CSR 2022 Eng

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Report on corporate social responsibility

2022
This report on corporate social responsibility contains the mandatory reporting under sections 99a, 99b and 99d of the Danish Financial Statements Act. Lead article 2 About Verdo 4 Verdo’s business model 7 Risk assessment 8 Framework for CSR ................................................................ 12 Social contract 13 Three new focus areas ........................................................ 14 Questions for Verdo’s Sustainability Manager 15 Climate and environment 16 Social factors 36 Good governance 52 Aims and development 69 Data foundation – reporting form 70 Contents

We must prevent future crises

2022 was a hard year for consumers. The energy crisis caused prices to skyrocket, and after decades of taking a secure energy supply for granted, we suddenly found ourselves at risk of being unable to keep warm all winter.

If we look at the underlying causes, it is clear that war and the climate crisis had a very direct impact on life in Denmark.

Russia’s invasion of Ukraine led to a ban on imports of Russian gas and biomass. Drought and dried-out rivers meant that France had to halt production at 26 of its 56 nuclear power stations during the summer, because there was no water to cool the nuclear reactors. Norway’s hydroelectric power plants were short of water from the mountains. These are just some of the factors that have driven the energy crisis.

As a result, 2022 was an instructive year for Verdo and the energy sector overall. The energy crisis has clearly highlighted the need for an accelerated green transition in the energy sector, based on energy sources that are more fragmented in terms of type and production location – and thus more robust. This underscores the importance of the results presented in this CSR report – particularly in the environmental area. This work will help us prevent future crises, so we avoid finding ourselves in the same situation again and again.

But the energy crisis has also highlighted some of the dilemmas associated with the green transition. How do we best achieve the goal of phasing out fossil fuels, given that we also cannot accept that Danes freeze?

Due to this specific issue, we have moved backwards in some areas in 2022, while we moved forward in others. If we look at climate action, we have increased trade in coal, but have also accelerated the roll-out of district heating and signed a climate partnership agreement with Randers Municipality. This may appear contradictory, but this is the reality Verdo has to work within, and it is important to note that the direction remains the same. We are not shying away from our green goals and ambitions.

With regard to social initiatives, I am pleased that Verdo’s social contract is really taking off. This applies in relation to

developing an attractive working environment, and to giving back to the local community – and to introducing social responsibility requirements throughout the supply chain.

When we look at governance, as an international company with global value chains, we have a social responsibility and obligations that go beyond our local communities and the decent conditions we are used to in our part of the world. Our employees, suppliers and partners play a key role in helping us to fulfil these obligations and our aims. That is why we are continually developing Verdo’s Code of Conduct, which defines our requirements and expectations of everyone we work with.

We recognise that we have development work ahead of us, and through dialogue and cooperation with suppliers and partners, we will ensure continued progress in this area.

I would like to thank our employees, partners and other advocates who have contributed to advancing Verdo’s work with environmental, social and governance goals in 2022. I look forward to our ongoing partnership.

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About Verdo

Verdo’s core narrative

A green step ahead – together.

Verdo means ‘green’. And green responsibility starts with you and me.

We are with you around the clock. As you brew your morning coffee, and as you take a shower. When traffic lights shine green for you on the way to work, and when you charge your car. When the street lights show you the way home, and when you turn up the heat and turn on the lights in your living room in the evening.

We make sure you have electricity, water, heating and light. Around the clock. All year round. As we have done for over 150 years. Being a cooperative, we are also owned by you and me. You will see us around town, and involved in sports and clubs, and in culture. We are part of the life of the local community, which we actively support.

Behind Verdo stand more than 500 capable staff – in a forward-looking organisation with sustainable energy aspirations. We are the specialists who build the district heating network, and produce and transmit the heat in your radiators. Who supply and optimise the fuels used today, so they become greener tomorrow. Who upgrade the street lighting, reducing energy consumption and climate footprint. Who develop intelligent traffic lights that read and optimise traffic flows. And who make it easier to drive green with our charging stations.

We make a mark. At home. Locally. Nationally. Globally. More than ever, we are part of the world as a whole. We take a joint responsibility as we develop and use energy-efficient solutions, for the benefit of our climate and planet – and you, me and future generations.

We take new steps every day. A green step ahead – together.

A value-based company

Verdo is a value-based company founded on the values: Together, Responsible and Ambitious. These values are reflected in our approach to CSR. They are also reflected in our aim of being an active and responsible local player that helps drive the green transition.

Together

We have a strong team spirit, and pull together as employees to create solutions for future society with our customers and partners

Responsible

We take responsibility for more than our own results, and strive to make a clear difference in the green transition

Ambitious

We take the lead by ensuring continued development through dynamism, professionalism and dedication

Verdo’s vision Verdo’s mission

A green step ahead – together

We are a green step ahead when we... demonstrate due care and are at the forefront strive towards renewable green technologies

• create high value and make it easy to be a customer

• support efficient digital and innovative operation

Verdo is succeeding when we together... develop new solutions with customers develop infrastructure and cities with local partners

• work with authorities

• build a strong common corporate culture

Verdo operates and develops sustainable critical infrastructure for the benefit of customers and future society, based on heating, water, electricity and technical infrastructure

Sustainable:

• Think in terms of new opportunities and invest thoughtfully

• Focus on climate, the environment and resource efficiency

Build a profitable business

Customers:

• Make life simple for our customers

• Ensure efficient operations and a customer-oriented approach Are digital and innovative

Society:

• Ensure competitive prices and high security of supply

• Contribute to future society – locally and nationally

About Verdo

Verdo is a purpose-driven company, that was incorporated as a cooperative society (Verdo a.m.b.a.) at the end of 2021. This change has helped emphasise that Verdo works to promote the cooperative owners’ common interest in heating, water and electricity, and towards increased democratisation, by ensuring the broadest possible consumer influence in Verdo’s supply areas in Randers, Herning and Kongerslev.

We are a locally anchored energy group, responsible for supplying electricity, water and/or heat to a large number of private homes and companies in central Jutland. We balance our regulated utility business as one activity area with our commercial business activities as the other. The commercial business covers several business areas that are contributing to the green transition.

For example, Verdo is a leader in LED street lighting throughout Denmark and also supplies intelligent traffic light systems. We supply energy systems on the European market, and trade globally in fuel, biomass and coal for energy and industrial purposes. We also sell green power from environmentally certified and renewable energy sources and provide charging solutions for electric or plug-in hybrid vehicles throughout Denmark.

As of 31 December 2022 there were 530 employees at Verdo – 118 in Energi & Forsyning, 110 in Energy, 144 in Teknik, 39 in Trading, 80 in Holding and 39 in Electricity sales, charging solutions and our Customer Centre.

The majority of employees work at our Danish sites in Randers, Herning, Aarhus, Aalborg, Hillerød and Næstved. We also have sites in Norway, Poland and USA.

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Verdo’s business model

Verdo’s business model is based on working to transform resources into value. The process involves significant mutual impacts between Verdo and the outside world. We seek to balance these in the best possible way – both the positive and the negative aspects.

Activities

Development and installation

∂ Energy plants

∂ Street lighting

∂ Traffic systems

∂ Electricity installation Operations and maintenance

∂ District heating

∂ Drinking water

∂ Energy plants

∂ Street lighting Service

∂ Energy plants

∂ Electrical installation Trading

∂ Electricity sales

∂ Biomass

∂ District heating

∂ Technical carbon

∂ Coal

Values

Customer value

∂ Future-proof heating

∂ Clean drinking water

∂ Green power

Social value

∂ Products for the green transition

∂ Robust infrastructure

∂ Contributing to sustainable communities

∂ Danish and international jobs

∂ Tax payments in Denmark

Resources

People

Renewable energy Finances

Raw materials

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Risk assessment

This section reports on significant risks of adverse impacts on the climate, environment and social factors Verdo’s business activities are deemed to have, and how we manage these risks, pursuant to section 99 a(3) of the Danish Financial Statements Act.

As an energy group, we engage in a wide range of activities that can significantly impact citizens. We therefore continually strive to identify and prevent the possible negative impacts of our activities on the climate, the environment and people.

