workshops, departmental meetings, team building exercises, executive coaching, community projects, employee volunteer programmes to aid people with diabetes and internal employee campaigns such as “Take Action”, which encourages employees to relate sustainable development to their own job and to their lives, are the means by which Novo Nordisk communicates its CR policies and culture to its employees on a day-to-day basis.
The main thrust of Abbott’s employee programmes is the inclusion of women and minorities in Abbott’s workforce.
How to win friends and be a sociable company
GSK’s community investment and charitable contributions in 2002 totalled £239 million (US$377 million), almost half of which went toward GSK’s patient assistance programme for financially disadvantaged patients in the US.
GSK is a key partner in the global effort to eliminate lymphatic filariasis. In 2002, the fourth year of the programme, the company donated 66 million tablets to 31 countries. GSK also contributes to the African Malaria Partnership.
In line with the World Health Organization’s guidelines for drug donations, GSK worked with charitable partner organisations to provide half a million treatments of Augmentin, an antibiotic, to Tajikistan as GSK’s contribution to the “Hope” project.
In the UK, GSK committed almost £1 million (US$1.6 million) to a programme to promote science education in schools.
In 2002, Novo Nordisk’s “LEAD” initiative – Leadership in Education and Access to Diabetes care – began to lay the groundwork for funding projects in developing countries. Novo is now building on its model for sustainable diabetes care in developing countries to help establish national healthcare capacity through its national diabetes programme. In 34 countries, plans were made for such programmes.
Novo Nordisk took up a commitment to engage young people in shaping the future via Bridging Europe, a pan-European initiative launched in 2001 by the World Economic Forum and the Danish think tank Mandag Morgen. The objective of the initiative, of which Novo Nordisk is a co-founder and main sponsor, is to help shape a sustainable Europe through multi-stakeholder engagement.
Novo Nordisk is also the main sponsor of the Nordic Partnership, a group of companies dedicated to making sustainability a reality via developing a workable model for driving sustainability in business.
To address the need for additional funding, Novo Nordisk established the World Diabetes Foundation (WDF) in November 2001 with an endowment of DKK 500 million (US$78 million) to be spent over the next decade.
In 2002, as part of Novo Nordisk’s World Partner Programme (WPP), Novo developed a model for sustainable diabetes care for helping people with diabetes in poor countries to gain access to diabetes care.
Abbott’s Patient Assistance Program provided free drugs in 2002 to more than 110,000 patients, filling approximately 240,000 prescriptions valued at more than US$55 million.
In mid-2002, Abbott worked with six other pharmaceutical companies to launch the "Together Rx" programme, providing qualifying senior citizens with discounts of 20 to 40 percent on more than 170 branded and generic prescription drugs sold through retail pharmacies, including 14 Abbott drugs. The programme now includes around 98 percent of the pharmacies in the United States. By the end of 2002, approximately 500,000 senior citizens had enrolled in the program, to collectively make a saving of approximately US$27 million on their drugs.
In 2002, Abbott donated more than US$75 million worth of products for humanitarian aid and toward supporting 720 physician mission trips. As a member of the Partnership for Quality Medical Donations, Abbott donates essential medicines to relief organisations that have expertise in all aspects of product donations.
Through a variety of programmes, Abbott and the Abbott Laboratories Fund provide funding and volunteer assistance for student and educator workshops and programmes, career development support and funding for college and university science facilities, scholarships and fellowships.
How they present their cases
GSK draws on various different sources to collate its social report. These include the Global Reporting Initiative (GRI) and the OECD guidelines.
Novo Nordisk prepared its most recent report in accordance with the Global Reporting Initiative’s 2002 Sustainability Reporting Guidelines. Deloitte and Touche verified the 2002 report.
Abbott used the Global Reporting Initiative’s 2002 Sustainability Reporting Guidelines during the development of its latest report. According to Reeta Roy, a systemised learning process has been put into place and Abbott is drawing on the methods of metrics and data collection from its environment, health and safety department. The company is now exploring ways of integrating its CR policy into its supply chain. Abbott intends to use external auditors in the future, but at this stage the company is still finalising data gathering processes.
What does the public think?
Novo Nordisk is widely recognised as being one of the world leaders in its approach to corporate responsibility and overall transparency. Its reports are comprehensive, with clearly set goals and easy-to-chart progress reports. The company clearly states its position on each of the issues covered in the report with an explanation of why it has taken such a position. The report is a detailed explanation of how the company approaches and achieves CR in day-to-day operations. Each page and section of the report is replete with contacts for those responsible for each section, and the report welcomes comments and questions from the public.
