NVSEF Novartis Ag Basel Namen Akt (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM SD

 

SPECIALIZED DISCLOSURE REPORT

 

NOVARTIS AG

(Exact name of the registrant as specified in its charter)

 

Switzerland		1-15024		98-0363351
(State or other jurisdiction of		(Commission		(IRS Employer
incorporation or organization)		File Number)		Identification No.)

 

Lichtstrasse 35

4056 Basel, Switzerland

(Address of principal executive offices)

 

Karen L. Hale

Chief Legal Officer

Tel.: +41-61-324-1111

(Name and telephone number, including area code, of the

person to contact in connection with this report.)

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

x  Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2023.

 

¨  Rule 13q-1 under the Securities Exchange Act (17 CFR 240.13q-1) for the fiscal year ended __________.

 

 

Section 1. Conflict Minerals Disclosure

 

Item 1.01 Conflict Minerals Disclosure and Report

 

In accordance with Rule 13p-1 under the Securities Exchange Act of 1934, Novartis has filed this Specialized Disclosure Report (Form SD) and the associated Conflict Minerals Report.  Both reports are posted and publicly available at the Novartis corporate website: www.novartis.com.

 

Item 1.02 Exhibit

 

The Conflict Minerals Report is attached as Exhibit 1.01.

 

Section 2. Exhibits

 

Item 2.01 Exhibits

 

Exhibit No.		Description
1.01		Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

	NOVARTIS AG
	By:	/s/ Harry Kirsch
		Name: Harry Kirsch
		Title: Chief Financial Officer
	By:	/s/ Karen L. Hale
		Name: Karen L. Hale
		Title: Chief Legal Officer

 

Date: May 31, 2024

 

 

 

Exhibit 1.01

 

Conflict Minerals Report of Novartis AG

 

Overview

 

This is the Conflict Minerals Report for Novartis AG and its consolidated affiliates for calendar year 2023 in accordance with Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Section 1502”) and Rule 13p-1 under the Securities Exchange Act of 1934 (“Rule 13p-1”).  Unless the context requires otherwise, the words “we,” “our,” “us,” “Novartis,” “Company,” and similar words or phrases in this Conflict Minerals Report refer to Novartis AG and its consolidated affiliates.  We have performed a Reasonable Country of Origin Inquiry (“RCOI”) on the conflict minerals that were in our supply chain between January 1 and December 31, 2023, to determine whether these conflict minerals were sourced from the Democratic Republic of Congo or adjoining countries (the “Covered Countries”) or came from recycled or scrap sources.  The conflict minerals covered by these rules are: tin, tantalum, tungsten and gold (collectively the “Conflict Minerals”).

 

Novartis is an innovative medicines company. Our purpose is to reimagine medicine to improve and extend people’s lives. Our strategy is to focus on high-value, innovative medicines that alleviate society’s greatest disease burdens through technology leadership in research and development (“R&D”) and novel access approaches. To support our strategy, we have clear focus areas where we commit most of our time, energy and resources. These core therapeutic areas are cardiovascular, renal and metabolic; immunology; neuroscience; and oncology. We are engaged in the research, development, manufacturing, distribution, and commercialization and sale of innovative medicines, with a focus on these core therapeutic areas. Headquartered in Basel, Switzerland, we employed 76,057 full-time equivalent employees as of December 31, 2023. Our products are sold in approximately 130 countries around the world.

 

Reasonable Country of Origin Inquiry (RCOI)

 

In accordance with Section 1502 and Rule 13p-1, we performed an RCOI on Conflict Minerals that were in our supply chain between January 1 and December 31, 2023, to determine whether these Conflict Minerals were sourced from the Covered Countries or came from recycled or scrap sources.  As a result of the RCOI process, we concluded in good faith that during 2023 we had reason to believe that certain of the products that we manufactured or contracted to manufacture contained Conflict Minerals, but that we were unable to determine whether the Conflict Minerals originated in the Covered Countries or came from recycled or scrap sources.

 

Products

 

We reviewed for Conflict Minerals content all categories of materials either necessary to the production of our products or necessary to the products’ functionality.  In accordance with SEC Staff Guidance with respect to Rule 13p-1, we excluded packaging materials from this review.  Based on the review, the categories of our products that were determined to potentially include Conflict Minerals or to include metals of undeterminable content requiring additional analysis were: syringes (used as delivery mechanisms for certain pharmaceutical products); and electronics and mechanical components used in advanced laboratory automation equipment.

