Global Materiality 
Assessment 2021
Results Report
Environmental, Social 
and Governance

2 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Table of Contents
Table of Contents
Letter from the President, Global Health & Sustainability	
3
About this Report	
4
	
Key Takeaways	
5
Background	
6
	
Why Novartis Conducts Materiality Assessments	
6
	
Materiality Approach at Novartis	
6
	
How Novartis Defines and Measures Material Topics	
8
	
Strategic Objectives of the Novartis Materiality Assessment	
8
Results	
9
	
Sample Size	
9
	
Materiality Assessment Results	
11
	
Priority Impact Topics	
13
	
Comparison vs. Previous Years	
29
	
Strategic Implications	
30
Next Steps	
31
	
Stakeholder Dialogue	
31
External Support	
32
Appendix	
33
	
Impact Topic List and Definitions	
33
	
Glossary	
37

3 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Letter from Lutz
Letter from the President, Global Health & Sustainability
Dear Reader, 
As a global medicines company, our purpose is inherently a social 
one – to reimagine medicine to improve and extend people’s 
lives. We use innovative science and technology to address 
some of society’s most challenging healthcare issues. Yet, we 
realize that our impact extends far beyond the patients and 
healthcare professionals we serve, to other stakeholders such as 
policymakers, investors, and our own associates, as well as the 
communities in which we operate. It is therefore important that we 
understand all their needs if we are to deliver on our purpose and 
ensure we create a positive impact on those around us. Materiality 
assessments play a critical role in helping us accomplish this goal.
Since we began these assessments in 2006, they have helped 
us learn about the Environmental, Social and Governance (ESG) 
topics that matter most to our stakeholders, as well as assess 
stakeholder expectations. They have also helped us understand 
how our stakeholders perceive our performance in these areas, 
and, importantly, where and how we can improve.
The 2021 Novartis Materiality Assessment is our fourth and 
represents the most robust piece of employee and stakeholder 
engagement we have carried out to date. The results show that 
both internal and external stakeholders are aligned in prioritizing 
four main areas: patient health and safety, access to healthcare, 
innovation, and ethical business practices. While all the topics we 
discuss in this assessment are important, it is these four themes 
that have been identified as being the most material globally for our 
company.
As we work to further evolve our ESG strategy and to make 
progress toward our vision to become the most valued and trusted 
medicines company in the world, listening to our stakeholders and 
ensuring our efforts are in step with their insights and needs has 
never been more important. 
On behalf of Novartis, I would therefore like to thank everyone 
who has taken the time to participate in this assessment and look 
forward to continuing this constructive dialogue in the months and 
years ahead.
Sincerely, 
Lutz Hegemann,
President, Global Health & Sustainability
Lutz Hegemann, 
President, Global Health & Sustainability

4 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
About this Report
About this Report
This report summarizes the results of the 2021 
Novartis Materiality Assessment, as well as the 
methodology used. This assessment is undertaken 
every four years and is critical for embedding 
materiality at the core of our business. This systematic 
approach enables us to assess both our stakeholders’ 
views on the impacts Novartis has on society and 
the environment, and the potential impact of outside 
events on our business. Materiality assessments 
therefore constitute a valuable management tool for 
our company.
While a number of best practice guidelines from 
international standard setters exist, none of them 
outline how to actually undertake such an exercise. 
Through our materiality assessment, and by 
incorporating the latest thinking about the topic into 
our methodology, we therefore aim to set the standard 
for what constitutes best practice when it comes to 
embedding stakeholders’ views about materiality into 
a company’s processes.
At Novartis, we believe focusing on material ESG topics will drive financial performance and 
deliver meaningful impact for society. As a company, we constantly evaluate the impact we’re 
having on the world to make good on the social contract we have with countries and patients.” 
Vas Narasimhan, 
Chief Executive Officer
The Novartis Materiality Assessment 
is a valuable tool because it enables us 
to take onboard the perspectives of a 
wide range of stakeholders on how we 
can improve our impact on society.” 
Joerg Reinhardt,
Chairman of the Board of Directors
The materiality analysis helps us identify 
focus areas for the company, which the 
Board of Directors oversees through 
its committees. This exercise truly 
contributes to creating an environment 
of accountability within Novartis.” 
Andreas von Planta, Member of the 
Board of Directors and the Governance, 
Sustainability and Nomination Committee

5 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
About this Report
On Patient Health & Safety and 
Pharmacovigilance in particular, the 
performance of Novartis was widely seen 
as strong. Internal stakeholders viewed the use of 
cutting-edge tools, including Artificial Intelligence, 
as key to sustaining the company’s performance 
in this area. External stakeholders considered that 
pharmacovigilance was the topic where Novartis 
could have the most impact as, unlike health 
education, it was among the company’s core 
responsibilities. The topic of diversity in clinical trials 
has also risen to prominence in this year’s edition.
Stakeholders expressed concerns around 
Access to Healthcare topics including 
Pricing and Intellectual Property, due 
at least in part to strained healthcare budgets in 
the wake of the COVID-19 pandemic. While some 
pointed to value-based pricing as the way forward, 
others highlighted that, in certain cases, healthcare 
systems may not all be able to support this 
pricing model. Internal and external interviewees 
pointed out that Sandoz could help improve overall 
affordability and accessibility of medicines.
Regarding the topic of Innovation, 
stakeholders focused on the activities 
of Novartis in delivering transformative 
therapies to patients, with some concerns 
expressed around the lack of accessibility. 
Others pointed to the need for a greater focus 
on addressing disease areas where the burden 
is greatest. At the same time, the capacity of 
Novartis to deliver life-changing innovation for 
patients was widely recognized.
When it came to Ethical Business 
Practices, stakeholders generally held 
the view that controversies resulting in 
negative media coverage have largely receded. 
This was mainly because of a perceived recent 
cultural change in relation to integrity and 
ethics within the company. Novartis associates 
emphasized the importance of cascading 
communication on these topics from leadership to 
employees on the ground, to ensure consistency 
and local ownership.
On the topic of People & Culture, stake­
holders noted that there was still room 
for Novartis to improve its performance 
in terms of employee attraction & retention. 
Interviewees also mentioned that ensuring that 
social rights standards and benefits for the external 
workforce (contractors) were on a par with those 
for Novartis employees would build trust.
Overall, stakeholders held the view 
that the company’s performance on 
Good Governance – and Corporate 
Governance in particular – was robust. More 
specifically, the rationale in decision-making was 
often deemed to be both clear and transparent. 
When it came to Supply Chain Management 
however, many investors said they would welcome 
more openness and transparency.
Moving on to the topic of Sustainable 
Financial Performance, investors 
generally believed Novartis to be a 
financially healthy company. However, concerns 
remained across different stakeholder groups 
that profit margins and dividends were having 
an adverse impact in low- and middle-income 
countries, with some arguing that profit margins 
can stand in the way of volume pricing.
Some thought that Environmental 
Sustainability was less of an issue in the 
pharmaceutical sector compared to other 
industries, as the sector is not perceived as a 
major contributor to global warming. Nonetheless, 
the ambitious goals set by Novartis, including the 
target to become fully carbon-neutral by 2030 
and achieve net zero by 2040, went a substantial 
way toward building trust in its efforts to reduce its 
environmental footprint.

Novartis ESG Impact Clusters
External and internal perspective
Please see the Novartis in Society Integrated Report for more 
information on how we create value for society as a company.
Key Takeaways
External View
Internal View
1
2
3
4
5
6
7
8
Patient Health 
and Safety
Access to 
Healthcare
Innovation
Ethical Business 
Practices
People and 
Culture
Good 
Governance
Sustainable Financial 
Performance
Environmental 
Sustainability

6 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Background
Background
Why Novartis Conducts Materiality Assessments
Businesses face ever-increasing demands – from 
consumers, politicians, regulators, investors and 
others – that they create value in society that goes 
far beyond simply producing products, employing 
staff and rewarding shareholders. They face calls to 
address society’s challenges, reduce inequalities and 
contribute to the communities in which they operate. 
In turn, businesses are also increasingly entrusted 
to play their part in resolving the issues faced by the 
society they are a part of.
As a global medicines company, Novartis welcomes 
this shift. We have long been committed to using 
innovative science and technology to address some 
of society’s most challenging healthcare issues. 
Understanding the effects of the actions we take 
is embedded in our strategic thinking. We view this 
as essential both for our continued success as a 
business and to ensure we always impact society in 
the most positive way we can.
We conduct global materiality assessments every 
four years to help determine which Environmental, 
Social and Governance (ESG) topics are most 
important for the company’s internal and external 
stakeholders. These allow us to look at how our ESG 
impacts are perceived along our value chain, and 
how they translate today and in the future into both 
opportunities and risks for the company. Materiality 
assessments also contribute to building trust with key 
stakeholders, by enabling a dialogue to take place that 
ensures their views and priorities are considered and 
reflected in our strategy.
Materiality Approach at Novartis
How We Define Materiality
ESG topics are considered to be material to Novartis 
if they have a substantial likelihood of influencing the 
judgment and decisions of key stakeholder groups and 
significantly impacting overall business performance. 
There are a number of different materiality definitions 
within a range of global sustainability frameworks and 
guidelines which have provided input to our own. In 
addition, Novartis determines materiality in accordance 
with standards set forth by the United States’ Security 
and Exchange Commission (SEC), since Novartis 
reports under the Generally Accepted Accounting 
Principles (GAAP), which consider both material 
externalities and dependencies. 
Double Materiality and Why We Measure it
At their core, companies exist to perform business 
activities such as manufacturing goods or providing 
services. In doing so, they have an impact on society and 
the environment. At the same time, changes in society 
and the environment can affect a company’s activities. 
This two-way relationship is called ‘Double Materiality.’
Impacts by the company on society and the environment 
are commonly referred to as externalities because 
they affect stakeholders beyond the business. 
Some impacts are unintended, and potentially 
negative: for example, impacts on the environment. But 
externalities can be positive too, for example skills that 
employees learn through company training can be used 
outside the company itself, to the benefit of society as 
a whole. 
By contrast, potential impacts on the company are 
commonly referred to as dependencies. They include 
topics which affect a company’s ability to deliver 
medicines and treatments, such as its potential 
vulnerabilities to a disruption of the supply of natural 
resources or changes to its operating ecosystem.
Financial vs. Non-Financial Materiality 
While sustainability and ESG are often thought of as 
being non-financial, they can have indirect financial 
implications for businesses too. For example, ethical 
misconduct or product recalls can translate into fines, 
while pandemics or other extreme weather events 
can disrupt our ability to manufacture our products. 
Issues like these will eventually be internalized in 
our financial statements. However, the impact of the 
material event may be complex and may take time to 
appear on financial statements. This means we need 
to be forward-looking when it comes to assessing the 
potential effects of ESG topics.

