Novartis: the integration of social action and the management of foundations in the CRS policy

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What is key for making social activity an important element in developing a CSR policy? How can these policies be aligned with business objectives? How can one differentiate social activity from pure marketing or sponsorship?

In the recent debate, it seems that those are right who believe that the objective of CSR is risk management and creating opportunities in the social, economic, environmental and labour dimensions of the enterprises. But if this management is being developed only as a function of a company’s interests with the objective to improve its performance and financial results, it may help to achieve management excellence, but will not make the company a socially responsible actor. In order to be recognized as a socially responsible company, it’s important to take into account not only internal benefits, but also the benefits of various stakeholders, especially the benefits of the society itself.

These observations are especially important in the context of an increased activity of foundations pertaining to different companies

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Novartis: the integration of social action and the management of foundations in the CRS policy

  1. 1. CasesStrategy DocumentsC06/2011Public AffairsNovartis:The integrationof social action and themanagement of foundationsin the CSR policy What are the keys to make social work an important support in the development of Corporate Social Responsibility plans? In which manner do these policies align themselves with the activity and business of a company? How do we differentiate good social work from marketing with a cause or a collection of sponsorships? Those who have been stating for some time, as Corporate Social Responsibility is often confused, part of the confusion that still persists around although it forms an important and integral part of it. this matter, that CSR centers its objective on the management of risks and also opportunities in the Projecting commitment with a responsible social, economic, environmental and labor spheres performance of the company through external social of organizations, are right. work decisively contributes to making the company a fully responsible organization. That is at least the But if this management is developed only as part opinion of Joan Josep Artells, General Manager of of a company’s interests, with the objective of the Fundacion Salud, Innovacion y Sociedad (the improving efficiency and results, excellence in Health, Innovation and Society Foundation) of management will probably be achieved, but will not Novartis, the pharmaceutical company, in Spain, make the company responsible by itself. In order to who also states that all this should fit with the manage this, it is not only necessary to bear in mind strategic lines of the company’s activity, and must the internal dimension, but also that of the different have a close relationship with them. stakeholders, especially that of society itself. Yes to social work, no to mere sponsorship And it is recently in that field where the activity But also, social work itself has often been confused with of company foundations emerges strongly, the rise social marketing (named by some as ‘marketing with of companies’ social work with which the whole of a cause’) or sponsorships with which organizationsDocument prepared by Corporate Excellence with reference to, among other sources, the intervention of Antonio Argandona (Economicsprofessor and holder of the ‘la Caixa’ chair in CSR and Corporate Governance at IESE) and Joan Josep Artells (Director General of theHealth, Innovation and Society Foundation of Novartis Spain) during the sessions of the Executive Education Program “Making SocialResponsibility Work: The Cornerstone of Sustainable Business” organized by the IESE Business School in Barcelona in July 2011.
  2. 2. The integration of contribute economically. In this sense, sharing certain innovation in the field of health for the improvementsocial action and causes through the development of social work which in people’s quality of life, and the ‘how’, the ethical andthe managementof foundations in is linked to causes that fit with the philosophy and responsible action in order to achieve it.the CSR policy activity of the company, trying to influence, in turn, on aspects which worry, trouble or constitute a need The activity of the Foundation centers fundamentally or aspiration for society or interest groups as a whole is on four large areas of activity: also a completely valid, necessary and complementary way of crediting company responsibility. 1. Institutional cooperation: through networks of collaboration with relevant health, business ‘Projecting commitment and social agents establishing agreements. 2. International conferences, seminars and courses: with a responsible spreading knowledge, bringing cultures together, performance through comparing and adopting better practices. 3. In-house research: lines of research applied to social work contributes to social sciences for the attainment of shared making the company a fully objectives with institutional contributors. 4. Publications: compilation and circulation responsible organization.’ in report, monograph, magazine and collection formats of the investigative Social work may be seen as mere philanthropy if and formative activities. it is carried out in a separate way from the other CSR policies or from company activity itself, And to make such a mission possible and develop these but implemented within the strategy framework activities, the SIS Foundation works with the various of Corporate Social Responsibility it becomes a interest groups connected to the fields of health and practical expression of the relationship, dialogue biomedical investigation, advising them, cooperating and attention process to stakeholders and the in joint projects o generating new unpublished company itself, globally. information. Its five main stakeholders are: For that reason, it is important to differentiate 1. Managers of the National Health System in Spain. it from the pure sponsorship of events or third 2. Health departments in Spanish regions. party activities, to the extent that it can become 3. User and patient organizations. a marketing, communication or image tool far less 4. Investigators and academics in the bioscience field. focused on strategy, with many more risks, less 5. Innovative economic and sector authorities. ambition in its objectives, rigor in its procedures and efficiency in its results, as it can lead the company Definición de stakeholders de la Fundación to incur great costs which, in the end, may not be compatible with what may globally be expected “Health departments from each of these. in Spanish regions and Health and Consumer Ministry” “National and “Managers The activity of the Novartis Foundation International and leaders The Foundation for Health, Innovation and academic leaders Fundación of assistance and investigators Salud mechanisms in Society (SIS), created in 1999, defines as its in the bioscience the National Innovación main mission to contribute to the development, field” Sociedad Health System” modernization and sustainability of the public “Industrial and “Consumer, patient health system in Spain, as well as the creation of economic authorities, and community an independent and informed opinion in social and innovative business representative sectors” organizations” health policy through the development of its own research activities or in collaboration with other Fuente: Novartis, 2011. public and private organizations and institutions, within three fundamental spheres: The Novartis Foundation also promotes open and plural debates, as well as participation exercises, 1. Social Work. discussion and negotiation groups among these 2. Experimentation in organizational innovations. stakeholders, in the following areas: 3. Diffusion of good practices in clinical management and promotion of health. 