 

Due Diligence

 

We designed our due diligence measures to conform in all material respects with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas Third Edition (OECD 2016) (the “OECD Framework”) and related Supplements.

 

As a purchaser, we are many steps removed from the mining of the conflict minerals and do not purchase raw ore or unrefined Conflict Minerals.

 

 

Our annual due diligence activities, which are in line with the OECD Framework, are summarized below.

 

Step 1:  Establish strong company management systems

 

	·	We have a Third Party Code, which requires third parties with whom we collaborate to comply with the law, to adhere to ethical business practices, and to operate in a manner that is consistent with our values and ethical principles, including concerning human rights, labor rights, health, safety and environmental sustainability, anti-bribery, animal welfare, responsible minerals, quality, trade sanctions and management systems. Specifically with respect to Conflict Minerals, our Third Party Code requires third parties to help identify the source of Conflict Minerals in the products, components or materials supplied to Novartis (including the smelter or refiner where such Conflict Minerals were processed and the country of origin of the Conflict Minerals where possible through reasonable means); cooperate with Novartis in our due diligence process and in responding to our requests for information relating to minerals used in our products; provide, upon request, reasonable evidence of third parties’ performance of similar due diligence with respect to any of their suppliers or sub-contractors involved in the production of the materials or products supplied to Novartis or any components of those materials or products; and work with Novartis to assess opportunities for alternative sources where Conflict Minerals are identified.
	·	Our Conflict Minerals Core Team (“Core Team”) is responsible for the implementation and ongoing management of Conflict Minerals reporting activities, and the documentation and reporting of the results of the Conflict Minerals due diligence activities described in this and the next four steps.
	·	We have established an annual process to evaluate the products manufactured by us, in order to identify and assess the presence and sources of Conflict Minerals in the supply chain, as set forth in further detail in Step 2 below.
	·	The Core Team uses standardized documentation to capture key decisions, processes and procedures used in gathering information related to the use of Conflict Minerals in our products, and to the sources of any such Conflict Minerals.  We are required to retain such documentation in accordance with our corporate document retention policy.
	·	Novartis provides feedback mechanisms available to all interested parties to provide information or voice their concerns regarding our compliance with laws and regulations.

 

Step 2:  Identify and assess risks in the supply chain

 

	·	On an annual basis, we review the suppliers that provide materials used in manufacturing to identify potential sources of Conflict Minerals in our supply chain. The Core Team is responsible for determining the suppliers of materials that are necessary to the production or functionality of products that potentially contain one or more Conflict Minerals, or contain metal of undeterminable content.
	·	Suppliers of the items identified as containing or reasonably believed to contain Conflict Minerals or metals of undeterminable content are designated as “In Scope” for the RCOI.
	·	As part of this annual process, we offer Conflict Minerals training for In Scope suppliers and require them to complete a web-based survey based on the current version of the Conflict Minerals Reporting Template (“CMRT”) published by Responsible Minerals Initiative (“RMI”).
	·	To help encourage the highest level of compliance, we make multiple attempts to get responses from all In Scope suppliers, including through email and telephone calls.
	·	We review the information provided by each supplier to determine the completeness of each supplier’s responses, and note certain points of information, including whether the supplier has a policy regarding conflict minerals and whether they source any Conflict Minerals from the Covered Countries.
	·	We review aggregate supplier CMRT responses as well as company statements made by suppliers regarding the status of Conflict Minerals in their supply chain in order to summarize key findings regarding risks in the supply chain.  The Core Team meets regularly to review progress.
	·	We conduct a review of smelter/refinery information provided in the supplier surveys to determine the actual number of unique smelters/refiners identified by our responding suppliers and whether each facility has been audited by a third party or presents a “red flag” as defined by the OECD Framework.  To make the determination of each smelter/refiner’s due diligence status, we rely upon information provided by RMI.  RMI conducts an industry-standard Responsible Minerals Assurance Program (“RMAP”), in which it certifies smelters/refiners worldwide by conducting an independent audit to validate company-level management and sourcing processes for responsible mineral procurement.  RMI makes available to the public the list of smelters/refiners that it has certified as “Conformant,” which identifies smelters/refiners that are in conformance with the RMAP assessment protocols and that bear the highest level of Conflict Minerals responsible sourcing due diligence certification set by RMI.