7 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Background
The Changing Nature of Materiality
Nothing remains static in our world. What is relevant 
and pressing today may no longer be an issue in the 
future. In contrast, what seems unimportant today may 
be business-critical in the months or years ahead. We 
therefore need to view our analysis as a constantly 
evolving process, rather than a one-off exercise, and 
examine a series of possible future scenarios.
Global vs. Local Relevance
When conducting assessments, it is important to 
ensure they are relevant not just at a global level, but at 
a local level too. Different aspects of materiality might 
be priorities in different parts of the world at different 
times. So, tailoring the findings from our materiality 
exercises to the places in which we operate is critical 
to ensure they are relevant for our activities. Only then 
are we in a position to listen to the stakeholders of the 
communities within which we operate. 
An Established Practice Since 2006
Materiality assessments have been an established 
practice at Novartis since 2006, when we first 
evaluated what matters to our stakeholders and our 
impacts on them. In 2013, a regular cycle began, 
with global assessments carried out every four 
years. While this may seem like a significant time 
lapse, this time is necessary both to allow Novartis 
to fully implement the actions resulting from the 
materiality assessment as well as to give time for our 
stakeholders to become aware of these changes. 
Between each edition, the methodology used is 
refined and updated, as topics change or become 
more relevant. Beyond the corporate assessment 
Novartis country organizations across the globe also 
conduct their own materiality assessments to help 
them define strategic areas of focus and integrate 
their findings into their business priorities in line with 
local stakeholder expectations. 
Enterprise Risk Management (ERM)
As we learn how we best create value, we also shed 
light on opportunities and risks. We look at these in 
different ways. While opportunities are considered as 
part of our ESG strategy, risks are compared against 
the company’s strategic, operational, and emerging 
risk management. If the risks we find are lacking 
from our mapping, they are then considered within 
the enterprise risk management (ERM) process to 
ensure it is responsive to stakeholder perceptions and 
remains forward-looking.
Impact Valuation
The Novartis Materiality Assessment helps us 
understand how our impacts are perceived by society 
and what stakeholders expect of us. However, it does 
not measure our actual performance. In order to do 
so, performance metrics are needed that can reflect 
how value is created, sustained or destroyed. 
We therefore operate with impact valuation metrics, 
taking into account benefits and costs to society in 
monetary terms. The results of the 2017 assessment 
were used to inform the initial set of impact valuation 
metrics. In turn, the results of the 2021 assessment 
will be used to identify gaps in our performance 
measurement and consider impacts against which we 
do not yet report systematically. 
Continuous Monitoring: Leveraging the 
Latest Technology
Society and the environment in which Novartis 
operates are constantly in flux. In order to ensure we 
address all the value creation opportunities that are 
relevant to our activities as quickly as possible, we 
continuously monitor the concerns and expectations 
of our stakeholders. One effective way of undertaking 
such monitoring is through leveraging artificial 
intelligence (AI).
Through the use of such technology, we are able to 
review our stakeholders’ public statements in order to 
improve our understanding of their perspectives. The 
use of such AI solutions can therefore help us monitor 
materiality topics in real time and ensure we are aware 
of how our stakeholders’ priorities and views on ESG 
topics change over time.
Forward-looking Deep-Dives 
(Scenario Analysis)
Real time monitoring is not enough to understand our 
ever-changing world. It can be helpful to think about 
the future and how we can pursue our purpose not 
only tomorrow, but also 10 years from now. But how 
do we account for the multitude of different events 
that may occur over that period? 
The use of forward-looking deep dives on future 
scenarios (also known as Scenario Analyses) can be 
a way of addressing these uncertainties and deciding 
on plans for the years ahead. In addition, they can 
identify topics that may become material in the future. 
In order to ensure that Novartis conducts meaningful 
and engaging scenario analyses, we are currently 
experimenting with a number of different methodologies 
to assess the contribution they could make.

8 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Background
How Novartis Defines & Measures Material Topics
The company’s systematic approach to materiality 
enables us to assess both our stakeholders’ views on 
the impacts we make on society and the environment, 
and the potential effect of outside events on our 
business. Measuring these helps Novartis identify 
potential vulnerabilities that could affect its ability to 
deliver medicines and treatments, while also enabling 
the company to manage its impacts and be more 
aware of how it is perceived by stakeholders. 
In addition, materiality assessments help us 
understand topics such as any potential contributions 
to climate change through our emissions and, in turn, 
the impact of any such change on our future business.
Our materiality assessment follows 
a multi-step process, including desk 
research, stakeholder identification, 
online survey and in-depth interviews.
Strategic Objectives of the Novartis Materiality Assessment
The 2021 materiality assessment has been specifically developed with three sets of objectives in mind:
Aligning our strategy, operations and resource allocation with societal expectations, 
business needs and market developments by:
Intensifying engagement with our key stakeholders to:
Manual 
review of key 
stakeholder 
sources 
to create 
impact and 
dependency 
list
Via function 
& division to 
define internal 
contact 
owners of 
external 
stakeholders
Quantitative 
online survey 
among internal 
(anonymous) 
& external 
stakeholders
Qualitative 
interviews 
and workshop 
with internal 
& external 
stakeholders
Ranking of 
cluster and 
issues, corre­
lation analysis 
and scenario 
analysis
Informing 
business 
strategies, 
management 
processes 
and decision 
making
Assurance
1
2
3
4
5
6
Desk 
Research
Management 
Survey
Materiality 
Surveys
Stakeholder 
Discussions
Analysis & 
Interpretation
Results 
Report
Creating a standardized and holistic reporting process that:
Ensures transparency 
for management 
decisions
Ensures external 
transparency 
for our stakeholders
Informing the strategic 
priorities of Novartis 
(including our ESG 
strategy)
Informing our 
risk management 
process
Informing our 
divisional and 
functional processes
Build trusted 
relationships so 
we receive candid 
feedback
Align company 
objectives with 
the priorities and 
expectations of society
Co-create inclusive 
solutions to resolve 
societal challenges

9 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Results
Who we surveyed globally
Both the quantitative and the qualitative results of the Novartis Materiality Assessment 2021 (MA21) process 
relied on robust participant samples. An overview of the participants is presented below:
Quantitative Assessment
While securing larger numbers of internal participants 
to take part in the survey was easier, as might be 
expected, an unprecedented number of external 
participants was also secured for our quantitative 
assessment. The following infographics provide 
further details on the sample population for the 
quantitative component of our MA21 research:
Internal Assessment
•	Survey period: February 8, 2021 – March 17, 2021
•	Invited: 158,797
•	Participants: 19,753
•	Response rate: Global: 12.4%
•	Included surveys: 12,555
•	Completion rate: 63.3%

Response rate: Number of responses/Total invited. 
Completion rate: Included surveys/Participants
External Assessment
•	Survey period: February 8, 2021 – June 22, 2021
•	Invited: 3,583 + ~500*
•	Participants: 1,439
•	Response rate: 35.2%
•	Included surveys: 538
•	Completion rate: 37.4%

*3583 stakeholders received it from the central stakeholder database + 
stakeholders who received the survey link directly from internal contact 
owners (no option to trace back the exact number [~500 additional 
contacts])
Sample size
Division
Job Family
Breakdown of participants
Distribution of internal participants by department
N = 12555  |  3.2 Your Division/Organization Unit
N = 11906  |  3.5 In which function do you work (Job Family)? 
“Other” = 546; “Don’t know” = 103
Internal Stakeholders

10 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Distribution of external participants by category
External Stakeholders
Relationship to Novartis/Role
Stakeholder groups
N = 514  |  3.1 Please categorize your organization. “Other” = 24
Total = 767  |  3.3 Please indicate your organization’s perceived 
relationship(s) to Novartis. 2.x Are you a Healthcare Professional/
Public Official/Patient Group Representative? Multiple selections 
were possible.
Geographical distribution of internal participants
Region
Top 10 countries
N = 12555  |  3.4 Country “Other” = 37
N = 7954  |  3.4 Country 108 countries in total
Internal Stakeholders
Qualitative Assessment
Complementing our quantitative assessment, a 
series of qualitative interviews were conducted 
among a group of 140 internal (73) and external 
(67) stakeholders, who were asked to provide more 
context around their survey responses. 
The sample was as comprehensive and representative 
as possible, including stakeholders from the following 
categories:
•	Governments and regulatory, political 
and economic stakeholders
•	Representatives from nongovernmental 
organizations (NGOs), non-profit organizations 
(NPOs) & charitable organizations
•	Advisory & other groups
•	Financial market participants, comprising 
mostly of Novartis investors
•	Healthcare providers & industry representatives
•	Academia
•	Novartis associates across divisions and functions

11 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Materiality Assessment Results
Overview of Impact Topics 
The overall objective of the materiality assessment 
results is to enable Novartis to assess the value that 
we create, sustain or erode, and incorporate it in our 
decision-making process. Before diving into the more 
detailed findings later in this section, you will find 
below a chart providing a high-level overview of the 
different ESG topics where Novartis has an impact 
and how significant this impact is.
How to read the chart:
The inner circle reflects the impact topic clusters. The top 
four material clusters are highlighted in dark grey. The outer 
circle represents the 30 individual impact topics. The relative 
importance of a topic is indicated by the height of the column, not 
its width. The cluster ranking (inner circle) is based on a separate 
topic cluster ranking question; it is not derived from a calculation 
of the individual impact rankings of topic-specific questions.
Access to healthcare
1	
Affordability & pricing
2	
Availability of medicines
3	
Intellectual property
4	
Health system strengthening
5	
Patient assistance programs
Sustainable financial performance
6	
Business model innovation
7	
Sustainable allocation of capital 
8	
Impact-based operational decisions
9	
Profit margins and dividends 
Environmental sustainability 
10	 Pharmaceuticals in the environment
11	
Emission, waste & effluents
12	 Resource consumption
Ethical business practices
13	 Ethical & compliant behavior
14	 Responsible use of data & 
artificial intelligence
15	 Corporate citizenship 
16	 Responsible use of new 
bio‑technologies
Good governance
17	 Corporate governance
18	 Data privacy and security
19	 Supply chain management
Innovation
20	 Advanced technologies for 
improved health outcomes
21	 Transformative treatments 
for unmet medical needs
22	 Patient-centric innovation 
“beyond the pill”
People & culture
23	 Health & safety of employees 
24	 Fair working conditions 
25	 Diversity, inclusion & corporate 
culture 
26	 Employee training & upskilling 
for digital workplace 
27	 Employee attraction & retention 
Patient health & safety
28	 Pharmacovigilance, safety 
profile and quality of drugs
29	 Prevention of counterfeits & 
drug use stewardship
30	 Health education & prevention
Materiality Assessment results polar chart
Inner Circle:   
  Material topic clusters
Outer Circle:   
  Priority topics
The relative importance of the respective topic is indicated by the height of the column.
Access to 
healthcare
1
2
3
4
5
6
8
9
10
11
12
13
14
15
16
21
22
26
27
28
29
30
23
24
25
17
18
19
20
7
Sustainable 
financial 
performance
Environmental 
sustainability
Ethical 
business 
practices
Good 
governance
Innovation
People & 
culture
Patient health 
& safety

