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12 12 2 0 0 4 S U S TA I N A B I L I T Y R E P O R T Visit the 2004 Sustainability Report online at www.jnj.com. We invite your comments and feedback via our website or using the comment card provided in this report. “We must be good citizens—support One Johnson & Johnson Plaza New Brunswick, New Jersey 08933 good works and charities...We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources...” Cert no. SW-COC-1340 This report is printed on paper made from 100% post-consumer waste, certified for the Forest Stewardship Council rules and manufactured with wind-generated energy. Printed by Pictorial Offset Corporation, an ISO 14001-Environmental Management Systems company. The following trademarks and trade names of Johnson & Johnson and its affiliated companies appear in this report: BAND-AID, CHARITÉ, CYPHER, DURAGESIC, MOTRIN, PROCRIT, REMICADE and TYLENOL. The following trademarks of other companies also appear in this report: HARRIS INTERACTIVE (Harris Interactive Inc.), HEALTHMEDIA (HealthMedia, Inc.), LIFEWORKS (Ceridian Corp.), WEIGHT WATCHERS (Weight Watchers International, Inc.) and WORKPLACE RESPONSE (Screening for Mental Health Inc.). © Johnson & Johnson Services, Inc. 2005 Living Our Credo The values that drive our business strategy of sustainable, long-term growth and leadership C O N T E N T S GRI Content I N D E X SECTION ONE Strategic Approach to Sustainability at Johnson & Johnson – Living Our Credo Chairman’s Message Summary of Key Indicators Sustainability Organization and Management System Our Credo SECTION TWO 12 Responsibility to Customers 1 2 2 7 8 SECTION THREE Responsibility to Employees Safety Health Employment Policies and Practices 10 16 21 SECTION FOUR Responsibility to Communities Environment Society 24 34 SECTION FIVE Living Our Credo Responsibility to Stockholders Financial Performance Corporate Governance Research and Development 38 38 39 Index 41 This report was prepared based on the Global Reporting Initiative’s (GRI) 2002 Sustainability Reporting Guidelines. The mission of GRI is to promote international harmonization in the reporting of relevant and credible corporate economic, environmental and social performance information to enhance responsible decision-making. GRI pursues this mission through a multi-stakeholder process of open dialogue and collaboration in the design and implementation of widely applicable sustainability reporting guidelines. GRI has not verified the contents of this report, nor does it take a position on the reliability of information reported herein. For further information about GRI, please visit www.globalreporting.org. The cover features Dang Huong Giang, a first grade student in Vietnam, pictured wearing a safety helmet donated by Johnson & Johnson (see related story beginning on page 13). Photography by Trinh My Anh of the Asia Injury Prevention Foundation. For additional information on Johnson & Johnson programs and performance, use the reply card enclosed in this report or contact: Brian K. Boyd, Vice President, Worldwide Environmental Affairs Tina Lucchetti, Manager, Investor Relations Johnson & Johnson One Johnson & Johnson Plaza New Brunswick, NJ 08933 Website: www.jnj.com GRI TOPICS REFERENCE* Accident rates LA7 Accidental releases EN13 Association memberships 3.15 Awards and recognition SO4 8, Biodiversity EN7 Business conduct policies SO2,3.7 Child labor HR6 Community outreach SO1 Compliance Conservation EN16 EN27 PAGES 2, 12-14, 15 2, 25, 26, 33 35, 41 15, 27, 31, 39 26-27, 32, 37 39 4, 23 2, 13-14, 25, 26-28, 35-36 2, 3-5, 23, 25, 26 2, 15, 25, 26-27, 37 19, 34-37 Contributions EC10 Corporate governance 3.1, 3.2, 3.6 Diversity LA10,11 Employee health and wellness LA12 Employment policies HR 4,5,6,9 Energy use 3.19, EN3 Environmental costs EN35 Ergonomics LA7,12 External certifications 3.20 External manufacturers 3.16, EN33 Facility assessment 3.19 Fleet safety 3.19, LA7 Goals 3.19 38-39 4, 22-23 10, 16-22 21-23 2, 27, 28-29 32 11 2, 15, 25 4-5 4 2, 12-13 2-3, 5, 11, 13, 17, 24, 25, 27, 28, 32, 33 Greenhouse gases 2.16, EN8 2, 27, 28-29, 33 HIV/AIDS LA8 19, 36, 39-40 ISO 14001 3.20 2, 25 Laboratory safety LA7 11-12 Lost work days LA7 2, 15 Materials EN1 2, 27, 30, 33 Net sales EC1 38 Nonproduct output EN10,11,12 2, 27, 31-32, 33 OHSAS 18001 3.20 15 Organization 3.4, 3.6 3 Our Credo 3.7 7 Packaging EN1,14 2, 27, 30, 33 Process Excellence 3.19 38 Products 2.2, 3.13, 3.16, EN14 8, 9, 25 Renewable energy EN17 28-29 Report coverage 2.11 - 2.14 2, 33 Research policies 3.14, 3.16 39-40 Standards 3.19 3-4 Strategic vision 1.1 1, 7 Supply chain 3.16, EN33, HR3 4-5 Toxic chemical releases EN10, 11, 12 2, 27, 31, 33 Voluntary initiatives 3.14 15, 29, 32 Waste EN11 2, 27, 30-31, 33 Water use EN5 2, 27, 29, 33 *GRI refers to the voluntary reporting guidelines of the Global Reporting Initiative, available at www.globalreporting.org. Organizational Partnerships As a good corporate citizen, we work with organizations all over the world to advance the concepts of sustainable growth, protect natural resources and enhance worker health and safety. Members of our senior management team also serve on the boards of major conservation and health organizations. American College of Occupational and Environmental Medicine www.acoem.org Business for Social Responsibility www.bsr.org The Conservation Fund www.conservationfund.org Global Environmental Management Initiative www.gemi.org Harvard Medical School, Center for Health and the Global Environment www.med.harvard.edu/chge Healthy People 2010 www.health.gov/healthypeople National Safety Council www.nsc.org The Nature Conservancy www.nature.org New Jersey State Safety Council www.njsafety.org Partnership for Quality Medical Donations www.pqmd.org Prevent Blindness Tri-State www.preventblindnessct.org Student Conservation Association www.thesca.org Trust for Public Land www.tpl.org US-EU Cooperation on Workplace Safety and Health www.useuosh.org The Wharton School of the University of Pennsylvania, Risk Management and Decision Processes Center http://grace.wharton.upenn.edu/risk The Wilderness Society www.wilderness.org World Business Council for Sustainable Development www.wbcsd.ch World Environment Center www.wec.org World Resources Institute www.wri.org World Wildlife Fund www.panda.org 41 Section 1 S T R AT E G I C A P P R O A C H T O S U S T A I N A B I L I T Y Living Our Credo Chairman’s Message I am pleased to present the 2004 Sustainability Report for Johnson & Johnson, which describes our efforts – through our vision, programs and performance – to deliver on our commitment to sustainable growth. Johnson & Johnson today is the world’s most comprehensive and broadly based company in human health care. Nothing has served us better in achieving our record of long-term performance than Our Credo. For more than 60 years, we have followed this simple document, which states that our shareholders will prosper if we serve our patients and customers, our employees, the communities in which we live and work, and the global community. Our Credo articulates the values that drive our business strategy of sustainable, long-term growth and leadership. In essence, it is our sustainability strategy: our Company’s commitment to meet our responsibilities to people, communities and the environment. We have organized this year’s report to align directly with the Credo and more clearly demonstrate the relationship between it and our efforts to support sustainable growth. This report shows the character of Johnson & Johnson, built on the strength, quality and diversity of our people. Through the leadership of our employees, we are pursuing a core set of strategic principles. We are committed to remain broadly based in human health care, discovering, developing and selling health care products in more than 175 countries around the world. We manage our business for the long term, by advancing science and technology to keep us at the forefront of health care. Under our form of decentralized management, we foster strong, skilled and diverse business leaders at every level of the Company, making decisions locally that enable us to better serve patients and customers. And we operate on a foundation of ethical principles, under the guidance of Our Credo. In this report, you can learn about some of the products we manufacture and sell that improve the lives of millions of people, our leadership in providing a healthy and safe workplace, our partnerships to improve local communities, our efforts to protect the natural environment, and our commitment to ethical and responsible business practices. One area of focus that remains critical for us is William C. Weldon Chairman of the Board and Chief Executive Officer reducing carbon dioxide (CO2) emissions. It is clear that continuing with “business as usual” is simply unacceptable in addressing the risks associated with climate change. Through adoption of our Climate Friendly Energy Policy in 2003, Johnson & Johnson companies are implementing state-of-the-art technologies to improve energy efficiency and harness renewable resources such as solar and wind power. These projects reduce our impact on the environment and improve the security of our energy supplies while lowering the cost of doing business. Our responsibility to the environment, to communities and to future generations requires us to build on these successes and continue working aggressively toward our CO2 reduction goals. I’m proud of the efforts of Johnson & Johnson associates around the world to establish this corporation as a leader in addressing climate change and other sustainable growth issues. We believe that growth and leadership will enable us to better address our responsibilities to our many stakeholders – from those who use our products to our employees, neighbors and shareholders – today and in the future. We look forward to continuing to work with others in achieving this Credo-based vision. William C. Weldon Chairman of the Board and Chief Executive Officer 1 S U M M A R Y O F K E Y I N D I C A T O R S We define sustainable growth as This table summarizes our 2004 performance in a number of areas, as well as our progress toward meeting stated goals. We collect and report data from our operating companies worldwide; external manufacturers are not included in these data. More information on our EHS performance is available later in this report. Use the index at the end of the document to locate particular topics of interest. LOST WORKDAY CASE RATE 0.05 lost workday cases per 100 employees in 2004 58% reduction 2000-2004 SEVERITY RATE 1.52 lost work days per 100 employees in 2004 45% reduction 2000-2004 SERIOUS INJURY/ILLNESS RATE 0.03 serious injuries/illnesses per 100 employees in 2004 25% reduction 2000-2004 FLEET RATE 5.19 accidents per million miles driven in 2004 24% reduction 2000-2004 FIRES 32 fires in 2004 20% reduction 2000-2004 ISO 14001 CERTIFICATION GOAL: 100% of facilities receive third-party certification ACTUAL: 96% of facilities third-party certified by year-end 2004 REVIEW OF NEW PRODUCTS, PROCESSES AND PACKAGING GOAL: 100% of new products, processes and packaging reviewed for environmental impact ACTUAL: 99% reviewed in 2004 REGULATORY COMPLIANCE GOAL: Zero noncompliance events and accidental releases ACTUAL: 15 Notices of Violation (NOVs) 5 penalties paid, totaling $30,800 23 noncompliance events identified from 275 agency inspections 186 self-reported permit noncompliances CONSERVATION & COMMUNITY OUTREACH GOAL: 100% of facilities implement site-specific conservation and outreach plans ACTUAL: 92% implemented such plans as of year-end 2004 GOAL: 100% of high exposure facilities initiate and maintain community forums ACTUAL: 76% conducted community forums in 2004 ENERGY USE – CO2 EMISSIONS GOAL: Absolute reduction in CO2 emissions of 4% from 1990 to 2005 and 7% from 1990 to 2010 ACTUAL: 3.1% decrease in absolute CO2 emissions from 1990 to 2004 GOAL: 100% implementation of Energy Best Practices by year-end 2005 ACTUAL: 89% implementation by year-end 2004 WATER USE GOAL: 10% cumulative avoidance 2001-2005 ACTUAL: 12.1% cumulative avoidance 2001-2004 Sustainability Organization and Management System Organization I n 2004, the Public Policy Advisory Committee of the Board of Directors was the primary link to the Board for review of the Company’s policies, programs and practices on public health issues regarding the health and safety of employees and the environment. The committee advised and made recommendations to the Board on these issues, providing a direct avenue for the Board to consider critical aspects of sustainability. The Worldwide Environmental Steering Committee reviews the Company’s overall environmental performance by business segment twice per year. This committee is chaired by Robert J. Darretta, our Vice Chairman and Chief Financial Officer, and includes senior management representatives from Corporate Law, Government Affairs and Worldwide Operating Group Management. The Worldwide Health & Safety Leadership Team is chaired by Michael J. Dormer, Worldwide Chairman, Medical Devices and a member of the Johnson & Johnson Executive Committee. The team meets twice a year and focuses primarily on risk reduction and accident prevention in the areas of machine safety and ergonomics. Team members include senior management from across the three business segments (Pharmaceutical, Consumer, and Medical Devices and Diagnostics), plus health and safety global management. RAW MATERIAL USE Setting Sustainability Goals PACKAGING USE A GOAL: 5% cumulative avoidance 2001-2005 ACTUAL: 6.9% cumulative avoidance 2001-2004 GOAL: 10% cumulative avoidance 2001-2005 ACTUAL: 6.7% cumulative avoidance 2001-2004 NONHAZARDOUS NONPRODUCT OUTPUT (NPO) GOAL: 10% cumulative avoidance 2001-2005 ACTUAL: 12.5% cumulative avoidance 2001-2004 HAZARDOUS NPO GOAL: 5% cumulative avoidance 2001-2005 ACTUAL: 27% cumulative avoidance 2001-2004 TOXIC NPO GOAL: 5% cumulative avoidance 2001-2005 ACTUAL: 21% cumulative avoidance 2001-2004 2 achieving economic vitality while promoting social equity and environmental protection. crucial component of our leadership approach is setting goals and publicly reporting on our progress. The Johnson & Johnson Next Generation Goals are scheduled for completion in 2005. In order to develop a new set of sustainability goals for the Company, we began a comprehensive process in 2003 with significant involvement of internal and external stakeholders. Organizational Structure and Responsibilities Public Policy Advisory Committee Board of Directors Global Sustainability Organization Office of the Chairman Worldwide Health & Safety Leadership Team Executive Committee Worldwide Environmental Steering Committee Technical Resources & Compliance Human Resources Worldwide Environmental Affairs Energy Management Equal Opportunity Corporate Contributions & Community Relations Worldwide Health & Safety Corporate Medical Global Health Services We engaged in dialogue with representatives of nongovernmental organizations, industry, socially responsible institutional investors, academia and governments in the United States and Europe. These conversations provided valuable insights on stakeholder expectations of our industry, emerging issues facing private enterprise, and potential leadership goals for Johnson & Johnson. In addition, we examined the goals of highly rated companies both within and outside the health care industry, especially those that received outstanding ratings from third parties. We used feedback from interviews with more than a hundred managers across six Johnson & Johnson companies on a parallel project involving our Company values. Building upon what we learned through this process, we are working with representatives from Johnson & Johnson companies worldwide to draft our Healthy Planet 2010 goals. We will continue to refine and test these goals to ensure that they will keep us moving in the right direction, toward a more sustain- The chart identifies the reporting relationships among the various departments relevant to this report, but is not meant to show the entire corporate organization. able future for the environment, our employees and the local communities in which we operate. The goals will be finalized in 2005, and we will begin tracking data aligned with these goals in 2006. Standards and Assessments J ohnson & Johnson has established a comprehensive set of environmental, health and safety (EHS) standards for our operating companies and facilities. Corporate staff regularly review and update the practices with the aim of maintaining a forward-looking stance and challenging ourselves to do better. The corporation’s Management Awareness and Action Review System (MAARS) is our global assurance process for EHS, going beyond regulatory requirements and reducing risk. It provides Johnson & Johnson companies with a proactive approach and a set of tools to assess EHS performance and drive continuous improvement. 