An overview of current, material risks follows.

Harder to source certified biomass

Since the conversion of Verdo’s combined heat and power plant from coal to biomass, it has reduced CO2 emissions by 99.3%. However, Verdo is continuing to advance the green transition.

The sustainable biomass used in our district heating production or sold to both private and commercial customers is certified through schemes that fulfil recognised and regulatory standards. However, it has become more difficult to source certified biomass for Verdo as a result of the war in Ukraine. Work is therefore constantly being done to secure the biomass supply by considering more options and new responsible solutions.

Verdo keeps an emergency coal stockpile intended to be used as a reserve in the event of disruptions to supply chains or biomass supply. In such situations, we put security of supply for citizens above the short-term environmental impacts of using coal.

Price increases and delays due to global resource shortages

Verdo experienced continued price increases for materials and services from suppliers in 2022 due to global shortages of resources and components. This has particularly impacted the roll-out of district heating and the establishment of energy plants, as well as Teknik & Belysning, which works with street lighting, traffic light systems and technical installations.

For Verdo Energy Systems, this has affected everything from PLCs to boilers, while for Teknik & Belysning, it has impacted luminaires, cables and excavation contracts, contributing to higher prices and delays in Verdo’s deliveries to customers. At Verdo Varme, the rising prices for materials and contractors have also increased costs. This will impact new district heating customers in 2023 in the form of higher connection prices.

New biomass legislation implemented in 2022

Since 2015, when Verdo received its first certificate (FSC® Traceability Certificate) to ensure sourcing of responsible biomass, our strong focus on sustainability has not only resulted in green and responsible district heating for consumers in Randers, but also kept us at the forefront.

The sector agreement to ensure sustainable biomass took effect in 2016, and Verdo was ready to meet the associated requirements. Since then, Verdo has been certified to trade biomass under several recognised certifications. This has again put us at the forefront, ready to comply with the new Danish legislation which replaces the sector agreement and implements the EU’s Renewable Energy Directive, and additional Danish requirements for biodiversity and carbon stores.

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When it became clear that Verdo was no longer willing or able to trade with Russia, there was a risk of ending up in a situation where there was not enough wood-based biomass for Danish private households using this fuel. The Danish Energy Agency has therefore made an exception, relaxing the sustainability requirements for wood pellets for private households, in order to ensure security of supply. However, it has so far been possible for Verdo to avoid lowering the requirements. Through persistence, good business connections and knowledge of the sector, we have successfully sourced biomass that meets all requirements – including the extra Danish ones.

Trade in energy coal

Verdo’s trade in energy coal is complex. It conflicts with the transition away from fossil energy supply. Yet it is still part of the current energy mix that allows citizens around the world to stay warm.

About 60% of our coal trade is in industrial coal. This is coal used by industry for metal alloys and manufacturing a wide range of products, such as flat screens, mobile phones, solar cells, steel and aluminium.

Verdo therefore continues to trade in coal, and has no separate aim of phasing out this trade. This is based on the view that it is not distributors that can phase out the use of energy coal. The use of energy coal can only be phased out directly, and this will happen as new, more eco-friendly energy sources become available to provide the energy.

Until then, Verdo is working to ensure socially responsible conditions throughout the value chain for coal trading. Verdo’s policies for social responsibility in value chains are reflected in our Code of Conduct.

Code of Conduct implementation

We see potential risks in our supplier management. We have not identified any concrete human rights violations or corruption among our suppliers, but we strive to do what we can to prevent these from occurring.

For a number of years, Verdo Trading has been requiring suppliers to commit to our Code of Conduct. We started working on a Code of Conduct for the entire Verdo Group in 2021. Our expectations for rolling this out in 2022 were not fully met. To ensure that the requirements are in line with the expectations of our partners and society – nationally and internationally – we have revised the Code of Conduct. We have therefore been in dialogue with various partners during 2022 to ensure that we continue to set relevant and contemporary requirements.

In collaboration with consultants in the field, we have undertaken a materiality analysis to ensure that we set the right requirements in relation to risks and opportunities in our value chains. Work on implementing our updated Code of Conduct will continue in 2023, as a framework for all trade in coal and biomass, and for all other trade and collaboration with the Verdo Group as a whole.

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Energy crisis

In 2022, the energy crisis proved to be a two-edged sword – which can help accelerate the green transition in some areas, while delaying it in others. A greater need for fossil fuels to maintain security of supply in 2023 cannot be ruled out. There is also a risk that electrification of the energy sector will be slower than expected.

We are working strategically to ensure an energy supply that is based on renewable sources as soon as possible. This is partof our work with future heating and digitalisation of supply.

CO2 emissions from energy production

Verdo has seen a dramatic rise in district heating customer numbers in recent years. However, this did not affect our CO2 emissions at the CHP plant in 2022, which were 45% lower than in 2021. Looking ahead, however, a higher number of customers may negatively impact Verdo’s total emissions, due to production and higher fuel consumption.

Even though Verdo risks having higher CO2 emissions in the long term as a result of increased district heating production, district heating conversions can still make a significant contribution to the green transition overall. The reason is that many new customers will switch to Verdo from more fossil-intensive forms of heating.

Verdo’s environmental declarations are publicly available.

They state that Verdo Varme Herning emits 26.7 g CO2e per kWh of district heating, with a renewable energy share of 90%. Verdo Varme Randers emits 7.8 g CO2e per kWh with a renewable energy share of 99%.

In 2021, we initiated the preparation of climate accounts based on scopes 1, 2 and 3 of the Greenhouse Gas Protocol.

This work continued in 2022 and will contribute, in the first instance, to Verdo’s goal of a 70% CO2 reduction by 2030.

Building stock

Verdo owns a number of buildings that could be more climate-friendly. Most of these buildings – including our head office in Randers – are quite old, and major initiatives are therefore required.

To minimise the risks associated with the building stock, we took a number of steps in 2022 to improve building energy efficiency. The measures include a new ventilation system, sensor control for lighting in all offices and corridors (except for a few one-person offices) and timer and sensor control for outdoor lighting, so that only necessary lighting is switched on. All lighting uses LEDs.

Furnishings are also maintained and reused as far as possible. Items are only discarded when they are worn out.

We also lowered the flow temperature and set thermostats to maintain a lower temperature in the 2022/2023 winter. We have set a target of around 20 degrees.

There is also a plan to replace the roof over the next 4-5 years, which is expected to reduce heat loss.

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Skill shortages

Verdo relies on highly specialised labour, including engineers, professional project managers and digital experts, in its work to realise the green transition. The shortage of labour (especially expert labour) was a challenge in 2022, and this is expected to continue in 2023. This is reflected in part in higher recruitment costs and lost earnings due to unfilled positions.

We are therefore committed to making Verdo an even more attractive workplace. “Competencies and the future workplace” was adopted as one of three new strategic focus areas in 2022. A new digital career universe has also been established that aims to help Verdo attract the necessary labour.

We can also attain some of the missing competencies through further training for current employees at Verdo Academy. However, there is a risk associated with this if we fail to identify and implement the relevant continuing education needs.

The underrepresented gender

There continues to be a lack of female managers at various levels in the Group. The proportions are 13% at level 1, 22% at level 2 and 20% at level 3. There is thus still some way to go to achieve the 2025 targets of 25%, 25% and 33% respectively.

Our initiatives include seeking to attract more female managers and to motivate more existing female employees to pursue management careers by encouraging all Verdo employees to undergo further training. Studies show that continuing education holds promise as a pathway for women into the management role. Overall, we see an imbalance in relation to gender diversity. In addition to a low proportion of female managers, around 80% of Verdo’s employees are men, and the proportion of women decreases the higher we move up the management hierarchy. The imbalance is due to the fact that Verdo is a predominantly technical organisation and the sector has historically been dominated by men, and this continues to this day. We are not alone with this demographic in the energy sector, but it is an area we want to focus on, in order to increase the representation of women.

Verdo will in future give greater focus to presenting female candidates in the final pool when hiring employees. This new approach aims to help eliminate gender bias in the recruitment process.

These efforts were intensified in 2022 with the addition of the “Competencies and the future workplace” strategic focus area.