12 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Dependencies per Impact Cluster
Shift in disease 
patterns & global 
burden
Counterfeit 
medicines
Pandemics & 
epidemics
Pandemics & 
epidemics
Lack of basic 
public services & 
infrastructure
Lack of 
basic services & 
infrastructure
Changing 
market 
dynamics
Global 
development 
challenges
Changing 
market 
dynamics
Shift in disease 
patterns & global 
burden
Tech 
transition
Changing 
market 
dynamics
Changing 
market 
dynamics
Changing 
market 
dynamics
Shifts in equity 
& sustainability 
expectations of 
society
Shifts in equity 
& sustainability 
expectations of 
society
Shifts in 
equity & 
sustainability 
expectations 
of society
Geopolitics & 
resulting humanitarian 
challenges
Tech 
transition
Changing 
reporting 
legislation
Changing 
market 
dynamics
Climate 
change & 
its eﬀect on 
the planet
Sustainable
ﬁnancial 
performance
Environmental 
sustainability
Patient health 
and safety
Access to 
healthcare
Innovation
People & 
culture
Ethical 
business 
practices
Good 
governance
  Environment
  Social
  Governance
  Dependencies
As previously outlined, the purpose of the Novartis 
Materiality Assessment is to determine what the 
environmental and societal impact of the company is 
while also identifying the external forces and trends 
which could potentially affect its operations, known 
as dependencies. To achieve a truly inclusive picture 
of an organization’s impacts and dependencies, 
incorporating the social and environmental value the 
company creates into its decision-making is essential. 
This is the ultimate purpose of conducting materiality 
assessments, which also enables the company 
to identify potentially significant risks as well as 
discovering opportunities for adaptation, resilience, 
and efficiency. The chart above regroups the eight key 
impact clusters of Novartis, while also indicating what 
external factors are impacting the company’s activities 
in this sector the most.

13 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Priority Impact Topics
The following sections feature 15 impact topics 
identified as priorities from a managerial perspective. 
This analysis helps us to deep dive into the findings 
and identify a subset of topics that need to be 
managed with priority moving forward. Topics were 
identified as priority if they fulfil one or several of the 
following criteria:
Internal and external stakeholders were given the 
opportunity to comment on the topics via open 
text fields in the surveys and through interviews. 
For each priority topic discussed below, we explain 
how it may impact Novartis and outline specific 
stakeholder observations in terms of what Novartis 
does well and where there are opportunities to 
improve its performance. While the stakeholder 
opinions discussed do not always reflect Novartis’ 
own views, we believe disclosing them is important 
for our assessment to be both transparent and 
comprehensive.
High impact and 
low performance: 
All topics which were 
rated high on impact 
but relatively low on 
performance. Five 
of the priority topics 
were seen to be 
fulfilling this criterion
Comparatively 
low performance:
All topics where 
Novartis’ performance 
was relatively low, 
indicating where 
the company should 
focus on improving 
its performance. Six 
of the priority topics 
were seen to be 
fulfilling this criterion
Identified during 
interviews:
Topics which were 
frequently mentioned 
by interviewees, and 
which were identified 
as priorities as a result 
of our qualitative 
analysis. Four topics 
were identified as 
priorities as a result 
from interviews
Human rights 
exposure:
Topics that pertain 
to upholding human 
rights. Nine of the 
priority topics were 
seen to be fulfilling 
this criterion
Priority Topic Ranking by Impact and Performance:
  Innovation topics
  Access to healthcare topics
  Ethical business practices topics
  Good governance topics
  Sustainable financial performance topics
  Environmental sustainability topics
  People and culture topics
  Patient health and safety topics
Resource 
consumption
Health system 
strengthening
Impact based 
operational decisions
Affordability & 
pricing
Pharmaceuticals in 
the environment
Employee attraction 
& retention
Intellectual property
Supply chain management
Availabilty 
of medicines
Diversity, inclusion & corporate culture
Fair working conditions
Transformative treatments 
for unmet medical needs
Pharmacovigilance, safety 
profile & quality of drugs
Patient-centric innovation “beyond the pill”
Ethical & compliant behavior

14 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Patient Health & Safety
Pharmacovigilance, Safety Profile & Quality of Drugs
Definition: Ensuring healthcare products are 
manufactured at the highest quality level and 
the efficacy and safety features of a medicine 
outweigh its risks (e.g. side effects), as well as to 
collect and record adverse event reports. This may 
include compliance with relevant regulations and 
standards (e.g. Good Manufacturing Practice), as 
well as transparent and timely communication in 
the case of product safety or quality issues (e.g. 
prompt product recalls).
How does it impact Novartis? 
Pharmacovigilance, safety profile & quality of drugs 
is a topic that is essential for any pharmaceutical 
company to operate, as the safety and quality of our 
products have a direct impact on patient health. In 
addition, a medicine being withdrawn from the market 
over safety concerns has a disruptive impact on 
patient treatment and can have a detrimental impact 
on trust in a company. While pharmacovigilance 
is widely seen as a “hygiene” (must have) factor 
for pharmaceutical companies, a truly robust 
performance in this space can make a company stand 
out in making patient safety the core of its business 
activities. A strong performance in this space also 
goes a long way towards establishing medicine-
producing companies as trusted, which in turn makes 
their products more trustworthy for patients. Securing 
and maintaining patient trust is therefore key for 
companies like Novartis, and this can be achieved 
through transparency and immediate action in the 
event of product quality or safety issues.
Stakeholder observations
Stakeholders familiar with pharmacovigilance 
and product quality and safety view Novartis as 
performing very strongly on these topics, including 
in comparison to competitors; some believe this 
gives the company a competitive advantage. At 
the same time, this strong performance also raises 
stakeholder expectations for Novartis, putting 
pressure on the company to maintain its “first class 
standards”. Overall, stakeholders felt that Novartis 
has strong pharmacovigilance reporting standards, 
particularly those in developed markets. Stakeholders 
in developing markets also noted there is trust in the 
quality of medicines included within Novartis’ portfolio.
This is a topic being prioritized by the pharmaceutical 
industry as it gains prominence in several markets 
including the United States. In addition, there is an 
observed gap in Novartis pharmacovigilance between 
developed countries and developing countries, where 
it is considered by some stakeholders as being 
somewhat less established. Pharmacovigilance in 
clinical trials, particularly in developing countries, 
was cited as an area where Novartis should be 
more rigorous, and concerns were raised that 
outsourcing could potentially impact the quality of 
safety reporting. Stakeholders also called for Real-
World Evidence studies to be conducted in more 
countries, beyond the US and the EU. There were 
suggestions among stakeholders that Novartis could 
work towards ensuring more diversity in clinical trials. 
Some suggested that building quality of life into drug 
development and strengthening collaboration with 
patient groups should also be a focus for Novartis. 
Finally, leveraging the potential of anonymized 
big data analytics on collected data in R&D was 
seen by stakeholders as holding a lot of potential 
for pharmaceutical companies like Novartis, while 
respecting privacy standards.
I’m very familiar with safety and pharma­
covigilance, and I think that I’ve had a 
very positive experience with Novartis in 
this area, I think the company is strong.” 
Patricia Gonzalez Garcia,
CEO, The Max Foundation
Relevant links to Novartis 
positions and resources
Ensuring Patient Health and Safety
Quality Assurance
Quality Management System

15 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Access to Healthcare
Affordability & Pricing
Definition: Responsible pricing for innovative and 
generic medicines that takes into consideration 
regional affordability, a favorable cost-benefit 
ratio, and overall healthcare costs. Examples may 
include models such as tiered pricing, managed 
entry agreements, outcome-based pricing, price 
considerations throughout the supply chain to 
manage mark-ups, and non-exclusive voluntary 
licensing.
How does it impact Novartis?  
Ensuring affordability and setting responsible 
pricing levels can lead to elevated shareholder 
confidence and reduced reputational risk. However, 
the company’s innovative pipeline, which includes 
highly innovative gene therapies such as Zolgensma, 
has faced significant societal pressures over pricing. 
Indeed, the pharmaceutical industry as a whole faces 
reputational challenges stemming from an ongoing 
public debate on pricing. The COVID-19 pandemic 
has also resulted in a reset of society’s expectations 
about a new ‘social contract’ between pharmaceutical 
companies and healthcare systems. As a result of 
these shifting societal expectations, stakeholders 
look to Novartis to be a genuine partner to healthcare 
systems, co-creating sustainable solutions.
Stakeholder observations
External stakeholders generally agreed that Novartis 
had a competitive edge in affordability and pricing 
due to strong patient assistance programs (such as 
the US Novartis Patient Assistance Foundation) and 
its emerging market brand strategy which expands 
access to innovative medicines to people in Low-
to-Middle-Income Countries. The Novartis Access 
Principles were also recognized as being an important 
step in the right direction in terms of expanding 
patient access for critical medicines. In addition, 
issuing a sustainability-linked bond in 2020 helped 
reinforce stakeholders’ views about how seriously the 
company takes this subject. 
Stakeholders suggested that Novartis could do more 
in the area of affordability and pricing, particularly 
for gene therapies. They noted the emergence of 
crowdfunding campaigns, seen as a last resort 
for patients to access high-price treatments, and 
therefore encouraged Novartis to do more when 
it comes to patient assistance. While there was 
understanding from stakeholders about value-based 
pricing, many mentioned that such strategies were not 
affordable for all health systems, notably in the field 
of cell and gene therapies, and also mentioned that 
their rationale needed to be communicated better to 
the public. Overall, there was agreement that prices 
needed to better align with the particular disease 
burden as well as local purchasing power, while 
markups by third parties should be prevented. Finally, 
internal respondents mentioned that incorporating 
access strategies within country Profit & Loss reports 
remained challenging, particularly for Sandoz.
Overall, I believe Novartis is doing well 
[in terms of affordability] – at the end 
of the day you need to make a profit. 
However, the higher-priced therapies 
for instance in oncology are an issue 
particularly in developing countries 
which you will have to continue manag­
ing in the future.” 
External interviewee from 
NGO community
Relevant links to Novartis 
positions and resources
Access Principles
Value-Based Pricing
Affordability and Novartis Access Strategies

