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Responding department: Corporate Responsibility

Stock Exchange Symbol: (NOVN:VX)

Does your company have a publicly available commitment to respect human rights?

[link] [link]: Including Access to Healthcare, Clinical trials, Human Rights etc. Please take note: the current Human Rights GL and position is currently under review. Code of Conduct: [link], Supplier Code: [link].

How are human rights governed in your company?

The lead for specific HR issues are with the responsible functions. e.g. Human Resources, Development, etc. Oversight GNCRC (Board of Directors) as HR is a key CR topic.

See document:http://www.novartis.com/downloads/corporate-responsibility/resources/cr-... Respecting, protecting and fulfilling human rights is, first and foremost, the responsibility of the state and international community. But we have an important role to play, working in partnership with international organizations, governments, NGOs and others.

We use a three-tiered approach to classify our human rights responsibilities:

  • Essential compliance requirements enshrined in laws (i.e. paying our associates, paying taxes, abiding to laws, etc.)
  • Responsibilities which can reasonably be expected by society, such as the right to a decent standard of living for our associates (we pay a living wage) or helping patients in need through our access-to medicine programs
  • Engagement which is desirable, such as the company’s philanthropic commitment through its community engagement or voluntarism activities

As well as being a signatory of the UN Global Compact, Novartis has developed a Guideline on human rights. This sets out our human rights commitments and responsibilities and is implemented through normal management procedures. Together with institutions like the Danish Institute for Human Rights (DIHR), the International Business Leaders Forum (IBLF), and the International Finance Corporation (IFC), we have helped to develop new tools for mainstreaming human rights into business and assessing corporate impacts. Please take not: the current Human Rights GL and position is currently under review.

How are human rights managed within your company?

The processes and responsibilies are explained in the following documents: [link] [link]: Including Access to Healthcare, Clinical trials, Human Rights etc.

Please take note: the current Human Rights GL and position is currently under review.

Code of Conduct: [link]

Supplier Code: [link]

Re managing misconduct: Associates who report potential misconduct or who provide information or otherwise assist in any inquiry or investigation of potential misconduct will be protected against retaliatory action. Misconduct is any conduct that violates the Novartis Code of Conduct and pertinent policies and/or external law or regulation. All associates are required to bring potential misconduct to the attention of Novartis.

Associates with knowledge of potential misconduct, or associates receiving a report of misconduct, must notify the Business Practices Officer (BPO) or report the issue via one of the other channels described below without further disseminating the information. Associates can report potential misconduct to the BPO in person or by letter, fax, direct phone, e-mail or through integrity telephone and web-based confidential hotlines, which operate in more than 50 languages.

The options for reporting are:

  • The supervisor
  • The Human Resources representative
  • The Country President
  • Any member of the Legal Department – Any Compliance Officer

What is the company’s approach to the engagement of stakeholders (including workers, and local communities impacted by the company’s activities), on human rights issues?

Dialogue with human rights stakeholders Human rights issues and all potentially related company-specific problems are of a high inherent complexity. Being aware that different stakeholders will give different answers when asked what standards of corporate activity need to be met in order for human rights demands to be satisfied, Novartis sees dialogue with human rights stakeholders both as an opportunity to learn about other parties’ points of view and as a chance to contribute to the debate from the corporation’s point of view. Stakeholder groups Our stakeholders include our associates, civil society, companies, governments, international agencies, foundations, customers, shareholders, financial markets, suppliers, local communities and others. We must engage with these diverse groups to understand their needs and expectations, and to improve access to healthcare. What is the basis for identification and selection of stakeholders: Novartis interacts with an increasingly complex map of stakeholders with diverse – sometimes conflicting – expectations. We identify our stakeholders based on the impact and influence level they exert over our company and vice versa. Our stakeholders include companies, governments, international agencies, foundations, customers and others. We must engage with these diverse groups to understand their needs and expectations, and to improve access to healthcare. In order to deepen these insights, in 2013 Novartis completed an extensive CR materiality analysis. To gauge the views of key internal and external stakeholders. We are embracing new technologies and information channels to better engage with our stakeholders, from patients to physicians to payors and retailers. Health applications on mobile phones, known as mHealth applications, are expected to provide a low-cost, real-time way to track disease progression and facilitate communication with all sorts of stakeholders. Approach to stakeholder engagement We engage with our stakeholders in a variety of ways, including through focus groups and collaborations with patient advocacy organizations to better understand patient needs, participation at scientific congresses to interact with the scientific community, public policy work to meet with authorities and regulators, bi-annual global associate surveys to gauge associates’ perspectives on the company, or roundtables to exchange experiences and expectations with our suppliers. These are just some examples of how we interact with our diverse range of stakeholders.

Stakeholder management at Novartis helps us to:

  • Participate actively in civil society
  • Learn and gain relevant knowledge regarding our business and expectations of our stakeholders
  • Correct misperceptions and voice our arguments in the social debate
  • Make strategic adjustments in corporate practice in order to optimize our business success
  • Reach trust and common understanding when differences arise We find this approach to be beneficial in many ways.