3 Our EHS Management System: Beyond Compliance E ach of our companies and facilities is expected to go Beyond Compliance, striving to set the standard and be a leader among our peer companies rather than simply meeting minimum requirements. To conform to our definition of “Beyond Compliance,” each Johnson & Johnson company will: meet all Johnson & Johnson standards and regulatory requirements ● optimize the design of products, processes and facilities by incorporating quality, safety, environmental and engineering standards ● proactively partner with regulators and anticipate changes in regulations, standards and public expectations ● achieve operational excellence ● We firmly believe that our Beyond Compliance culture creates competitive advantage for Johnson & Johnson. Sustainability Beyond the Fence Line: Working with Suppliers We recognize that the EHS impacts that result from the operations of those who supply goods and services to Johnson & Johnson – our global supply chain – are greater in magnitude than those resulting from Johnson & Johnson operations alone. With more than $20 billion in annual spending on materials, goods and services, we have a tremendous opportunity to improve conditions around the world. By leveraging our supply chain relationships and helping to bring about improvements in the way our suppliers operate, we can have a greater overall impact than we can by focusing solely on our own operational performance. Our footprint and responsibility extend far beyond our facility borders. Supply chain impacts are identified as a key issue with rising expectations for Johnson & Johnson and others in our industry and across the private sector. We separate our supply chain into two categories: ● suppliers of materials, good and services ● external manufacturers (EMs) – a subset of suppliers consisting of firms that either provide active pharmaceutical ingredients to our manufacturing facilities or produce finished Johnson & Johnson products Each research and development (R&D) and manufacturing facility conducts a MAARS self-assessment annually and develops a Management Action Plan (MAP) based on the self-assessment results. The assessments measure adherence to Johnson & Johnson global standards and management system requirements, as well as applicable laws and regulations, covering the full suite of EHS issues. The operating company’s business leader periodically reviews each MAP, demonstrating senior-level awareness of the issues and commitment to corrective actions. Corporate staff reviews the plans and conducts facility joint assessments once every three years at a minimum to ensure progress toward “Beyond Compliance.” We regularly share information on our proactive EHS programs with our suppliers and communicate to them our expectations for strict regulatory compliance at a minimum. Many Johnson & Johnson operating companies have cultivated strong relationships with key suppliers, a practice that brings strategic business benefits. Having this type of supplier relationship also enables us to work with those suppliers to design more sustainable products and processes within their facilities. For external manufacturers, we have established a more formal evaluation process. Our policy requires that EMs working with Johnson & Johnson agree, at a minimum, to comply with all applicable EHS regulatory requirements, to provide Johnson & Johnson with access to information on their compliance status, and to follow our Policy on the Employment of Young Persons. This is part of our standard language used in contracts and For more information on supplier policies at Johnson & Johnson, including our Supplier Diversity Program, visit our website at www.jnj.com/supplier_resources. 4 Living Our Credo purchase agreements, and noncompliance is grounds for contract termination. In some parts of the world, compliance with local laws or regulations may not thoroughly address EHS issues. In those instances, we require that a supplier adhere to some basic EHS standards, such as making personal protective equipment available to workers, having a written emergency response plan, and preventing adverse environmental impacts due to air or water discharges. On the basis of periodic site visits to EMs, we assign ratings of acceptable, marginal or unacceptable. Johnson & Johnson companies cannot use any new EM rated unacceptable, and if an existing EM receives an unacceptable rating, we ask them to develop a corrective action plan to improve their performance. Facilities rated marginal receive site visits annually and also are required to prepare and implement corrective action plans. Facilities rated acceptable receive site visits once every three years. If an EM obtains third-party certification for its environmental management systems (e.g., ISO 14001) or safety management systems (e.g., OHSAS 18001), we accept that certification as evidence of an acceptable rating in that area. As of year-end 2004, approximately 350 EMs out of 1,300 have been visited to verify compliance. Our goal is to complete on-site reviews of all EM sites by the end of 2005. EHS Benefits through Supplier Partnerships W e participate in collaborative projects to improve EHS management of supply chain issues as well as raise the level of EHS performance at our suppliers’ facilities. Two programs in which we took part during 2004 are described below: ● Johnson & Johnson facilities in Puerto Rico are participating in a pilot program of the Green Suppliers Network (GSN), an initiative sponsored by the US Environmental Protection Agency. GSN seeks to work with all levels of the manufacturing supply chain to achieve environmental and economic benefits by improving performance, minimizing waste generation and removing institutional roadblocks. The network encompasses resources across the United States for technical assistance to manufacturers. Access to such resources can help suppliers continuously improve their products and processes, increase energy efficiency and reduce waste. ● Johnson & Johnson, together with the World Environment Center (WEC) and the US Agency SAFEGUARDING OUR SUPPLY CHAIN BUSINESS CONTINUITY PLANNING THROUGH for International Development, successfully implemented pilot projects in Mexico and Brazil Business interruptions caused by natural or man-made to promote the adoption of cleaner production catastrophic events can have far-reaching effects on by small to medium-sized supplier manufacturing our customers, not to mention impacts to communities, sites. During 2003, Janssen-Cilag S.A. de C.V. in employees and investors. Johnson & Johnson has Mexico initiated a series of workshops with initiated a rigorous worldwide campaign to ensure that more than 12 of its suppliers to present cleaner business continuity plans are in place and fully integrated production and lean assessment methods. In 2004, into the overall strategic planning process at the Johnson & Johnson in Brazil invited 15 suppliers to company level. The goal is the uninterrupted flow of its campus in São José dos Campos to begin their products and services to our customers. Our Business training in cleaner production. As a result of such Continuity Planning (BCP) team has developed a training, together with on-site assessment visits by standardized process for facilities to use in assessing WEC and its consultant, the participating suppliers their vulnerabilities and developing their plans to have been able to identify, prioritize and implement restore all business operations in the event of a disaster. dozens of projects that reduce waste, improve The BCP team continues to conduct workshops in all safety and lower costs. After the suppliers are geographic regions where we operate. Each facility trained in the assessment methodology, they are tests and refines its business continuity plans through using the techniques to find additional opportunities table-top exercises. Successful execution of its table-top for waste and cost reduction at their sites. exercise is required on an annual basis. 5 Living Our Credo 6 Our Credo We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens — support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. 7 Section 2 R E S P O N S I B I L I T Y T O C U S T O M E R S “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality…” FROM OUR CREDO Corporate Profile Johnson & Johnson, through its operating companies, is the world’s most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services for the consumer, pharmaceutical and medical devices and diagnostics markets. Johnson & Johnson employs 109,900 people in 57 countries around the world. Our 200 operating companies produce thousands of products spanning our three business segments: CONSUMER – Includes a variety of products for skin and hair care, sanitary protection, wound care, oral care and baby care. PHARMACEUTICAL – Develops products in the following therapeutic areas: anti-fungal, anti-infective, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, psychotropic (central nervous system) and urology. MEDICAL DEVICES AND DIAGNOSTICS – Product lines include surgical implants, instruments, wound closure devices, orthopaedic products for joint repair and replacement and for correcting spinal deformities; contact lenses; clinical chemistry systems; medical devices, including circulatory disease management products; and diagnostics for identification of diseases. Our customers include individual consumers as well as medical professionals, doctors’ offices, hospitals, clinics and other health care facilities. Each business within the Johnson & Johnson Family of Companies has a high degree of independence. Our decentralized management philosophy seeks to foster growth and innovation. Corporate functions – such as health and safety, environmental affairs and engineering – provide governance, standards, guidance and support to our operating facilities around the world. 8 AWARDS & RECOGNITION ● Johnson & Johnson was named #9 on Fortune’s 2005 Most Admired Companies list and ranked as the number one company in the annual survey’s Pharmaceuticals category. ● An annual reputation poll from Harris Interactive® and The Reputation Institute for 2004 cited Johnson & Johnson for having the best corporate reputation in America for the sixth consecutive year, since the inception of the survey. Living Our Credo Our Products: Contributing to Healthier Lives W hether it’s analgesics or baby care, endoscopic surgery or interventional cardiology, oral care or wound care, Johnson & Johnson companies make products that help people live longer and stay healthier. Highlighted below are just a few of the thousands of products our customers rely on to improve the quality of their daily lives. ● ● ● The CHARITÉ Artificial Disc represents a breakthrough in non-fusion technology for the spine, offering an innovative surgical option to physicians for treating degenerative disc disease and related spinal conditions. In 2003, DePuy Spine, Inc. acquired the rights to this technology, which has been used in Europe since the mid-1980s. In US clinical trials comparing artificial disc replacement to spinal fusion surgery, CHARITÉ Artificial Disc patients maintained or improved their range of motion, experienced pain relief more quickly, had a speedier recovery and were more satisfied with the procedure. Another innovative medical device that has helped many thousands of patients is the CYPHER Sirolimus-eluting Coronary Stent, developed and manufactured by Cordis Corporation. Used in the treatment of coronary artery disease, the CYPHER Stent is designed to prevent the excessive growth of coronary tissue that can follow stent placement procedures and which is a leading cause of recurring blockage in the arteries. The CYPHER Stent is coated with a polymer that slowly releases Sirolimus – a substance that prevents such overgrowth of coronary tissue. REMICADE (infliximab) is an innovative treatment that works with the body’s immune system to help treat rheumatoid arthritis and Crohn’s disease. This medication, discovered and manufactured by Centocor, Inc., blocks the immune system’s overproduction of the protein TNF-alpha, which is an underlying cause of these diseases. REMICADE ● relieves painful symptoms associated with rheumatoid arthritis and Crohn’s disease and may help prevent progressive joint damage. Johnson & Johnson companies produce several prescription and nonprescription medicines to relieve pain and reduce fevers. McNeil Consumer & Specialty Pharmaceuticals manufactures TYLENOL (acetaminophen) and MOTRIN (ibuprofen) analgesics, which have helped millions of patients and are among the most highly recognized drug brands in the world. More hospitals use TYLENOL for the relief of minor aches and pains than any other product. 9 Section 3 R E S P O N S I B I L I T Y T O E M P L O Y E E S “We are responsible to our employees, the men and women who work with us throughout the world…” FROM OUR CREDO Safety Johnson & Johnson strives for an injury-free workplace in all of our global operations. We recently integrated our employee health and wellness function with our worldwide safety organization, allowing us to address employee health and safety in a more comprehensive manner and providing opportunities to extend the geographic scope of our health services support. We have developed a new vision statement to better reflect the Company’s responsibility to employees. Johnson & Johnson Health & Safety Vision W e are committed to making Johnson & Johnson the world leader in health and safety by achieving healthy lifestyles and injury-free workplaces. We affirm that: ● We hold health and safety among our highest values. ● Health and safety are everyone’s responsibility. ● All accidents and injuries are preventable. ● All employees understand the value of active, healthy lifestyles. ● Health and safety metrics are key indicators of organizational excellence. ● Attaining healthy and safe lifestyles with our employees and their families creates a competitive advantage. We must consider health and safety in every decision we make and in every activity we perform. We care about the health and safety of our fellow employees, their families, their communities, our customers, 10 contractors and visitors. Worldwide Computer Ergonomics Strategy “ approach to our employees. We are going beyond work-related injuries and illness. T he largest percentage of Johnson & Johnson’s recorded injuries is ergonomics-related: repetitive strains and overexertions. Before improvements can be made, work environments and tasks must undergo thorough risk assessments. In 2002, Johnson & Johnson initiated a Global Ergonomics Strategy for identifying ergonomics risk in manufacturing settings and developing mitigation plans to reduce it to the lowest possible level. As a result of leadership by operations management, aggressive plans are in place to mitigate ergonomics high-risk tasks from manufacturing areas by year-end 2008. We have now expanded this risk reduction effort to administrative areas, with particular emphasis on ergonomics risk associated with computer use. A team of ergonomics experts and Johnson & Johnson employees has developed a standardized assessment tool and a strategy to address computer ergonomics risks in all areas of Johnson & Johnson (administrative, sales, laboratory, manufacturing and warehouses). The Computer Workstation Ergonomics Job Analyzer tool was created and translated into 18 languages. The tool, in conjunction with the global strategy, will identify employees working on high-risk computer tasks and assist Johnson & Johnson companies in mitigating risks to its employees. The strategy requires that all Johnson & Johnson employees answer a seven-question survey to immediately identify those with potential computer ergonomics risk. Those determined to be at elevated risk receive additional evaluation and recommendations for ergonomics improvements. An intranet site was created allowing all Johnson & Johnson employees to answer the survey in their local language and providing facility safety contacts with a method for managing computer ergonomics programs at their locations. The intranet site also enables the facility contacts to document assessments and mitigation efforts. The website was deployed globally in September 2004. By year-end, 18,000 employees had completed the survey. Our goal is to have all employees complete the survey by September 2005 and to mitigate all identified computer ergonomics risk by mid-2006. The Computer Ergonomics Leadership Team, under the direction of JoAnn Heffernan Heisen, Chief Information Officer, Executive Committee member and Global Champion for Our vision now addresses a holistic The focus now is on total health and safety, whether ” on or off the job. — Ather Williams, Jr., Vice President Worldwide Health & Safety the Computer Ergonomics Strategy, will drive the completion of the survey so as to prevent future injuries and help achieve our vision of having the healthiest employees in the safest workplaces. Safe Science T he Safe Science initiative, developed in 2003, continued to spread its mission throughout Johnson & Johnson’s pharmaceutical R&D sites to “provide an environment that is uninterrupted by injury, incident or work-related illness.” Safe Science has been officially launched in pharmaceutical R&D facilities around the globe, often with major kickoff events. Through its emphasis on safe laboratory conditions, one of the most valuable outputs of Safe Science is the implementation of a comprehensive EHS inspection process. Pharmaceutical R&D sites are situated all