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Framework for CSR

Over the past year, Verdo’s CSR focus has moved towards a more unified ESG mindset, where Environment, Social and Governance set the framework for sustainable business conduct and development. The strategic foundation has been further strengthened with the appointment of a Sustainability Manager.

This development is a natural extension of the restructuring of Verdo into a cooperative society, and reflects Verdo’s desire to meet our significant social responsibility as a large Danish company – the 189th largest at the time of writing (source: Børsen, 9 October 2022).

The UN’s Sustainable Development Goals serve as a good common frame of reference that most people – partners, customers, employees and society in general – can relate to. As an energy group, it is natural that we focus particularly on goals 6, 7 and 13. We also have a strategic focus on goals 9, 11 and 17.

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We were put on earth with the social contract as our ‘birth certificate’. We therefore have an obligation to put ourselves in the shoes of our customers, our own people, local communities and partners, to deliver the added long-term dimension that is our purpose.”
Torben Høeg Bonde, Chairman of the Board

Social contract

Verdo’s social contract was adopted in 2021 in connection with our StepTogether group strategy, and the social contract initiatives have since been incorporated into our various business areas. This is a development that we accelerated during 2022, and to which we will give even greater focus in 2023.

The social contract defines Verdo’s efforts in relation to the climate and environment, and economic, social and governance sustainability. It is based on mutual interest and dependence between companies and society, such that we create change together – for the benefit of all.

Customers – simplicity in daily life

• We make an effort to understand and deliver on our customers’ needs, so we can make it easy to be a customer with us.

• We provide sustainable and secure utility services at competitive prices. We act with decency and want a relationship based on trust with our customers.

Employees – a community that promotes growth

• We equip employees for the future labour market through individual development and the opportunity to have great responsibility.

We create the framework for a committed community and dedicated employees, where we dynamically work towards ambitious common goals.

• We create an attractive workplace with a strong sustainable purpose.

For companies, it is vital to have a functional society that provides security, opportunities and strong infrastructure, in order to ensure continued growth – and thus their viability. Conversely, society has an interest in successful and competitive companies that can support the economy. The social contract thus helps to cement our responsibility towards customers, the local community, partners and each other as employees of Verdo.

Society – local development

• We give back and contribute to the development of our local communities.

• We create an attractive foundation for a rich and growing business community.

We develop and share knowledge and support projects that promote a sustainable transition.

Partners – long-term relationships

• We are transparent and flexible in the way we work with our partners.

We set the bar high, and place demands on competitiveness, deliveries, working conditions, etc.

• We work towards close relationships and long-term benefits.

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Three new focus areas

Verdo’s corporate strategy was updated in 2022 with three new focus areas – defined in the group strategy as mustwin battles* – which aim in part to strengthen CSR within the Group. For each focus area, success criteria have been defined for the period up until 2025. These are continuously followed up at management level.

The three focus areas are closely linked, as the companies and employees of the future will need to be able to quickly acquire knowledge and the necessary sustainability competencies. This demands strong competencies in the development of new technologies and green solutions, data understanding and assurance, communication and digitalisation.

Verdo’s three new strategic focus areas aim to ensure that we emerge stronger through this development.

Competencies and the future workplace

Must-win battle #1

• Right competencies for future aims

• An attractive place to work – today and in the future

Stronger sustainable development

Must-win battle #2

• Create competitive advantages

Ahead of legislation

Green and responsible supply chains

• Develop green products and green digital services

Digitalisation and data

Must-win battle #3

• Accelerate Verdo’s digital transformation

• We create digital customer experiences and a digital mindset and become a data-driven organisation.

* Must-win battles are the decisive ‘battles’ that must be won to achieve the organisation’s key goals. They must be cross-cutting and relevant to several business areas, and concrete so that they can be measured.

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Stine Brøgger Thygesen, Head of Strategy at Verdo

Questions for Verdo’s Sustainability Manager

Line Risgaard Mortensen joined Verdo’s Strategy Office on 1 February 2022 as our first Sustainability Manager. We asked her to sum up her take on Verdo after her first year, and where Verdo stands in relation to the green transition.

Is Verdo a green company?

It is hard to give a definitive answer, as very few companies can call themselves purely green. Verdo is already contributing significantly to the green transition in a number of key areas. We are doing everything we can to stay on track, but we are not there yet, and there is still much that we can and should do. This is because new requirements are constantly emerging that are ever more extensive and complex. We are thus all gradually gaining an understanding of how to ensure continued sustainable development.

Verdo has been moving in this direction for many years. We therefore have good insight into what measures are needed to ensure we are at the forefront. This requires strong collaboration across the organisation and with our suppliers and partners.

Many green initiatives are being implemented, through which we are already helping to realise the transition. We are in the process of systematising this area, so that we can measure it. It is vital that we incorporate sustainable development into every business plan we make, as this is what will allow us to systematise and document this development, and ultimately help us understand how we can measure it.

How eager are the employees to take part in the transition?

One thing that has made a big impression is how the culture is constantly changing. Today, it is just as much the employees who place certain demands on Verdo as the other way round, and that is great to see.

As I see it, future workplaces are dependent on being green, because there is a strong focus on a company’s aims and the higher purpose of its existence, and employees being able to feel they are contributing to something bigger.

What is the most important task facing Verdo?

We face many important tasks – now and in the future. One of the major tasks is for our business areas – with the involvement of the employees, who are the experts in their fields – to define our materialities. For example, what are the key initiatives for achieving the greatest possible CO2 reduction?

This is no simple matter. It involves mapping and data assurance for all our own activities and for all value chains. We should not only look at how we impact society. It is also important how society affects us – for example, if there is risk of shortages of the biomass needed for our district heating production or the like. But defining our materialities helps us to ensure we constantly apply our efforts where they will have the greatest impact. The new legislation, which puts even greater focus on materiality, can thus help us set the goals that will make the biggest difference.

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Climate and environment

This section contains our statutory statement on social responsibility pursuant to section 99a of the Danish Financial Statements Act, in relation to environmental factors, including what Verdo is doing to reduce the climate impact of the company’s activities.

Verdo – climate and environment Our climate and environment policy

As a responsible energy group, our focus is naturally on the environment and climate that we potentially impact. Climate is defined here as weather conditions in the form of precipitation, air pressure, humidity and temperature – the basic conditions for ecosystems – while environment is seen as the physical environment and conditions under which humans, animals and plants live interdependently.

Future heating

2022 was the year when Verdo began the strategic work of developing the future heating in Randers and Herning in earnest. Towards 2025, a comprehensive plan will be drawn up that aims for a future fossil-free heating supply for residents of the two municipalities.

Phasing out current CHP plant in Randers

The development of Flodbyen Randers is a central element in plans for the future heating supply in Randers. The establishment of this new harbour-side district means that Verdo expects production of heat at the current CHP plant to be phased out by the end of 2036.

Sustainable energy is crucial to Verdo, and we are actively contributing to sustainable development. Our climate and environment policy is based on our own analyses and goals as well as national and international goals and guidelines, including greenhouse gas reduction targets and international climate commitments. The energy sector has a major impact on greenhouse gas emissions in Denmark. Within its economic framework, Verdo seeks to implement projects that ensure cost-effective energy efficiency and minimal climate and environmental impacts.

Verdo’s strategy contains the following goals:

Fair prices for utility services and high security of supply

• CO2e and NO

x reductions

• Clean drinking water

Updated agreements with Herning CHP plant

In Herning, Verdo has a contract with Ørsted for heating supply from Herning CHP plant until June 2034. Even though this is more than 10 years away, the role of the plant is part of the strategic work of setting the direction for future heating in Herning.

Where will heating come from in the future? Which production solutions are relevant? What are the economic parameters? And what is their lifespan? These are some of the questions that the steering committee for ‘Future Heating’ has worked on in recent years.

The options are many, and the mix of energy sources is central to the development of a secure, green and economically attractive heating supply.

The steering committee has therefore screened various energy sources such as solar heating, solar cells, wind, geothermal, electric boilers, heat pumps, excess heat from industry, biomass, waste incineration etc.

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Results 2022

99.2%

Verdo uses 99.2% biomass to power the Randers CHP plant.

