Annual Report 2006

• Front page
• Who we are
  
• What we do
  
• How we perform
• How we work
• How we are accountable
• Downloads
  

How we perform

• Access to health
• Advocacy
• Awards and recognitions
• Bioethics
• Business ethics
• Community engagement
• Environmental management
  • Climate change
  • Environmental footprint
  • Green accounts
  • Environmentally sound design
  • Product stewardship
• Financial performance
• Human rights
• Legal issues
• Key performance data
• Interactive charts
• Quality
• Responsible sourcing
• Socio-economics
• Workplace quality

Environmental management

Ensuring environmental sustainability is one of the global challenges addressed by the UN Millennium Development Goals. Loss of environmental resources not only upsets the ecological balance of the Earth, but also has a huge impact on human lives. In addition, the unequal access to environmental resources means that in some parts of the world economic growth is hindered by the lack of eg clean drinking water, whereas in other parts of the world the abundance of and access to energy is accelerating the depletion of fossil fuels.

Governments and intergovernmental organisations such as the UN recognise the urgency of this issue and seek to promote the integration of the principles of sustainable development into national and regional policy programmes. Legislation and policy instruments such as taxation and regulation aim to curb or even reverse the loss of environmental resources, but not even these initiatives fully factor in the environmental costs and the potentially negative impacts on human lives in the long term. The business community has a key role to play if we are to achieve more sustainable growth.

Environmental issues such as global climate change, ozone layer depletion, use of freshwater and fossil fuels, and waste generation call for collaborative efforts and responsible action. As corporate citizens, businesses, like other actors in society, have a responsibility to contribute to environmental sustainability, and – being in many cases not only highly dependant on access to environmental resources but also heavy users of resources such as energy, water and chemicals – companies must support efforts to decouple environmental impacts from economic growth. As the sphere of influence of companies expands, so does their sphere of responsibility in the eyes of the global community and the societies in which they operate.

Environmental management is much more than good housekeeping; increasingly, it extends beyond the factory gates. To companies with global operations, it is also a matter of more effectively managing risks and optimising production.

Performance 2006

Novo Nordisk accounts for its environmental performance as part of its non-financial statements.

The consolidated environmental data in the Annual Report build on information from Novo Nordisk's 13 production sites. In the interactive charts, all data can be extracted for comparison or further analysis from each of the production sites or at corporate level.

Key indicators of environmental performance can be found in the environmental footprint article. Below is an overview of the top-level key indicators for monitoring of Novo Nordisk's environmental performance as well as other strategic initiatives.

Top-level performance indicators

• Eco Intensity Ratios (EIR) on water and energy

As of 2006 the EPI has been replaced by a new key performance indicator to measure water and energy efficiency relative to production. The Eco Intensity Ratio (EIR) is defined as: ‘EIR = Resource consumption per produced or released unit’.

By using the performance indicator 'EIR', the total performance measured for water and energy of a production facility or a business area, can be calculated by adding the EIR ratios in standard units from each process step or intermediary product in the process flow from eg fermentation to packaging of the finished product.

To ensure ongoing improved performance, EIR targets for water and energy are defined on an annual and long-term basis. The annual targets are used as milestones towards achievement of the long-term target. EIR targets are adjusted in connection with the performance reporting in accordance with development in product mix, which significantly affects the possibility for achievement of the targets. The adjusted EIR targets are calculated as follows: ‘Adjusted EIR target = Forecasted EIR target * Forecasted product mix / Actual product mix’.

The annual EIR targets are implemented in the Balanced Scorecard for Novo Nordisk as well as in the bonus scheme for management.

EIR is reported in the Annual Report for the two business areas: Diabetes care and Biopharmaceuticals. The long-term EIR target for 2006–2010 is a 2% reduction in water and energy consumption relative to production on average per year.