1. Internationalization of investigation and support to the pharmaceutical systems with a bioscience base. Not in vain, the President of the Foundation and 2. Continuous and sustainable modernization of Novartis Spain, Jesus Acebillo, believes that of the health system and constant social the corporate culture of the company and its social legitimization of the public health service. commitment can be summarized in only two words, 3. Participation of the health user in “responsible innovation”, thereby uniting the company’s government agencies of the health two strategic themes of action, which are the ‘what’, system and autonomy of the patient. Cases 2
  3. 3. The integration of 4. Development of multi-departmental The value of anticipation and cooperationsocial action and public health policies and intervention inthe management The case of Novartis and its foundation is alsoof foundations in determinant social factors of health. relevant to the extent that it highlights thethe CSR policy importance of not only developing good CSR ‘Social work may be seen practices and social work in that which is essential to the company (essential responsibility, the ‘we as mere philanthropy if it must’) or in that which is expected of it (the ‘we is carried out in a separate have to’), but also in that which is desired from the organization (the ‘we can’), the root of excellence in way from the other CSR this type of socially responsible practices, something policies or from company especially important in the case of a sector which is regulated, like the one in which Novartis operates. activity itself.’ And it is there where the capacity to be ahead and Keys to evaluate the respond to needs, expectations and demands in effectiveness of social work many cases not formulated or specified by society or For Antonio Argandona, Economics professor and its interest groups is key, something which the SIS holder of ‘la Caixa’ chair in CSR and Corporate The hierarchy of Corporate Responsibilities Governance at IESE, there are four keys that must be taken into account when evaluating the relationship Corporate between company and foundation, between the Corpo- Responsibility Nices to rate Phi- Excellence strategic policy of the company, CSR and the action, have (can) lantropy contribution and participation in social aspects: Corporate Enlightened Responsibility beyond 1. As in the case of CSR, the management self-interest legal duties (wise Good of a company must be equally involved (ought to) strategic decisions) Management and supporting the entire process. Practices Make profit and comply 2. Priorities must be jointly established by all Essentials with applicable law and the staff departments in the company. (must) regulation 3. The social work must be aligned with the entire CSR policy and with the business, Source: Ethics World, 2011. but this must not interfere in it. 4. The evaluation of the social work must Foundation carries out permanently through the be constant and included in a continuous process of constant dialogue and active listening, process of internal and external audit. according to Josep Artells. And to correctly evaluate these projects it is Along these same lines, the display of a cooperative necessary to take into account several key elements, strategy with the use of partner networks (not strategic find and put forward the necessary information on alliances) in projects is also fundamental, when each one and submit it to critical judgment: choosing them (they should agree with the strategy and culture of Novartis), motivating them (look for 1. The sector or field in which there is points in common), linking them (mutual agreements collaboration: type of organizations, prior and knowledge) and evaluating them (periodically). knowledge of the sector and existing contacts. 2. The problem in contributing to its solution: knowledge, experience and Conclusions: social work skills and prior participation. in line with CSR 3. The result to be achieved: concrete The case of Novartis shows how through good planning, results that were to be obtained. tracking and evaluation we can implement a number 4. Activities to develop: establishing a of social works using a foundation as an instrument complete list, stages and calendar. to close the circle of Corporate Social Responsibility 5. The resources to be used: existing or and contribute, in a responsible and ethical manner, additional requested, including human. to the activity, operations and its consequences in the 6. The assigned budget: correspondence of costs environment, with a constant dialogue with interest with activities and control undertaken. groups and society, towards social improvement, 7. The impact achieved: in participative directly or in collaboration with third parties in the management, in autonomous or independent company’s immediate sphere of action. tracking and in multiplied effects achieved. Cases 3
  4. 4. ©2011, Corporate Excellence - Centre for Reputation LeadershipBusiness foundation created by large companies to professionalize the management of intangible assets and contribute to the developmentof strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidatesthe professional management of reputation as a strategic resource that guides and creates value for companies throughout the world.Legal NoticeThis document is property of the Corporate Excellence - Centre for Reputation Leadership and has as its objective to share businessknowledge about Brand, Reputation, Communication and Public Affairs Management.This document is directed exclusively towards its addressee and contains confidential information, subject to professional secrecy, whosedisclosure, copy or non-authorized use is against the Law. If you receive this document by mistake, let us know immediately and erase itwithout keeping a copy.Corporate Excellence - Centre for Reputation Leadership is the owner of all the intellectual property rights of the images, texts, designsand any other content or elements of this product and has the necessary permission for its use, and therefore, its copy, distribution, publicrelease or transformation is prohibited, without express authorization from the owner.

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