90%

District heating in Herning is produced using 90% biomass

181 tonnes

NOx emissions at Randers CHP plant decreased from 242,079 kg in 2021 to 181,176 kg in 2022

24.6

MW

Verdo is constructing two waste-fired plants in Norway (15 MW and 9.6 MW)

45%

CO2 emissions at Randers CHP plant were around 45% lower in 2022 than in 2021, despite more district heating connections

10%

Meat accounted for just under 10% of the food served in Verdo’s canteen in Randers in 2022

In addition to weighing up the environmental and climate-related advantages and disadvantages, the screening looks at how Verdo can future-proof the high security of supply with a decentralised system, and spread the financial risks in relation to the heating price.

This can be done by combining different energy sources, for example, solar heat production when the sun is shining and this is the cheapest form of production, and other energy sources when the sun is not shining.

In 2023, work will continue more concretely with the various production scenarios, including possible locations for the different production solutions. After that, the strategic work will enter a third phase, where a plan will be made for phasing in the future production system in the district heating network.

Verdo aims to have a final plan ready by 2025 showing the direction for the development of future heating.

The figure shows how a decentralised heating system in a connected network can contribute to a green and secure heat supply for all local communities in and around Randers.

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Digital Supply will deliver major savings through data project

Verdo’s work to secure a stable energy supply and focus on sustainability has paved the way for an exciting new project on utilising data for the benefit of the environment and customers.

Using data from customers’ installations, Verdo will lower the supply and return flow temperatures in the district heating network and optimise the heat utilisation. This will allow each customer to best utilise the heat that enters their home.

The project will focus on data from consumers’ heat meters, and use this to identify whether the customer has poor heat utilisation – i.e. such that the hot water passes through the house and the installation.

Verdo currently has the data to manually identify which customers have the worst heat utilisation. The aim is to create an algorithm that can automatically send the customer or heating and sanitation technician a detailed description of what is wrong with the customer’s installation based on data, and thereby optimise the energy supply, for the benefit of the customer and the environment.

• Ensuring that information and necessary resources are available to achieve goals and objectives.

• Operating and maintaining an effective eco-management system, focused on reducing the climate impact of the company’s activities.

Monitoring and recording our emissions and formulating useful key figures.

• Focusing on procuring climate-friendly, eco-friendly and energy-efficient products and solutions.

• Ensuring that relevant employees are aware of the company’s emissions and motivating employees to make suggestions that can reduce environmental impacts and negative climate effects.

• Implementing the projects which prove to be costeffective.

Verdo undertakes to observe applicable legislation and relevant regulatory requirements in relation to the climate and environment.

Verdo also undertakes to develop and share knowledge in relation to the green transition, internally and externally.

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We fulfil our climate and environment policy by:

Climate partnership in Randers

On 2 November 2022, Verdo formally entered into its most comprehensive climate partnership to date.

The partnership is with Randers Municipality, and through it, Verdo aims to deliver fossil-free water and heating throughout the municipality by 2030. The municipality will also strive to support Verdo’s work in achieving this ambitious goal.

Under the climate partnership, electricity, heat pumps and similar renewable energy technologies will be some of the primary energy sources in Randers. Verdo will also work towards utilising waste heat from local companies, establishing

PtX plants and phasing out biomass for heat production.

Verdo aims to promote afforestation, with a focus on protecting drinking water and developing recreational areas.

The other initiatives are listed in the table below.

In extension of the partnership agreement, action plans will be drawn up and more specific agreements concluded in each area in the coming period.

Initiatives in the climate partnership agreement

The climate partnership agreement contains several elements that set the direction for Verdo’s climate efforts in Randers towards 2030. The initiatives include:

• Verdo aims to supply fossil-free and sustainable water and heat by 2030, including:

• Using electricity/heat pumps and other renewable energy technologies as primary energy sources

Promoting the establishment of PtX plants

Promoting the phase-out of new biomass for heat production – and the phase-out of biomass at other plants (for example, through collaboration and knowledge sharing)

• Utilisation of most of the waste and excess heat from companies in the municipality

• Verdo offers green power in Randers Municipality

• Contribute to optimising traffic (and thus reduce kilometres driven and idling time) by developing solutions for traffic lights/signals

Support improvements to energy efficiency of the building stock in Randers municipality

• Support the expansion of a fine-meshed electricity infrastructure in Randers Municipality

• Contribute to better monitoring, control and sharing of data across the organisation, so energy consumption is lowered

Promote afforestation and other natural carbon capture initiatives in Randers Municipality, in part with a focus on drinking water and recreational opportunities

• Contribute to networking and a higher level of knowledge in the local community regarding sustainable consumption and production

Contribute to Randers Municipality’s future energy strategies and action plans (e.g. through analyses and mapping possibilities)

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Climate and environment initiatives and results

2022 drew the spotlight to our work, and in the light of the energy crisis, it is impossible to ignore Verdo’s CHP plant and the three associated emergency load plants in Randers, when looking at how we already have and can further contribute to more sustainable development. This is where heat and electricity are produced for Verdo’s thousands of district heating and electricity customers, and the energy sector has traditionally had a major impact on greenhouse gas emissions in Denmark.

It is therefore natural to start with the footprint of the CHP plant when adding up the numbers for 2022.

The plant was built in 1982, and was converted to biomass (from coal) in 2009. The biomass consists of approx. 80% wood chips and 20% residual products – such as shea meal from Aarhus-based AAK, which produces vegetable oil.

Although certified biomass is only a transition fuel until Verdo can switch to other, more renewable energy sources, the focus on biomass during the energy crisis worked out well because biomass price increases were relatively limited – compared to natural gas prices. However, the war in Ukraine has also put pressure on the supply chains for certified biomass, because the loss of Russian biomass, oil and gas led many traditional Eastern European suppliers to hold onto their biomass.

For the same reason, Verdo purchased 5,000 tonnes of coal in 2022 as an energy reserve, in case the supply of biomass is disrupted for a certain period.

Phasing-in eco-management at Verdo Production

Following a review of the environmental permit, Verdo Produktion has been required to establish an eco-management system that meets the requirements in BAT 1 under the BREF document for combustion plants larger than 50 MW. We used the recognised DS/EN ISO 14001:2015 standard as our basis and have built an ISO 14001 system that also meets the BAT 1 requirements. This is a certifiable system which has not been certified. There is no requirement for certification. We have therefore chosen not to seek this, as it is an unnecessary expense that does not create value. The system is operated, maintained and audited by our HSE Manager instead.

The system was implemented in autumn 2021, and we conducted the first internal audit in autumn 2022.

Internal auditing verifies whether the system is in compliance and identifies any opportunities for improvement.

BREF and BAT – explanations

The EU adopts environmental requirements for companies based on what can be achieved using the Best Available Techniques (BAT). These environmental requirements are formulated as BAT conclusions and included in ‘BAT reference documents’, abbreviated as BREF. The environmental requirements in the BREF documents govern companies’ emissions and resource usage. The documents are revised every 8 years so that new techniques can be incorporated in the legislation.

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Decrease in the proportion of harmful particles

Verdo’s investment in an NCR DeNOx system to remove harmful particles from the CHP plant’s primary boilers also bore fruit in 2022. NOx particle emissions decreased from approx. 240,000 kg NOx in 2021 to approx. 180,000 kg NOx in 2022, despite energy production remaining at around the same level in 2022 as in 2021.

The new DeNOx system also helps us meet new emission requirements, but if emissions are to be reduced even further, large investments will be required, which customers will ultimately have to pay for. One factor in the assessment is that Verdo plans to decommission the CHP plant in 2036.

We publish our environment declarations on the Verdo website. The table titled ‘Key figures for the Randers CHP plant over time’ shows our actual emissions, while the environment declaration is based on standard values. The environment declaration for Verdo Varme Herning shows emissions of 26.7 g CO2e per kWh of district heating, with a renewable energy share of 90% in 2022, while the figures for 2021 were 22.4 g CO2e and a renewable energy share of 92%. The higher emissions and lower renewable energy share are explained in the section ‘More customers, unchanged footprint’.

