Statement from Chairman & CEO
Dear Johnson & Johnson Stakeholders,
2018 marked a meaningful anniversary for our Company.
Seventy-five years ago, we enshrined one of our most enduring values into Our Credo: to put the needs and wellbeing of those we serve first. By always prioritizing those we serve—something we’ve done since our founding—we’ve grown from a purveyor of surgical dressings to the largest broadly based healthcare company in the world.
At Johnson & Johnson, we believe we’re uniquely positioned to bring together science, people, technology and the ideas needed to profoundly change the trajectory of health for humanity. That scale and reach come with a huge sense of responsibility—every decision we make can have an enduring impact across the globe.
Our 2018 Health for Humanity Report is an invitation for you to experience the work we do. You’ll see how our ethos of results, transparency and accountability runs through our key focus areas: better health for the whole world, investing in our people, responsible business practices and safeguarding the environmental health of our planet. Living by these values is how we’ve helped to address some of the greatest healthcare needs in modern history while delivering long-term value for all the stakeholders we serve.
The stakes continue to get higher. A rising middle class, now in the billions around the globe, is demanding quality, accessible healthcare in unprecedented ways. Our increasingly aging population is redefining standards of care. Scientific advances and technological disruption give us the opportunity and means to constantly innovate. And the health impacts of climate change provide the urgency for more action.
At Johnson & Johnson, we know that meeting those challenges head on means addressing disease along the entire continuum of health: from prevention to interception to cure. We’re making great progress on our preventive HIV and Ebola vaccines. As a committed partner in the global fight against tuberculosis (TB), we’re delivering on our Health for Humanity 2020 Goal to treat the disease by increasing access to our multidrug-resistant TB therapy, bedaquiline.
You can also see our commitment to expanding access in our second annual Janssen U.S. Transparency Report. It details all the ways we’re working to secure and expand patient access while leading in our commitment to visible, accountable and responsible drug pricing practices in the United States. Globally, we make the same commitment to expand access and it helped land us a #3 position on the Access to Medicine Index.
We recognize that we cannot solve all the pressing healthcare challenges alone and are proud to work in close partnership with healthcare organizations around the world. In sub-Saharan Africa, for example, we’re piloting a series of collaborations to create an affordable, scalable quality care model for the treatment of severe mental illness. That same collaborative spirit informs much of our philanthropic investment. Take our historical support of workers at the front lines of healthcare. This year, we expanded that commitment by joining the Health for All alliance to ensure that 450,000 frontline healthcare workers around the world get the training they need.
However, none of these achievements would be possible without our incredible global workforce. As part of our 75th anniversary enhancement of Our Credo, we emphasized our commitment to always creating a diverse culture of respect, inclusion and belonging. And, as always, we continue our push to have one of the healthiest workforces in the world by supporting our employees with everything from best-in-class health programs to investing in their personal and professional growth.
Putting the needs of those we serve first also means protecting our shared environment and natural resources. Our Consumer business segment joined 240 other organizations in the New Plastics Economy Global Commitment to tackle the urgent environmental challenge of plastic waste. This initiative expands upon our broader organizational commitment to advance environmental sustainability in our own operations and in our supply base.
To ensure we’re always investing for the future and keeping the long-term view, we’re participating in important initiatives like the Embankment Project for Inclusive Capitalism, CECP’s Strategic Investor Initiative and the U.S. Business Roundtable. With these expert partners, we’re helping to shift the conversation in the financial markets toward a long-term view and measurement of the value to society that a business like ours creates.
Our Health for Humanity Report demonstrates how we’ve used our history of innovation to change the health and wellbeing of everyone we serve. Our unique mix of talent, know-how and values is how we’ll change the world—not just as leaders in healthcare, but also as global citizens and champions of transforming lives and communities.
In the meantime, we recognize there is always more to do, and we welcome the challenge to make sure we’re even more sustainable, innovative and responsible moving forward.
Chairman, Board of Directors
and Chief Executive Officer
Q&A with Our CFO
How does the changing healthcare landscape impact Johnson & Johnson’s priorities when it comes to environmental, social and governance practices?
