Keywords: | Novo Nordisk; Ethical aspects; Biosafety/Foodsafety; Biodiversity prospecting. |
Correct citation: | Pistorius, R. (1997), "Novo Nordisk's Environmental Accountability." Biotechnology and Development Monitor, No. 33, p. 1619. |
Novo Nordisk, a Danish private company, is the world's leading producer of enzymes and diabetes care products. It seeks to position itself as an environmentally responsive biotechnology company. The company focuses on environmentally friendly technologies, social equity, environmental justice and good business ethics. It hopes to achieve the role as forerunner through a corporate strategy of dialogue with nongovernmental organizations (NGOs). How prepared is Novo Nordisk to adapt and sacrifice its commercial interests for environmental goals?
In 1970, Novo Nordisk was confronted with the environmental debate for
the first time. In that year, one of its products, a protein digesting
enzyme (Protease) used in the detergent industry, was found to be causing
allergies in workers and domestic detergent users. In the resulting public
uproar, Novo Nordisk's turnover fell by 50 per cent within a year. "That
was our early lesson", said Steen Riisgaard responsible for
the enzyme production, "since then we have been extremely careful not
to run into that type of problem again." As a result, in 1991 Novo
Nordisk decided to shift from a solely compliance based environmental agenda
towards a more progressive one, involving all social stakeholders.
Although Novo Nordisk's motivations and philosophy behind this large
efforts are not entirely apparent, the social acceptance of the company's
production process is clearly an incentive. Since many years, Novo Nordisk's
core business has depended on the use of genetically modified organisms
(GMOs)
and imported microbiological resources which are collected through bioprospecting
worldwide. Both issues rank high on international environmental agendas.
An important role in the implementation of the 'greening' policy of
Novo Nordisk is played by SustainAbility, a small British consultancy group
that focuses on environmental strategy and management. SustainAbility's
main activity is to develop concepts and practical measures to stimulate
an integrate economic, environmental and social priorities in business
practices. The alley of opportunity the group envisages is to create a
more 'sustainable capitalism' which should not only include environmentally
friendly technologies, but also 'radically new views' on social equity,
environmental justice and business ethics.
The cooperation started in 1991 when SustainAbility reviewed Novo Nordisk's
environmental policies. The review resulted in a new Corporate Environmental
Affairs Unit, currently employing 14 people. The Unit acts as an internal
consultancy with responsibility for the development of environmental policies
and the support of auditing work of production managers in all sites.
Novo Nordisk's environmental policy declares that it will work proactively
on issues of importance to the international environmental agendas. The
company has therefore sought direct dialogue with environmental groups.
On October 3031, 1997, SustainAbility, on behalf of Novo Nordisk,
invited representatives of about ten European NGOs for discussions. Among
them were representatives of Greenpeace (Austria), Friends of the
Earth (Europe), the Women's Environmental Network (UK), ECOROPA
(France), the Consumer Council of Denmark, the Danish environmental
group NOAH, GLOBAL 2000 (Austria), and several specialists from
universities. The most interesting issues discussed in the two day meeting
are summarized below.
A transnational corporate environmental regulation?
How accountable is Novo Nordisk's environmental policy? An answer to
this question requires a focus on the transnational character of its business.
Novo Nordisk has built production plants in the USA, France and Japan,
and more recently in Brazil, South Africa, and China. These plants serve
the rapidly growing middle class consumer markets for processed foods and
detergents. Enzyme sales in Asia now represent about 20 per cent of the
world's total sales.
Novo Nordisk's environmental policies follow the principles of the
Charter of the International Chamber of Commerce (ICC), and involve
all its production facilities worldwide. Naturally, the company has to
pursue them in compliance with the host country's national environmental
regulation. The complexity of this is illustrated by Novo Nordisk's attitude
towards regulation on the release of GMOs. Today, nearly all its enzyme
products are GMObased. The company claims that GMObased enzymes
allow for a more efficient and cheaper production process, as well as a
higher level of purity and product quality.
The use of GMOs is subject to both Danish national and EU regulation.