over the globe, and in the past, each had its own inspection process. As part of Safe Science, we have deployed a single, uniform lab inspection checklist process. If a deficiency is found at one site, it will be corrected and then communicated to other companies and sites, 11 Section 3 RESPONSIBILITY TO E M P L O Y E E S which now have the same tools available to prevent recurrence. In a corporation as decentralized as Johnson & Johnson, this is a significant achievement. The principles of Safe Science have expanded to facility design, including standardized designs, guidelines and procedures for building R&D facilities. Safe Decisions for Life B y the end of 2004, 98 percent of Johnson & Johnson sites had participated in the Safe Decisions for Life campaign. This awareness-building initiative focused on hand safety and encouraged Johnson & Johnson employees to apply safety practices at work and at home. Universally, people are at risk for hand injuries, including serious hand injuries such as amputations, fractures and lacerations. Around the corporation and the globe, responses to the Safe Decisions for Life campaign were very favorable. Results show that the campaign yielded more than just increased awareness. In 2003, hand-related incidents accounted for 18 percent of our total lost workday and serious injury cases (17 out of 96); this proportion decreased to only 14 percent in 2004 (12 incidents). A key reason for the success was senior management action. Sponsored by Michael J. Dormer, Worldwide Chairman, Medical Devices and Executive Committee member, the campaign launch involved active participation by senior managers. Our companies continued to deliver hand safety messages throughout the year, using materials provided in the campaign tool kit. We distributed a video in the third quarter of the year to thank each site for participating, and to introduce the next Safe Decisions for Life campaign: Fall Prevention. Slips, trips and falls accounted for 17 of 42 total serious injury cases at Johnson & Johnson companies in 2004 (40 percent). All of these injuries were fractures, with half occurring in manufacturing, 40 percent in our fleet population (sales and service representatives), 5 percent in administration and 5 percent in labs. We believe this area presents our greatest opportunity for improvement in 2005, because regardless of one’s job in any facility, in any location, all employees are exposed to slip, trip and fall hazards. As we expand our focus to the whole person, home safety is also an important target given the fact that 85 percent of all falls take place 12 at home. The risk of falling, as we age, becomes a very significant threat to our health and well-being. The process for launching the Safe Decisions for Life fall prevention campaign will be modeled after that used for hand safety. Senior managers will be involved at each launch event, and materials (posters, videos, presentations, self-assessment) will be available to increase behavioral awareness in seven areas: Watch Your Step! (Surfaces) ● Height Can Hurt! (Heights) ● Health Helps! (Personal condition) ● Don’t Do It! (Inappropriate behaviors) ● Wear the Right Shoes! (Importance of appropriate footwear) ● Hold On! (Using support when necessary) ● Fix it! (Reporting and remediating hazards) ● We will continue using the Safe Decisions for Life campaign to stress an individual’s responsibility in making safe decisions at work and at home. SAFE Fleet J ohnson & Johnson’s fleet safety program, SAFE Fleet, is aimed at employees who drive as a regular part of their job duties. It has been an integral part of the Johnson & Johnson Family of Companies for 10 years. Its longevity is significant given the typical short tenure of corporate fleet safety programs. What is especially meaningful about SAFE Fleet is that it continues to reduce vehicle-related accidents — despite the growth in numbers of company vehicles worldwide. At the inception of SAFE Fleet, our accident per million mile (APMM) rate was not high in the context of other companies in our industry. But as with other Johnson & Johnson performance indicators, we sought continuous improvement. Over the past 10 years, Johnson & Johnson’s SAFE Fleet has trained 40,000 people around the globe in behind-the-wheel We have achieved a 40 percent reduction in APMM since 1994, to a 2004 level of 5.19. Our goal is to drive the APMM rate to 3.0 by 2009. Worldwide SAFE Fleet Results 1995-2004 Accidents per million miles driven 8.76 8.45 8.77 7.70 7.18 Helmets for Kids 6.85 5.98 5.74 5.52 5.19 GOAL 3.00 95 96 97 98 99 00 01 02 03 04 09 Size of Worldwide Fleet 1995-2004 J ohnson & Johnson’s Asia Pacific region began a community safety effort just for children by becoming the National Sponsor of the Helmets for Kids program in Vietnam. Motorbikes are the main mode of transportation in the region, and few drivers or passengers wear helmets — including children who are driven to school. The program was launched in April as part of the World Health Organization’s (WHO) World Health Number of vehicles in thousands 32.0 34.2 34.5 28.6 25.2 25.1 21.7 14.3 16.5 16.6 “E very student in my school has a very lovely helmet, a gift from Johnson & Johnson, our sponsor. For me, my helmet is not just a helmet, but also a close friend 95 96 97 98 99 00 01 02 03 04 on the road. One time, I was on my way to pick up my mom, who was selling things driving skills. Employees and their family members have participated in on-line driving safety awareness interactions. The SAFE Fleet program has prevented an estimated 6,700 accidents, 800 injuries and 13,500 days away from work. A key success factor of SAFE Fleet is ownership at the local company level. Each Johnson & Johnson company invests in its drivers’ safety by participating in SAFE Fleet. This financial involvement by those with bottom-line responsibility translates to greater integration of fleet safety into the sales process. SAFE Fleet succeeds because it is not a safety program about sales, but a sales program about safety. As a result, in 2004: in Hao Nam market. Approaching the crossroad, I slowed down my bike and waved to signal for a right turn when suddenly I saw a blue bike running toward me from the other side of the road. It was rather dark and the traffic was heavy. I was so scared then and my little hands could not control the bike. I fell off onto the pavement. The bike fell upon my legs while my arms hit the pavement surface and my head hit a rubbish bin. I thought my head must have been terribly hurt, but it was just a bit shocked. My helmet ‘friend’ suffered ” the most – he had a scar on his head from then on. — 11-year-old girl, Cat Linh Primary School, Hanoi, Vietnam Company presidents include fleet safety as part of their regular communications. ● Fleet safety is on the agenda of national sales meetings. ● People at all levels in the field talk openly about safety as a core value. ● Safety results are part of performance reviews. ● Companies budget hundreds of dollars per associate to ensure they — and their driving family members — are skilled, aware, alert drivers. ● 13 Section 3 RESPONSIBILITY TO E M P L O Y E E S Day 2004 with the global theme of “Road Safety is No Accident.” SAFE Fleet Asia Pacific (part of Johnson & Johnson’s global fleet safety initiative) and Johnson & Johnson Vietnam, in collaboration with Asia Injury Prevention Foundation, distributed protective motorcycle helmets to 1,600 schoolchildren in Hanoi. By year-end, Johnson & Johnson provided more than 6,000 helmets to schools in four cities. Stefan Phang, SAFE Fleet Asia Pacific Regional Manager, who spearheaded the project, has received thank you notes from grateful parents who could not otherwise have afforded to buy a safety-marked helmet for their child. He knows that these helmets have saved at least five children from serious head injuries due to motorbike accidents. Johnson & Johnson plans to extend the program across a larger Asia Pacific region, and a larger audience, in 2005. Recognizing Safety Excellence A wards of Excellence is Johnson & Johnson’s internal awards program recognizing safety achievement. As part of our worldwide efforts to continually drive down injury and illness rates, we placed new emphasis on the awards program this year, providing recognition to those facilities that have done well and providing an added incentive for facilities to improve. Companies assess themselves against specific safety criteria (e.g., implementation of corrective actions; deployment of behavior-based safety programs; and reaching targets on ergonomics, industrial hygiene, machine safety and fleet safety dashboards). For 2004, 29 companies obtained Merit level recognition (bronze medal) and 6 others obtained Achievement level (silver medal). All still aspire to the Excellence level (gold medal), which indicates 100 percent compliance and meeting targets on all safety dashboards. 14 ACHIEVEMENT LEVEL (Silver) Ethicon, Inc. Ethicon Endo-Surgery, Inc. Janssen-Farmacêutica Ltda. Johnson & Johnson Professional Products Manufacturing Company Ltda. LifeScan, Inc. OMJ Pharmaceuticals, Inc. San Lorenzo, Puerto Rico Juárez, Mexico São José dos Campos, Brazil São José dos Campos, Brazil Cabo Rojo, Puerto Rico San Germán, Puerto Rico MERIT LEVEL (Bronze) Cordis de Mexico, S.A. de C.V. DePuy Ireland DePuy Mitek DePuy Orthopaedics DePuy Orthopaedics Juárez, Mexico Cork, Ireland Smithfield, Utah, US New Bedford, Massachusetts, US Raynham, Massachusetts, US Ethicon S.A. Ethicon, Inc. Ethicon Ltd. Ethicon, Inc. Ethicon, Inc. Ethicon Endo-Surgery, Inc. Janssen Pharmaceutica N.V. Janssen-Cilag (Pty.) Ltd. Janssen-Ortho Johnson & Johnson Consumer Products Company Johnson & Johnson Consumer Products Company Johnson & Johnson G.m.b.H. Johnson & Johnson Inc. Johnson & Johnson Pharmaceutical Research & Development Johnson & Johnson Professional Johnson & Johnson Wound Management McNeil Consumer & Specialty Pharmaceuticals Micro Typing Systems, an Ortho-Clinical Diagnostics company Noramco, Inc. Noramco, Inc. Ortho Biologics Ortho-Clinical Diagnostics Ortho-Clinical Diagnostics, Inc. Vistakon Auneau, France Cornelia, Georgia, US Kirkton Campus, Scotland San Angelo, Texas, US Somerville, New Jersey, US Albuquerque, New Mexico, US Beerse, Belgium Midrand, South Africa Gurabo, Puerto Rico Skillman, New Jersey, US Haina, Dominican Republic Hallein, Austria Montreal, Quebec, Canada Beerse, Belgium Mumbai, India Gargrave, UK Las Piedras, Puerto Rico Pompano Beach, Florida, US Athens, Georgia, US Wilmington, Delaware, US Manatí, Puerto Rico Cardiff, Wales Raritan, New Jersey, US Jacksonville, Florida, US Safety Worldwide Results AWARDS & MILESTONES ● ● ● Tasmanian Alkaloids Pty. Ltd. in Westbury, Australia, achieved dual certification under the Occupational Health and Safety Assessment Series 18001 and Australian Standard 4801, with zero nonconformances identified during the facility audit. The company also received two awards from the Tasmanian state government in the categories of Best Training Program and Best Solution to a Workplace Manual Handling Hazard. ● ● 0.12 Severity Rate 2000-2004 Lost work days per 100 employees 2.75 2.54 2.65 2.12 0.09 0.08 1.52 0.06 0.05 Ortho-Clinical Diagnostics, Inc. in Raritan, New Jersey, US, achieved Star status under the US Occupational Safety and Health Administration Voluntary Protection Program. The Puerto Rico Manufacturers Association issued Distinguished Safety Performance awards in 2004 to the following Johnson & Johnson facilities in Puerto Rico: ● OMJ Pharmaceuticals, Inc., San Germán ● Cordis, San Germán ● LifeScan, Inc., Cabo Rojo (7th consecutive year) ● McNeil Consumer & Specialty Pharmaceuticals, Las Piedras ● Johnson & Johnson Business Services, Caguas These awards recognize facilities with a recordable injury and illness frequency rate that is at least 90 percent below the average national frequency rate for a specific type of industrial operation. ● Lost Workday Case Rate 2000-2004 Lost workday cases per 100 employees Johnson & Johnson Ltd., Mumbai, India, received the “Yogyata Praman Patra” (Meritorious Achievement Award) in recognition of the company’s safety performance and management. The company also received first place in the Industrial Safety Performance Award Competition under the pharmaceutical group category. Johnson & Johnson Asean Ltd. received the 2004 Thailand Best Industry Award in the safety category. Several facilities achieved milestones with no lost work days: ● 1 million hours – Vistakon’s Optical Tooling group, Jacksonville, Florida, US ● 10 years – Research and Development Center, São José dos Campos, Brazil ● 23 years – Johnson & Johnson Medical Suture Plant, Dharavi, India 00 01 02 03 04 00 01 02 03 04 Achievement: 58% reduction 2000-04 Achievement: 45% reduction 2000-04 Serious Injury/Illness Rate 2000-2004 Serious injury/illness cases per 100 employees Fleet Rate 2000-2004 Accidents per million miles driven 0.06 6.85 5.98 5.74 0.04 0.04 0.04 5.52 5.19 0.03 00 01 02 03 04 Achievement: 25% reduction 2000-04 00 01 02 03 04 Achievement: 24% reduction 2000-04 Serious injury/illness cases include fatalities, amputations, fractures and hospitalizations. Fires 2000-2004 Number of fires 51 53 40 00 01 02 31 32 03 04 Achievement: 20% reduction 2000-04 15 Section 3 RESPONSIBILITY TO E M P L O Y E E S Health “I make it a priority to include some form of exercise in my schedule everyday. I encourage Johnson & Johnson’s first priority is to protect and promote the health, safety and well-being of its employees and their families both on and off the job. Toward this end, there is a relentless effort to provide cutting-edge resources that inform, guide and motivate individuals to live their best lives, understanding that it is impossible to separate the health of individuals from the health of the corporation. ” each of you to do the same. — William C. Weldon, Chairman and Chief Executive Officer Healthy People 2005 H ealthy People 2005 is an ambitious initiative we are implementing in the US, focusing on four critical areas of health: inactivity, smoking, cholesterol and blood pressure. Prior to the program’s launch in 2003, we established baseline scores using past results from the Health Risk Assessment that is offered every other year to employees. Healthy People 2005 targets were set to represent good health outcomes. Results from current Health Risk Assessments are aggregated to indicate what sort of progress we are making. In 2004, we have exceeded our set targets in three of the four critical areas of health (smoking, high blood pressure and high cholesterol). Over the past eight years, the number of employees that describe themselves as smokers has declined by 50 percent, reports of high blood pressure have declined by 21 percent and the number of individuals with high cholesterol has declined by 47 percent. Our fourth critical area of health, inactivity, has proven to be our biggest challenge. To demonstrate management support for improving performance in this area, our Chairman and Chief Executive Officer William C. Weldon led “Walk With Weldon” and invited all employees to make a personal commitment to become more active. Throughout the year, Johnson & Johnson distributed 22,000 free pedometers to employees to encourage participation in a walking program aimed at taking “10,000 Steps a Day.” Health & Safety professionals coordinated fitness events around the world. Building activity into everyday activities is a key focus. WALK WITH WELDON In September 2004, presidents of several Johnson & Johnson operating companies participated in group walks to raise awareness of the importance of exercise. Our CEO took the lead at Johnson & Johnson World Headquarters in New Brunswick, New Jersey, US. Michael Jackson, ALZA President, leads a company walk to promote more active lifestyles. Each participant received a free pedometer from the company. 