In 2006, we have achieved the following EIR results:

Diabetes care:

  
Biopharmaceuticals:

Note: API = Active Pharmaceutical Ingredients< BR >

The EIR concept and the long-term targets will be evaluated – and if necessary revised – at the beginning of 2007. The evaluation is based on experiences from 2006, which has been considered as the ‘test period’ for the new performance indicators.

• Legal compliance

Compliance is a high priority. Preventive measures are beginning to show results: the number of breaches of regulatory limit values has decreased by 30% from 174 in 2005 to 122 in 2006. Out of the 122 breaches, 97% are related to pH and temperature in waste water, which are monitored through continuous measurements.

In the same period, however, the number of accidental releases has increased by 29% from 104 in 2005 to 134 in 2006, of which 81 are releases to the atmosphere of cooling agents such as HCFC’s and HFC’s. This increasing number reflects particular efforts focused on cooling equipment, initiated in 2006. This focus has resulted in improved registration of releases of cooling agents and what causes them, and hence also a higher number of reported releases than previously. A 'Cookbook for limiting emission of cooling agents' has been launched during 2006, and it is expected that this will result in fewer releases of cooling agents in the future.

The accidental releases in 2006 comprise:

• 93 releases to the atmosphere, of which 81 were due to leakage of cooling agents. The environmental impact from releases of cooling agents corresponds to a ozone layer depleting potential of 44 kg CFC11 equivalents, which is a decrease of 43% from 2005. In addition, the releases of cooling agents have contributed to less than 1% of the total global warming potential that Novo Nordisk is accountable for.
• 29 releases to sewage systems, of which 16 incidents were due to waste water that was not sufficiently pH-neutralised. The remaining incidents were caused by accidental releases of minor amounts of different chemicals. All accidental releases to the sewage systems are treated in public waste water treatment plants, before discharge to a water recipient.
• 12 releases to soil at our site in Kalundborg due to accidents with ethanol waste and leakage from sewage systems. The releases have caused pollution of approximately 2,000 tons of soil, which has been removed and sent for purification and subsequent reuse of the soil.

There were no accidental releases of GMOs in 2006.

All of these incidents have been reported to the authorities and in all cases corrective actions have been implemented to limit the impact on the external environment and to prevent reoccurrence of similar incidents. It is assessed that breaches of regulatory limit values and accidental releases have had no or only minor impact on the external environment.

The general target to avoid breaches of regulatory limit values and accidental releases has therefore not yet been met.

In 2007 and the following years there will be continued focus on compliance and preventive measures, which can further reduce the number of breaches and help curb the curve of accidental releases. Preventive measures are long-term efforts, consisting of training of key employees, risk assessment of production and pilot facilities and implementation of technical solutions to mitigate these risks.

*) Was reported as 83. Reporting error now corrected.

• Complaints

In 2006, we have only received three complaints over nuisances from our production facilities. Two complaints were due to noise and one to odour. This is a significant improvement from 2005, when 16 complaints were registered.

Other strategic initiatives

• Climate strategy

In January 2006 Novo Nordisk adopted a climate strategy for the company worldwide. Also in 2006, Novo Nordisk signed an agreement with WWF to become a member of the Climate Savers programme. We have hereby committed to reducing total CO₂ emissions in 2014 to 10% below the level in 2004. Implementation of the climate strategy was initiated already in 2005. For more information, please download the article: ‘Climate strategy puts energy efficiency in the spotlight’ from the 2006 Annual Report (PDF).

• Waste strategy

In 2006, Novo Nordisk developed a waste strategy for the company’s production sites. The objective is to reduce the amount of waste and how hazardous it is . The strategy focuses on two strategic principles:
a) Waste prevention
b) Environmentally sound waste management
A number of initiatives will be launched to implement the waste strategy in 2006–2010.

• ISO 14001 certification

All Novo Nordisk's production sites are to be ISO 14001-certified. By the end of 2006, five sites remain. The following sites are certified according to ISO 14001

Environmental investments and costs

Compared to 2005, environmental investments have increased by 1.3 million Danish kroner from 46.5 million to 47.8 million. Environmental investments constitute 1.7% of the total investment in tangible assets, which is an increase of 0.4 percentage points compared to 2005.