It serves as an early warning system, supplies us with knowledge of stakeholders and their opinion leaders, and provides an opportunity to influence the development of a debate through sound arguments. A key example of our stakeholder engagement is our interaction with patient groups. Building and sustaining relationships with patient advocates and the groups they represent is an important way we can help meet our patient commitment and our commitment to society as a whole. As we share balanced, accurate and easy-to-understand scientific information on diseases, treatments, and health policies impacting patients, we learn about patient concerns and needs. Patient advocates also offer us valuable insights and counsel that inform our work around the world and across therapeutic areas – from drug development through regulatory approval and reimbursement into product launch and marketing. Novartis believes open dialogue and transparent exchange of information among all the stakeholders in the healthcare community is vital to advancing access and healthcare delivery to patients. In all our interactions with patient groups, we are committed to working ethically and transparently while respecting their integrity. With regards to the disclosure of patient group support, Novartis strives to be fully compliant with all applicable legal requirements in every country in which it operates. We commit to disclose the names of patient groups that have received funding or non-monetary support from Novartis as well as the purpose of this support in Europe and the US. In the case of European patient groups, Novartis also discloses the funding amount. This list is updated annually. In 2013, we undertook a thorough materiality analysis among our stakeholders. With support from AccountAbility, a CR consultancy, Novartis interviewed nearly 100 individuals, including executives from across the company and representatives of patient organizations, NGOs, health institutions, customers, academics and other groups considered important to the industry and our business.

Priority human rights issues: What are some of the priority human rights issues for your company?

The company selected the following from a check list:

  • Health (including environmental health, workplace health & safety)
  • Workplace diversity / non-discrimination
  • Women
  • Children (including child labour)
  • Other Issue(s): Living Wages, access to healthcare, responsible clincal trials, fair business practices

Actions on 'other' issues

Living Wages: Novartis is one of the first international companies to have developed and implemented a voluntary commitment to pay a living wage to all its Group company associates. We commissioned Business for Social Responsibility (BSR) to establish a methodology to calculate living wage levels. Using those BSR calculations as a starting point, we rolled out the living wage program, working in close consultation with local management in countries with divergent economic systems and standards of living. A living wage reflects the cost of a basket of goods and services that are required to cover certain basic goods, taking into account the social circumstances and requirements of the environment. A living wage generally is higher than the minimum wage in the same country. In 2013, there were four cases of Novartis employees with wages below the living wage (0 in 2012; 17 in 2011; 24 in 2010; 0 in 2009; 3 in 2008; 11 in 2007; 21 in 2006; 93 in 2005). In these cases, salaries were increased to reflect the living wage.

How are human rights commitments and information about how the company addresses its human rights impacts communicated, internally and externally?

See the Novartis Performance Report (reporting in line with G4): [link]

What provisions does your company have in place to ensure that grievances from workers and affected communities or individuals are heard, and can you provide examples of remedies provided?

Associates who report potential misconduct or who provide information or otherwise assist in any inquiry or investigation of potential misconduct will be protected against retaliatory action. Misconduct is any conduct that violates the Novartis Code of Conduct and pertinent policies and/or external law or regulation. All associates are required to bring potential misconduct to the attention of Novartis.

Associates with knowledge of potential misconduct, or associates receiving a report of misconduct, must notify the Business Practices Officer (BPO) or report the issue via one of the other channels described below without further disseminating the information. Associates can report potential misconduct to the BPO in person or by letter, fax, direct phone, e-mail or through integrity telephone and webbased confidential hotlines, which operate in more than 50 languages. The options for reporting are:

  • The BPO at [email protected]
  • The supervisor
  • The Human Resources representative
  • The Country President
  • Any member of the Legal Department
  • Any Compliance Officer

We support an open culture in which Group company associates can speak up and raise concerns. In 2005, we established the Business Practices Office (BPO) to provide a formalized system for dealing with complaints, offering employees and external stakeholders a channel to report, anonymously or not, actual or suspected cases of misconduct without fear of retaliation. All complaints are investigated professionally, independently and with proportionality. The investigation results are shared with the appropriate management and, in general and where appropriate, for information with our Compliance, Legal and HR teams, to allow them to implement appropriate action on the basis of the findings. We believe this is key to deterring and preventing misconduct, and provides associates with the confidence that action is taken when cases are found to be substantiated. Violation of Novartis standards may result in disciplinary action, including dismissal. The BPO also provides support in the identification of root causes and lessons learned, to prevent similar issues arising elsewhere in the future. As part of our commitment to foster an open culture, we have implemented processes guaranteeing confidentiality and non-retaliation, to help Group company employees report allegations of misconduct.

We have introduced integrity telephone lines in 115 countries, through which employees have the option of reporting allegations in 41 languages. Confidential and anonymous messages can be left for the BPO, who endeavors to respond within three working days. The BPO generally aims to turn around each case within six weeks

Which external and collaborative human rights initiatives does your company participate in, and what is the nature of your involvement?

UN Global Compact, LEAD, BSR Guiding Principles on Access to Healthcare, The London Declaration

Which are the key one, two or three elements of your approach to human rights that been developed or amended since June 2011? Please indicate if these actions were in response to the UN Guiding Principles.

The current Human Rights approach is under review, which will consider UNGP HR.