16 Healthy People 2005 Targets and Progress INDICATOR BASELINE TARGET 2004 RESULTS Smoking 12% 9% 6% High Blood Pressure 14% 10% 9% High Cholesterol 19% 15% 9% Inactivity 39% 20% 38% This table summarizes our progress against our Healthy People 2005 goals. Current percentages are aggregated from voluntary, confidential Health Risk Assessments completed by 44,000 US employees from September 2001 through 2004. Healthy Eating Initiative A chieving optimal health also requires attention to diet and healthy food choices. In support of this, our goal is to have healthy cafeterias, vending machines and catering for meetings. A special task force of Johnson & Johnson health professionals is working with food vendors at our US companies to ensure we are offering sound options while employees are at work or company-sponsored events. These efforts are supported by fitness professionals, telephonic lifestyle counselors, HealthMedia® (an on-line nutrition program), Weight Watchers® at Work, and Weight 4 Me in many locations. We are expanding the Healthy Eating initiative into our global operations in 2005. Global Health I n 2004, we began to expand the geographic scope of our corporate health and wellness function toward being a truly worldwide program. The following key objectives guide the activities of our newly formed Global Health Team: Provide injury and illness preventive strategies for employees worldwide ● Deliver consistent medical services worldwide ● Uniformly deploy and apply global occupational health standards ● Develop worldwide programs and services addressing employee well-being ● Regularly measure worldwide occupational health service performance ● SPORTS DAY To encourage physical fitness and provide an opportunity to socialize within the community, Health & Safety employees at Xian-Janssen in Xian, China, held a series of sports games and invited the Trade Union to participate. More than a hundred participants enjoyed basketball, table tennis, badminton and track events. “I came back from Short Term Disability and had post-cancer complications. My doctor recommended that I get a work-out regimen, so I met with my Johnson & Johnson fitness professional. She has been unbelievable! She designed a plan around my lifestyle, monitors me regularly and helped me change my diet. The results have been staggering. I have lost 45 pounds, my body fat percentage dropped by 14 points, and I have lost inches to my chest and waist. All of this is secondary to the change in my life and personality. This is a testament to the Johnson & Johnson Credo. ” Thank you. — A Johnson & Johnson employee 17 Section 3 RESPONSIBILITY TO E M P L O Y E E S Global Health Conferences A s the globe becomes a smaller place, it is critical to create and participate in opportunities to bring together thought leaders in the health services field. Johnson & Johnson provides opportunities for health professionals to share perspectives that inform our ability to care for the physical, social and emotional well-being of our employees, their families and the communities in which we work. External benchmarking, professional alliances and internal conferences facilitate our capacity to identify and implement leading-edge solutions. First Global Medical Team Meeting – New Jersey, US Fifteen health, safety, wellness, disability and mental health professionals met for three days to discuss the Johnson & Johnson global strategy for implementing consistent medical, wellness and mental health services throughout all of our operating companies. First Europe/Middle East/African (EMEA) Occupational Health Conference – Brussels, Belgium Fifty medical, mental health, safety and human resource specialists from twelve countries gathered for the first EMEA Occupational Health Conference. Current health issues, strategic plans, and best practices in absence management, occupational medicine, wellness and fitness and employee assistance were shared over the four-day meeting. Participants at EMEA conference. 18 Latin American Health Meeting attendees in Brazil. Second Regional Latin American Health Meeting – São José dos Campos, Brazil Thirty health, safety, mental health and human resources professionals from Argentina, Brazil, Colombia, Spain, Trinidad, the US and Venezuela met for three days of dynamic exchange of information related to injury and illness prevention, ergonomics strategies, musculoskeletal disorders, wellness promotion and mental health. Strategies for improving the health of the “whole person and family” were discussed. Cancer Prevention and Screening Smoke-Free Workplaces Tobacco is the second leading cause of death in the world. It is currently responsible for about one in ten adult deaths worldwide (5 million deaths each year). We have a Credo responsibility to our employees and to the countries where we conduct our business to make every effort to provide an environment conducive to healthy living. As a leader in health care, we must set the gold standard for cancer prevention efforts worldwide. Recognizing this, Johnson & Johnson is expanding our current smoke-free workplace policy. The policy will be rolled out worldwide during 2005, taking into consideration local, regional and country rules and regulations pertaining to smoking in the workplace. Worldwide Health & Safety will market and build awareness for current smoking cessation intervention opportunities within the Corporation and in surrounding communities. Smoking cessation programs, awareness, behavior modification tools and resources will be available to employees interested in quitting smoking. Cancer Screening at Ortho-Clinical Diagnostics, Inc. Early detection can be crucial to the successful treatment of cancer. However, with busy work and family schedules, many people are not proactive in taking care of themselves because time at the doctor’s office is time away from other responsibilities. Ortho-Clinical Diagnostics, Inc. (OCD) in Raritan, New Jersey, US, has partnered with local health care providers to make it easier for OCD employees to take advantage of screening services that are available in the community. ● One out of every nine women will develop breast cancer in her lifetime. To address breast cancer issues, nurses from Somerset Medical Center in Somerville, New Jersey, came to the company’s site and educated employees on the importance of early cancer screening. Participants were urged to visit their individual doctors’ offices for a test prescription, then on the appointed day for the mammograms, the Medical Center provided a shuttle to the hospital and back to OCD. The women were very appreciative that OCD management gave them the time away from work to have this very important screening. ● With the assistance of a local dermatologist, OCD also sponsored screenings for skin cancer, the world’s most prevalent malignancy. The risk of developing melanoma, the most dangerous form of skin cancer, has more than doubled in the past decade. The American Cancer Society recommends skin examination as part of a cancer related checkup every three years for people between 20 and 40 years old, and on an annual basis for anyone over 40. OCD provides free screening at its facility with the cooperation of management, Human Resources and Occupational Health. Living HIV/AIDS T Our Credo with the International Partnership for Microbicides, oday, more than 40 million people throughout the Elizabeth Glaser Pediatric AIDS Foundation and the world are infected with HIV/AIDS. This global the National AIDS Fund, to name a few, offers pandemic has had a dramatic and devastating impact Johnson & Johnson the opportunity to participate on all types of people: rich and poor, young and in targeted research, fund programs for women and old, men and women. These individuals include our children, and provide advocacy, counseling and friends, our neighbors, our colleagues and family testing for HIV/AIDS patients worldwide. Our goal is members. HIV/AIDS has both social and economic to improve the lives of all who are already impacted implications worldwide. by the disease and to help prevent its spread. As a global health care company with a We are also actively involved in scientific research values-based approach to business and corporate to help people with HIV/AIDS live longer, healthier social responsibility, as outlined in Our Credo, we lives. For more information, see the Research and have a genuine interest in those who suffer, whether Development section of this report (page 39) and our from HIV/AIDS or other diseases. Our interest website at www.jnj.com/community/aids/science. stems from a historic commitment this corporation has made to health and safety and the nurturing of LOCAL HIV EFFORTS IN SOUTH AFRICA future generations. Our medical professionals at Johnson & Johnson (Pty.) Earlier in 2004, Johnson & Johnson formed Ltd. in East London, South Africa, identified a critical a workplace task team to look at current medical need to address HIV within their community. The team coverage, policies and practices for our employees set out to determine the prevalence of HIV infection; and their eligible dependents around the world. model the prevalence data and forecast probable HIV Our objective is to ensure that all of our employees infection levels for the next 10 years; provide voluntary have access to HIV/AIDS treatment. counseling and testing; and make recommendations In the area of corporate philanthropy, we have for appropriate control measures, monitoring and partnered with several organizations to better evaluation. They have accomplished all of these efforts understand how to strengthen our commitment to in addition to providing significant family and peer people who are living with HIV/AIDS. Our association counseling support groups within the region. 19 Section 3 RESPONSIBILITY TO E M P L O Y E E S Employee Assistance Program — The Whole Person C aring for the wellness of the whole person, on and off the job, inevitably requires us to deal with personal issues that we as individuals must face from time to time. Relationship concerns, parenting questions, work/family responsibilities, workplace conflict, mental health, substance abuse and stress management are a few of the real-life challenges that our Employee Assistance Program (EAP) mental health counselors address with employees, household members and management teams. Currently, 50 percent of Johnson & Johnson operating companies around the world provide EAP and efforts are underway to continue the expansion of the program. Services are free and confidential, and include, but are not limited to: ● assessing the concerns of the employee, household member or management team ● short-term counseling provided face to face or telephonically 24 hours a day, 7 days a week ● referral to medical, mental health or other support groups within the community when additional treatment is required ● management consultations during times of change ● critical incident debriefings following man-made or natural traumas ● employee orientation and education ● supervisor training that ensures management understands how to identify potentially troubled employees and refer them to one of our EAP professionals Workplace Response P revention and screening for mental health issues is key to early intervention that yields significantly improved opportunities for positive outcomes. Workplace Response® interactive screening for mental health offers anonymous, confidential computer-based screenings for depression, anxiety, eating disorders, post-traumatic stress, bipolar disorder, and substance abuse and has been available to our US employees and their families for two years. Results and recommendations for follow-up are provided immediately upon completing the screening. To date, more than 8,000 Johnson & Johnson employees and family “T he loss that we have suffered as a result of a death in our family has been enormous. My Employee Assistance counselor was there from the beginning to listen, guide and connect us with other resources that could understand our grief. I cannot believe Johnson & Johnson provides this level of personal support for employees and families. I will always be grateful. — A Johnson & Johnson employee ” Team members instrumental in launching the Taiwan EAP (left to right): Stephanie Yang, Human Resources Director, Johnson & Johnson Taiwan; Alex Chang, Managing Director, Janssen-Cilag Taiwan; Linda Wang, Human Resources Manager, Johnson & Johnson Medical Taiwan; Chris Lin, Managing Director, Johnson & Johnson Vision Care (Taiwan); and Alice Liang, Human Resources Director, Janssen-Cilag Taiwan. TAIWAN EAP L AUNCH The Johnson & Johnson companies in Taiwan launched an Employee Assistance Program in response to a need identified by human resource managers at Janssen-Cilag Taiwan, Johnson & Johnson Taiwan, Ltd. and Johnson & Johnson Medical Taiwan. Since the Taiwan EAP launch in October 2004, individual consultations, employee orientations and educational workshops have been offered across all companies to enthusiastic audiences. 20 members have taken advantage of these screenings. In 2004, Johnson & Johnson funded the translation of this English/Spanish-based program into Portuguese so that it could be utilized by a broader population, and in April 2005, we are launching the program across our complex in São José dos Campos, Brazil, as well as in Puerto Rico. Employment Policies and Practices Our Credo responsibility calls for fair treatment of employees and respect for every individual, while being mindful of ways to help our employees fulfill their family responsibilities. All of these employment policies carry the full endorsement and support of senior management throughout our worldwide organization. Work, Family and Personal Life A Workplace Response® poster advertising web-based screening services. t our US companies, Johnson & Johnson provides a wide variety of Work, Family and Personal Life programs and services to support employees at every stage of life – from having a baby or planning an adoption, to parenting and child care, education, caring for an ill or older relative, preparing for retirement and more. In recognition of our employee programs, Johnson & Johnson was again named one of the Top 10 Best Companies for Working Mothers by Working Mother magazine for 2004. Johnson & Johnson is one of only two companies that have been on the list of Top 100 Best Companies for nineteen consecutive years. “Stellar on-site child-care benefits, manager training and accountability on work/life issues, and family-friendly resources help this company secure a spot among the best of the best.” – Working Mother, October 2004 SERVING AS A COMMUNITY HEALTH RESOURCE First aid training was provided to Xian-Janssen employees in Xian, China, who volunteered to provide first response assistance within our operating company and their own communities. Shaanxi Province Red Cross professionals conducted this training and 100 percent of our volunteers successfully completed certification. Support Services Regarding Elder Care Elder care resources are one example of the support services available to our US employees through LifeWorks®. Included are an Elder Assessment and Care Planning Program to assess a relative’s current and future care needs, and assistance in comparing and selecting the most appropriate living situation for a family member. In addition, LifeWorks provides an online assessment and consultation about daily needs, home safety, financial and legal issues, nutrition, health and more. At our World Headquarters in New Brunswick, New Jersey, US, employees have the opportunity to participate in an Elder Caregivers’ Support Group whose purpose is to share information on and experiences with elder caregiving. In 2004, we conducted an Elder Care Fair to make it easier for 21 Section “ I liked the personal touch. The 3 employees to speak with representatives from community resources and learn more about their services. Care Manager went out of her way to make my mother feel comfortable during the assessment so that my Diversity ” D iversity is part of the culture of Johnson & Johnson. We recognize that differences in age, race, gender, nationality, sexual orientation, physical ability, thinking style and background bring a richness to the working environment. As we achieve excellence in managing diversity, we strive to create a workplace where we all can achieve and contribute the best that we have to give. Our vision is to be the “Employer of Choice in a Dynamic Global Environment.” Johnson & Johnson provides diversity awareness education in the form of Diversity University, a comprehensive online resource for employees that serves as a gateway to a multitude of diversity related resources. The offerings of the University are global in scope and relevant for all Johnson & Johnson employees worldwide. Within Diversity University, users can find cultural awareness training tools with country-specific content. The University also links employees to e-learning courses and information offered throughout the Johnson & Johnson Family of Companies on related mother would respond to questions. — A Johnson & Johnson employee RESPONSIBILITY TO E M P L O Y E E S Living Our Credo SUPPORTING WORK/LIFE RESEARCH AND RESOURCES Johnson & Johnson is proud to be one of the which examines the changes within the American founding members of the American Business workforce since 1977 in relation to job satisfaction, Collaboration (ABC), made up of nine major work/life support, gender roles and attitudes. corporations with a common objective of helping Conducted by the Families and Work Institute, the their employees manage their work and personal study examined representative samples of workers responsibilities. Since its inception in 1992, from across the United States in an effort to a major focus of the ABC has been to create and develop rigorous data around generation and fund innovative programs for child care and gender differences, instead of relying on assump- elder care services to alleviate gaps between the tions or anecdotal information as most corpora- needs of working families and available services tions and social observers have done. Among the and programs in identified communities across most striking findings was the fact that younger the country. ABC companies are focusing our workers tend to be more family-focused or dual- collaborative efforts on understanding the focused (on both career and family equally) com- needs of the constantly evolving workforce and pared to older workers, and that this shift applies implementing creative solutions to improve to both men and women in the workforce. ABC workforce