16 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Access to Healthcare
Availability of Medicine
Definition: Efforts to manage barriers that may 
prevent, restrict, or delay treatment availability 
for patients in need in both well-connected and 
remote areas. Effective management of such 
barriers may include more efficient distribution, 
and improved supply chain strategies and 
registration process requirements.
How does it impact Novartis? 
While ensuring medicines are available to patients 
has always been important, the COVID-19 pandemic 
has shone an even brighter spotlight on the topic – 
both at a societal and political level. As the disruption 
caused by the pandemic has impacted supply chains, 
reduced healthcare budgets and delayed treatment 
availability, there are growing expectations that large 
pharmaceutical companies such as Novartis should 
do more to improve the availability of their medicines 
for patients.
Stakeholder observations
Several external stakeholders said Novartis was a 
leader in the pharmaceutical sector when it came to 
ensuring the availability of its medicines. In particular, 
they praised the commitment of Novartis to provide 
innovative medicines to more patients in Sub-Saharan 
Africa through both a dedicated governance structure 
and a new strategy. The wide country reach of 
the company’s Patient Access Programs was also 
hailed as an asset. Finally, recent efforts to extend 
product registration to more countries, as well as the 
company’s strong Global Health Programs for flagship 
and legacy compounds, were cited by external 
stakeholders as being strong tools for improving 
medicine availability.
Stakeholders felt that the generics capabilities of 
Novartis could be further leveraged as a competitive 
advantage. Sandoz in particular was often seen 
as an underused strategic asset from a global 
health perspective by both internal and external 
stakeholders, who argued that Novartis could expand 
access to medicines through the increasing its 
generic medicine activities. Some stakeholders also 
noted Novartis could provide increased access to 
innovative medicines for a larger number of patients. 
Despite Novartis’ position as a leader when it comes 
to Access to Medicines, external stakeholders 
encouraged Novartis to continue and intensify 
efforts to make available and register its innovative 
products in LMICs. In addition, it was mentioned that 
commercially driven decisions to withdraw products 
without first considering whether viable alternatives 
were available should be avoided wherever possible. 
Some external stakeholders also called for smoother 
reimbursement transitions for patients in clinical 
trials. Respondents also highlighted the need to 
inform healthcare professionals about the company’s 
different Patient Access Programs; many also noted 
their preference for a simplified qualification process 
for such programs. Finally, prioritizing the product 
delivery of less strategic brands to countries with 
lower volumes of pharmaceutical consumption and 
high amounts of stock-outs was mentioned as a way 
to build trust with stakeholders.
Most companies are struggling to 
even make complex treatments 
available across Europe, let alone in 
Sub-­Saharan Africa, Southeast Asia or 
Latin America. So even though there 
are few companies that move further 
than Novartis does, there is still much 
more that needs to be done to reach all 
eligible patients.” 
Marijn Verhoef,
Company Engagement Manager at the 
Access to Medicine Foundation
Relevant links to Novartis 
positions and resources
Access Principles
Commitment to Patients and Caregivers – 
Expanding Access to our Medicines
Novartis Oncology Access

17 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Access to Healthcare
Health System Strengthening
Definition: Efforts to improve healthcare 
infrastructure and deliver healthcare-related 
services “beyond the pill”. Examples may include 
capacity building, training and education, improved 
health data collection, provision of physical 
infrastructure, partnerships involving the public 
and private sectors to improve healthcare access 
in underserved areas, and contributions to 
reducing healthcare costs for payers, insurance 
companies and consumers.
How does it impact Novartis? 
While Novartis is not primarily accountable for 
ensuring that health systems function well, such 
systems are essential for ensuring medicines reach 
the patients who need them. As such, Novartis 
has a direct interest in partnering to support well-
functioning health systems. Robust health systems 
can help control costs and reduce price pressure and 
coupled with skilled healthcare workers, they can help 
ensure proper diagnoses and administration of the 
company’s medicines. In addition, reliable regulatory 
systems are key in supporting pharmacovigilance, 
good manufacturing and clinical practices, which in 
turn help improve patient outcomes.
Stakeholder observations
External stakeholders were often aware of the 
company’s activities in health system strengthening, 
particularly in R&D, and viewed the company as 
being ahead of its peers. Some internal stakeholders 
noted that while gaps persisted, Novartis was in the 
process of developing a harmonized approach to such 
initiatives.
There was agreement among both internal and 
external stakeholders that the lack of basic public 
services and infrastructure was a key dependency 
when it came to ensuring access to healthcare. There 
were, however, diverging views both internally and 
externally on whether Novartis should do more to 
support the strengthening of healthcare systems.
Several external stakeholders argued that, in the wake 
of the COVID-19 pandemic that has put a strain on 
healthcare budgets, particularly in LMICs, there will 
be increasing expectations placed on the company to 
do more, and partner with governments to strengthen 
systems. Novartis was encouraged to establish 
long-term partnerships and increase accessibility to 
information on health system strengthening efforts 
and patient support. Notably, there were calls for the 
company’s approach to health system strengthening 
to be more inclusive, by better tailoring it to local 
needs, particularly when it came to capacity building, 
training and education, improved health data 
collection, provision of physical infrastructure and 
when advocating for Health Technology Assessment 
& Universal Health Coverage. Continued transparency 
on the long-term access benefits of health system 
strengthening activities was encouraged.
You are not a healthcare provider: your 
responsibility is to innovate and create 
products that the health sector can use 
in order to prevent and treat diseases. 
The access issue is really more of an 
issue for governments.” 
Andreas Seiter,
Global Lead for Private Sector, 
World Bank
Relevant links to Novartis 
positions and resources
Framework
Access Principles
Strengthening Healthcare Systems

18 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Access to Healthcare
Intellectual Property
Definition: Responsible patent exclusivity 
management that balances Intellectual Property 
(IP) protection with the provision of affordable 
drugs, and stimulates third party R&D for IP 
assets that have not been selected for in-house 
development. Examples may include transparent 
patent management, participation in patent sharing 
arrangements, voluntary licensing and avoidance 
of compulsory licensing.
How does it impact Novartis? 
A solid IP framework encourages and protects 
innovation and provides the incentives required to 
drive R&D investments for areas of unmet medical 
need. At the same time, IP rights are perceived by 
some as presenting a barrier to access. The recent 
debate over IP waivers for COVID-19 vaccines and 
products has brought renewed attention to this 
topic, which could potentially result in a loss of 
shareholder confidence across the pharmaceutical 
sector if unaddressed. As healthcare budgets 
become stretched in the wake of the pandemic, 
there is growing pressure from regulators, patients, 
politicians and payers to lower or limit the price of 
pharmaceutical products, which in turn brings IP rights 
further into the spotlight.
Stakeholder observations
Novartis received positive feedback regarding 
the registration of products in LMICs without IP 
protection.
According to a number of stakeholders, the rationale 
driving the patenting strategy of Novartis could be 
better articulated. Increased attention should be given 
to transparency, especially for products included on 
WHO Model Lists of Essential Medicines. Similarly, 
Novartis was encouraged to more actively consider 
voluntary licenses, collaborate in early discovery 
through IP sharing programs. Stakeholders called 
for Novartis and the wider pharmaceutical industry 
to support more systemic access to medicines and 
health. Concerns also remain around the high prices 
of gene therapies, with stakeholders calling for 
pharmaceutical companies including Novartis to use 
IP protection sparingly.
Patents should be used to fully recover 
its investment but not as a main source 
of income, as Novartis’s role is to provide 
access to its drugs.” 
Peter van der Werf,
Senior Manager Engagement, Robeco
Relevant links to Novartis 
positions and resources
Patents and Licensing
Novartis Position on Intellectual Property
Access to Healthcare – Needs-based R&D and 
Intellectual Property

19 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Innovation
Patient-centric Innovation “Beyond the Pill”
Definition: Embedding patients’ perspectives 
in the development and delivery of holistic 
treatments and healthcare services to tailor 
interventions accurately to their needs. Holistic 
treatments “beyond the pill” may include flexible 
companion diagnostic tests, mobile applications 
supporting treatment regimes, adaptable 
treatment administration, technology-enabled 
health data collection and analytics.
How does it impact Novartis? 
Patient-centered innovation “beyond the pill” is an 
important tool for ensuring patients are able to benefit 
as much as possible from Novartis treatments. While 
some may consider such innovations as outside of 
the core responsibilities of Novartis, “beyond-the-pill” 
solutions remain essential in ensuring patients have 
access to both accurate diagnostics and adequate 
treatment administration. The company’s support 
and investment in such innovation helps improve 
patient outcomes while also building trust in the 
company among stakeholders, particularly patient 
organizations.
Stakeholder observations
While some stakeholders felt that the patient 
community expected Novartis simply to develop 
innovative medicines rather than provide care, others 
viewed patient-centric innovation as an additional 
positive and mentioned projects underway that 
support patient adherence and health. Examples of 
these include smart injectors and an innovative drug 
delivery service.
Some stakeholders felt Novartis was outpaced 
by peers in patient-centric innovation “beyond the 
pill”. Stakeholders considered holistic treatment 
approaches as an area where Novartis could lead 
mentioned the importance of focusing on LMICs, 
especially through digital interventions, ultimately 
making transformative treatments more accessible, 
affordable and effective. They also said the use of 
digital technology could support health outcomes and 
bring additional value in a cost-constrained landscape. 
Several internal stakeholders discussed that while 
privacy concerns surrounding patient data remained 
an important topic, the company should be mindful 
of inflexible bureaucratic processes that could risk 
slowing the development of “beyond-the-pill” solutions.
I know that Novartis has quite a number 
of smart people who are looking into 
patient-centric innovation. It’s a compa­
ny that is on the leading edge of these 
issues.” 
Andreas Seiter,
Global Lead for Private Sector, 
World Bank
Relevant links to Novartis 
positions and resources
Digital Health Solutions
Addressing Global Health Problems 
Research & Development – Novartis Pipeline