Danish Energy Agency’s ranking model for greenhouse gas emissions

Key figures for the Randers CHP plant over time

Verdo’s district heating systems in both Randers and Herning are in the green category in the Danish Energy Agency’s ranking model, and are far below the threshold for the yellow category.

The emissions for Verdo Varme Randers in 2022 were 7.8 g CO2e per kWh district heating, with a renewable energy share of 99%. The figures for Randers in 2021 were 14.3 g CO2e per kWh and a renewable energy share of 98%.

Note 1: CO2 emissions from the CHP plant in Randers and emergency load plant. These are calculated based on fuel consumption, calorific value and an emission factor, in line with monitoring plans approved by the Danish Energy Agency.

Note 2: NO x emissions from the CHP plant in Randers have been measured using an Automatic Measuring System (AMS).

Note 3: Consumption of wood chips, other biomass and coal is weighed using calibrated conveyor scales.

Note 4: Net electricity production from documented sustainable biomass is calculated based on the measured net electricity production, adjusted for the documented share of sustainable biomass.

Note 5: Unlike previous years, the figures for district heating production include four peak-load stations in Randers. District heating production is measured using calibrated meters.

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Unit 2020 2021 2022 CO2 emissions1 Tonnes 2606 3002 1649 NO x emissions2 Kg 163,772 242,079 181,176 Consumption of wood chips3 Tonnes 155,435 179,187 177,720 Consumption of other biomass3 Tonnes 25,463 27,557 22,436 Consumption of coal3 Tonnes 444 739 496 Net electricity produced from green energy4 kWh 85,609,008 129,598,877 121,893,825 District heating production⁵ MWh 549,484 621,764 564,337 Customers/Active heating installations 13,945 14,722 15,513
0 50 100 150 200 250 g/kWh 9,3 g/kWh: 22,4 g/kWh: 144 g/kWh: 212 g/kWh: Verdo Varme Randers Verdo Varme Herning Individual heat pump Individual natural gas
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Carbon capture, storage and utilisation collaboration

The Intergovernmental Panel on Climate Change (IPCC) completed its third and final major interim report on escalating global warming in April 2022. In the report, researchers have pooled the existing knowledge about the possibilitiesfor slowing down climate change. One of the initiatives highlighted by the IPCC is carbon capture, storage and utilisation.

Verdo launched several collaborations in this area in 2022.

Cluster collaboration in East and Central Jutland

Randers CHP plant joined the CCUS cluster collaboration in East and Central Jutland in summer 2022. This currently numbers 11 companies. CCUS stands for Carbon Capture, Storage and Utilisation, and the goal of the collaboration is to identify the measures needed to promote the capture and utilisation of carbon.

The collaboration has produced a report: ‘Cluster collaboration on the development of infrastructure for transporting CO2 in East Jutland’.

The report is a contribution to the Folketing and the authorities, which all face an important task in developing, formulating and adopting the framework conditions that will be so central

to being able to develop, establish and operate carbon capture, transport, utilisation or storage solutions.

The cluster will continue its collaboration and hold regular biannual meetings. The companies will provide updates on their projects at these, and discuss market developments, business models and the possibility of concrete collaborations that lead to CO2 reductions .

Researchers analysing data from Randers CHP plant for carbon capture development

Verdo Production has initiated collaboration with DTI, DTU and others, which aims to develop and design a test platform for the development of flexible BECCUS processes. These involve carbon capture and utilisation or storage based on biomass combustion.

Under the collaboration, Verdo Production is sharing data with project participants, so researchers can analyse the composition of steam from the chimney at the CHP plant at the Port of Randers.

This knowledge can help facilitate the development of carbon capture methods and systems to ensure efficient and economic carbon capture in the long term.

Randers CHP plant is suitable as a data source because it has flexible operation and heat and electricity production based on biomass.

While the plant in Randers may never have its own carbon capture system, it can contribute important knowledge that can help exploit the potential at many other combustion plants. And the potential is great.

Randers CHP plant emitted a total of 282,103 tonnes of CO2 in 2021 – 2,447 tonnes from fossil fuels and 279,656 from biogenic fuels.

Seven companies and institutions are taking part in the RD-BECCUS project, which is anchored at DTI and supported by Innovation Fund Denmark.

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Verdo’s vehicle fleet*:

More customers, unchanged footprint Accelerating fleet conversion

Despite the energy crisis, Verdo’s consumption of oil, coal and gas dropped in 2022. This also means that Verdo’s CO2 emissions from the combustion of fossil fuels (coal, gas and oil) at Randers CHP plant were approx. 45% lower than in 2021. This is remarkable in a year where Verdo connected a record number of new customers to the district heating network – 1,265 new customers in Herning and Randers combined.

The short explanation for the drop in CO2 emissions is that there was less need for Verdo’s three peak and reserve load stations in Randers last year. They have all been on standby, and are only used if the CHP plant experiences disruptions to operations or is falling behind.

The performance of the biomass boilers was also stable throughout the period. The CHP plant was actually threatened by a fire affecting the conveyor belt that feeds in wood chips in 2022, but fortunately managed to stay in operation while the damage was repaired.

The slightly longer explanation for the drop in CO2 emissions is that consumer behaviour and a mild autumn also played a role. Due to the rising energy prices, many private and public sector customers reduced their energy consumption, and the mild autumn made it possible to save without compromising too much on comfort and indoor climate. But even though consumers changed their habits, it is worth noting that the drop in CO2 emissions occurred in a year when many new and large customers joined the district heating network. For example, in large industrial districts in south Randers. The picture was a little different for Herning in 2022. Unfortunately, there was more downtime at Herning CHP plant than in the previous year. It was therefore necessary to make greater use of our reserve load stations, which run on oil and gas.

Part of Verdo’s climate impact derives from the carbon emitted by our diesel or petrol vehicles. Verdo therefore has a goal of reducing the total CO2 emissions from our vehicle fleet by 70% compared to 2020 levels, by 2030.

A decision was made in 2022 to pursue a greener vehicle policy. The transition to electric vehicles generally occurs as diesel, petrol and hybrid vehicles need to be replaced, as current leases expire. Verdo has company cars and work vehicles (vans/lift trucks/pool cars). In 2022, Group management decided that company cars will be replaced by electric cars as current leases expire. This means an end to petrol and hybrid company cars in Verdo. However, company cars that need to drive more than 35,000 km per year can also be diesel cars.

Verdo’s work vehicles are being continuously replaced by electric vehicles where possible. A complete analysis of work vehicles will be carried out in 2023. This analysis will provide the basis for a new policy for work vehicles.

At the end of 2022, Verdo had nine hybrid vehicles (two of which were work vehicles) and 14 electric vehicles (nine of which were work vehicles). Another eight electric vehicles are due for delivery in 2023. This trend will continue for the rest of the year. In comparison, Verdo had four hybrid vehicles and three electric vehicles in 2021, so the proportion increased significantly in 2022.

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Unit 2020 2021 2022 Goal Number of electric vehicles Number 5 8 14Number of plug-in hybrid vehicles Number 0 0 9Petrol cars Number 2 2 2Diesel cars Number 227 203 190Estimated CO2e emissions from Verdo’s fleet Tonnes CO2e 1433 1625 1447 -
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*From 2023 we will measure our vehicle fleet in a new, more accurate way. We expect to measure the change both in average CO2 emissions and in propellant (electricity/fuel) consumption per kilometre driven.

New future-proof waterworks in the pipeline

Based on a thorough analysis and mapping of future needs, Verdo Vand decided in 2022 to establish a new waterworks northeast of Randers.

The new plant will function as a gathering point, handling groundwater from two existing spring sites at Østrup Forest and Bunkedal.

The planning is focusing on a climate-friendly and future-proof system that can ensure a stable and secure supply of clean drinking water. The first step is to climate-proof the plant, by constructing it on an elevated site in relation to Randers Fjord. Verdo Vand will then identify the possibilities for running the plant using renewable energy. The plan is to replace traditional electricity with electricity produced locally using renewable energy, including solar and wind power.