effectiveness. support of research like this is helping companies In 2004, the ABC released the results of its Generation and Gender in the Workplace study, 22 better understand their employees and manage work/life effectiveness. Of the 13 individuals on the Johnson & Johnson Board of Directors, three are women and two are African American. subjects such as mentoring, international assignments, and leadership and rotational development programs. To gauge the effectiveness of diversity initiatives, operating companies use different metrics including the composition of the workforce, the level of diversity education and training, and the impact of diversity on marketing and sales. Results to date indicate that becoming the employer of choice is an attainable goal. Affinity Groups Affinity groups are voluntary organizations, initiated and driven by employees, that usually focus on a shared interest or characteristic, such as race, ethnicity, gender or sexual orientation. Each group’s main intent is to create an open forum for exchanging ideas, and to strengthen ties to and within diverse communities. Every affinity organization at Johnson & Johnson has a formal structure, including an Executive Management Advisor, and is open to all employees. Affinity group activities include professional development, workplace enhancement and community involvement. Current employee affinity groups within Johnson & Johnson include the African American Leadership Council, Community of Asian Association at Johnson & Johnson, Gay and Lesbian Organization for Business and Leadership, Help Our Neighbors with Our Resources, Hispanic Organization for Leadership and Achievement, South Asian Professional Network and Association and the Women’s Leadership Initiative. Dispute Resolution – Finding Common Ground I n any organization, occasionally differences arise on matters relating to an individual’s employment. The Johnson & Johnson Family of Companies offers its US employees the use of Common Ground, an innovative program for resolving such concerns fairly, quickly and as amicably as possible. The program provides a collaborative framework with three comprehensive steps for resolving issues or disagreements – Open Door, Facilitation and Mediation. In Open Door, the operating company Human Resources representative reviews the issues and works with both parties to resolve them fairly. If needed, Facilitation is the next step. The facilitator, who is a neutral party in Johnson & Johnson’s Office of Equal Opportunity and Workplace Solutions, works to open up lines of communication and identify creative solutions. If Facilitation has not resolved the matter, employees may pursue Mediation, an informal dispute resolution process conducted by a mediator who is a neutral third party. The mediator helps to move both parties toward a mutual and voluntary resolution of the issues. Employee participation in Common Ground has quadrupled since the program’s inception in 1999. The majority of issues are resolved at the Open Door stage. For issues that progress beyond the Open Door phase, the majority are resolved at Facilitation. Employees who have utilized the program express satisfaction and an appreciation for the individualized guidance and support during difficult times. Both employees and company personnel also appreciate the value that is placed on a collaborative process in an atmosphere of mutual respect. Labor Policies A s a company with a strong commitment to Credo values and a special interest in maternal and child health, we are particularly concerned about the issue of child labor. Our Policy on the Employment of Young Persons prohibits employing anyone under the age of 16. No person between the ages of 16 and 18 shall be employed unless such employment is in compliance with the health, safety and morals provisions of the International Labour Organization Convention 138 Concerning Minimum Age. This policy applies to our manufacturing facilities worldwide as well as to external manufacturers of products for Johnson & Johnson companies. We recently developed a set of Global Labor and Employment Guidelines and are disseminating these to our businesses throughout the world. These guidelines formalize the labor policies and practices that have been in place for years at companies throughout Johnson & Johnson. The guidelines are generally consistent with internationally accepted labor and employment standards, and address issues such as anti-discrimination, prohibition of forced labor, enforcement of child labor restrictions, and support of each employees’ right to associate and to bargain collectively. It is understood that we will first ensure that our policies and actions are in full compliance with the laws and regulations of the country in which we are operating. 23 Section 4 R E S P O N S I B I L I T Y C O M M U N I T I T O E S “We are responsible to the communities in which we live and work and to the world community as well…” FROM OUR CREDO Environment Our Credo commits us to “maintain in good order the property we are privileged to use, protecting the environment and natural resources.” This is a fundamental aspect of the corporate culture at Johnson & Johnson. As a large, multinational organization, our environmental footprint is complex and far-reaching. We have standard procedures in place requiring that each of our worldwide facilities characterize and understand the environmental impacts of their operations, plan for emergencies, and seek opportunities for continuous improvement. On a corporate level, we establish goals that drive us toward reducing our overall consumption of resources, increasing the efficiency of our operations, and minimizing the adverse effects of waste. 24 This section of the report summarizes our performance with respect to those key indicators we measure, and describes our progress toward meeting our quantitative goals. Our Next Generation Environmental Goals apply through 2005, and we are working to develop Healthy Planet 2010 goals and metrics that will continue to move us forward. The process of goal setting (discussed earlier in this report; see page 2) includes dialogue with multiple stakeholders, both internal and external to Johnson & Johnson, and requires us to identify those issues and impacts that are most material to our operations around the globe so we can target them for meaningful improvements. Management Performance Next Generation Goals (NGGs) – Management Performance Indicators METRIC GOAL 2004 STATUS Management Systems All manufacturing, research and development sites obtain and maintain third-party ISO 14001 certification As of year-end 2004, 107 out of 111 facilities (96 percent) were third-party certified New Products, Processes and Packaging Review all new products, processes and packaging for environmental impact during development 99 percent of new products, processes and packaging were reviewed for environmental impact in 2004 Regulatory Compliance Zero noncompliance events and zero accidental releases on an ongoing basis 15 Notices of Violation (NOVs) 5 penalties paid, totaling $30,800 23 noncompliance events identified from 275 agency inspections 186 self-reported permit noncompliances (air/wastewater permits) Conservation and Community Outreach All manufacturing, research and development sites develop and implement site-specific conservation and outreach plans As of year-end 2004, 92 percent of sites have conservation and outreach plans and are implementing them on schedule High exposure facilities initiate and maintain community forums 76 percent of high exposure facilities conducted community forums in 2004 Review of New Products and Processes Design for the Environment (DfE) is our process for identifying and minimizing the environmental impacts of new and modified products and processes. The computer-based DfE tool uses a quantitative scoring system that rates processes based on environmental factors, such as energy use, water use, hazardous material requirements, process efficiency and yield, and nonproduct output (NPO) generation. This scoring mechanism allows designers to quickly compare the overall environmental friendliness of a variety of options. Johnson & Johnson’s goal is to design products that are more environmentally friendly by integrating DfE into every aspect of developing a new product or process. R&D organizations across the corporation are responsible for implementing DfE, with environmental professionals serving as coaches for the evaluation process. From the time a new product is just a concept, through development, manufacturing, sales, marketing and ultimate disposal or recovery of the product, DfE helps identify negative environmental impacts and options for avoiding those impacts. The DfE tool enables users to identify restricted or banned substances and evaluate country-specific regulations surrounding chemical use, packaging and disposal. Designers can also assess the impacts of new products or processes on energy use, raw material consumption and waste generation. By making sound decisions early in a product’s development, we can improve performance while preventing the need for costly retrofits to address environmental problems that may be identified later. This provides significant business advantages. DESIGNING PRODUCTS TO MINIMIZE ENVIRONMENTAL IMPACTS Ortho-Clinical Diagnostics, Inc. (OCD) in Raritan, New Jersey, US, is working toward a complete phase-out of the preservative thimerosal, which contains mercury. OCD decreased its annual use of mercury by 80 percent from 2000 to 2004 by applying DfE principles to product development and periodic review of processes. By reducing mercury use and its presence in products, OCD is avoiding the ultimate disposal of mercury, which tends to bioaccumulate and may be harmful to human health and the environment if not managed properly. All remaining OCD products containing thimerosal are scheduled for replacement with mercury-free products by 2008. 25 Section 4 RESPONSIBILITY TO C O M M U N I T I E S Compliance During 2004, Johnson & Johnson facilities received 275 environmental regulatory inspections. While the vast majority of these inspections – more than 96 percent – resulted in no findings of noncompliance, there were 23 agency-identified noncompliance events. Under our standard procedures, any noncompliance event or accidental release at a Johnson & Johnson operating company must be reported to our Worldwide Environmental Affairs office within 72 hours of occurrence. We also track self-reported breaches of environmental permit limits and requirements, regardless of the magnitude or environmental impact. Nearly all of our 125 manufacturing and research facilities have prescribed wastewater and air emission limits for numerous parameters. Our broad approach to reporting noncompliance events allows us to detect and address problem areas and trends more proactively. Our efforts to improve wastewater permit compliance showed success in 2004, where we were able to reduce wastewater permit breaches from 105 in 2003 to 63 in 2004. Further reductions are anticipated this year as new treatment system improvements come on line. “S takeholder engagement is a vital part of our sustainability program – from representatives of governments, nongovernmental organizations, academia, socially responsible institutional investors and industry, who give feedback on our direction and progress, to suppliers and third-party manufacturers who play an ” integral role in improving our performance. — Brian K. Boyd, Vice President Worldwide Environmental Affairs 26 During 2004, we experienced an increase in self-reported air permit noncompliance events. Two Johnson & Johnson sites, our Ethicon, Inc. plant in San Angelo, Texas, US, and our ALZA plant in Cashel, Ireland, received new air emission permits in 2003/2004. Both permits require continuous emissions monitoring of the air pollution control equipment and related operating parameters. In practice, we have had difficulty complying with the specified permit parameters. Indeed, 117 of our 186 total self-reported permit noncompliance events in 2004 resulted from these two sites. During an assessment of the San Angelo situation, we identified additional unreported events for the latter part of 2003. Hence, we have restated our 2003 compliance figures to reflect these events. The overwhelming majority of these events were slight breaches of oxidizer temperature limits and resulted in no excess emissions to the environment. Our sites reported 15 accidental releases last year. The sum total of all 15 releases is an estimated 6.8 cubic meters (1,800 gallons) of material, with more than half of the releases amounting to 0.2 cubic meter (55 gallons) or less. Each release resulted in an immediate and effective response, with no significant environmental impacts. Our 2004 noncompliance events summarized above resulted in 15 Notices of Violation and 5 penalties paid totaling $30,800. Three of the penalties were for clerical issues and two were attributed to accidental releases. While site-level corrective actions are being rigorously implemented, we are renewing our global focus during 2005 to drive better compliance results. Conservation and Community Outreach Recognizing that the Credo responsibility toward communities is integrally linked to environmental protection, our goals require all Johnson & Johnson facilities to engage with their neighbors regarding conservation and community impacts. The following examples illustrate ways in which our operating companies are meeting this goal. Ethicon Ltd., Kirkton Campus, Livingston, Scotland – The facility has embarked on a highly successful initiative to create and enhance habitat, improve landscaping and protect water resources at the site. This is being accomplished through the leadership of a Biodiversity Steering Group with members from Facilities, Manufacturing and Environmental Affairs at Ethicon Ltd. as well as several external conservation partners (including West Lothian Council, Btcv Scotland and Scottish Natural Heritage, among others). Brown hares – an endangered Operational Performance NGGs – Operational Performance Indicators ENERGY WATER RAW MATERIAL PACKAGING (NON-PACKAGING) NONPRODUCT OUTPUT (NPO) GOAL By year-end 2005, 100 percent implementation of enhanced energy best practices and 4 percent absolute reduction in CO2 emissions from base year 1990 By year-end 2010, 7 percent absolute reduction in CO2 emissions from base year 1990 2004 PERFORMANCE ▼ 3.1 percent decrease in absolute CO2 emissions 1990-2004 By year-end 2005, 10 percent cumulative avoidance* By year-end 2005, 5 percent cumulative avoidance* ▼ 12.1 percent cumulative avoidance 2001-2004 ▼ ▼ 6.9 percent cumulative avoidance 2001-2004 89 percent implementation of enhanced energy best practices By year-end 2005, 10 percent cumulative avoidance* 6.7 percent cumulative avoidance 2001-2004 By year-end 2005, 10 percent cumulative avoidance* in nonhazardous NPO and 5 percent cumulative avoidance* in hazardous and toxic NPO ▼ Nonhazardous: 12.5 percent cumulative avoidance 2001-2004 Hazardous: 27 percent cumulative avoidance Toxic: 21 percent cumulative avoidance *Note: Cumulative avoidance goals present avoidance in generation or use resulting from projects implemented in Year 1 (Y1), Year 2 (Y2), Year 3 (Y3), etc., calculated as follows: Total Avoidance (Y1 + Y2 + Y3 +…) X 100% Total Usage or Generation (Y1 + Y2 + Y3 +…) species in that area – and voles are now observed on those portions of the site with restored natural habitat. A strong educational component of the project involves school children in planting and maintenance efforts, as well as other environmental awareness activities such as recycling and energy conservation. The Ethicon team provides awards and recognition to school groups for completing environmental tasks. Students at a local agricultural college also surveyed employees and community members regarding potential environmental management objectives for the site, and the information was used to develop the current biodiversity plans. McNeil Consumer & Specialty Pharmaceuticals, Fort Washington, Pennsylvania, US – This company has pursued significant watershed protection efforts over the past several years in partnership with local government and conservation organizations. McNeil is located in an area that is rich with natural resources, biological diversity and an involved citizenry. However, the area is also undergoing rapid development, which has resulted in stormwater problems and degradation of some of the small streams in the Wissahickon watershed. To help alleviate these concerns, the facility has identified and implemented projects to enhance stream buffers, recreate meadows and develop wetlands-based stormwater management systems. McNeil assists the local watershed association, Whitemarsh Township and the Pennsylvania Department of Transportation on similar projects located off site. Janssen Pharmaceutica Products, L.P., Titusville, New Jersey, US – The Stony Brook-Millstone Watershed Association has awarded its first-ever River Friendly Certification to Janssen in recognition of the company’s efforts to conserve water and pursue innovative stormwater management practices. The facility has significantly reduced its use of pesticides and fertilizers, planted drought-resistant native vegetation, and increased the level of internal water reuse. A solarpowered aeration system is used to minimize algae growth and improve water quality in one of two on-site stormwater ponds. For the past two years, Janssen has held an environmental education event on Earth Day, in cooperation with the New Jersey Department of Environmental Protection and other partners, at which children learn about various environmental topics and about the company’s watershed protection programs. 