Overall, in view of the size of GSK, the information provided in its reports is extremely limited and focuses largely on philanthropic projects that it is involved in either directly or via funding. Unfortunately, this does not suffice as a social report. GSK’s report and website provide one generic contact email for the company’s CR team.
Despite having only recently addressed CR, Abbott’s report is far more comprehensive. However, it does lack defined strategies for engaging its employees in its CR culture. Abbott’s report and website provide no direct contact to its CR team.
Both GSK and Abbott would do better to increase their current levels of transparency on issues of public concern and to assess their approach to embedding a culture of corporate responsibility within day-to-day operations. The limited or absent contact details give an impression that both companies discourage public comment on their reports and CR strategies.
The analysts’ view of the industry
Some, such as KPMG, go so far as to suggest that the pharmaceutical industry is at risk of going into a steep decline if it continues to ignore CR to the extent that it has so far. John Morris, European head of pharmaceuticals at KPMG, argues that the global policies of the industry as a whole on issues such as pricing and intellectual property have been of the ‘too little, too late’ variety. Mr Morris believes that the pharmaceutical industry has “demonstrated an inflexible and short-term approach that has only served to weaken its own position, commercially and socially.” While he points out that many pharmaceutical companies do have CSR teams in place, he also suggests that the degree of influence these groups have at the strategic level continues to be very limited.
Dr Markus Lehni, director of global environment and sustainability services at Deloitte & Touche, comments that compared with other industries, such as metals, mining or chemicals, the pharmaceutical industry is more disparate in terms of its reporting and adoption of CR. Dr Lehni suggests that the delayed uptake and implementation of CR policies has mainly been due to a lack of pressure from the investment community and a subsequently reduced inclination on the part of pharmaceutical companies to address stakeholder concerns, given the relatively high level of profitability within the industry as a whole.
Aled Jones, an SRI analyst with Innovest Strategic Value Advisors, argues that the pharmaceutical industry is not so different in its adoption of CR to most other industries. “The disparities in terms of CSR adoption and reporting between individual companies is broadly the same as any other industry,” he says. “A key indicator of the extent to which CSR policies have been integrated across a company is how management is responding to issues – or rather, the level to which these issues are elevated within the management structure,” he explains.
Commenting on the importance of a good CR strategy, Mr Jones said, “A company with a good approach to CSR is more likely to be around in 100 years. This is mainly because the company has a more broad approach to risk management.”
To illustrate this, Mr Jones cites Novo Nordisk’s current strategy on patent relaxation in LDCs. “Around 70 percent of all newly diagnosed cases of diabetes are in low-income markets. It would be foolish for Novo Nordisk to ignore these markets in terms of not properly addressing the current issues surrounding access to medicines,” he explains.
However Mr Jones adds that, while the current focus is on access to medicines and companies’ work with health-related NGOs and governments, companies should also be aware of the need to practice the values they extol. He suggests that lobbying is one such area – that companies should be careful not to contradict their CR policies by lobbying for concessions that undermine their public CR image. If companies are caught out, he warns, the media and public backlash is likely to be quite extreme.
Deloitte & Touche recently carried out a benchmark survey on reporting practice within the pharmaceutical industry. When asked whether good reporting is synonymous with good CR practice, Dr Lehni concurs that it has to be on the grounds that the gathering of data and the measurement of performance and goals in itself illustrates a company’s level of commitment.
Aled Jones agrees on this point. However, he suggests that quantifying a company’s social behaviour is more difficult than quantifying a company’s environmental performance. “There are some slick companies out there, but you can get a feeling very quickly as to whether the report is hot air or not,” he says, continuing, “At present, very few companies are reporting and, to be honest, there are only two or three companies per sector that are addressing the issues seriously.”
To date, only 16 pharmaceutical companies are producing reports that comply with the GRI guidelines. As with all other industries, aside from the GRI, which guides companies on how to produce a report, there is no formally recognised body that has been established for the sole purpose of verifying social reports. As a result, the quality and relevancy of reports tends to vary widely and, in many cases, brings the stakeholder no closer to finding an accurate assessment of how responsibly a company is behaving.
Most reports will provide exhaustive information on philanthropic missions. A recurrent feature of pharmaceutical reports is the tendency of companies to ‘gift wrap’ their preferential pricing programmes for drugs destined for LDCs in CR packaging. The reality is that preferential pricing is simply a market penetration and patent protection strategy. Many social reports do not provide information on results of healthcare probes, marketing violations, data reporting on patient deaths related to certain products, methods of pitching to doctors, fraud investigations or other ethical issues. In this respect, the degree of transparency continues to be very low.