In 1986, when Novo Nordisk started producing GMObased enzymes, the
Danish government passed the world's first Environment and Gene Technology
Act. Firms wishing to use GMOs in their production process must submit
an application to the Danish National Agency of Environmental Protection.
In 1991 this Act was used as a model for two directives of the European
Union on the contained use of GMOs (90/219), and the deliberate
release of GMOs into the environment (90/220).
GMOs and waste processing
The risk of environmental effects of accidental releases of GMOs by
biotechnology companies is an issue that frequently reappears on the agendas
of national environmental conferences and critical environmental NGOs.
The issue is most relevant to Novo Nordisk. Novo Nordisk breached the regulatory
limit values set by Danish and EU regulation twice in 1996. On these breaches,
the Novo Nordisk's environmental year report states that: "The method
for measuring this limit value is not sensitive enough to detect breaches".
In another report on earlier breaches in 1993 a similar remark can be found,
but this time followed by the conclusion that: "Regular production over
several years does not appear to have led to the spreading and establishment
of the microorganisms in the adjacent soil and aquatic environment."
This conclusion was confirmed by the Danish authorities but received with
distrust by the NGOs.
The concern of the NGOs relates to a product called NovoGro.
Since 1986, Novo has processed the residuals of fermentation processes
generated by GMOs into "biomass" or "sludge". The sludge is dehydrated
and freely distributed among farmers. NovoGro is virtually the company's
only possibility to dispose of its massive enzyme production waste. In
1996, 2.2 million cubic metres of NovoGro were produced. This isased into
the local sewage system. Daily about 150 truckloads of NovoGro are
spread over 70 hectares of land in Den in addition to an almost equal amount
of nondehydrated sludge, which is cleaned up in the production plant
and then relemark. Total costs are about US$ 13 million per year, all carried
by Novo Nordisk. Last year, a Danish farmers' organization protested against
the distribution of NovoGro because it suspected pollution by GMOs.
Many environmental NGOs, both within industrialized and developing
countries, argue that any risk with GMOs is not worth the social benefit
of its products as long as the environmental impact of GMO releases are
not monitored by independent parties. According to Novo Nordisk, the dry
sludge (containing 4 per cent dry matter) does not contain active GMOs.
NovoGro does not (yet) fall under the regulation on the release of
GMOs into the environment. However, because the use of NovoGro falls under
the regulation on manure of the Danish Environmental Protection Agency,
NovoGro is not allowed on the fields in the period from October to the
end of January. Other options to dispose of the sludge have been considered,
such as export to other countries (e.g. Spain), storage, or burning (incineration).
Although the first solution is cheap it would certainly meet political
opposition, and the latter two are too expensive, Novo Nordisk has opted
for extra dehydration (up to 30 per cent dry matter).
Novo Nordisk's new plant near Beijing, China, has followed the Danish
example regarding sludge treatment. Trials on the use of NovoGro were conducted
on rice, wheat and other crops. According to Novo Nordisk's environmental
report, the Chinese authorities prefer this practice over the usual practice
of dumping the sludge on land fill sites. In China, NovoGro will be used
as a fertilizer from mid1998 onwards. The use of GMOs in China will
be approved by the Ministry of Light Industry and the Biosafety Committee
of the Ministry of Agriculture.
During the meeting at the Novo Nordisk's headquarters in Denmark, the
NGOs doubted if national legislation in countries such as China is sufficiently
strong to both develop and implement a regulation on the use and release
of GMOs. Novo Nordisk is aware of the fact that China's national environmental
legislation is weak, but Novo Nordisk claims to maintain its own GMO safety
regulations as defined by the headquarters.
Performance of Novo Nordisk
Novo Nordisk's Bioindustrial Group (BIG) is the world's largest
supplier of industrial enzymes for the detergent, starch, and textile industries.
In health care products, it is also the world's largest producer of diabetes
care products. Novo Nordisk's focus continues to shift towards health care
products because of its comparative advantage. The company has subsidiaries
and offices in 53 countries and sells its products in 130 countries. Of
its 13,395 employees, 3,099 are engaged in R&D.