27 Section 4 RESPONSIBILITY TO C O M M U N I T I E S Energy The world scientific community agrees that human behavior has adversely affected Earth’s climate through the emission of greenhouse gases. Atmospheric concentrations of carbon dioxide (CO2) have significantly increased in the past century and continue to rise. The burning of fossil fuels is the largest man-made source of greenhouse gases in our atmosphere. At Johnson & Johnson, we are doing our part to address climate change risks through a sustained energy management program. In 1999, we announced a goal to reduce CO2 emissions by 7 percent below 1990 levels by the year 2010, in line with the intent of the Kyoto Protocol. Johnson & Johnson’s emissions have decreased by 3.1 percent from our 1990 baseline, at the same time that Company revenue has increased 322 percent. Much of this progress has been accomplished through the adoption of our Climate Friendly Energy Policy in 2003, which accelerated the deployment of innovative technologies at our companies around the world. Two examples are highlighted in the following paragraphs. Taken together, the CO2 reduction benefits from these two projects are equivalent to removing more than 1,400 cars from the road. Landfill gas methane combined heat and power project at ALZA Corporation, Mountain View, California, US – ALZA has implemented an innovative contract with the city of Mountain View to purchase methane gas from a municipal landfill. The gas will serve as fuel for three generators, providing the ALZA Corporation campus with 3 megawatts of power supply and offsetting 7,000 metric tons of CO2. Biodiesel fired boiler at Centocor, Leiden, the Netherlands – Centocor replaced conventional fuel with a fuel blend that incorporates biodiesel, a renewable energy source generated from sustainably harvested seeds of the rape plant. In 2004, the site used 160,000 liters of biodiesel, offsetting 388 metric tons of CO2. Building on these successes, we have also introduced an innovative CO2 capital funding process to ensure funding for a variety of large projects that yield both notable environmental benefits and cost savings. In its first year, the new funding process has prompted the initiation of 24 new projects, including three solar photovoltaic and seven cogeneration facilities. 28 In a further commitment to minimizing our climate change impact, Johnson & Johnson has demonstrated leadership in purchasing green electricity and renewable energy certificates. In 2004, an estimated 18 percent of our worldwide electricity supplies were from environmentally friendly resources, including solar, wind and biomass. We are one of the largest corporate purchasers of windpower in the United States. In addition, solar photovoltaic installations at Johnson & Johnson facilities in California, New Jersey and Pennsylvania are supplying carbon-free electricity to our operations. At Centocor’s operations in Leiden, the Netherlands, 100 percent of our electricity supply is obtained from renewable energy sources. We are addressing CO2 emissions from our worldwide sales fleet as well and taking steps to reduce such emissions. In early 2005, we added 200 Toyota Prius hybrid electric vehicles, raising the fuel efficiency of our overall fleet. We actively partner with other companies and organizations to share climate change strategies and stay abreast of the latest trends and opportunities. Highlights of these partnerships include: ● Founding member of the World Resources Institute (WRI) Green Power Market Development Group and participant in WRI’s Climate Northeast project ● Charter member of the World Wildlife Fund Climate Savers program since 1999 Company representatives in front of wind turbine in eastern Pennsylvania, US. Johnson & Johnson companies purchase the output of one turbine from this windpower facility, about one megawatt of renewable energy capacity. Monitoring of recently constructed wastewater treatment system in Beerse, Belgium. AWARDS & RECOGNITION Founding member of The Climate Group, a UK-based organization of multinational corporations, NGOs and governmental bodies taking the lead on reducing greenhouse gas emissions Member of US EPA’s Climate Leaders, a voluntary initiative that encourages companies to inventory their emissions, set reduction targets and report publicly on their progress The US Environmental Protection Agency (EPA) and the US Department of Energy presented Johnson & Johnson with the 2004 Leadership Award for Green Power Purchasing. This awards program recognizes companies, governments and organizations that contribute to the development of renewable energy markets through their purchasing decisions. Water Adequate water supply is a critical public health resource and one that is experiencing increasing pressure worldwide with rising populations and levels of development. Conserving water is an important part of our responsibility to the communities in which we operate. Facility-specific goals for water conservation help keep our operating companies focused on the need for continuous improvement in this area. Johnson & Johnson Worldwide Environmental Affairs provides tools and guidelines that our sites can follow to identify and implement promising water reduction methods. Facility teams also use quantitative analysis and assessment tools to optimize their water saving efforts. Since the initiation of our Next Generation Goals in 2001, total water use by our worldwide manufacturing operations has declined by about 16 percent. About half of this reduction is due to the divestiture of several facilities that were historically large water users; the rest of the decrease has resulted from water conserva- tion projects that facilities have implemented. With a 12.1 percent cumulative avoidance ratio from 2001 through 2004, and ongoing avoidance projects such as the facility example highlighted below, we expect to surpass the 2005 goal of 10 percent cumulative water use avoidance. Janssen Pharmaceutica N.V. in Beerse, Belgium, has taken an innovative approach to sustainable water use. Through an extension of its wastewater treatment plant, the site implemented a wastewater and rainwater recycling plant, resulting in yearly savings of 150,000 cubic meters of drinking quality water, equivalent to the annual use of a population of 3,300. The recycling project is the result of a team effort by the Energy and Utilities departments, Facility Engineering and Environmental Affairs. This collaboration has led to the foundation of a water working group to better understand water uses throughout all processes in the facility and to identify more opportunities for reducing water use. ● ● 29 O ur Pharmaceutical Sourcing Group Americas (PSGA) business group has developed an innovative means of improving management of raw materials at its facilities. By calculating a Raw Material Efficiency Index (EI) metric, PSGA has been able to accurately track the use of raw materials throughout the manufacturing process and drive significant reductions in the amount of materials used to create a given quantity of finished product. PSGA facilities are applying this EI metric and educating employees to better understand its uses as an operational tool. Pharmaceuticals in the Environment One area of potential impact to the world’s water resources, which is of common concern across the pharmaceutical industry, is the detection of trace amounts of pharmaceuticals that have been detected in rivers and streams. The small amounts of pharmaceuticals being measured – which are only now being detected because of advances in analytical chemistry – arise primarily from patient use. Typically, medicines will be excreted from the human body in both metabolized and unmetabolized forms and will then make their way to various waterways through municipal wastewater treatment systems. Both monitoring and modeling data have shown that the trace amounts of medicines found in aquatic environments are orders of magnitude below therapeutic values. Johnson & Johnson continues to work with others in the health care industry to study potential impacts from the normal use of pharmaceutical products. Raw Materials We continually work to reduce consumption of raw materials used in our manufacturing operations. Progress is made by improving process efficiency and material management. Decreasing material use in turn helps minimize waste generation and improve process efficiency. Just as energy efficiency reduces air emissions, and water conservation leads to reduced wastewater impacts, careful management of raw materials can have significant benefits throughout a product’s life cycle. Johnson & Johnson tracks the amount of raw 30 Section Converting Raw Materials to Finished Products – Efficiently 4 RESPONSIBILITY TO C O M M U N I T I E S materials used at our manufacturing facilities worldwide (excluding water, which is tracked separately), and we have established a goal of 5 percent cumulative avoidance from 2001 through 2005. We have met and exceeded our goal in this area, achieving a 6.9 percent cumulative avoidance over the period 2001 through 2004. This is in part due to McNeil Nutritionals, LLC divestiture of a sucralose manufacturing facility in 2004, which resulted in significant reductions in both the amount of raw materials purchased (391 million kilograms in 2004) and raw material use avoided (31 million kilograms in 2004). Packaging Johnson & Johnson tracks the use of packaging material separately from other raw materials and has set an aggressive avoidance target of 10 percent in this area. Across the health care industry, the challenge is to minimize packaging use while fully maintaining compliance with quality standards and not compromising product integrity. During our product development process, we identify opportunities to minimize the amount of packaging used and maximize recyclability. We have achieved a 6.7 percent cumulative avoidance ratio for 2001-2004, and avoidance has been increasing steadily. While our total packaging use increased to about 194 million kilograms last year, new avoidance projects are helping us minimize the growth of packaging use even as we continue to introduce successful new products. Polyvinyl chloride (PVC), a material used in some product packaging, is the focus of increased attention primarily because of concerns over its recyclability. PVC has long been used in packaging for drugs, medical devices and cosmetics because it provides moisture-, gas- and flavor-barrier properties required in many applications and because it has desirable physical characteristics. Johnson & Johnson operating companies are aware of the environmental concerns associated with PVC and are taking steps to limit use of this material. During product development, our operating companies identify opportunities to minimize the amount of packaging used and maximize recyclability, while still ensuring packages meet quality and safety specifications. Our consumer product companies also are actively engaged with suppliers to identify alternatives to replace existing PVC packaging and to avoid PVC use in future products. Nonproduct Output NPO is defined as waste prior to treatment, off-site recycling or disposal. By minimizing NPO – through increased process efficiency and internal recycling and reuse – we can reduce the need for off-site transport of waste, and we can help conserve land and water resources that can be adversely affected by landfilling of waste. Johnson & Johnson has set goals for reducing generation of three categories of NPO: nonhazardous, hazardous and toxic. Regardless of regulatory differences around the world, we have internally established standard definitions of these three categories for global tracking and reporting purposes. Facility-based avoidance projects, such as those described below, in addition to plant divestitures, have resulted in cumulative avoidance to date that exceeds our targets: 12.5 percent cumulative avoidance of nonhazardous NPO for 2001-2004 (compared to a target of 10 percent); 27 percent cumulative avoidance for hazardous NPO (target is 5 percent); and 21 percent cumulative avoidance for toxic NPO (target is 5 percent). ● At Noramco, Inc. in Athens, Georgia, US, the site EHS team identified opportunities to reduce hazardous NPO from its pharmaceutical operations. Through this initiative, toluene recovered from coating operations is now sent off-site for use in the manufacturing of adhesives. By reusing the toluene, the site no longer needs to dispose of this by-product as a hazardous waste. AWARDS & RECOGNITION AWARD California Waste Reduction Award Program (WRAP) RECIPIENT Advanced Sterilization Products, Irvine, California, US (7th time this company has received the award) LifeScan, Inc., Milpitas, California, US (6th time this company has received the award) DESCRIPTION WRAP is an annual program, established in 1993 by the California Integrated Waste Management Board, which recognizes businesses that have made outstanding efforts to reduce nonhazardous waste and send less garbage to landfill. Most Bicycle-Friendly Employer, Northern Region Cordis Europa, Roden, the Netherlands The Milieufederatie (a national nongovernmental organization) issues this annual award to the employer who stimulates and rewards green traffic the most. It was the first time that this award was issued. Blue Ribbon Level P2AD* Partnership Program, Charter Member Noramco, Inc., Athens, Georgia, US Georgia established the P2AD program in 2004 to foster environmental leadership and recognize superior environmental performance. Austrian Mobility Award Johnson & Johnson G.m.b.H., Hallein, Austria Presented by the VCÖ (Verkehrs Club Österreich, or Traffic Club of Austria) for first place in the company category demonstrating the theme “better — healthy — mobile.” Environmental Quality Honor Roll Ortho-Clinical Diagnostics, Inc., Raritan, New Jersey, US Presented by the New Jersey Business and Industry Association to companies that create jobs, protect the environment, improve their workplaces and strengthen the community. Most Trustworthy Company on Environmental Protection Johnson & Johnson Medical Ltd. and Johnson & Johnson China Ltd., Shanghai, China The Shanghai Minhang Environmental Protection Bureau presented this award, which recognizes companies demonstrating regulatory compliance, business success, efficiency and sustainability. Environmental Excellence Award Janssen-Cilag Farmaceutica, S.A. de C.V., Puebla, Mexico The Procuraduría Federal de Protección al Ambiente (federal Environmental Protection Agency) created this award in 2002 to recognize companies that contribute to environmental sustainability in Mexico. Kyung-Gi Province Exemplary Environmental Achievement Award Janssen-Cilag Korea, Ltd., Seoul, Korea Conferred by the Governor of Kyung-Gi in recognition of excellent environmental performance and leadership. *Pollution Prevention Assistance Division 31 J ohnson & Johnson is proud to serve on the Corporate Council of the Center for Health and the Global Environment at Harvard Medical School. We are supporters, in particular, of the center’s biodiversity and human health project, the goal of which is to educate policy-makers and the public, through rigorous scientific data and compelling stories, about the urgent need to preserve natural ecosystems because they are essential to human health. Currently, project work is focusing on communicating and disseminating information and preparing a book manuscript for publication. Center staff members have published articles in scientific journals, spoken at conferences around the world, and distributed a brief Interim Executive Summary of the project’s results. Co-sponsors of this globally important project include the United Nations (UN) Development Programme, the UN Environment Programme and the WHO. ● Johnson & Johnson G.m.b.H. in Hallein, Austria, improved its material handling to minimize nonhazardous NPO generation. The company installed an air handling system that collects material fibers from the tampon manufacturing process while excluding any dust or other particles, thereby allowing the fibers to be reused instead of being disposed as nonhazardous NPO. Through this and other waste reduction efforts, the facility is avoiding 20,000 kilograms of nonhazardous NPO annually and reducing the need for raw materials. Section Supporting Biodiversity and Human Health 4 RESPONSIBILITY TO C O M M U N I T I E S Johnson & Johnson is among the first three companies to receive the Corporate Leader designation. Our program commitments consist of the following: ● ● ● ● ● Further reducing carbon dioxide emissions to 7 percent below 1990 levels, by 2010, in absolute terms. Further reducing water use by 65 million gallons by 2010 compared to 2003. Increasing facility membership in Performance Track. Conducting environmental audits at 100 percent of our external manufacturing facilities by 2010. Increasing by 50 percent the amount of paper packaging that is derived from certified, sustainably managed forest, or that is made from recycled paper containing at least 30 percent post-consumer content, by 2010 (compared to a baseline year of 2005). Environmental Cost Reduction and Avoidance J ohnson & Johnson tracks environmental costs and cost avoidance as a result of projects implemented by facilities to meet the Next Generation Goals. Environmental costs include the costs of transporting, storing, treating and disposing of raw materials and process waste. By tracking our reductions in these costs, Johnson & Johnson has built a strong business case for our environmental goals and programs. Environmental Costs and Cost Avoidance Worldwide ($ IN MILLIONS) 2004 2003 Environmental Labor (Environmental Staff and Contractors) 28.3 26.3 Wastewater Management (Treatment and Disposal) 12.5 12.6 Solid and Chemical Waste Management (Reuse, Recycle, Treatment and Incineration) 35.4 36.5 4.6 4.6 12.3 12.8 5.6 6.3 14.8 13.6 TOTAL ENVIRONMENTAL COSTS $ 113.5 $ 112.7 Capital Spending for Environmental Controls and Equipment $ $ ENVIRONMENTAL COSTS Air Emission Management (Treatment and Disposal) Management Systems and Compliance (Assessments, Consultants, Permits and Training) US EPA Performance Track I n early 2005, the US EPA distinguished Johnson & Johnson as a Corporate Leader in the Performance Track Program, recognizing our environmental achievements and the significant number of our US facilities that participate in Performance Track (40 out of 49 major sites). EPA developed the Corporate Leader designation to encourage companies to be active members in the facility-level program, proactively manage environmental issues at the corporate level, and extend their environmental management activities beyond the fence line to their value chain (including suppliers and customers). 