November 2005

Danes Author Guide to Governance

Sometime between Ivan Boesky and Bernie Ebbers, companies got tired of seeing their executives do the perp walk with carefully crafted, expensively conceived corporate logos as background. Legislators got into the act and, in the United States, the resulting Sarbanes-Oxley Act of 2002 was considered the most important piece of legislation affecting corporate governance in decades.

Fifty-some countries and governmental organizations have established or updated codes of corporate governance in the past six years. One is Denmark, whose Nørby Committee, named after its chair, had been appointed in response to perceived corporate risk-taking rather than to any scandals. Mads Øvlisen, MBA ’72, the board chairman of Novo Nordisk, was a member of that four-person advisory group, which made its final recommendations in 2001.

Unlike Sarbanes-Oxley, Nørby offers guidelines rather than laws. The Danes intend their document to be non-binding and flexible. The important thing, they say, is that a company’s governance be transparent. Øvlisen joined a somewhat larger committee to take Nørby’s recommendations to the Copenhagen Stock Exchange, which last year adopted a revised version of Nørby’s “comply or explain” principles for companies listed on the exchange.

Novo Nordisk, for one, is happy to comply, and adopted sustainability as a core principle of the company. “Sustainability is not just a corporate statement, but something we all live,” Øvlisen says. The company, which is a major supplier of insulin, is working with the World Diabetes Foundation to overcome the psychosocial barriers to diabetes management. “This will not improve our financial bottom line for many, many years,” he says, “but it gives us the opportunity to ask the right questions in our work to develop better products and services, while we at the same time are helping diabetics and health care professionals have a useful dialogue, hopefully leading to a better treatment, a better quality of life for the individual, and lower costs to society.”

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