20 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Innovation
Transformative Treatments for Unmet Medical Needs
Definition: Maintaining a high level of investment in 
creating innovative treatments that address unmet 
medical needs, with a focus on optimizing health 
outcomes before considering market potential. 
This includes both research into new compounds 
as well as the modification of existing medicines, 
and improving access or efficacy for diverse and 
especially-vulnerable patient groups. This may 
include R&D for diseases which disproportionately 
affect people in low-income settings, for which 
little or no treatment options are available, and 
where market failure limits research activities.
How does it impact Novartis? 
Developing innovative and transformative treatments 
for patients is at the very core of the mission 
of Novartis. It continually assesses its product 
portfolio to see where it can deliver new solutions 
for vulnerable populations, including developing new 
formulations, and conducting research to expand the 
clinical use of existing medicines into new indications 
and new populations. Ensuring stakeholders 
understand that Novartis is investing to address 
disease areas where unmet global need is greatest is 
therefore critical for building trust in the company.
Stakeholder observations
Innovation was lauded as a main strength of Novartis 
by interviewees, with the company’s successful track 
record in developing new treatments, especially 
cutting-edge gene therapies, contributing to the 
perception. Novartis is viewed especially positively 
for embedding multiple new technologies and 
approaches within its portfolio, and its high standards 
of quality in genomics and biotherapeutics.
Many stakeholders believed Novartis should further 
invest in innovation by conducting research into 
those disease areas where the global unmet need is 
greatest. External stakeholders in particular shared 
views that gene therapies such as Zolgensma, while 
highly innovative, help a smaller number of patients. 
Similarly, it was often discussed that Novartis could 
define its pipeline based on forecasted social impact. 
In addition, the company was encouraged to view 
transformative treatments from the point of view 
of patients, not solely technology. For example, it 
was felt R&D should also focus on prevention and 
early detection to maximize its impact. Many also 
said Novartis could expand its innovation by making 
transformative treatments more accessible and/ or 
affordable, particularly in LMICs. The academic and 
scientific communities called for closer cooperation 
from the company when it comes to working with 
peers and across sectors to reduce the fragmentation 
of private sector contributions. Other stakeholders 
saw increasing focus on digitalization as an 
opportunity for Novartis to address unmet needs. 
Internal stakeholders meanwhile cautioned against 
the divestment of certain products, noting this was 
perceived as contrary to the company’s objective 
of delivering transformative therapies for patients. 
Internal and external interviewees mentioned the 
benefits of a more holistic approach to R&D, for 
example improving the understanding of how patient 
lifestyles and education may impact health and 
disease management In addition, a more equitable 
balance in R&D activity was encouraged between 
common and rare diseases.
*Sickling is when the hemoglobin inside red blood cells sticks or clumps together, 
causing the cell to become fragile, rigid, and crescent – or sickle – shaped.
There is nobody out there with a treat­
ment that prevents sickling* that is as 
good as the Novartis biologic.” 
Kawaldip Sehmi,
CEO, International Alliance of Patients’ 
Organizations (IAPO)
Relevant links to Novartis 
positions and resources
Putting Patients at the Center of our 
Clinical Trials
Innovative Medicines
Core Therapeutic Areas

21 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Ethical Business Practices
Ethical & Compliant Behavior
Definition: Processes and systems to ensure 
Novartis operates in line with high principle-
based ethical standards especially in regards to 
interactions with HCPs. Examples may include 
adherence to laws, regulations and international 
conventions (such as on Human Rights), and anti-
bribery, anti-corruption and anti-trust legislation. 
Other examples include supporting whistleblowing 
channels, fostering open discussions on ethical 
dilemmas, responsible lobbying and political 
contributions, being sensitive over promotional 
activities, drug prescription stewardship 
and responsible incentive structures and 
compensation.
How does it impact Novartis? 
While stakeholders generally agreed that the 
reputation of Novartis had recovered from legacy 
integrity issues, trust remains easy to lose. Ensuring 
we behave in an ethical and transparent manner is at 
the very core of our license to operate as a company. 
In addition, operating ethically and in compliance 
with laws and regulations is essential for attracting 
investment and ensuring Novartis is perceived as 
a leader in the pharmaceutical industry. Finally, 
scrutiny from governments alongside increased 
societal expectations mean this will only increase in 
prominence as a topic.
Stakeholder observations
There was general agreement among stakeholders 
that Novartis has made significant progress in 
recent years, and has created positive momentum 
due to initiatives such as its code of ethics and the 
conclusion of the 2020 settlements for investigations 
into legacy behaviors. Many internal Novartis 
respondents, felt that the company’s investment in 
online trainings has further supported compliance 
awareness and had an impact on the company’s 
reputation. While some stakeholders noted prior 
issues impacted their perceptions of Novartis, internal 
and external stakeholders (particularly investors and 
advisors) also often noted that the company had 
significantly improved. They mentioned that under 
new leadership, they felt Novartis had improved 
in ensuring ethical and compliant behavior was 
embedded in its processes.
As Novartis is a global company, stakeholders felt 
it must keep in mind that what constitutes ethical 
behavior, whether from a regulatory, political or 
cultural standpoint, may vary from country to country. 
Therefore, employees may benefit from further 
information on companywide ethics/compliance 
trainings, their complementary country-specific 
programs and how these are customized to meet 
local regulations. While Novartis has global systems 
in place to report ethics or compliance concerns, 
some internal stakeholders were unaware while others 
felt company action in this area could be expedited. 
In addition, stakeholders flagged moral concerns 
related to the high price of cell and gene therapies 
as well as with innovative biotechnologies in general. 
Stakeholders also underlined ethical concerns in 
the work environment, not specific to Novartis but 
for the company’s continued vigilance; for example, 
operations in low salary countries, trust around 
personal data and how R&D success was measured.
We view Novartis as having a good rep­
utation, free of negative publicity, acting 
with integrity and being worthy of our 
trust. The lack of negative events always 
popping up solidifies our ability to trust 
the company.” 
William Butterly,
General Counsel and Director of 
Sustainability and Engagement, 
Boston Partners Global Investors
Relevant links to Novartis 
positions and resources
Ethics, Risk and Compliance 
Code of Ethics 
SpeakUp Office

22 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
People & Culture
Diversity, Inclusion & Corporate Culture
Definition: Creating a corporate culture in which 
each associate can contribute and be recognized, 
ensuring equal opportunities and fostering a 
diverse and inclusive workplace. Examples may 
include empowering employees to achieve their 
personal and professional goals, unconscious 
bias training, equal pay, and strategies aimed 
at attracting talent regardless of age, ethnicity, 
gender, nationality, language, sexual orientation, 
physical ability, or religious and personal belief.
How does it impact Novartis? 
Diversity and inclusion are at the very center of the 
cultural journey of Novartis. While there is work to 
be done to improve representation, the company’s 
efforts to become more inclusive were recognized 
by stakeholders. As society’s expectations in the 
area grow, diversity, inclusion and a strong corporate 
culture are essential as they affect a wide range of 
the company’s activities and stakeholders (patients, 
clinical investigators, vendors/ suppliers and 
others). Stakeholders believe Novartis can outpace 
its competitors by pressing for even more diverse 
workplaces, beyond gender diversity targets, and in 
return gain deeper trust and more commitment from 
employees, patients and shareholders.
Stakeholder observations
There was general agreement that Novartis is 
making significant efforts to ensure diversity and 
inclusion in its workforce. In particular, there was 
positive feedback from the LGBTIQ+ community at 
the company. Other internal stakeholders mentioned 
parental leave, pensions and investment options as 
being in line with ESG standards.
Stakeholders felt that Novartis could show how its 
statement and policies have a tangible impact on 
culture and the wellbeing of its associates. There were 
also some concerns raised about equitable treatment 
across genders, as some stakeholders felt that, in line 
with a broader predominant trend across society, men 
were often assessed more favorably than women, 
regardless of actual work output. Some stakeholders 
also suggested that the efforts of Novartis to ensure 
greater diversity were largely focused on gender, with 
less emphasis on race and ethnicity. 
Internal stakeholders pointed out that corporate 
culture would improve with more proactive responses 
from managers when diversity and inclusion issues 
were flagged to them. Some also noted that the shift 
of certain roles to other countries contributed to 
concerns of job security.
We do have the impression of a com­
pany that is really forward-looking and 
trying to do the best it can in relation to 
culture, to inclusion, to respect for its 
people – which at the end enhances 
retention.” 
Esperanza Martinez,
Head of Health, the International 
Committee of the Red Cross (ICRC)
Relevant links to Novartis 
positions and resources
Diversity & Inclusion
People and Culture
Unleash the Power of our People – 
Diversity & Inclusion Performance

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Materiality Assessment Results
People & Culture
Employee Attraction & Retention
Definition: Human capital management that aligns 
recruitment efforts with the company’s purpose 
and strategy, and provides talent management 
programs to engage and retain associates with 
relevant skillsets. This may include mentoring 
and learning programs for personal and career 
development skills, adopting new approaches 
such as agile management styles, and offering 
more flexible working models tailored to 
augmented workforce schedules and workplace 
transformations. 
How does it impact Novartis? 
Attracting and retaining talent is crucial to maintaining 
a high level of productivity and ensuring an influx 
of expertise. Yet increasing competition for talent 
continues to challenge recruitment and retention 
efforts. Remaining reputational biases toward the 
pharmaceutical sector also further impedes talent 
attraction. Keeping a highly talented workforce 
motivated, while being an employer of choice for new 
candidates, is critical for Novartis to remain competitive.
Stakeholder observations
The ongoing evolution in company culture was 
perceived positively by both internal and external 
stakeholders, although many noted there was work 
still to be done, particularly in the prioritization 
of diversity and inclusion throughout all aspects 
of the business. Novartis was seen as being an 
employer who makes safe working conditions one 
of its top priorities. This was notably showcased 
by the company’s prioritization of the wellbeing 
of its employees during the COVID-19 pandemic. 
Additionally, the multiple career paths offered within 
the organization, and general levels of work flexibility, 
were mentioned positively.
Talent retention, particularly across high-performing 
staff, was flagged as a challenge by internal 
stakeholders, with organizational restructuring noted 
as a retention hurdle. Reducing high workloads 
was raised as a potential solution for attracting and 
retaining talent. In addition, streamlining internal 
communications and channels was another frequently 
cited point for improvement. Internal stakeholders also 
supported salary increases and promotions for better 
employee retention. Some external stakeholders 
specialized in workforce and staffing solutions felt that 
open positions are at times not sufficiently promoted 
by Novartis, and that the benefits of contract 
workers did not always align with those for Novartis 
employees.
I have just seen it too often, that we let 
knowledge go and believe we can 
easily hire someone else.” 
Novartis employee
Relevant links to Novartis 
positions and resources
Associates’ Well-Being
Supporting and Protecting our Employees
Awards and Recognitions