Through our Priority Topics Assessment process, we continuously ensure that we are identifying and prioritizing the environmental, social and governance (ESG) issues that matter most to our stakeholders—and to our Company’s purpose to change the trajectory of health for humanity. If you look at the ESG priorities outlined in this report, they reflect and encompass many of the challenges and opportunities we face in today’s dynamic healthcare landscape, such as aging populations, the impacts of climate change on health, and the increasing importance of robotics and AI to medicine. We know that as one of the world’s largest healthcare companies, we have a unique responsibility in leading the industry forward on these matters. As always, Our Credo guides us to ensure that we are multi-faceted in determining our ESG priorities.
As the Chief Financial Officer, why do you care about sustainability?
We have long believed that continuing to improve the sustainability of our business is integral to Johnson & Johnson’s ability to achieve financial success and create long-term value for our stakeholders. As a leader and financial steward of Johnson & Johnson, one of my responsibilities is to manage risk. Managing sustainability risk is a component of our approach to overall risk management. Sustainability provides us with the opportunity to contribute to enhancing compliance and reducing operating costs, while also improving our business processes and efficiencies. Sustainability practices are embedded in our operations, resulting in innovative manufacturing processes and transformative products, which enable us to deliver environmental, societal and economic benefits.
What are Johnson & Johnson’s current sustainability priorities?
Our current key sustainability priorities are Product Quality Safety & Reliability, Ethics & Compliance, Access & Affordability, Global Public Health and Innovation, which align to the areas of focus for us as a global healthcare company. We are also currently working to review and evolve our priorities list, as the stakeholder expectations and the business environments in which we operate continue to evolve.
From the perspective of Johnson & Johnson’s CFO, there are a few sustainability priorities that are of particular importance to me: Ethics & Compliance and Innovation. These priorities are integral to the Finance organization’s efforts to create long-term value that reflect the values of Our Credo. For example, inherent in Ethics & Compliance is our commitment to pay our fair share of taxes at the local, state, federal and international levels. From this vantage point, Johnson & Johnson helps the communities in which we operate by contributing to their economic strength, stability and growth for the long term.
I’m very proud of the fact that our commitment to innovation has enabled us to pursue both our purpose and performance with equal commitment. It is Johnson & Johnson’s relentless focus on transformational innovation, science and technology that enables our strong financial performance. As a result, this financial performance enables us to sustain and exceed our investment in innovation. In fact, in 2018 we invested approximately $11 billion in research and development, not only a record level for our Company, but this also positioned us as one of the top 10 companies investing globally in innovation.
How would you describe the Johnson & Johnson approach to long-term value creation?
Managing for the long-term is a central principle for our Company and has been a powerful generator of value over our history. Our years of robust performance are indicative of the strength of our broad-based business, and reflect our relentless drive for innovation, rigorous portfolio management, purposeful execution and a disciplined capital allocation strategy, all of which are regularly reviewed with our Board of Directors.
Whether you call it “corporate social responsibility,” “ESG factors” or “long-term value creation,” the concept of creating value for our stakeholders and society at large has been a vital part of how we have done business since the Company’s inception in 1886. Our Credo is Johnson & Johnson’s original sustainability framework document, as it recognizes that strong returns to our shareholders are achievable in concert with meeting the needs of all our stakeholders reflected in the four paragraphs of Our Credo—the patients, doctors and nurses, mothers and fathers and all others who use our products and services; our employees; our communities; and our shareholders.
How are you using disclosure at Johnson & Johnson?
We believe that transparency benefits all participants in the healthcare system and we take our responsibility seriously. We are a leader in providing transparency about our commitment to profoundly advance health for humanity, as well as how we price our medicines and invest our resources. We communicate these important disclosures, and many other topics, through the Health for Humanity Report you are reading now, our annual Janssen U.S. Transparency Report, our Proxy Statement, our Annual Report and other Company SEC filings. Through these disclosures, we aim to provide a holistic view of how we create long-term value for Our Credo stakeholders, as well as our Company’s position on important topics. We look forward to feedback from our stakeholders on these issues and are always open to new ideas and ways we can enhance our disclosures or practices.