Verdo Vand is in dialogue with landowners regarding the location of the new waterworks, with two locations between Tjærby and Vestrup currently under consideration. In the process of selecting a construction consultant, a candidate has been singled out, with whom further work is being done.

Construction is expected to take at least two years. Once complete, it will be able to deliver 1 million cubic metres of clean drinking water annually to households in the Randers supply area.

The new waterworks will replace two existing waterworks in the area, which are nearing the end of their service life. The existing waterworks were built between the late 1960s and early 1970s, and are run down and technically outdated. They cannot fulfil the demands placed on modern waterworks today.

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New water supply infrastructure designed for energy savings

Verdo is working on several major infrastructure projects to secure the future water supply for customers. As always, there is a strong focus on water quality and security of supply, but energy savings are also an integral part of the projects. Work is currently underway on two specific projects – new waterworks east of Randers to replace two older waterworks, and establishment of a new spring site to replace the largest of Verdo’s four spring sites.

The new waterworks will house updated production facilities, which will reduce total energy consumption compared to the current waterworks. The location of the new waterworks will also lead to lower energy consumption in the pipeline network. Finally, there will be a focus on sustainable construction in terms of execution and materials, and renewable energy will be looked at as a source for water production at the waterworks. The waterworks is expected to be ready for production by the end of 2024.

The new spring site will replace our largest spring site, which has very low elevation and is also close to town. Low elevation generally means higher energy consumption to distribute the water, and being close to town is problematic due to the risk of contamination from various activities. The new spring site is therefore being selected based on having an elevated location in relation to Randers and offering sufficient water of good quality. This should mean lower energy consumption for the production and distribution of water and sustainable, long-term operation in relation to water quality.

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Reduced climate footprint via green power

All Verdo’s private electricity customers still automatically receive green power, and we have linked the one-leaf labelling scheme to all electricity products by default, to make it easier for customers to choose green. This means that power is 100% based on renewable energy sources, as we purchase certificates corresponding to the customer’s electricity consumption. We also plant two trees for each new electricity customer welcomed, in cooperation with various partners. Planting trees helps protect groundwater, reduce CO2 emissions and preserve biodiversity in nature.

Regarding our business customers, we saw greater interest from many companies in buying power from renewable sources in 2022. For each new business customer who chooses electricity from Verdo, we plant five trees in a Danish public forest in collaboration with Growing Trees Network Foundation. We also give companies the option to increase the number of trees if they wish.

Finally, Verdo has a partnership with Randers Regnskov, under which we again in 2022 supported rainforests in Bigai in Ecuador with DKK 1,000 for every GWH of green power our business customers purchased.

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We plant trees together

At Verdo, we work every day towards reducing our climate footprint – and making a sustainable impact on the future. This is one of the reasons why we partnered with the Growing Trees Network Foundation in 2019 to plant trees in Danish public forests.

CO2 levels in the atmosphere must be reduced if we are to slow down climate change. But it is not enough to just reduce emissions. We must also remove CO2 from the air. Forests are currently the most effective way to do this – and therefore part of the climate solution.

In cooperation with Growing Trees Network Foundation, we planted 4,500 trees in Danish public forests in 2022. Forests that make a difference to our climate, biodiversity and groundwater.

And we are not about to stop. We will continue the partnership in 2023, and aim to plant even more trees, so we can together make a better impact on the future.

Verdo Group becomes new member of FSC® Verdo decided to become a member of FSC Denmark (Forest Stewardship Council) in 2022.

FSC is the most ambitious global certification scheme for responsible forest management and guarantees consumers that wood and paper come from well-managed forests and other responsible sources. The organisation works both for nature and human conditions in the forests of the world.

Verdo’s membership takes effect in 2023. It will cover the entire Verdo Group. Verdo wishes to contribute, through the new membership, to greater focus on and protection of the world’s forests.

VERDO FSC licence code: FSC® C125676

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Social responsibility through sustainable energy production

Verdo designs, installs and operates all types of energy plants – biomass plants, solar heating plants, heat pumps, electric boilers, mobile energy plants, boiler plants and waste-fired plants – which can typically replace fossil fuel plants such as gas boilers in utilities, and utilise green

power or waste and biomass as fuel. This means the energy plants can produce the cheapest and greenest heating for consumers.

Waste-to-energy plant to futureproof heating supply in rural Norwegian community

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For example, in 2022, we sold waste-fired plants to Kvitebjørn Varme AS in Tromsø and Senja Avfall in Finnsnes, which both displace CO2, as they reduce the use of fossil fuel. Both plants only burn waste that cannot be efficiently recycled. The Senja plant will also have an ORC plant for

electricity generation connected to the boiler plant, which can supply charging stations for the customers’ electric waste collection vehicles in future.

Verdo is not only contributing to the green transition at the local level. In the Tromsø and Senja municipalities in the far north of Norway, Verdo’s engineers are future-proofing the heating supply through new plants designed to maximise utilisation of local waste. The work includes preparation for future connection of a carbon capture system.

New plant in Tromsø will be ready for future carbon capture

In Tromsø, a growing population has led to a need for more heating. Verdo Energy Systems has therefore partnered with the local Kvitebjørn Varme AS utility company to install a new 15 MW waste-fired boiler plant.

The new plant will supplement Kvitebjørn’s existing two 10 MW waste-fired plants with locally produced district heating based on ‘refuse-derived’ fuel. This is the residual waste that is left over from the sorting plant. Instead of driving it away, it is used as a fuel resource locally in Tromsø.

In addition to building the new boiler plant, Verdo Energy Systems will rebuild the two existing boiler lines so they are ready for a carbon capture system to be connected in the future.

The new boiler plant will be completed by late 2024, while conversion of the two existing boiler plants will take place in summer 2023. The project in Tromsø is the largest undertaken to date by Verdo Energy Systems, both in terms of boiler plant output and price.

Circular system with high standards in Senja

In Senja, local conditions place unique demands on the local energy supply. Infrastructure north of the Arctic Circle is thin. One consequence of this is that it is necessary to be able to utilise different types of waste from private households, industry and hospitals locally in a responsible manner.

This is the background for the new CHP plant being built by Verdo Energy Systems for local utility Senja Avfall.

This is a 9.6 MW waste-fired plant based on Verdo’s model for such facilities, but adapted to local conditions, with greater incineration flexibility. The plant makes it possible to combine heating and electricity production, which is also important for the local community. The greater flexibility demands the kind of advanced control, regulation and monitoring normally only seen on larger plants. This is necessary to ensure high operational reliability.

The different types of waste will be handled in a circular system. The waste will first be sorted and fragmented, so that all relevant materials are recycled and only the residual is incinerated. This ensures the most efficient use of resources.

The plant is expected to be completed in 2024.

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Certified fuels, CO2 reduction and compensation

As another outworking of our aim to contribute actively to the green transition, Verdo is one of Europe’s leading suppliers of certified biomass. We require that all wood-based biomass we procure and resell must be certified under recognised schemes and verified by independent third-party organisations. We thereby help maintain forest ecosystems and carbon stores and ensure responsible and lawful work processes.

At Verdo, part of our CO2 emissions derive from the transport and handling of fuels in our Trading division. Fuels are unloaded and loaded at our sites in Randers and Næstved using front-end loaders and trucks. We have therefore changed our fuel to GTL biodiesel. We also have a partnership through which we compensate for the CO2 impact associated with freight to customers. Our CO2 compensation

supports large, recognised nature projects that help limit the amount of CO2 in the atmosphere.

Each year we also compensate for thousands of pallets of wood pellets by planting trees in Danish public forests in collaboration with Growing Trees Network Foundation. With our PremiumPlus wood pellets, we take joint responsibility with our customers – who are happy to pay for a product that is not only certified, but also delivered to them on FSC-certified® wooden pallets and in 80% bio-based packaging. With Heatlet’s PremiumPlus, we have thus achieved such a climate-friendly journey that the net CO2 impact is zero. We can therefore rightly call the wood pellets CO2-neutral. This has been verified by the Preferred by Nature non-profit organisation.

Carbon Partners achieves silver status at EcoVadis

Carbon Partners, owned by Verdo Trading, has been rewarded for its sustainability efforts by EcoVadis. This time with an impressive silver status.

