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 Novo Nordisk's Environmental Accountability
By
Robin Pistorius
  
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. 
In 1996, about 80 per cent of the R&D expenditure was allocated for the development of new pharmaceuticals, compared with 19 per cent for enzyme production.


Novo Nordisk net turnover (1996) 
Total US$ 2.2 billion
Health care business  
Diabetes care
52.3 %
Growth hormones
9.9 %
Women's health care
6.3 %
Other health care products
6.0 %
 
75 % 
Enzyme business 25 % 

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)
 
Total market US$ 1.3 billion
Detergent industry
34 %
Starch industry
12 %
Textile
11 %
Other industries
43 %
Source: http://www.novo.dk

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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