Climate change
Human-induced global climate change is one of the greatest environmental challenges ever to confront mankind. The atmospheric concentration of heat-trapping greenhouse gases such as carbon dioxide (CO2 ) is rising fast, primarily due to the burning of fossil fuels for energy. Rising global temperatures mean more frequent and severe droughts and storms, changes in agricultural productivity and water supplies, rising sea levels, and damage to vulnerable ecosystems such as coral reefs. People in the developing world who depend directly on natural resources for their livelihoods are particularly at risk.
Given the magnitude of the problem, governments are taking action to regulate emissions of CO2. As a major user of energy, industry is expected to support such action.
Performance 2006
In January 2006, Novo Nordisk signed an agreement with WWF that made the company a member of the Climate Savers programme. This programme invites leading global businesses to demonstrate that investing in reduction options can benefit the long-term health of the business. Under this agreement Novo Nordisk has set an ambitious target for the company’s CO2 reductions: to achieve a reduction of 10% of its CO2 emissions by 2014 compared to 2004. To do so, the projected significant growth in production needs to be decoupled from the levels of energy needed in the processes.
The climate strategy has two elements: energy-saving initiatives, and more use of renewable energy. Novo Nordisk is looking into opportunities such as windmills, solar power and geothermal energy.
The ongoing cLEAN® programme – an adapted LEAN manufacturing programme to increase productivity – in Product Supply underpins the climate strategy and will positively affect the level of CO2 emissions. As a result of this programme Novo Nordisk will achieve a lower energy consumption per produced unit.
Energy efficiency was the focus in 2006. Significant progress has been made in identifying opportunities for energy savings at individual production sites. By the end of 2006 Novo Nordisk Product Supply had conducted energy screenings at 10 of its 13 production sites. Sites in Brazil, China and Japan will be screened in 2007. Many projects are easy wins and most of the projects have short payback times.
A fund was established for sites to conduct feasibility studies of energy-saving projects, and an internal price for carbon was introduced to promote implementation of energy-saving projects.
Novo Nordisk’s approach
Novo Nordisk is determined to go beyond compliance on this issue and be proactive in reducing CO2 emissions. Under the Climate Savers agreement Novo Nordisk has set an ambitious target for the company’s CO2 reductions: to achieve a reduction of 10% of its CO2 emissions by 2014 compared to 2004. The reductions will be achieved through energy efficiency measures and renewable energy supplies, underpinned by production efficiency gains. The long-term climate commitment aims to better position the company for a carbon-constrained future. The agreement covers CO2 emissions from Novo Nordisk worldwide. Key objectives of the CO2 strategy (2005–2008) are:
- Screening of energy efficiency measures at all sites.
- Energy management system to ensure the management and implementation of energy efficiency projects.
- Stronger integration of energy/environmental considerations in the design of new buildings and plants.
- Investigation and implementation of other reduction options such as fuel switching and renewable energy.
EU emissions regulations
As of January 2005 in Europe, a ton of CO2 carries a price like any other commodity, and releasing emissions beyond the allocated quotas will require companies to purchase additional CO2 allowances from the market. Novo Nordisk has been allocated CO2 quotas under these regulations at its sites in Bagsværd and Hillerød. For 2005–2007 Novo Nordisk has surplus quotas in relation to its expected CO2 emissions. However, after 2008 there is considerable uncertainty as to the total quotas that will be allocated to the sites.
Climate leadership
The Carbon Disclosure Project (CDP), a global survey of how the world's largest companies are responding to climate change, has named Novo Nordisk as one of the best in the pharmaceutical sector for strategic awareness of the risks and opportunities of a carbon-constrained environment, as well as for the quality and effectiveness of its programmes to reduce overall greenhouse gas emissions. The CDP is backed by 155 institutional investors representing 22 trillion US dollars in assets under management.
Case stories
- The insulin-filling facility in Clayton, North Carolina, US, has identified eight projects ranging from more efficient use of boilers to minimising energy losses in the steam system. All measures will be implemented in 2007 with a total CO2 reduction of 1,033 tons per year and an average payback period of 18 months.
- Substantial savings opportunities were also identified following energy screenings at the production sites in Denmark, where 90% of the company’s CO2 emissions occur. At the factor VIIa factory in Hillerød, significant energy and cost savings are expected to result from improvements in the ventilation system, which contributes to 40–50% of total energy use. Lessons learned can be transferred to other sites.
- Optimising production (using cLEAN® ) in a purification plant in Kalundborg, Denmark, made it possible to close down a plant in Bagsværd producing identical products – and move all production to Kalundborg. By doing so, not only did we manage to avoid CO2 emissions from a whole plant – the move also enabled better utilisation of the more energy-efficient equipment already installed in Kalundborg. All in all, this has led to a decrease in annual CO2 emissions of 43% or 5,800 tons per year – while still producing the same amount of insulin.
About Climate Savers
WWF's Climate Savers programme is an international instrument designed to get companies to emit less CO2. The programme invites leading global businesses to demonstrate that investing in reduction options can benefit the long-term health of the business. For WWF, it is crucial to engage leading companies through such partnerships. The organisation hopes that this will help spur the world's governments to do what is needed to arrest climate change. Besides Novo Nordisk, WWF has signed agreements with Lafarge in France, Sagawa in Japan, and the US-based companies Johnson & Johnson, IBM, Nike, Polaroid, Collins, Xanterra and Catalyst. Sony and Tetrapak also joined the programme in 2006.
At least 50% of Novo Nordisk’s reduction in CO2 is to be made in the OECD countries or affluent nations. In the UN Convention on Climate Change, these are designated as Annex 1 countries.
The CO2 reductions will stem mainly from energy efficiency measures in Novo Nordisk's production apparatus and from renewable energy projects.
Progress towards meeting the target will be verified each year by an independent third party and the results will be submitted to WWF.
Projected emissions
The chart illustrates the expected development of Novo Nordisk's CO2emission:
Climate Leadership Index
Novo Nordisk continues to maintain its lead in the Climate Leadership Index. The company strategy and approach have been rated well within the sector. While the leadership index and methodology had changed in 2006 to focus on the 10 highest carbon impact sectors, the project still continues to rate carbon strategies in each sector. More information on the CDP4 disclosure project can be obtained here.
This page has been assessed by PricewaterhouseCoopers as part of its assessment of Novo Nordisk’s statement that it reports ‘in accordance’ with GRI. Please refer to Audit and assurance for a full description of the nature of assurance offered.