EcoVadis is a recognised, independent rating agency that globally evaluates and ranks companies’ sustainability efforts.

In their assessments, EcoVadis follows verifiable international CSR standards. These include the Global Reporting Initiative (GRI), the principles

of the UN Global Compact and the ISO 26000 standard. They evaluate initiatives within the categories of environment, labour and human rights, ethics and sustainable procurement.

The assessment puts Carbon Partners among the top 25% of companies rated by EcoVadis globally, across sectors.

This is the second time Carbon Partners has earned recognition from EcoVadis. The first time was in 2021 when it received bronze status.

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Energy optimisation projects for street lighting save tonnes of CO2 each year

Verdo operates, maintains and renovates street lighting and traffic lights in more than 20 municipalities throughout Denmark. This makes us one of Denmark’s largest players in the operation and maintenance of street lighting and traffic lights, whereby we help address the important societal task of ensuring traffic safety and security for citizens.

We completed energy optimisation projects for a number of municipalities in 2022, with the aim of reducing energy consumption in street lighting by replacing it with an LED version or updating existing street lamps – also to use LEDs. We have thereby saved municipalities – and the climate – many thousands of kWh, and thus many tonnes of CO2, annually.

In addition to direct energy savings in the street lighting systems, LED modules have a lifetime of around 100,000 hours, approx. 800% longer than traditional street lamps. LED lighting thus also contributes in a broader perspective to reducing the general maintenance costs, for example in the form of CO2 reductions for transport, etc.

Verdo’s climate accounts

In 2022, we continued our efforts to prepare climate accounts in line with the Greenhouse Gas protocol.

We have used the Danish Business Authority’s calculation model – initially with the aim of identifying data needs and related processes, with the goal of automating data collection in the long term. Based on our climate accounts, our goal has been to define actions that can contribute to achieving national targets for combatting climate change. We have initially chosen to concentrate on scopes 1 and 2. We will also measure our scope 3 down the track.

Note 1: We have used the GHG protocol to prepare our climate accounts. We have not included volatile emissions for 2022. We will work to identify these in 2023, and also restate the figures retrospectively for 2022.

Note 2: Verdo has purchased green power certificates equal to our total electricity consumption. We have therefore used an emission factor for electricity of 0 g CO2e per kWh for our market-based emissions.

Note 3: Biogenic CO2 emissions from the combustion of biofuels (e.g. biogas, bioethanol, biodiesel) are calculated outside scopes 1, 2 and 3. Under the GHG protocol, emissions from combustion of biomass are considered to be net zero for scope 1 direct emissions, as the biomass absorbs CO2 during its growth phase equivalent to the amount released during combustion.

33 Climate accounts¹: Unit 2022 Direct emissions. Scope 1 Tonnes CO2e 12,728 Indirect emissions. Scope 2 (Location based) Tonnes CO2e 1,342 Indirect emissions. Scope 2 (Market based²) Tonnes CO2e 72 Emissions outside scope 1-3. (Direct biogenic emissions³) Tonnes CO2e 280,084

Energy optimisation projects for street lighting save many tonnes of CO2 each year

An energy crisis makes the transition to green heating and renewable energy even more urgent, also in relation to street lighting and traffic lights.

Verdo Teknik operates, maintains and renovates street lighting and traffic lights in more than 20 municipalities throughout Denmark. This makes us one of Denmark’s largest players in the operation and maintenance of street lighting and traffic lights, whereby we help address the important societal task of ensuring traffic safety and security for citizens.

We completed energy optimisation projects for a number of municipalities in 2022, with the aim of reducing energy consumption in street lighting by replacing it with an LED version or updating existing street lamps – also to use LEDs. We have thereby saved municipalities – and the climate –many thousands of kWh, and thus many tonnes of CO2, annually.

An example based on concrete figures (but anonymised municipalities):

In addition to direct energy savings in the street lighting systems, LED modules have a lifetime of around 100,000 hours, approx. 800% longer than traditional street lamps.

LED lighting thus also contributes in a broader perspective to reducing the general maintenance costs, for example in the form of CO2 reductions for transport, etc.

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CASE
Project kWh saved Total annual savings – municipality A 240,854.951 Total annual savings – municipality B 187,816.080 Total annual savings – municipality C 147,585.650 Municipality D Stage 1 33,810.608 Stage 2 31,113.560 Stage 3 46,236.800 Total annual savings – municipality D 111,160.968 Total annual savings in all municipalities 687,417.649 CO2 reduction [tonnes] 95.6

Every little bit helps...

As regards Verdo’s own direct environmental and climate footprint, 2022 also saw results in a number of areas that could be categorised as ‘little things’ in isolation, but together make a difference.

For example, we switched to reusable towels in all toilets, and took a number of steps to improve energy efficiency in buildings that we own. The measures include a new ventilation system, sensor control for lighting in all offices and corridors (except for a few one-person offices) and timer and sensor control for outdoor lighting, so that only necessary lighting is switched on. All lighting of course uses LEDs.

We also lowered the heating flow temperature at our sites, and set thermostats to a lower temperature – around 20 degrees – in winter 2022/2023. There is also a plan to replace the roof over the next 4-5 years, which is expected to reduce heat loss.

We managed to reduce paper consumption across the entire organisation, by reducing the printer paper weight from 90 and 80 grams to 75 grams, and by becoming conscious of printing less. This meant that we only used 2.14 tonnes of printer paper in 2022, compared to 2.92 tonnes in 2021. This is a reduction of 0.78 tonnes.

We also have a policy that all furnishings must be maintained and reused as far as possible, and only discarded when they are actually worn out. This is also applies to IT. We ensure that all our outdated IT equipment is either reused internally in Verdo or sent for reuse via a local company.

And speaking of IT, in 2022 we shut down some of our physical servers and made them virtual, to save both power and equipment. We have a long-term strategy of further virtualisation, and we expect to be able to reduce the energy consumption for cooling in the server room next time we replace our servers.

In our canteen, we make a targeted effort to reduce food waste through various forms of nudging. In 2022, as a result of the energy crisis, we reduced the number of days with hot food and introduced days with cold food every week. There is also a strong focus on reducing the amount of meat.

Finally, in 2022 we introduced a new waste sorting system at all Danish sites. We are thereby in compliance with the

new requirements from the Danish Environmental Protection Agency, under which workplaces must sort domestic waste according to the same sorting criteria as private households.

The change meant removing the small bins and paper boxes at the employees’ desks. Instead, employees now use the new, large recycling stations set up in key locations in all buildings. We sort our domestic waste into the following seven waste types at these: food, paper, glass, plastic, beverage cartons and residual waste.

We are continuing our efforts to make waste sorting more efficient. Our aim is that in future we can also sort hazardous waste, cardboard, metal and textile waste at our recycling stations.

With the new waste sorting system we are contributing to a higher recycling rate. This helps make a difference to the environment and climate, as more recycling means less incineration and reduces the drain on natural resources.

Verdo’s canteen in numbers – 2022

• Almost 37% of all ingredients used in Verdo’s canteen at Agerskellet were organic

Meat accounted for just under 10% of the food served in the canteen

The canteen made ongoing efforts to reduce food waste

At the request of canteen staff, all porcelain mugs and glasses at Agerskellet were replaced with new and lighter models in 2022. These are easier for staff to handle and lift, and are also more sustainable in the production process, as well as being recyclable

• The canteen has the ‘bronze’ eco-label

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Social factors

This section contains the statutory statement on social responsibility pursuant to section 99a of the Danish Financial Statements Act, in relation to social and staff factors.

Our social policy Occupational health and safety policy

Our employees are our most important resource. We therefore actively seek to offer an attractive and engaging workplace. Our key objective is to maintain and increase our employees’ job satisfaction by adhering to a number of social policies.

This means that:

We strive to retain and develop our existing staff team, while also seeking to attract the best qualified applicants.

• We want to fill every position through competition among several suitable applicants, in line with our recruitment policy. However, existing employees take precedence if they have the same qualifications as external applicants. We focus on training apprentices and trainees, and numbers must reflect the company’s needs and opportunities.

• We focus on the individual needs of our employees at different stages of life and in different life situations. This includes retaining seniors.

