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 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 a 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 companies' sphere of influence 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.

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 its daily business. To ensure that its 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. 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.

Novo Nordisk formulated its first environmental policy in 1975. Since then it has been revisited on a couple of occasions, 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 ISO14001 standard at all production sites.

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 reputation, people and 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 ISO14001 standard. The responsibility for this lies with anchored with the External Environment department as the corporate hub and is implemented at the sites via Product Supply.

In 2005 the environmental strategy was reviewed to assess the progress made in meeting the strategic goals outlined in the five-year strategy. As part of this work, the corporate strategic goals were analysed in light of the Novo Nordisk business strategy developments and internal and external commitments on corporate responsibility. The updated corporate strategy refines the priorities to focus direction, seeking to ensure that resources, in terms of money, people and time, are allocated to issues that are material to the long-term business.

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 the corporate level for 2005-2008:

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

In addition, environmental impacts of strategic importance, such as resource consumption, waste and emissions, are managed as part of the ongoing ISO14001 activities.

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. Below is an overview of the five top-level indicators for Novo Nordisk's environmental performance.

The eco-producivity indices (EPI) for water and energy improved by 8% and 9% in 2005 respectively compared to 2004. In the period 2001-2005 the average annual realised improvements were 8% and 14% respectively. Hence, the five-year target has been met for both water and energy.

As of 2006 a new indicator will be used to measure consumed water and energy against production: the Eco Intensity Ratios (EIR) for water and energy. EIR for the two production areas, Diabetes Care and Biopharmaceuticals, will be reported. There will not be an aggregated target of EIR for Novo Nordisk. A long-term target for EIR for 2006-2010 will be set in 2006 and will be based on lessons learned in 2006 with the new indicator.

EIR targets have been set for water and energy for 2006. To get the best experience with EIR, the target is based on a bottom-up process where Production has given its best estimates for energy and water consumption and related these to the forecasted production. The EIR targets are implemented in the Balanced Scorecard for Novo Nordisk as well as in the bonus scheme. A more comprehensive explanation of the EIR concept will be given in the next Annual Report.

In 2005 Novo Nordisk continued to be challenged on compliance. The number of breaches of regulatory limit values increased to 174 from 74 in 2004. The number of accidental releases increased from 29 in 2004 to 83 in 2005. The targets for both indicators are zero and were therefore not met.

The registered breaches and accidental releases are evaluated as being minor incidents with no or only minor impact on the external environment. 164 out of 174 breaches of regulatory limits (94%) are related to pH and temperature in wastewater, which are monitored through continuous measurements. The increase in the number of breaches is therefore largely due to the fact that there have been challenges in dealing with pH in the wastewater at most sites in spite of the fact that the company has invested up to DKK 10 million per neutralisation system at some sites. Several initiatives have been taken to ensure increased focus on compliance and one reporting standard has been successfully implemented globally. 50 out of the 83 accidental releases (60%) were related to accidental releases of cooling agents such as HCFCs and HFCs. A campaign in 2005 focused on accidental releases from these types of facility. In 2005 there was one accidental release of GMOs at the site in Montes Claros.

Four of the total number of accidental releases to air, water and soil were accidental releases where a significant volume was released. These are:

• Emission of 1,279 kg HCFC to air at Novo Nordisk’s site in Montes Claros
• Emission of 900 litres of base to soil at Novo Nordisk’s site in Bagsværd
• Emission of 500 litres of 30% HCl to the wastewater system at Novo Nordisk’s site in Bagsværd
• Emission of 500 litres of NaOH to the rainwater system at Novo Nordisk’s site in Bagsværd
  

In 2005 two more of Novo Nordisk's production facilities achieved ISO14001 certification. All Novo Nordisk's production sites are to be certified. By the end of 2005, three sites remain: Tianjin, China; Hayward in California, US; and Montes Claros, Brazil.

See a list of  ISO14001 certificates:

The focus on sound environmental management in the organisation will facilitate the work with the CO2 strategy and the energy reduction which will be needed to met the absolute reduction target.

Compared to 2004, environmental investments have decreased by DKK 7.5 million from DKK 54.0 million to DKK 46.5 million. Environmental investments constitute 1.3% of the investment in tangible assets, which is a decrease of 0.5 percentage points compared to 2004 at 1.8 percentage points.

Environmental investments compared to gross investments have increased, mainly due to a higher investment level in 2005 compared to 2004; the gross investments have increased by 23% from DKK 2,977 million in 2004 to DKK 3.665 million in 2005.

A large part of the increase is related to new production facilities and generally increased activity at all sites.

Compared to 2004, environmental costs have increased by DKK 54.7 million. This is mainly due to increased production. In 2005 the environmental costs as a percentage of total production costs, sales and operating income are almost at the same level as in 2004.

The environmental costs as a percentage of investments have decreased due to the high investment level in 2005.

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