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Materiality Assessment Results
People & Culture
Fair Working Conditions
Definition: Ensuring fair employment processes, 
including upholding labor rights, freedom of 
association and collective bargaining, good 
labor relations and union practices, and fair 
compensation and benefits. This may also include 
work-life balance considerations.
How does it impact Novartis? 
Fair working conditions are important to attract, 
motivate and retain talent, helping the company 
stay competitive. But they are also about treating 
people with the respect that everyone deserves. 
Fair conditions can help reduce turnover, protect 
productivity levels and protect the corporate culture 
that Novartis has worked hard to build.
Stakeholder observations
The company’s internal stakeholders praised its 
corporate culture of encouraging employees to 
give upward feedback and for providing ongoing 
opportunities for acquiring new skills. In addition, 
the commitment of Novartis to pay a living wage to 
all its employees – usually above the minimum wage 
requirements in each country – was hailed as an 
asset. Respondents also agreed that Novartis put its 
employees’ health and safety at work first, viewed as a 
highly positive commitment from the company.
Internal respondents often remarked that heavy 
workloads were a concern among employees, 
impacting both personal health and the organization’s 
productivity. They suggested a greater focus on 
improved change management, more proactive 
balancing of workloads, addressing high turnover and 
better hiring practices. Some external stakeholders 
noted difficulty in being hired directly by Novartis as a 
contractor.
We see Novartis building global pro­
grams that support and respect the 
diversity in your workplace. For exam­
ple, by providing a minimum level of 14 
weeks parental leave for all associates 
across the world, or to better support 
associates experiencing gender dys­
phoria. Global Diversity and Inclusion 
initiatives like these are really being 
embedded within the corporate culture.” 
Cathy Course,
Enterprise Client Leader, Aon
Relevant links to Novartis 
positions and resources
Living Wages
Safe Workplace
Supporting and Protecting our Employees

25 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Good Governance
Supply Chain Management
Definition: Processes to ensure responsible 
supply chain practices, and that suppliers 
uphold the appropriate social, human rights 
and environmental standards. Examples may 
include supplier risk assessments and audits, the 
sanctioning of non-compliance and transparent 
reporting practices. They may also include 
upholding company standards in outsourcing 
decisions and third-party manufacturing, and 
collaborating with clinical research organizations.
How does it impact Novartis? 
Supply chain management and mitigating third-party 
risk more broadly is an essential step in fulfilling 
society’s expectations of a pharmaceutical company. 
With an effective supply chain management strategy, 
organizations can diagnose problems and disruptions 
quickly and effectively. As a result of the pandemic, 
supply chain management has attracted increasing 
attention: in the EU for example, the forthcoming 
Sustainable Corporate Governance initiative has 
brought the topic under a greater spotlight. As part of 
the proposed legislation, supply chain due diligence 
will be more thoroughly regulated for any producer 
operating in the EU market. Whether in the EU or 
elsewhere, Novartis will have to adhere to future 
standards in order to retain the trust of financial 
stakeholders and society alike.
Stakeholder observations
Internal and external stakeholders broadly agreed 
that Novartis was doing a good job in protecting its 
supply chain. The company’s risk management system 
was considered to be thorough, and constituted best 
practice for the sector. The company was also lauded 
for its efforts to build even more efficient supply 
chains.
Stakeholders noted that although the company’s third- 
party risk management system was indeed thorough, 
it was not without issues. Internally, the reporting 
burden was perceived as being onerous for example, 
affecting the productivity of business owners due to 
the responsibility they needed to take over the whole 
process. 
Stakeholders shared concerns about transparency 
and the impacts of outsourcing on product quality. To 
mitigate this, stakeholders felt that the cost-saving 
assessments used in procurement could be reviewed. 
Respondents also suggested there were too many 
stockouts for medicines in the pharmaceutical sector 
broadly, and the single sourcing of critical supplies 
should not become standard practice.
We look into questions like ‘How do you 
protect that supply chain? How do you 
protect those really expensive drugs? 
How do you protect and make sure that 
anything that needs to get delivered at 
a certain temperature is done, and you 
don’t have too many losses?’ And we 
saw Novartis […] is doing this quite well.” 
Cathy Course,
Enterprise Client Leader, Aon
Relevant links to Novartis 
positions and resources
Third-Party Risk Management
Quality – Third-Party Suppliers
ESG Management Targets

26 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Sustainable Financial Performance
Impact-based Operational Decisions
Definition: Holistic operational decision-making 
that factors in financial, economic, social and 
environmental impacts and their long-term costs, 
even if currently externalized. Examples may 
include commitments to retaining talent for as long 
as possible and to avoid outsourcing to low-cost 
locations, selecting low carbon energy suppliers, 
and local procurement.
How does it impact Novartis? 
A company’s impact on ESG topics and issues needs 
to be accurately factored into its operational decision 
making because it is fundamental in ensuring the 
company impacts society positively. Stakeholders 
agree that companies’ societal and environmental 
impacts are becoming increasingly important, in the 
eyes of the public, investors and policymakers. A long-
term approach and perspective is needed to meet 
stakeholder expectations, generate positive societal 
outcomes and maintain the financial sustainability of 
Novartis.
Stakeholder observations
External interviewees were positive about the 
company’s targeted stakeholder engagement 
activities, noting they felt Novartis listens to the views 
of others about its impact on society as a whole. 
In addition, one external stakeholder pointed to 
the engagement of Novartis in the Value Balancing 
Alliance – which aims to create a way of measuring 
and comparing the value of contributions made by 
businesses to society – as a demonstration that 
Novartis was working to ensure its operational 
decisions had a positive impact.
Those stakeholders familiar with the topic argued 
that although Novartis conducted thorough impact 
valuation efforts, the results should more consistently 
feed into concrete business decisions (such as in 
procurement or portfolio choices). External and 
internal stakeholders also noted that the immediate 
social outcomes of the company’s activities should be 
more actively measured beyond the social impact of 
products to the social impact of its supply chain. An 
example of this was the need to consider not just how 
transferring manufacturing can reduce costs, but can 
also have broader, non-financial consequences. 
Finally, some internal and external stakeholders 
suggested that low scores for impact-based 
operational decisions could be related to a lack of 
awareness about the steps Novartis was taking (such 
as in ensuring that suppliers meet sustainability 
criteria), rather than a lack of attention or action from 
the company.
You’re moving your manufacturing […] to 
Slovenia, Romania or some other place 
to cut costs and it has a huge impact. I 
don’t think the impact this has on oper­
ations is ever understood by those who 
make the decision.” 
Patricia Gonzalez Garcia,
CEO, The Max Foundation
Relevant links to Novartis 
positions and resources
Group Performance
ESG Management Targets
Our Strategy

27 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Environmental Sustainability
Pharmaceuticals in the Environment
Definition: Efforts undertaken to minimize the 
negative environmental impact of the company’s 
activities and products over their life cycle, and 
to ensure the proper and legal disposal of waste 
that contains active pharmaceutical ingredients. 
Examples may include product evaluation through 
environmental risk or wastewater assessments, 
raising awareness about responsible use of 
medicines and drug disposal stewardship, 
fostering environmentally friendly behavior among 
patients and engaging with third parties to improve 
manufacturing and discharge standards.
How does it impact Novartis? 
Pharmaceuticals in the environment can have a 
significant, negative long-term impact on natural 
resources and society, and the public expects 
companies to mitigate it. The topic that most 
frequently surfaced was that of pharmaceutical 
contaminates in water supplies fostering antimicrobial 
resistance (AMR). It was noted that the issue mainly 
exists downstream, in the final stages of production. 
Nevertheless, many stakeholders perceive there is 
still some action to be taken on the topic not only by 
Novartis but by the pharmaceutical sector as a whole.
Stakeholder observations
Overall, internal stakeholders believed that the 
company was already acting with the required 
sensitivity in terms of managing its impact on 
pharmaceuticals in the environment. In addition, it was 
generally perceived that the methodology currently 
used by Novartis assessed the company’s impact to 
the appropriate standard that was needed.
Still, many believed Novartis should continue to 
innovate its approach to mitigate impact, even in the 
face of challenges in assessing the effects of this 
along the whole value chain. Some stakeholders 
suggested that Novartis could take more action 
to ensure pharmaceutical take-back programs 
were available globally. Finally, several external 
stakeholders suggested there was a lack of 
awareness about the focus of Novartis when it 
came to the wider topic of pharmaceuticals in the 
environment, and urged the company to do more to 
raise its profile.
It isn’t just a Novartis problem. It’s a soci­
etal problem about the sheer amount of 
drugs and drug by-products that are out 
there in the environment because of the 
way that we manage our waste, which 
isn’t as effective as it needs to be.” 
William Heisel,
Director of Global Services for 
IHME Client Services, Institute for 
Health Metrics and Evaluation
Relevant links to Novartis 
positions and resources
Pharmaceuticals in the Environment
Novartis Environmental Sustainability 
and Occupational Health and Safety Data 
Supplement 2020
Enhancing Environmental Sustainability

28 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Environmental Sustainability
Resource Consumption
Definition: Measures and incentives to ensure 
the efficient consumption of energy, water and 
other natural resources. The objectives of such 
measures may range from managing a company’s 
impact on the planet and animal life to preserving 
biodiversity as a whole. Examples include 
responsible sourcing, recycling and re-use of 
natural resources.
How does it impact Novartis? 
Medicine production ultimately relies on the long-term 
protection and sustainable management of natural 
resources. The unsustainable use of energy, water 
or other resources can have substantial, negative 
long-term impacts on the environment and society, 
and carries with it regulatory and reputational 
risk. Increasingly, companies are also being held 
accountable for the performance of their supply 
chains, which can be complex. By using resources 
more efficiently, Novartis can therefore not only 
reduce costs, but also assume a leading role in 
sustainability and help preserve biodiversity.
Stakeholder observations
External stakeholders generally agreed that 
Novartis was ahead of its peers in terms of ensuring 
sustainable resource consumption. Ongoing efforts 
such as reducing the use of packaging contributed 
to this perception. There was a widespread view, 
especially among NGOs, that the pharmaceutical 
sector was not among the primary contributors to 
climate change. Nevertheless, a number of NGO 
stakeholders said that there was an opportunity for 
Novartis to take the initiative and become a leader 
among its peers. Some stakeholders also noted the 
science-based targets Novartis has set to reduce its 
consumption have had a positive impact.
Stakeholders generally agreed digitalization could 
help the company increase efficiency while reducing 
its use of packaging. Ensuring stewardship over 
the entire life cycle of products was highlighted as 
another area in which Novartis could improve. Finally, 
external stakeholders who specialized in biodiversity 
called for a clearer link to be made between the 
company’s resource use and the impact of its 
consumption on biodiversity loss.
I believe that in the long term, the design 
process for pharmaceutical manufac­
turing needs to be reviewed for resource 
and costs flows through production.” 
Nicolai Schaaf,
Senior Manager Swedish Waterhouse, 
Stockholm International Water Institute
Relevant links to Novartis 
positions and resources
Enhancing Environmental Sustainability
Environmental Sustainability
Novartis – Climate Change 2021