32 Remediation (Clean-up Costs and Legal Fees for Managing Environmental Impacts) Equipment Depreciation (Related to Treatment and Emission Controls) 22.0 41.4 RESOURCE COST AVOIDANCES RESULTING FROM INITIATIVES Raw Materials (Avoidance in the usage of process raw materials) 66.5 84.7 Packaging (Avoidance in the amount of packaging materials used with our products) 35.7 30.7 Energy (Avoidance in the usage of energy at our sites) 11.7 11.9 Water (Avoidance in the usage, treatment and processing of water) 2.4 1.9 TOTAL RESOURCE COST AVOIDANCES $ 116.3 $ 128.1 Environment Worldwide Results Our CO2 emissions reporting follows the Greenhouse Gas Inventory protocol developed by World Resources Institute and the World Business Council for Sustainable Development. The protocol requires that we recalculate historical emissions to reflect acquisitions, divestitures and mergers, so that all data shown on the chart represent emissions from the same set of facilities over time. For other environmental metrics, each year’s data present a “snapshot” of the Company as of the end of that year. Facilities divested during the year are not included in that year’s figures. When a new facility is acquired or begins operation, it must begin reporting environmental data within 18 months. These charts reflect some minor changes to environmental data for 2001, 2002 and 2003 that were found as a result of routine internal auditing. Water Use 2001-2004 CO2 Emissions 1990 -2004 (Million kg) 991 990 991 991 974 979 973 990 961 961 941 1005 905 90 91 92 93 94 95 96 97 98 99 00 01 04 Indexed to Sales (Million kg) (kg/1,000 $ sales) 12.1 31 01 02 03 01 02 03 04 04 04 01 02 03 04 Nonhazardous Nonproduct Output (NPO) 2001-2004 Absolute Indexed to Sales (Million kg) (kg/1,000 $ sales) 12.5% 4.3 8.0 166 164 01 02 14 4.5 194 4.3 180 4.1 156 20 28 163 3.5 145 20 03 04 01 02 03 04 01 Cumulative Avoidance (%) Avoided Used Cumulative Avoidance (%) Avoided Purchased 4.8 4.5 3.9 21 10.7 9.8 03 03 5.1 8.3 02 02 6.7% 391 0.36 Goal: 10% cumulative avoidance 2001-2005 Indexed to Sales 44 0.40 2.4 Cumulative Avoidance (%) Avoided Used 6.9% 01 13.0 2005 Goal 4% reduction 2010 Goal 7% reduction (kg/1,000 $ sales) 411 13.1 1.8 0.23 Absolute 29 1.1 0.29 Absolute 389 12.1% .7 10.9 Packaging Use 2001-2004 5.3 (m3/1,000 $ sales) 12.3 excludes water 391 Indexed to Sales (Million m3) 943 935 Raw Material Use 2001-2004 (Million kg) Absolute 1056 1047 02 03 103 2.2 04 01 02 03 04 Cumulative Avoidance (%) Avoided NPO Generated Goal: 5% cumulative avoidance 2001-2005 Goal: 10% cumulative avoidance 2001-2005 Goal: 10% cumulative avoidance 2001-2005 Hazardous NPO 2001-2004 Toxic NPO 2001-2004 Absolute Absolute Noncompliance Events and Accidental Releases 2001-2004 Indexed to Sales (Million kg) (kg/1,000 $ sales) 27% 16.4 1.0 45.8 7.4 43.1 41.1 15 3.5 0.51 16.5 3.9 0.9 13.3 42.2 9 0.45 177 0.32 5 10.5 02 03 04 01 02 03 04 Cumulative Avoidance (%) Avoided NPO Generated Goal: 5% cumulative avoidance 2001-2005 01 02 03 04 23 186 8 3.4 0.22 01 (Number of events) 21% 1.2 19.3 9.2 (kg/1,000 $ sales) 1.4 1.2 9.8 Indexed to Sales (Million kg) 01 02 03 04 Cumulative Avoidance (%) Avoided NPO Generated Goal: 5% cumulative avoidance 2001-2005 132 107 01 02 03 These 2004 events resulted in 15 NOVs and fines totaling $30,800 04 Accidental Releases Agency-identified Noncompliance Events Self-reported Noncompliance Events Goal: Zero noncompliance events and accidental releases 33 Section 4 RESPONSIBILITY TO C O M M U N I T I E S In response to the devastating tsunami in December 2004, Johnson & Johnson contributions helped provide temporary housing on Andaman Island, India. Society In addition to protecting the global environment, we fulfill Our Credo responsibility to communities through philanthropy and other efforts to meet social needs. Improving the health and welfare of people around the world is an integral part of our business; it is part of our mission as a health care company. Taking on the challenges of social responsibility is also increasingly an expectation held by stakeholders around the world. As a widely respected global corporation, we embrace these challenges. Contributions J ohnson & Johnson’s commitment to social responsibility is reflected in the Johnson & Johnson Credo and exemplified by a number of key initiatives carried out in communities around the world. Our contributions program, a worldwide social responsibility effort, is focused on five key platforms for giving: Access to Health Care, Women’s and Children’s Health, 34 Advancing Health Care Knowledge, Community Responsibility and Global Public Health. Johnson & Johnson sponsors a number of programs structured around the principles of these platforms. In addition, Johnson & Johnson has created “Signature Programs” to address community needs through strategies that are clearly aligned with the Company’s Contributions platforms. The Company also supports local initiatives that are critical to the communities in which our employees live and work. Employee engagement is a key element of our social responsibility programs. Engagement ranges from executives serving on a number of regional contributions committees to groups of employees participating in community efforts. In addition, Johnson & Johnson works with hundreds of nonprofit US-based and international organizations in collaborative efforts to improve health outcomes and to help create healthier communities. In 2004, Johnson & Johnson donated $524 million in cash and products, representing 4.1 percent of our CSR EUROPE Corporate Social Responsibility (CSR) Europe is a business-driven membership network whose mission is to help companies combine profitability and sustainability. Johnson & Johnson has been involved in CSR Europe since 2001. Through its many member organizations and research projects, CSR Europe has become a leader in communicating socially responsible strategies and practices. pre-tax income. For more information, please read our 2004 Corporate Contributions report, which is available at www.jnj.com/community. Sponsoring the Trust for Public Land J ohnson & Johnson has provided longstanding support for the urban parks and playground program of the Trust for Public Land (TPL). Over the past year, this funding has allowed TPL to complete redevelopment and revitalization projects in the US benefiting underserved communities in Newark, New Jersey, and San Francisco, California. In Newark’s South Ward, TPL completed the participatory design and development processes at Mildred Helms Park, the first city-owned park site to be included in TPL’s program. In San Francisco, the Trust initiated the revitalization of Potrero Hill Park, including community outreach, design development and the start of construction. Aerial view of Banda Aceh, Indonesia, one of the areas hardest hit by the tsunami. DISASTER RELIEF Since the San Francisco earthquake of 1906, Johnson & Johnson has provided disaster relief supplies to aid the victims of hurricanes, floods, fires and, more recently, terrorism. In response to the recent tsunami that devastated areas of Asia, individuals throughout the Johnson & Johnson Family of Companies have been taking part in relief efforts to provide immediate aid and to address long-term medical needs. In addition to an initial contribution of $2 million cash, we have continued to contribute funds and products to relief efforts. Donations of more than $81.4 million of medical supplies have been made, providing 2004 Cash Gifts and Product Contributions Total Giving: $528.7 Million antibiotics, antiseptics, disinfectants, wound care products, soap, anti-diarrheal medicine and other supplies. Individual Product & Other Non-Cash Gifts $406.9 Million 77% US Cash Gifts $111.8 Million International Cash Gifts $10.0 Million 21% employees in the US have contributed more than $330,000 to the American Red Cross International Relief Fund and the Company is matching their donations. In addition, donations from Johnson & Johnson employees and companies in Asia have totaled $400,000, and employees are aiding in the coordination and distribution of medical products, food, 2% water and blankets. Johnson & Johnson will remain committed to supporting stabilization and rebuilding efforts, particularly focusing upon the needs of mothers and children and upon the health and well-being of communities where we operate in the region. 35 Section 4 RESPONSIBILITY TO C O M M U N I T I E S Access to Health Care A lthough there has been steady growth in the world economy and a continuous increase in global health care spending, there are sizable unmet health care needs throughout the world. In this era of innovation and unlimited possibilities, there exists tremendous potential for Johnson & Johnson to reach new markets around the globe, enhance opportunities and build upon its strengths. About 60 percent of worldwide growth through 2020 is expected to occur in emerging markets such as China, Brazil, India, Mexico and Russia. Johnson & Johnson is focused on global growth in these markets through an emphasis on regional research and development; increased regional licensing and acquisitions; maintaining a global mindset in Johnson & Johnson Growth Brings Benefits to China I n emerging markets such as China, with its 1.3 billion population, Johnson & Johnson seeks to provide enhanced health care by reaching new consumers and growing established businesses. While market development efforts in underserved areas of the world are good for business in a financial sense, they also provide important access benefits to local populations. Johnson & Johnson consumer companies in China have been achieving solid growth since operations started in the late 1980s. Wound care, baby care, sanitary protection and skin care products are among the Johnson & Johnson consumer products brought to the Chinese market. Likewise, the establishment of Xian-Janssen Pharmaceutical Ltd., currently the largest and most successful foreign pharmaceutical company in China, led to tremendous success in bringing modern medicine to China through in-house manufacturing. 36 developing leaders; more systematically translating success from the most developed markets around the world; and altering attitudes from a US focus to a global mindset. Another significant avenue for providing access is through direct product donations. Johnson & Johnson donates to a number of leading nongovernmental organizations (NGOs) that conduct international relief efforts. As a founding member of the Partnership for Quality Medical Donations, we comply with the WHO Guidelines for Donated Drugs and we were among the first endorsers of those guidelines. Our current projects with local organizations include donations of miconazole muco-adhesive tablet (MAT) into a comprehensive drug distribution organization in Kenya called MEDS, which functions, in essence, as a revolving fund for drug procurement. This donation has been supplemented by cash for educational activities. We also support a home health care support program under a memorandum of understanding with HIV South Africa. A wide variety of over-the-counter medicines and personal care products are being provided for up to 10 community-based organizations, which serve an estimated 2,400 patients weekly. At the international level, we are currently operating under a memorandum of understanding with the IDA Foundation to supply free infection prevention products for distribution to government and nonprofit health care organizations worldwide. This Dutch foundation is associated with the International Dispensary Association (IDA) and has as its core objective to provide high-quality essential drugs and medical supplies at the lowest possible price to developing countries. Our Tibotec-Virco N.V. subsidiary in Mechelen, Belgium, provides miconazole MAT for treatment of oro-pharyngeal candidiasis, the most common opportunistic infection in AIDS patients. The three approaches used include: 1) the sale of miconazole on a costrecovery basis with IDA and several other not-for-profit pharmaceutical distributors supplying government hospitals, faith-based clinics and retail pharmacies; 2) donation programs to associations of people living with HIV/AIDS, various NGOs and faith-based support organizations and national AIDS programs in sub-Saharan Africa; and 3) inclusion of miconazole in basic drug kits for HIV/AIDS patients and their families. For more information on these programs see the Tibotec website: www.tibotec.com. The Nature Conservancy Projects in South America Sierra Nevada de Santa Marta, Colombia – The Nature Conservancy is working to raise awareness among the local population of the importance of the environment and its impact on human health. With Johnson & Johnson support, activities include reforestation, water and waste management, and analysis and management of vectors such as sand flies and mosquitoes that cause tropical diseases.Efforts are also underway to promote biodiversity-friendly farming and forestry practices. Sinangoé Community in the Condor Bioreserve, Ecuador – The Nature Conservancy has worked with the Cofán tribe, the indigenous people of Sinangoé, for more than 10 years. Current activities sponsored by Johnson & Johnson to promote community health include nutritional education, provision of medical supplies and construction of sanitary infrastructure. In turn, the Cofán tribespeople help preserve the native forested ecosystem through their knowledge of its species and ecological functions, developed over hundreds of years of living in the region. Research conducted in the mid-1990s showed that the forest area inside the Sinangoé Cofán territory was better conserved than tracts of forest found on land managed by families that had recently moved into the area. Support for Community Health T hrough our support of major NGOs and their local partners around the world, Johnson & Johnson is making a difference in peoples’ lives. Some of our most far-reaching community health efforts are undertaken through the World Wildlife Fund (WWF) and The Nature Conservancy and its Health and the Environment program. A Johnson & Johnson grant supported the training of community paramedics and health promoters to address the area’s most common needs: reproductive health, pediatrics, dentistry and disease prevention. © WWF/Philipp Goeltenboth World Wildlife Fund In many regions around the globe, WWF pursues projects to improve the standard of living in vulnerable communities, meet their subsistence and health care needs, and relieve pressures on the surrounding environment. Johnson & Johnson is supporting WWF efforts in the Congo Basin of Africa, the Eastern African marine ecoregion and the Eastern Himalayas to improve human health outcomes while at the same time protecting native ecosystems and rare species. WWF and its local nonprofit partners recognize that the health of human populations is integrally linked to the environment in areas such as food security, access to indigenous medicines and sustainable use of resources. Mbaracayu Forest Biosphere Reserve, Paraguay – View of one of the many bays and turtle nesting beaches in the Kiunga Marine National Reserve, Kenya. With support from Johnson & Johnson, the World Wildlife Fund is implementing a health and biodiversity project to benefit isolated fishing communities in the reserve. 