Climate change

Clarity on the science of climate change has never been stronger. Human-induced global climate change is described as one of the greatest environmental challenges ever to confront mankind. Over the past 200 years the atmospheric concentration of carbon dioxide (CO2), the chief heat-trapping greenhouse gas, has risen by 35%, while methane concentrations have more than doubled. These increases are due to human activities, primarily resulting from the burning of fossil fuels such as coal to produce energy and from deforestation.

Carbon that has been sequestered in the Earth's crust (in the form of oil, coal and other fossil fuels) for millions of years has been extracted, burned and released into the atmosphere in large quantities over the past two centuries. These changes in the composition of the Earth's atmosphere have increased the average global surface temperature by about 1°F (0.6°C) over the past 100 years. Scientists estimate that, if the increases in greenhouse gas emissions continue unabated, global temperatures will rise by 2.5-10.4°F (1.4-5.8°C) by 2100.

The effects of such temperature changes on agricultural production, water supply, forests and overall human development are likely to be detrimental to a large portion of the world's population. Regional effects are already beginning to be experienced and include: more frequent and severe droughts and storms; changes in agricultural productivity and water supplies; sea level rise; and damage to vulnerable ecosystems such as coral reefs. Populations which depend directly on natural resources for their livelihoods and which largely live in the developing world, will be the most vulnerable and affected by these changes.

Given the magnitude and scale of the issue and its potential impact, governments in Europe and, increasingly, other countries around the world have regulated emissions of CO2. 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 also been allocated CO2 quotas under these regulations at sites Bagsværd and Hillerød. During 2005-2007 Novo Nordisk has surplus quotas in relation to its expected CO2 emissions. However, after 2008 there is considerable uncertainty about the total amount of quotas allocated to the sites.

Novo Nordisk's management has decided to go beyond compliance on this issue and be proactive in reducing CO2 emissions. In 2004 Novo Nordisk therefore decided to participate in the World Wide Fund for Nature  (WWF) Climate Savers programme to reduce its CO2emissions. In January 2006 Novo Nordisk and WWF signed an agreement  under which Novo Nordisk pledges to make a substantial reduction in its CO2 emissions. Novo Nordisk is the first company in Denmark, the second in Europe and the tenth worldwide to sign this agreement under WWF international Climate Savers programme.

Under this agreement, Novo Nordisk pledges to restructure a substantial proportion of its energy consumption so that the company's CO2 emissions by 2014 will be 10% less than in 2004. In the absence of emission reduction programmes, Novo Nordisk's emissions would increase by approximately 67% during the period 2004-2014. The reductions will be achieved mainly through energy efficiency measures and renewable energy projects - greening of the company's energy supply. By consuming less energy and shifting towards renewable energy, eg from wind turbines and fuel shift, Novo Nordisk is adapting to the future challenges. 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:

1. Screening of energy efficiency measures at other sites
2. Energy management system to ensure the management and implementation of energy efficiency projects
3. Integration of energy/environmental considerations in the design of new buildings and plants
4. Investigation and implementation of other reduction options such as fuel switching and renewable energy

The Climate Savers programme under WWF is an international instrument designed to get companies to emit less CO2. For the 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.

At least 50% of the 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 or 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.

Climate Leadership Index
In September 2005 Novo Nordisk was honoured as 'best in class' in its approach to climate change in a report released by the Carbon Disclosure Project, a global survey of the responses of the world's largest companies to the issue of climate change. The CDP is backed by 155 institutional investors representing 22 trillion US dollars in assets under management. Novo Nordisk was judged among the best in its sector for its strategic awareness of the risks and opportunities of a carbon-constrained environment as well as the quality and effectiveness of programmes put in place to reduce overall greenhouse gas emissions.

The chart illustrates the expected development of Novo Nordisk's CO2 emission consisting of 'business as usual', with cLEAN® (Novo Nordisk's version of LEAN manufacturing) and 'business as usual', and with a CO2 strategy and cLEAN® combined.

Without cLEAN® improvements and the CO2 strategy, the emissions would have been three times higher in 2014 than in 2004 (630,000 tons). Since the cLEAN® programme is already operational, the reductions as a result of the efficiency measures under this programme are included when forecasting the 'business as usual' situation in a Climate Savers context. In the Climate Savers programme, a 'business as usual' scenario thus covers the forecasted emissions in the case of no CO2 strategy.

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.