Environmental costs have increased by 8.8 million Danish kroner from 210.2 million in 2005 to 219 million in 2006. This is mainly due to increased costs for the environmental organisation in Denmark, which expanded considerably during 2006, countered by significant decreases in costs for hazardous waste and energy taxes in Denmark.

In 2006 the environmental costs constituted 2.2% of total production costs, 0.6% of sales and 2.4% of the operating income which are almost at the same level as in 2005.

The full data set for environmental costs and investments can be viewed here.

Novo Nordisk's approach

Novo Nordisk is committed to ‘strive to conduct its activities in a financially, environmentally and socially responsible way’. Environmental responsibility implies working to continuously improve the company's environmental performance by setting high objectives and integrating environmental considerations into daily business. To ensure that environmental priorities are attuned with stakeholders' and society's concerns and requirements, the company maintains an open dialogue with stakeholders, communicates its activities, and reports annually on its performance.

In this area, as in any other business undertaking, Novo Nordisk is an active player on the international agenda, eg through its membership of industry groups and through engagements in partnerships between industry, governments, communities and NGOs.

Novo Nordisk subscribes to the International Chamber of Commerce's Business Charter for Sustainable Development and is a supporter of the Global Compact. Furthermore, we support the United Nations Convention on Biological Diversity. This implies supporting a precautionary approach in order to prevent serious or irreversible environmental degradation. Respect of this principle has been company practice for more than two decades.  For example, Novo Nordisk does not have operations in sensitive biodiversity-rich areas.

Environmental policy

Novo Nordisk formulated its first environmental policy in the early 1980s. Since then it has been revisited several times but the core has remained the same over the years. The efforts to achieve continuous improvements are supported by programmes to:

• promote environmental awareness and pollution prevention
• reduce impacts on the global and local environment by developing environmentally sound processes and products, by optimising use of materials, water and energy, and by reducing emissions and waste
• monitor and evaluate the environmental performance of suppliers
• engage in stakeholder dialogues and partnerships, and report on performance
• comply with environmental legislation and relevant requirements
• implement the ISO 14001 standard at all production sites
  

Environmental strategy

Novo Nordisk's environmental strategy and management system serve as robust tools that support the policy and the commitment to environmental responsibility. The strategy is reviewed to respond to emerging issues and proactively address societal and business challenges.

An Environment & Bioethics Committee, chaired by the EVP of Corporate Relations, is the company's highest authority with regard to environmental and bioethical issues. The committee works on behalf of Executive Management to ensure that:

• Novo Nordisk's interests and needs regarding environmental and bioethical issues are met.
• Novo Nordisk remains in compliance with the commitments spelled out in the Charter of the Novo Group.

The Environmental Management System is embedded in the organisation via the ISO 14001 standard. The responsibility for this lies with the External Environment department as the corporate hub and is implemented at Novo Nordisk’s production sites globally.

Strategy review

In 2005 the environmental strategy was reviewed to assess the progress made in meeting the strategic goals outlined in the five-year strategy, which covers the period 2003–2008.

As part of this work, the corporate strategic goals were analysed in light of Novo Nordisk business strategy developments, and internal and external commitments on corporate responsibility. The updated corporate strategy refines the priorities to concentrate on selected focus areas, seeking to ensure that resources, in terms of money, people and time, are allocated to aspects and issues that have significant impact on the environment.

Focus areas

The environmental strategy is supported by a Strategy Action Plan 2005–2008, which provides details on specific actions to be undertaken to address the focus areas at corporate level for 2005–2008:

• Genetically Modified Organisms
• Energy and Climate Change
• Sustainable Process/Product
• Product Stewardship
• Transportation
• Responsible Sourcing (Supply Chain Management)

In addition, environmental aspects and impacts of operational importance such as resource consumption, waste and emissions are managed as part of the ongoing ISO 14001 activities in Product Supply.

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.