Good corporate governance relies on two factors: a Board of Directors consisting of highly competent members, and the implementation of supportive management systems. The Novo Nordisk Way of Management is the framework for how we do business as a values-based company.

Good corporate governance -Committed to the Triple Bottom Line -Amendment of Articles of Association -Made-to-measure -Organisational development -Control and audits-In respect of Integrity

The commitment to sustainable development is anchored in the Novo Nordisk Way of Management. It weaves a connecting thread through the organisation. From Vision to action, from objectives to Balanced Scorecard targets, from Fundamentals to facilitations, and from Policies to business conduct.

Internally, as well as to external stakeholders, this governance framework defines our commitments and puts them into context. From our aspiration to defeat diabetes and to our endeavour to find the right balance between compassion and competitiveness, our Vision, the Charter and the Policies serve as guides. Frequently consulted and often quoted, these are the words with which new Novo Nordisk employees first become acquainted. We hold ourselves accountable to our core values accountable, ambitious, responsible, engaged with stakeholders, open and honest, and ready for change.

Novo Nordisk is in general in compliance with the codes of good corporate governance designated by stock exchanges inCopenhagen,New YorkandLondon, where Novo Nordisk is listed.

In response to increasing public focus on corporate governance, the US Congress adopted the Sarbanes-Oxley Act in 2002. It focuses on financial reporting, internal control, auditing and corporate governance. In 2003, the US Securities and Exchange Commission finalised a wave of detailed rulemaking under the Act. As a company listed on the New York Stock Exchange, Novo Nordisk has implemented or is in the process of implementing the necessary procedures in administrative routines, financial reporting and auditing to comply with these rules.

Novo Nordisk remains committed to the principles of good corporate governance such as transparency, accountability, openness, integrity and responsibility in our operations. For Novo Nordisks compliance with these codes, seeCorporate Governance.

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The Novo Nordisk Way of Management explicitly refers to the Triple Bottom Line social, environmental and financial responsibility as the companys underlying business principle. Explicit mention is made of the fact that Novo Nordisk subscribes tothe International Chamber of Commerces Business Charter for Sustainable Development,the United Nations Convention on Biological Diversityandthe United Nations Universal Declaration of Human Rights. Moreover, Novo Nordisk is a signatory to the United Nations Global Compact.

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In order to serve the long-term interest of the shareholders, at the Annual General Meeting in March 2004 the Board of Directors will propose an amendment to the companys Articles of Association to specify that the company will strive to conduct its activities in a financially, environmentally and socially responsible way.

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While we value the principles of good corporate governance, we also recognise that systems, procedures and policies do not in themselves guarantee performance to the highest standards, whether they are legal or ethical, global or company-specific. That is why the Novo Nordisk Way of Management has built-in follow-up methods that provide systematic and validated documentation of performance to our values-based management system.

Firstly, the Balanced Scorecard is employed as the management tool for embedding and cascading corporate goals throughout the organisation. It is well integrated into all core business processes and linked to the annual strategic planning process as well as long-term scenarios planning. The Balanced Scorecard outlines the key priorities for Novo Nordisk in a short-term perspective; targets for sustainable development are tied to the Balanced Scorecard at corporate and business unit levels.

Secondly, the annual reporting accounts for performance against targets, strategies, activities and new targets. Novo Nordisks annual reporting consists of the Annual Financial Report, the Annual Review and the Sustainability Report, all of which are approved by the Board of Directors and Executive Management. The Annual Financial Report is based on Danish GAAP with reconciliation to US GAAP; as of January 2004 the company will apply International Financial Reporting Standards (IFRS). The Sustainability Report is prepared in accordance with the Global Reporting Initiatives (GRIs) 2002 Sustainability Reporting Guidelines, the AA1000 Framework and the United Nations Global Compact. SeeAccounting for our performance.

Thirdly, facilitations, a unique set-up in the holding company, measure the companys governance performance at unit level, facilitate organisational learning and help align projects with business targets. The facilitators, a global team of people with long-standing managerial experience and expertise in the business, evaluate how well the practices and understanding of the Novo Nordisk Way of Management, including our commitment to the Triple Bottom Line, are embedded in the line. This involves review of documentation, interviews with management and employees, sometimes also external stakeholders, and analyses of relevant business processes. Hence, facilitations serve as a health check of the Triple Bottom Line approach. On average, each unit is facilitated every three to four years. Twice a year, a consolidated report is presented to Executive Management, giving a status on compliance and listing agreed action plans and recommendations.

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Organisational Audits are annual assessments, commissioned by the Board of Directors and Executive Management, of how the current and planned development of the organisation supports the achievement of short- and long-term business objectives. This process, which is conducted at senior management level, includes an assessment of Linking business and organisation and succession management, and takes a retrospective as well as a forward-looking perspective. A consolidated report is submitted to Executive Management, and as an innovation in 2003 the CEO and the chairman of the Board, respectively, act as challengers in the process prior to sign-off by the Board of Directors.

An annual self-assessment procedure has been formalised to improve the performance of the Board of Directors and Executive Management. The process evaluates whether each member of the Board and Executive Management participates actively in the Board discussions and contributes with independent judgement, and whether the environment supports open discussion at Board meetings. The Board continuously assesses, formally once a year, the performance of each executive. The chairman also conducts an annual interview with each executive.

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The Board of Directors has overall responsibility for Novo Nordisks systems of internal control. The company has an internal audit function, Group Internal Audit, which provides independent, objective assurance on the internal control environment. The function also helps Novo Nordisk accomplish its objectives by bringing a systematic, disciplined approach to the evaluation and improvement of the risk management, control and governance processes.

In order to ensure its independence from Executive Management, Group Internal Audit reports quarterly to the Board chairmanship.

In line with the current requirement for listed Danish companies, two independent auditing firms are elected by the Annual General Meeting and act in the interest of the shareholders and the public in general. The auditors report significant findings directly to the Board at Board meetings and via the audit book. For more information downloadAnnual Financial Reportas pdf file.

The independent assurance of the Sustainability Report is conducted by another auditing firm. Theirassurance statementis supplemented by aletterto the management with recommendations for improved performance.

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Business ethics is an example of how principles are applied in practice. The Novo Nordisk Way of Management spells out the standards of business conduct for employees and management: Our values are expressed in all our actions and Decency is what counts. The values specifically addressing business ethics are accountable, responsible, and open and honest. In addition, one of the eleven Fundamentals says that Every manager must establish and maintain procedures in the unit for living up to relevant laws, regulations and group commitments. Needless to say, the companys Legal Policy states that In Novo Nordisk we will conduct our business in compliance with the letter and spirit of all laws and regulations governing the activities of the company. This means that we will comply with laws and regulations in all jurisdictions.

The two independent functions, Facilitations and Group Internal Audit (GIA), systematically review operations at unit level. In the event of suspected fraudulent activities within the organisation, GIA assists Executive Management and the Board of Directors and notifies of the results.

In light of the increasing focus on business ethics in the pharmaceutical industry, we are reviewing these issues. To be able to respond better to stakeholders concerns on these issues, we have engaged Transparency International to help identify the areas that from a business ethics point of view are most critical to Novo Nordisk as a pharmaceutical company.