Economic Performance
OUR ECONOMIC IMPACT
Our Credo, written in 1943, established the business values and philosophy that guide our operating companies. It puts patients and customers first, then our employees, our communities and our shareholders—all of whom are touched by our economic impacts.
People all over the world rely on Johnson & Johnson, not just for our products and services but for other dimensions of our economic impacts, as shown in the chart below.
MANAGING RISK
Johnson & Johnson recognizes several categories of risk, including general industry conditions and competition; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; domestic and foreign health care reforms and governmental laws and regulations; and trends toward health care cost containment. A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 to the Company’s Annual Report on Form 10-K, and also available at www.sec.gov.
We also recognize risks posed to Johnson & Johnson by climate change and related policy responses. As part of our continued involvement in the Carbon Disclosure Project, we have evaluated these risks and filed a complete report, available at www.cdproject.net. In our 2009 report, we cited several general risks that will require attention and mitigation strategies: changing regulations; a forecast of more extreme weather events; climate implications that could affect the availability of raw materials or water and alter migration patterns; and increased cases of disease. Regulatory risks could include increased energy costs due to taxes and renewable-energy directives, higher costs due to additional requirements for tracking and managing climate change issues, and increased investment of capital in CO2-reduction projects. These costs are not anticipated to be material to the cash flow of Johnson & Johnson, as our businesses are not energy-intensive.
Of the risks to our business related to climate change, the most significant in the next decade is an extreme weather event, such as a hurricane or flood that would cause the closing of a manufacturing facility, disruption in the supply chain or loss of product inventory. There is also the possibility that climate change could affect the availability of raw materials for our products.
Though not financially significant, Johnson & Johnson owns and operates several on-site renewable-energy-generation facilities that could generate income from carbon offsets and renewable-energy credits. We are well-positioned to compete in an energy- and carbon-constrained economy, based on our successful, ongoing implementation of energy-efficiency, renewable-energy and carbon-reduction projects.