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Novo Nordisk net turnover (1996)
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Bioprospecting
In order to obtain a wide variety of microorganisms for the development
of new enzymes and pharmaceuticals, Novo Nordisk has established partnerships
with universities and research institutes in developing countries. Novo
Nordisk maintains a 'bioprospecting' system in which compensation in the
form of financial payments, training of scientists or technology transfer
goes directly to the collaborating organization. In line with the objectives
of the Convention on Biological Diversity, a benefit sharing mechanism
is maintained should the cooperation lead to a commercial product. Novo
Nordisk maintains a preliminary list of royalty rates varying from 0.1
to 2 per cent of sales, depending on the usefulness of the material for
the production of a new medicine.
Most 'benefit sharing', however, is in the form of nonmonetary
assistance to local research groups, for example technology transfer, training
of personnel, and the transfer of value adding data. These forms of assistance
apply to Ph.D. students from Brazil, India and Zimbabwe. The most extended
form of cooperation exists with Flinders University in Adelaide,
Australia. During the first five years of collaboration, 2,000 microorganisms
have been isolated from the desert and arid regions of South Australia.
Although compensation for Aborigines involved in the collection of microorganisms
in Australia is considered, Novo Nordisk has no actual experience with
royalties or other forms of payment. According to Hanne Gürtler
of the microchemical department, Novo Nordisk faces difficulties in determining
"the status of the Convention [on biological diversity], national
policies and access legislation in the different countries." Also "unrealistic
expectations to benefit sharing figures" tend to hinder Novo Nordisk's
bioprospecting activities.
World market for industrial enzymes (1996)
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Greening Novo Nordisk?
Amongst private sector companies, Novo Nordisk is generally held as
one of the most progressive biotechnology firms with regards to environmental
accountability. This status means that Novo Nordisk is being critically
watched by stakeholders that want to test Novo Nordisk's "very significant
steps forward in terms of responsible and systematic environmental management".
The company's environmental impact is practically global because Novo
Nordisk has production plants in China, Brazil, South Africa, USA and Japan.
Moreover, the enzymes it produces are used by the world's largest food
processing companies. At present, environmental groups outside Europe are
not invited to influence or at least follow the company's environmental
policy on issues such as the use of GMOs or bioprospecting. It is of course
doubtful if European NGOs should speak for them.
Although the company's environmental policy may be laudable, its approach
to reaching environmental goals remains orthodox. According to its research
director, Novo Nordisk wants "to become the best in its fields through
aggressive competition." Indeed, Novo Nordisk is good at finding technical
or economic solutions for environmental problems, especially those that
fall within the expertise of the company. But when its core business becomes
part of the discussion, Novo Nordisk becomes less flexible. The example
of voluntary labelling may illustrate this point.
Voluntary labelling of enzymes produced by GMOs is circumvented by
Novo Nordisk with the argument that the introduction of a labelling requirement
is "but one opportunity to inform consumers." The decision on labelling
is left to "the industry and lawmakers." It is unclear how this relates
to Novo Nordisk's environmental policy which states that "we will assist
our customers in achieving their environmental objectives."
A proactive environmental policy could imply an abandoning of (part
of) the company's reliance on transgenic techniques, and a new focus on
alternatives. During the meeting between NGOs and Novo Nordisk in Copenhagen
it seemed as if Novo Nordisk has set itself the task of convincing environmental
and consumer groups of the safety of its production processes, rather than
discussing the compatibility of its environmental goals with its business
strategy.
'Sustainable capitalism' as pursued by SustainAbility and Novo Nordisk
not only requires information on its compliance with environmental regulation,
but also clearness on Novo Nordisk's preparedness to adapt, or even sacrifice
(core) commercial interests for the environmental goals it has set itself.
Robin Pistorius
University of Amsterdam, O.Z. Achterburgwal 237 1012 DL, Amsterdam,
the Netherlands.
Email: pistorius@pscw.uva.nl
Source
http://www.novo.dk
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