37 Section 5 R E S P O N S I B I L I T Y S T O C K H O L D E T O R S “Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed…” FROM OUR CREDO Financial Performance Johnson & Johnson completed another highly successful year in 2004, with total sales of $47.3 billion (a 13 percent increase over 2003). Each business segment – Medical Devices and Diagnostics, Pharmaceutical and Consumer – achieved double-digit growth. Johnson & Johnson stock is publicly traded on the New York Stock Exchange (ticker symbol JNJ). 2004 Sales by Business Segment 2004 SALES Medical Devices and Diagnostics PERCENT CHANGE FROM 2003 $16.9 billion 13.2% Pharmaceutical $22.1 billion 13.4% Consumer $ 8.3 billion 12.1% 2004 Sales by Region United States $27.8 billion Europe Asia-Pacific Western $11.2 billion and Africa Hemisphere $5.8 billion (non-US) $2.6 billion For full information on the Company’s financial performance for 2004, please see our Annual Report, which is available at www.investor.jnj.com. 38 Improving Business Results through Process Excellence P rocess Excellence was launched at Johnson & Johnson in 1999 and focuses on improving business results while building stronger businesses for the long term. It encompasses business assessments, powerful improvement tools (Six Sigma, Lean Thinking, Design Excellence) and best practice sharing to help Johnson & Johnson companies achieve their shortand long-term goals. As of December 2004, more than 3,500 Black Belts and Green Belts, plus 114 Master Black Belts, have been trained in the Process Excellence improvement methods. These collective skills and competencies have contributed to the success of countless projects, which have delivered just over $1 billion in financial benefits during 2004, and a cumulative $3.5 billion in the last four years. In 2004, 51 companies within the Johnson & Johnson Family of Companies conducted a business assessment, using Process Excellence tools, that evaluated their performance and highlighted key areas for improvement. More than 200 Johnson & Johnson business leaders worldwide have received training as examiners to conduct these assessments. Process Excellence provides a common framework for achieving continuing improvement across the corporation. Corporate Governance Our Credo principles have guided us for many years and will continue to set the tone of integrity for the Company in all aspects of how we manage our business. Our Credo encompasses our accounting and financial reporting responsibilities to shareholders, investors and other stakeholders. The management of Johnson & Johnson is responsible for the integrity, objectivity, accuracy and clarity of our reporting. The Johnson & Johnson Board of Directors is currently made up of 13 individuals, 11 of whom are independent under the standards of the New York Stock Exchange. The independent, non-employee members of the Board meet in executive session, without any members of Johnson & Johnson management present, after most Board meetings. The Audit Committee of the Board of Directors is composed solely of independent directors with the financial knowledge and experience to provide appropriate oversight. The Company has adopted formal principles of corporate governance, which can be found in the Corporate Governance section of our Investor Relations website at www.investor.jnj.com. The website also contains more detailed information about the Board of Directors composition and committees, as well as information on contacting the Board. Research and Development Our commitment to managing our business for the long term drives us to leverage science and technology to serve the needs of consumers while creating strong value for our stockholders. From the invention of the BAND-AID Brand Adhesive Bandage in 1921 to today’s R&D breakthroughs in treating tuberculosis and HIV/AIDS – Johnson & Johnson continues to discover and develop innovative health care products. Research and Development Expenses 2001 $3.59 2002 $3.96 2003 $4.70 2004 $5.20 (billions of dollars) Business Ethics O ur Ethical Code For the Conduct of Pharmaceutical Medicine is intended to complement Our Credo by providing more specific standards of conduct and behavior for physicians, clinical research scientists and others who are responsible for medical aspects of pharmaceutical research and development. Johnson & Johnson’s Policy on Business Conduct contains the basic rules and policies governing our business practices around the world. Our employees worldwide are required to read, be familiar with and follow this policy, and our senior managers must certify annually that their organizations comply with its requirements. This Policy includes a requirement that employees promptly report information concerning any prohibited or unlawful act. HIV/AIDS Advances in Science J ohnson & Johnson searches for ways to help people with HIV/AIDS live longer, healthier lives. As a global health care company, we have a genuine interest in supporting scientific research for unmet medical needs. As described below, several of our operating companies have developed therapeutic medicines to address the worldwide HIV/AIDS crisis, and research into new products is continuing. Tibotec-Virco N.V. is advancing the search for new therapies that can help improve and save lives affected by HIV/AIDS in both the developed and developing countries of the world. Tibotec focuses on the discovery Recognition from the Investment Community J ohnson & Johnson stock has been included in the Dow Jones Sustainability Indexes (DJSI) since 2000. The DJSI family follows a best-in-class approach to identify sustainability leaders in each industry. The Company also enjoys a AAA rating – the highest given – from Innovest Strategic Advisors, an investment research organization that focuses on non-traditional drivers of investment risk and returns, such as corporate environmental, social and governance performance. Johnson & Johnson has been independently assessed according to the FTSE4Good criteria and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the independent financial index company FTSE Group, FTSE4Good is a financial index series that is designed to identify and facilitate investment in companies that meet globally recognized corporate responsibility standards. 39 Section 5 RESPONSIBILITY TO S T O C K H O L D E R S and development of new anti-retrovirals including protease inhibitors, non-nucleoside reverse transcriptase inhibitors and other products. Additionally, the company is developing an anti-tuberculosis agent, which was discovered by scientists at Johnson & Johnson Pharmaceutical Research & Development in Belgium. Tuberculosis is a common opportunistic infection found in HIV/AIDS patients and a leading cause of death in people with AIDS in the developing world. Virco BVBA in Mechelen, Belgium, has been actively participating in research collaborations aimed at evaluating the virological evolution of the HIV pandemic and monitoring the emergence of HIV drug resistance in both the developed and developing countries of the world. Virco BVBA scientists were among the first to develop HIV drug resistance tests, and today support doctors making personalized therapy regimens for their HIV positive patients by providing diagnostic services for the management of HIV infection. Ortho-Biotech Products, L.P., Bridgewater, New Jersey, US, has explored the use of PROCRIT (Epoetin alfa) to treat HIV-related anemia often caused by HIV medications, blood loss and nutritional deficiencies typical in people with HIV/AIDS. PROCRIT helps build red blood cells, which circulate more oxygen throughout the body, thereby providing more energy and reducing fatigue. DURAGESIC (fentanyl transdermal system) CII patch, created by Janssen Pharmaceutica Products, L.P., in Titusville, New Jersey, US, is a medication for moderate-to-severe chronic pain that can provide long-lasting relief from persistent pain in people suffering from late stage AIDS and cancer. Other Stakeholder Issues J ohnson & Johnson periodically receives inquiries on issues related to research and development activities, such as the use of stem cells and animals in research. Stem Cells Johnson & Johnson pursues some efforts in the area of stem cell research, including in-house efforts as well as work performed by external contractors, and collaborative research activities. Our internal policy on stem cell research activities allows for the use of adult human stem cells, adult somatic cells, animal stem 40 cells and animal somatic cells or stem cells from the umbilical cord blood or placenta. Research using somatic cells covers a broad range of unmet medical needs, including diabetes, heart failure, osteoarthritis, blindness and neurodegeneration. Our policy does not permit the use in any research of human stem cells or tissue that would be derived from fetuses. With regard to research using embryonic stem cells (an earlier stage of development than the fetus), the Company follows the guidelines established by US President George W. Bush for research conducted at the National Institutes of Health. We have a senior level committee, which includes external bioethicists, that is charged with reviewing developments in this area and assessing any requests to conduct research involving embryonic stem cells. No studies have been approved involving human embryonic stem cells derived after August 9, 2001. Animals in Research Johnson & Johnson has a responsibility to assure the safety and efficacy of our products for intended use and in the event of accidental misuse. The primary means of providing this assurance continues to be the judicious and ethical use of laboratory animals and in vitro (test tube) tests. The policies and guidelines governing animal testing at Johnson & Johnson as well as the company’s efforts to identify alternative testing methods can be found on the Social Responsibility section of our website, under Policies (www.jnj.com/community). Johnson & Johnson is committed to the “3R” principles of replacement, refinement and reduction of laboratory research animal testing and to seeking alternatives through internal efforts as well as by supporting studies at outside research facilities. Our commitment to the “3R” principles has resulted in a substantial decrease in animal usage. In the five-year period spanning 1999 through 2003, the number of animals used has dropped annually. By 2003, the number of animals used had been reduced by 24 percent. During the same period, overall R&D expenditures rose 81 percent. We provide financial support for outside research programs that develop and validate in vitro alternatives such as tissue culture programs. Johnson & Johnson is a corporate sponsor of the Johns Hopkins Center for Alternatives to Animal Testing and the Institute for In Vitro Sciences. We also supported a major program at the University of Texas to develop alternatives to skin and eye irritation testing. C O N T E N T S GRI Content I N D E X SECTION ONE Strategic Approach to Sustainability at Johnson & Johnson – Living Our Credo Chairman’s Message Summary of Key Indicators Sustainability Organization and Management System Our Credo SECTION TWO 12 Responsibility to Customers 1 2 2 7 8 SECTION THREE Responsibility to Employees Safety Health Employment Policies and Practices 10 16 21 SECTION FOUR Responsibility to Communities Environment Society 24 34 SECTION FIVE Living Our Credo Responsibility to Stockholders Financial Performance Corporate Governance Research and Development 38 38 39 Index 41 This report was prepared based on the Global Reporting Initiative’s (GRI) 2002 Sustainability Reporting Guidelines. The mission of GRI is to promote international harmonization in the reporting of relevant and credible corporate economic, environmental and social performance information to enhance responsible decision-making. GRI pursues this mission through a multi-stakeholder process of open dialogue and collaboration in the design and implementation of widely applicable sustainability reporting guidelines. GRI has not verified the contents of this report, nor does it take a position on the reliability of information reported herein. For further information about GRI, please visit www.globalreporting.org. The cover features Dang Huong Giang, a first grade student in Vietnam, pictured wearing a safety helmet donated by Johnson & Johnson (see related story beginning on page 13). Photography by Trinh My Anh of the Asia Injury Prevention Foundation. For additional information on Johnson & Johnson programs and performance, use the reply card enclosed in this report or contact: Brian K. Boyd, Vice President, Worldwide Environmental Affairs Tina Lucchetti, Manager, Investor Relations Johnson & Johnson One Johnson & Johnson Plaza New Brunswick, NJ 08933 Website: www.jnj.com GRI TOPICS REFERENCE* Accident rates LA7 Accidental releases EN13 Association memberships 3.15 Awards and recognition SO4 8, Biodiversity EN7 Business conduct policies SO2,3.7 Child labor HR6 Community outreach SO1 Compliance Conservation EN16 EN27 PAGES 2, 12-14, 15 2, 25, 26, 33 35, 41 15, 27, 31, 39 26-27, 32, 37 39 4, 23 2, 13-14, 25, 26-28, 35-36 2, 3-5, 23, 25, 26 2, 15, 25, 26-27, 37 19, 34-37 Contributions EC10 Corporate governance 3.1, 3.2, 3.6 Diversity LA10,11 Employee health and wellness LA12 Employment policies HR 4,5,6,9 Energy use 3.19, EN3 Environmental costs EN35 Ergonomics LA7,12 External certifications 3.20 External manufacturers 3.16, EN33 Facility assessment 3.19 Fleet safety 3.19, LA7 Goals 3.19 38-39 4, 22-23 10, 16-22 21-23 2, 27, 28-29 32 11 2, 15, 25 4-5 4 2, 12-13 2-3, 5, 11, 13, 17, 24, 25, 27, 28, 32, 33 Greenhouse gases 2.16, EN8 2, 27, 28-29, 33 HIV/AIDS LA8 19, 36, 39-40 ISO 14001 3.20 2, 25 Laboratory safety LA7 11-12 Lost work days LA7 2, 15 Materials EN1 2, 27, 30, 33 Net sales EC1 38 Nonproduct output EN10,11,12 2, 27, 31-32, 33 OHSAS 18001 3.20 15 Organization 3.4, 3.6 3 Our Credo 3.7 7 Packaging EN1,14 2, 27, 30, 33 Process Excellence 3.19 38 Products 2.2, 3.13, 3.16, EN14 8, 9, 25 Renewable energy EN17 28-29 Report coverage 2.11 - 2.14 2, 33 Research policies 3.14, 3.16 39-40 Standards 3.19 3-4 Strategic vision 1.1 1, 7 Supply chain 3.16, EN33, HR3 4-5 Toxic chemical releases EN10, 11, 12 2, 27, 31, 33 Voluntary initiatives 3.14 15, 29, 32 Waste EN11 2, 27, 30-31, 33 Water use EN5 2, 27, 29, 33 *GRI refers to the voluntary reporting guidelines of the Global Reporting Initiative, available at www.globalreporting.org. Organizational Partnerships As a good corporate citizen, we work with organizations all over the world to advance the concepts of sustainable growth, protect natural resources and enhance worker health and safety. Members of our senior management team also serve on the boards of major conservation and health organizations. American College of Occupational and Environmental Medicine www.acoem.org Business for Social Responsibility www.bsr.org The Conservation Fund www.conservationfund.org Global Environmental Management Initiative www.gemi.org Harvard Medical School, Center for Health and the Global Environment www.med.harvard.edu/chge Healthy People 2010 www.health.gov/healthypeople National Safety Council www.nsc.org The Nature Conservancy www.nature.org New Jersey State Safety Council www.njsafety.org Partnership for Quality Medical Donations www.pqmd.org Prevent Blindness Tri-State www.preventblindnessct.org Student Conservation Association www.thesca.org Trust for Public Land www.tpl.org US-EU Cooperation on Workplace Safety and Health www.useuosh.org The Wharton School of the University of Pennsylvania, Risk Management and Decision Processes Center http://grace.wharton.upenn.edu/risk The Wilderness Society www.wilderness.org World Business Council for Sustainable Development www.wbcsd.ch World Environment Center www.wec.org World Resources Institute www.wri.org World Wildlife Fund www.panda.org 41 12 12 2 0 0 4 S U S TA I N A B I L I T Y R E P O R T Visit the 2004 Sustainability Report online at www.jnj.com. We invite your comments and feedback via our website or using the comment card provided in this report. “We must be good citizens—support One Johnson & Johnson Plaza New Brunswick, New Jersey 08933 good works and charities...We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources...” Cert no. SW-COC-1340 This report is printed on paper made from 100% post-consumer waste, certified for the Forest Stewardship Council rules and manufactured with wind-generated energy. Printed by Pictorial Offset Corporation, an ISO 14001-Environmental Management Systems company. The following trademarks and trade names of Johnson & Johnson and its affiliated companies appear in this report: BAND-AID, CHARITÉ, CYPHER, DURAGESIC, MOTRIN, PROCRIT, REMICADE and TYLENOL. The following trademarks of other companies also appear in this report: HARRIS INTERACTIVE (Harris Interactive Inc.), HEALTHMEDIA (HealthMedia, Inc.), LIFEWORKS (Ceridian Corp.), WEIGHT WATCHERS (Weight Watchers International, Inc.) and WORKPLACE RESPONSE (Screening for Mental Health Inc.). © Johnson & Johnson Services, Inc. 2005 Living Our Credo The values that drive our business strategy of sustainable, long-term growth and leadership