29 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Comparison to Previous Years
When comparing the results of the Novartis 
Materiality Assessment 2021 with the 2017 edition, 
several prominent trends can be noticed. First, when 
looking at the impact topics selected for this year’s 
edition, we see that there was a marked increase of 
topics related to digital, the use of data and Artificial 
Intelligence. Other new impact topics included the 
sustainable allocation of capital and patient-centric 
innovation “beyond the pill”, highlighting the ongoing 
debate around how the industry can further add value 
for patients. 
On the topic of Patient Health & Safety and 
Pharmacovigilance in particular, since 2017 the 
perception of Novartis’ performance remains strong. 
Notably, the topic of diversity in clinical trials is 
something that has emerged since 2017. In the 2021 
edition of the Novartis Materiality Assessment, 
stakeholders also called for more Real-World 
Evidence studies. 
In terms of the findings themselves, a clear trend 
was that stakeholders’ concerns around Access to 
Healthcare topics were exacerbated since 2017. 
Topics such as pricing and intellectual property 
were always high on stakeholders’ agenda when 
speaking with the industry. However, stakeholders 
cited the combined impact of strained healthcare 
budgets in the wake of the COVID-19 pandemic and 
the perceived lack of accessibility of highly innovative 
Novartis therapies as reasons for Novartis to innovate 
its approach to access.
When it comes to Innovation, drug resistance was 
newly classified as a dependency rather than an 
impact topic. The 2021 materiality assessment 
explored the role Novartis can play in preventing 
antimicrobial resistance by reinforcing drug use 
stewardship. Overall, there was more focus around 
Novartis activities for delivering transformative 
therapies to patients, with concerns expressed around 
accessibility and on the need to focus on addressing 
disease areas where the burden is greatest. However, 
the highly innovative character of Novartis therapies 
was more commonly praised.
On Ethical Business Practices, there was an overall 
perception that litigation and controversies resulting 
in negative media coverage have largely receded. This 
was in large part due to a recent perceived cultural 
change in relation to integrity and ethics within the 
company as part of a wider cultural transformation 
seen to be driving a positive change on ethical behavior. 
Stakeholders’ views on Novartis’ performance on 
People & Culture topics changed considerably since 
2017. Employee attraction and retention continues to 
be a complex topic for Novartis to manage. Findings 
showed that concerns around work flexibility and a 
more diverse workforce have largely been addressed. 
However, more concerns around workload and 
organizational restructuring were raised. 
On Good Governance and Corporate Governance 
specifically, stakeholders felt that the performance 
of Novartis has improved. Specifically, they pointed 
out that they consider the rationale in decision-
making at Novartis to be both clear and transparent, 
a remarkable change compared to 2017.
Regarding the Sustainable Financial Performance 
topic, in 2017 like in 2021 investors considered 
Novartis to be a financially healthy company. However, 
in both editions of the materiality assessment different 
stakeholder groups also mentioned a focus on short-
term profits at the expense of longer-term financial 
sustainability as a challenge. In the 2021 edition of 
the materiality assessment there were particular 
concerns around profit margins and dividends having 
an adverse impact in Low- and Middle-Income 
Countries, with stakeholders arguing that profit 
margins often stand in the way of volume pricing.
On Environmental Sustainability topics, while 
performance scores remain relatively low, one notable 
finding was that the ambitious goals set by Novartis, 
including for the company to become fully carbon 
neutral by 2030 and to achieve net zero by 2040, 
went a long way toward building trust in the company’s 
efforts to reduce its environmental footprint. 
Furthermore, stakeholders tended to trust more in 
Novartis’ efforts in areas such as Pharmaceuticals in 
the Environment compared to the 2017 edition of the 
Novartis Materiality Assessment.

30 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Materiality Assessment Results
Our 2021 materiality assessment delivered 
comprehensive insights on Novartis’ impact on society 
at large, how Novartis activities are being impacted by 
external forces or trends as well as how our internal 
and external stakeholders view our performance 
in managing them. Rapidly changing societal 
expectations and technological progress mean that 
increasingly innovation must go beyond Research 
& Development. Accordingly, it is essential for the 
way Novartis evaluates its impact to adapt to the 
company’s changing role in an ever-changing world. 
As Novartis works to evolve its new ESG strategic 
framework and roadmap, the materiality assessment 
findings will be used as a foundation on which the 
strategy will be built. 
The results presented in this report will also be used 
to help us identify key quantitative performance 
indicators for the different topics surveyed, which in 
turn will help us track our progress and performance. 
The results of the materiality assessment have been 
shared internally with the functions in charge of 
managing the respective topics, providing concrete 
objectives for our topic/issue owners to work toward. 
As part of our 2021 materiality assessment cycle, 
Novartis also conducted a boundaries analysis of the 
materiality topics for our business. This analysis is 
how we bring Novartis’ four key value creation areas 
together, including financial, economic, environmental, 
social governance. Doing so also enables us to assess 
where we have the most impact: whether it is upstream, 
through our direct operations or downstream. 
Finally, the results of the materiality assessment 
were also integrated into our 2021 Enterprise Risk 
Management (ERM) process. The ERM process 
identified potential risk areas from the 15 priority 
topics and key dependencies. These key company 
risks have been mapped to identify potential blind 
spots and were then presented and discussed at the 
Enterprise Risk Workshop which took place in mid-
September 2021. 
Strategic Implications

31 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Next Steps
Stakeholder Dialogue 
The results of our materiality assessment have been 
shared with all relevant internal stakeholders. Doing 
so will help the results gain traction and provide us 
with a clearer view of our employees’ expectations. 
First, we will review the findings; based on the input 
received, we assess if new activities are needed to 
address any potential performance gaps or needs in 
how we engage with this stakeholder group. Following 
this important step, the focus of our activity will then 
shift toward how to keep the dialogue going with our 
internal and external stakeholders. 
Internally, the goal of our consultation efforts is to 
enable our stakeholders to provide us with their views 
on our progress of addressing gaps and opportunities. 
Doing so enables us to also build important and 
mutually beneficial relationships with our internal 
stakeholders, which is essential to further increase 
the interest in the materiality assessment process and 
strengthen the validity of our findings over time. 
Building and maintaining strong relationships with 
our external stakeholders is at the very core of the 
materiality assessment’s objectives. The first step 
in doing so is to share the materiality assessment 
results with our external participants. We are also 
currently exploring additional ways we can stay 
engaged with our stakeholders on ESG topics outside 
of the materiality assessment cycles. Should you 
have any thoughts and/or feedback you would like 
to share with us or if you wish to share your views 
on the scope of the next materiality assessment as 
one of our valued stakeholders, please reach out to 
­cr.materiality@novartis.com.
Next Steps

32 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
External Support
External Support
R.A.T.E. GmbH
R.A.T.E. GmbH is a measurement-based 
communications firm supporting clients with 
improving their results in corporate benchmarks 
such as rankings, awards, indices and ratings in 
areas including corporate sustainability. R.A.T.E. 
supported the Novartis Materiality Assessment 
2021 with the conduction and statistical analysis of 
the materiality assessment survey. 
Edelman
Edelman is a global communications and public 
relations firm that partners with businesses and 
organizations to evolve, promote and protect 
their brands and reputations. Edelman supported 
with the qualitative component of the Novartis 
Materiality Assessment 2021 as well as with 
the qualitative analysis of the results and the 
elaboration of the key conclusions.

33 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Appendix
Appendix
Impact Topic list
Following a thorough review of our last materiality assessment, and after conducting initial research, a total of 
30 impact topics have been selected for examination. In turn, these have been divided between eight impact 
clusters that are of particular relevance to the company’s activities. These eight clusters are:
Access to Healthcare
A group of topics which focus on improving access to 
medicines and healthcare services for all patients with 
needs, a key priority for Novartis. The topics in this 
cluster, and a summary of the perceptions stakeholders 
have about the company for each of them, are:
•	Affordability & pricing: This looks at the need to set 
responsible pricing levels for innovative and generic 
medicines that takes into consideration regional 
affordability, a favorable cost-benefit ratio and overall 
healthcare costs. Stakeholders tended to have a 
negative perception of the performance of Novartis 
in this area, largely due to the high cost of innovative 
cell and gene therapies
•	Availability of medicines: This topic includes efforts 
to manage barriers that may prevent, restrict or 
delay treatment availability for patients in both well-
connected and remote areas. The company’s Sandoz 
division is widely seen as an asset in this area, and 
stakeholders called for expanding access to therapies 
in Low-to-Middle Income Countries (LMICs)
•	Health system strengthening: This assesses 
attempts to improve healthcare infrastructure and 
deliver healthcare-related services that go “beyond 
the pill”. Despite a relatively low performance, some 
internal and external stakeholders questioned 
whether strengthening healthcare systems should 
actually be part of the company’s role at all. Others 
argued that activities that strengthened healthcare 
systems benefited Novartis in the long term, and 
should be viewed as an investment, not a cost 
•	Intellectual property: A topic which considers 
how to balance responsible patent exclusivity 
management with Intellectual Property (IP) 
protection. Many stakeholders viewed the 
performance of Novartis in this space poorly, and 
called for more transparency and for the company to 
protect its IP more sparingly
•	Patient assistance programs: This looks at 
supporting access to Novartis products for 
designated patients in need of financial support, or 
patients in need of access prior to approval outside of 
a clinical trial or where a product is not commercially 
available post-approval. Overall, external stakeholders 
agreed there were signs Novartis was moving in the 
right direction in this field, with patient assistance 
programs in oncology having been noted in particular 
as being an example of best practice
Sustainable Financial Performance
This Cluster includes topics which relate to the 
company’s long-term financial performance, and 
includes:
•	Business-model innovation: This topic looks 
at efforts to respond to emerging health needs 
and trends by changing existing strategies for 
sustainably conducting business and/or developing 
new business models. Both internal and external 
stakeholders argued there was room for Novartis to 
develop more innovative business models in this field
•	Impact-based operational decisions: An 
examination of holistic operational decision-
making, factoring in financial, economic, social and 
environmental impacts and their long-term costs, even 
if currently externalized. Overall, stakeholders argued 
there was still room for Novartis to better take 
account of the social and environmental impact of its 
activities in the future
•	Profit margin & dividends: This topic involves 
examining how to ensure the company’s continued 
viability, financial health and performance through 
supporting the long-term profitability of its business 
model and operations. Overall, Novartis was seen 
both internally and externally as a financially 
healthy company, creating trust among financial 
stakeholders. Concerns remained however among 
external stakeholders that high profit margins hinder 
patient access to the products of Novartis
•	Sustainable allocation of capital: This topic 
assesses how Novartis applies sustainable solutions 
to its corporate financing decisions related to debt 
and financial asset management, including its 
corporate pension funds. External stakeholders 
suggested that one way for Novartis to improve its 
performance in this area would be to allocate more 
capital to innovation, and less to patent protection