 

 

	·	Smelters/refiners with the RMI “re-audit in progress” designation are also considered to be RMAP Conformant during the period in which this designation is assigned.
	·	Smelters/refiners that carry the RMI “Active” designation are in the process of being audited by RMI to determine whether they can be certified as Conformant.  Smelters and refiners are identified as Active in the RMAP once they have submitted a signed Agreement for the Exchange of Confidential Information (AECI), an Auditee Agreement, and a Due Diligence Checklist, but have not yet finalized the RMAP audit.
	·	A smelter or refiner is deemed by RMI as “Eligible” if it was not Conformant or Active but is listed on the CMRT Smelter Reference List, and able to undergo an RMI assessment based on the criteria in the applicable RMI standard. The status information reflected in this report is current as of May 7, 2023.
	·	Based on the process described above, the results our due diligence for 2023 were as follows:

	a.	In Scope Suppliers (all were surveyed): 68
	b.	Responses received: 52
	c.	Unique Smelters/Refiners Identified: 410
	d.	Conformant Smelters/Refiners Identified: 236
	e.	Active Smelters/Refiners Identified: 5
	f.	Eligible Smelters/Refiners Identified: 121

·

Additionally, our suppliers reported sourcing from nine smelters or refiners classified as “Unknown,” four classified as “Name Correction,” and 35 classified as “Removed.” Unknown smelters have not been part of RMAP and have no smelter CID number assigned, or smelters whose CID number (as provided by a supplier) does not appear on RMAP Conformant or Active lists. Name Corrected smelters are not Active or Conformant but may be in a transitioning to such a status. Removed smelters are no longer Conformant, Active or currently Eligible. Suppliers naming smelters or refiners with these “red flag” designations may require undergoing mitigation measures.

 

Step 3:  Design and implement a strategy to respond to identified risks

 

	·	We continue to encourage supplier conformance with the Conflict Minerals section of the Novartis Third Party Code.
	·	We have established the capability to routinely store, maintain, and retrieve the key data that was collected as part of due diligence, should it be required to demonstrate reasonable efforts for compliance.
	·	As part of our review of compliance activities, we will assess our processes in order to determine whether additional actions are required in the future.

 

Step 4:  Carry out independent third-party audit of smelter/refiner’s due diligence practices

 

·

In accordance with the OECD Framework, we monitor industry actions and the results of independent third-party audits of the due diligence performed by smelters and refiners.  Given the nature of our business, the associated costs, and the current lack of transparency in our global supply chain, we are not in a position to conduct our own audits of smelters and refiners.

 

Step 5:  Report annually on supply chain due diligence

 

·

In accordance with Section 1502 and Rule 13p-1, we annually summarize the activities and results of our due diligence with regard to Conflict Minerals in this Conflict Minerals Report, which is filed as an exhibit to our Form SD.

 

Risk Mitigation and Future Due Diligence Measures

 

We will look to improve our due diligence process by considering measures aimed at increasing Supplier responses to our RCOI in terms of accuracy, timeliness and completeness. Additionally, we may seek to develop mitigation processes and procedures to identify and address suppliers naming “red flag” smelter or refiner facilities in their supply chain.

 

 

Determination

 

Consistent with the OECD Framework, our efforts to determine the countries of origin, the facilities, and the mines or locations of origin of necessary Conflict Minerals used in the manufacture of our products consisted of the due diligence activities described above. In response to these due diligence activities, certain In Scope suppliers provided us with no information about their smelters and refiners, certain other In Scope suppliers provided only a partial list of their smelters and refiners, and certain other In Scope suppliers provided us with a complete list of their smelters and refiners.

 

Based on the information from our In Scope suppliers that provided us with names of smelters and refiners in their supply chain, we have determined the following information with respect to the facilities used to process Conflict Minerals:

 

·

There were at least 410 unique smelters used by In Scope Suppliers in 2023.

 

·

Of those identified smelters, 236 were verified as being Conformant by RMI (as of May 2024).

 

Because the information that we obtained from the In Scope suppliers was incomplete, other than as set forth above with respect to the Conflict Minerals that were either necessary to the production of our products or necessary to the products’ functionality, we were unable to fully determine the countries of origin of the Conflict Minerals or the facilities used to process them.

 

 

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