34 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Appendix
Environmental Sustainability
The topics which have been gathered together in this 
cluster, and a summary of perceptions about how 
Novartis is performing, are: 
•	Emission, waste & effluents: An examination of the 
ways in which a substantial reduction – and better 
management – of emissions, waste, and effluents 
can be achieved through the company’s operations 
and products, as well as in its supply chain. Both 
internal and external stakeholders felt that while 
Novartis could improve its performance, as a 
pharmaceutical company its impact on the topic was 
limited
•	Pharmaceuticals in the environment: A topic 
which assesses efforts to minimize the negative 
environmental impact of the company’s activities 
and products over their life cycle, and to ensure the 
proper, legal disposal of waste containing active 
pharmaceutical ingredients. While the work Novartis 
is doing to measure and address its impact there 
was recognized, external stakeholders suggested 
that more could be done to mitigate the company’s 
footprint
•	Resource consumption: This topic explores 
measures and incentives to ensure the efficient 
consumption of energy, water and other natural 
resources. The science-based targets that 
Novartis has set to reduce its consumption have 
gone a long way toward building trust in the 
company’s environmental commitments, however 
external stakeholders argued there was still room 
for improvement in terms of cutting back on 
unnecessary resource usage
Ethical Business Practices
This cluster involves topics about the wider ways in 
which Novartis ensures that it goes about its business 
in an ethical manner. It includes:
•	Corporate citizenship: This looks at how Novartis 
ensures its conduct is responsible and makes a 
fair contribution to society. This is an area where 
Novartis is perceived as performing strongly, 
although some external stakeholders argued that the 
company should make more effort to communicate 
the impact on society of it programs and policies 
which support its corporate citizenship goals 
•	Ethical & compliant behavior: This topic considers 
the processes and systems required to ensure 
Novartis operates in line with the highest principles-
based ethical standards, such as its interactions 
with Health Care Professionals (HCPs). There was a 
distinct impression among external stakeholders that 
Novartis had put past controversies behind it, and as 
a result was improving its performance in this area
•	Responsible use of data & artificial intelligence 
(AI): This embraces the standards and governance 
systems needed to ensure data and AI are utilized 
in accordance with the highest ethical standards. 
While most internal and external stakeholders 
viewed the performance of Novartis in this topic 
as relatively robust, there was a notable exception 
among government representatives, who believed 
that more could be done to improve the company’s 
performance in this area
•	Responsible use of new biotechnologies: This 
analyzes how Novartis ensures the appropriate 
handling of controversial ethical questions relating 
to biotechnological advancements. Novartis is seen 
by many to have rigorous standards in this area, 
although several external stakeholders argued that 
the lack of accessibility to some of the company’s 
most expensive treatments raised ethical issues that 
needed to be addressed

35 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Appendix
Good Governance
Topics is this area include how Novartis ensures that it 
has the most robust internal systems and processes in 
place. They are:
•	Corporate governance: This topic assesses how 
the company’s management structure balances the 
interests of its different stakeholders and allows 
for appropriate target-setting and performance 
monitoring. It also examines how transparent it 
is, and the extent to which it discloses critical 
information to stakeholders, including the outcomes 
and impacts of its corporate activities. Internal 
stakeholders rated the performance of Novartis 
lower than external stakeholders in this area 
and said transparency around the company’s 
approach to corporate governance was an area for 
improvement, while external stakeholders generally 
felt Novartis’ transparency in terms of governance 
was sufficient
•	Data privacy & security: This examines the systems 
and processes in place to ensure information about 
patients, employees, business partners, suppliers 
and others is responsibly and securely collected, 
transferred and stored. While Novartis has progressed 
in improving its data privacy and security standards, 
both internal and external stakeholders argued they 
would like to see further progress in the field
•	Supply chain management: This looks at the 
processes in place to ensure responsible supply 
chain practices are in place, and the way Novartis 
ensures that its suppliers uphold the appropriate 
social and environmental standards, including in the 
area of human rights. Internal stakeholders were 
often more likely to perceive a gap between the 
impact and performance of the company in this topic, 
arguing that while it was thorough, the company’s 
third-party risk management system was relatively 
complex and resulted in a loss of productivity
Innovation
This cluster of topics examines how Novartis performs 
when it comes to innovating and adopting new 
technologies. The topics, and the response to them, 
are:
•	Advanced technologies for improved health 
outcomes: This topic examines how Novartis 
leverages advanced health technology platforms to 
revolutionize treatments and optimize outcomes for 
patients. Quantitative scores for this topic were high, 
reflecting the fact that Novartis is generally viewed 
as a leader in innovation both by internal and external 
stakeholders
•	Patient-centric innovation “beyond the pill”: 
This analyses how Novartis embeds patients’ 
perspectives in the development and delivery of 
holistic treatments and healthcare services so 
as to more accurately tailor interventions to their 
needs. While opinions were divided on the role and 
responsibility of Novartis for this topic, external 
stakeholders – and government representatives in 
particular – held the view that Novartis could further 
improve its performance in this area
•	Transformative treatments for unmet medical 
needs: This looks at how the company performs 
in terms of maintaining significant investment in 
creating innovative treatments that address unmet 
medical needs, with a focus on optimizing health 
outcomes before considering market potential. 
While external stakeholders praised the company’s 
capacity to innovate, many stated that the company 
could do more to focus its efforts in areas where 
global unmet needs are greatest

36 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Appendix
People & Culture
How does Novartis harness its employees to ensure 
the company makes the maximum use of their skills, 
while also ensuring it remains an attractive place to 
work? This cluster takes into account the topics which 
involve the company’s people, and includes:
•	Diversity, inclusion & corporate culture: This topic 
assesses how Novartis creates a corporate culture 
where everyone who works there can contribute and 
be recognized, ensures equal opportunities for all, 
and fosters a diverse and inclusive workplace. While 
Novartis has made significant progress in ensuring 
it has a diverse and inclusive workforce, internal and 
external stakeholders alike held the view that further 
progress could be achieved in translating its rhetoric 
to tangible impacts on culture and the wellbeing of 
associates
•	Employee attraction & retention: An examination 
of how human capital management aligns recruiting 
efforts with company purpose and strategy, and 
the extent to which the company provides talent 
management programs to engage and retain 
associates with relevant skillsets. Much like in 2017, 
internal stakeholders tended to rate the company’s 
performance in this space toward the lower end of 
the scale, although the company’s ongoing cultural 
journey was accepted as having had a positive 
impact on the company
•	Employee training & upskilling for the digital 
workplace. This topic looks at how Novartis ensures 
employees are equipped with the skills required to 
adapt to the changing demands of the workplace, 
and to succeed as digitalization transforms 
businesses around the world. Overall, internal 
stakeholders agreed the company currently invested 
significantly in training and in digital upskilling, 
however some felt this could result in an excessive 
workload being placed on employees
•	Fair working conditions: This topic examines the 
company’s fair employment practices, including 
upholding labor rights, freedom of association and 
collective bargaining, labor relations, union practices, 
and fair compensation and benefits. External 
stakeholders rated the performance of Novartis 
higher than internal stakeholders, some of whom 
argued the company could improve its record in 
terms of better balancing employees’ workloads
•	Health & safety of employees: This topic analyses 
the physical and mental health and safety of 
associates. Novartis’ performance in this area was 
seen as very robust by both internal and external 
stakeholders
Patient Health & Safety
The three topics in this cluster assess the ways in 
which Novartis ensures the safe treatment of those 
who use its medicines. They are:
•	Health education & disease prevention: This topic 
looks at efforts to increase disease prevention 
awareness and health literacy, and ensure a more 
effective use of medicines. External stakeholders 
were divided as to whether this topic should be part 
of the responsibilities of Novartis. Patient groups 
however argued that more could be achieved 
through intensified engagement with patient 
communities and associations
•	Pharmacovigilance, safety profile & quality 
of drugs: This involves examining how Novartis 
ensures that healthcare products are manufactured 
to the highest quality levels. It also looks at how 
the company decides that the efficacy and safety 
features of a medicine outweigh its risks, as well 
as the way it collects and records adverse event 
reports. Pharmacovigilance was widely seen by both 
sides as an area in which Novartis is a global leader: 
indeed, several external stakeholders argued it gave 
the company a competitive edge over its rivals
•	Prevention against counterfeits & drug use 
stewardship: This looks at the way the company 
uses its influence to fight substandard and falsified 
medicines around the world, and contributes to 
the global response to drug resistance. While the 
performance of Novartis in the area was generally 
seen as being reasonably strong, both internal and 
external stakeholders agreed it could focus more 
on combatting the disruptive impact of counterfeit 
products, particularly in developing countries

37 | GLOBAL MATERIALITY ASSESSMENT 2021 | ESG Management Office
Glossary
Glossary
Clusters: 
The materiality assessment makes use of clusters 
to regroup together similar or closely linked impacts/
dependencies. This also enables the materiality 
assessment to examine a wider range of topics, 
while keeping the information digestible.
Dependencies: 
Dependencies are forces and trends originating 
from the external environment that have the potential 
to affect Novartis operations and, ultimately, the 
company’s value to stakeholders.
ESG: 
Environmental, Social and Governance factors/topics, 
which companies like Novartis use as a basis to 
evaluate their performance on sustainability. The ESG 
concept is widely used by investors to describe the 
three types of non-financial factors that may affect 
the financial performance of a company.
Impacts: 
Also known as “externalities”, impacts are effects 
that an organization has on society, the environment, 
and/or the economy. Such effects can be intended 
or unintended by the organization, and positive or 
negative in nature.
Impact Valuation: 
Efforts aimed at measuring the company’s actual 
performance and not how it is perceived by Novartis 
stakeholders. This is notably achieved using impact 
valuation metrics, which consider benefits and costs 
to society in monetary terms and reflect how value is 
created, sustained or reduced. 
Interdependencies: 
Material topics do not exist independently: they are 
linked to one another and their position on the matrix 
should be understood accordingly. Exploring the 
interdependencies of these topics helps us identify 
the necessary system-wide approaches to put in 
place in order to drive progress on ESG topics.
Material topics: 
Topics that have a substantial likelihood of influencing 
the judgment and decisions of key stakeholder 
groups and significantly impact the overall business 
performance of Novartis.
Topics: 
While they are sometimes grouped into clusters, 
the Novartis Materiality Assessment also examines 
impacts and dependencies as individual topics. The 
basis for including individual topics within the scope 
of the Novartis Materiality Assessment is if they are 
deemed to have a substantial likelihood to influence 
the judgment and decisions of key stakeholder 
groups and/or have a significant impact on Novartis 
performance and business overall.