• We hold at least one annual development talk (employee development talk (MUS), group development talk (GRUS), leadership development talk (LUS) or similar) with all employees.

• We strive towards flexible employment conditions, with a focus on work-life balance.

• We want all employees to feel that they have the same career and leadership opportunities.

Verdo has a strategic goal of being an attractive workplace.

We therefore take good care of our employees and have a strong focus on health and safety. The goal for the Verdo Group’s OHS organisation is to always have the working environment in order, such that we are eligible for a green smiley from the Danish Working Environment Authority at any time.

It is our goal to maintain and develop a working environment that protects the Group’s employees from adverse health and safety impacts. We also want to ensure there is a good psychological working environment, in which employees thrive, and we aim to develop and maintain a good working environment that complies at all times with current legislation and is in line with technological and societal developments. The Verdo Group therefore has an OHS organisation with a Group OHS committee and local OHS committees and groups, covering all employees and actively working to:

• Support and develop employee awareness of the importance of occupational health and safety in their daily work, for themselves and others.

• Increase specific employee knowledge and insights about occupational health and safety.

• Develop and maintain a fast-working network in the OHS organisation.

• Clarify the responsibility of each employee for maintaining and developing the working environment. Impose requirements on subcontractors working for the Group to comply with applicable OHS legislation.

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Results 2022 9

In 2022, Verdo employed 9 trainees

4

Verdo’s eNPS score rose from 10 in 2021 to 22 in 2022

7

We had 4 employees in senior jobs in 2022

478

We had 7 people in flex jobs in 2022

Social initiatives and results

Our social contract has again set the direction for Verdo’s social initiatives in 2022. The focus has particularly been on preparing and improving the company for the future labour market.

A workplace is no longer somewhere you simply clock in and out, but also a place where you invest many of your waking hours. It is therefore important that the facilities are excellent, and there is room for both professional and personal development.

In 2022, Verdo put a strong spotlight on our role as a workplace. As a major player in our local area we have a responsibility. To create local jobs and give our employees the best conditions for being part of the future labour market.

Review of the past year

Data has become a more natural part of our social initiatives. As we announced last year, systematic registration is now part of HR workflows. This has improved our data on employee turnover, absence due to illness, the proportion of apprentices/trainees and salary levels. The exact figures are listed under each section, but we have generally met our goals on many parameters.

Despite an uncertain labour market, we have maintained our target of 10% apprentices. The potential has been even

Verdo Academy has completed 478 days of training

higher, but we have stuck to this level as a precaution, in order to maintain the quality of our training process. However, we have been more flexible towards our trainees. We have successfully renewed our workflows and adapted to the talents and wishes of the candidates.

The same applies to senior and flex jobs. Our constant focus on retaining experience and accommodating new candidates in need of flexible conditions has proven extremely rewarding.

Employee turnover in 2022

Employee turnover has been designated a KPI by Group Management, and has been closely monitored throughout 2022. We calculate this monthly, as the number of resignations at the end of the month as a percentage of the number of people employed on the first day of the month.

We use a simple benchmark based on public sector companies – which is an employee turnover of 15% per year. We have not yet found a public benchmark for private companies. For the monthly figures, we have used a simple arithmetic calculation (15 / 12 = 1.3). However, the monthly employee turnover will often be higher, as it includes shortterm appointments during the 1 January to 31 December period. At Verdo, employee turnover was 18.4% in 2022.

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As expected, employee turnover was high in the March to May 2022 period, as a result of organisational changes implemented in autumn. For the rest of the year, the monthly figures were between 0.6 and 2.8%. The average for the year was 1.8%, higher than our benchmark of 1.3%. Adjusted to take account of the organisational changes in autumn, the average is 1.2%. The annual average for voluntary resignations is 0.8% per month. Despite the major organisational change affecting 2022, employee turnover in 2022 was lower than in 2021. If we adjust the 2022 figures to correct for terminations actually effected in 2021, the annual employee turnover in 2022 was 14.7%.

We have launched various initiatives in 2022 to address the voluntary employee turnover. We have a strong focus on collecting feedback in connection with exit interviews, we have established Verdo Academy – to increase competency development opportunities, and we have carefully monitored the reasons for the voluntary resignations.

In 2023 we will keep our existing benchmark, and change the calculation of monthly and annual employee turnover to be in line with the Danish Business Authority’s guidelines*.

* The Danish Business Authority’s guidelines and catalogue of ideas for quantitative ESG KPIs.

Our monthly calculation will be as follows:

(voluntary resignations + forced terminations (in FTEs) during the given month / FTEs employed on the 1st of the same month) * 100

Diversity and employee composition

For this calculation, gender is determined based on civil registration (CPR) number, and the actual number of employees is used (not FTEs).

At the end of 2022, the Group had 102 female employees out of 530, equivalent to 19.2% of the workforce.

The average age of female employees is 44, with the youngest being 18 and the oldest being 64. The average age of male employees is 46, with the youngest being 18 and the oldest being 71.

We cannot calculate diversity information other than gender based on CPR no., as we do not have such information. From 2023 we will measure gender diversity based on FTEs, in line with the EU taxonomy.

Pay gap

The Danish Business Authority guidelines state that pay gap is calculated as the difference between the average gross hourly wage for male employees and for female employees, as a ratio of the average gross hourly wage for male employees. For Verdo, this figure is 11.25%.

The Danish Business Authority guidelines also state that the pay gap between the CEO and other employees is expressed as the ratio of the median employee wage to the CEO’s remuneration. For Verdo, the figure is 85.8%

Discrimination

At Verdo, we register via WPAs whether employees have been subjected to any form of bullying, threats of violence, physical violence or other harassment, either digitally or verbally.

Over the past three years, two cases of bullying have been registered. One was not a genuine case, but a test of whether registration is taken seriously. The second was a situation where an employee felt intimidated by a colleague.

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Annual calculation: Unit 2020 2021 2022 Goal Employee turnover % N/A 22.8 18.4 15 (voluntary resignations + forced terminations (in FTEs) during the year / FTEs employed on 1 January of the year) * 100 >

Flexible working conditions ensure the company continues to have strong competencies

At Verdo, we look after our employees. We therefore seek to adapt to our employees’ life situation, and offer a flexible and agile workplace that can accommodate all needs.

When hurdles arise in life, it can be difficult to juggle these while also doing a traditional 37-hour working week. But employees whose head or body cannot work full-time still possess important knowledge and relevant competencies – even if they work less hours than their colleagues.

Good employees are a cornerstone of our company. We are therefore willing to go to great lengths to retain competent workers.

“We have a strong focus on offering alternative employment conditions if the need arises. We engage in ongoing dialogue with both employees and managers, and we involve municipal caseworkers for assessments if necessary,” says HR Manager, Lone Abdene.

Each employee’s circumstances and health set the framework for the collaboration. We have eight flex job employees at Verdo.

Flex jobs in the field

For people with permanent and significantly reduced working capacity, a flex job is a possibility. We give consideration to each employee’s limited work capacity and organise their tasks accordingly.

One of our flex jobbers is Leif Ole Madsen, who installs street lights. After a stroke in 2010, he switched to a flex job, initially working 20 and then 16 hours a week. The flex job agreement has meant a lot to Leif:

“The flex job means that we can continue to make ends meet, even though I only work four hours a day. It also gives me a purpose, and the tasks are adapted to my capabilities. I deal with

things on the ground while my colleagues fix the lighting at height,” he explains.

From full-time to flex job

Annette Berntsen is another colleague we would find it difficult to do without. It was therefore natural to offer her a flex job when her health was no longer up to a full working week in the customer service department. An arrangement Annette is very happy about:

“I’m very grateful for the care I’ve been shown. I’ve always been really happy to be part of Verdo. And while it’s hard to let go of the role you have in a team when you go on reduced hours, it has meant a lot to me to still be part of a workplace and a social community.”

Annette now works 10 hours a week, spread over four days. In addition to servicing customers, Annette continues to serve as a union representative for a large group of colleagues.

A secure workplace community

Another solution we make use of comes from Flexvirk. This social enterprise offers services such as cleaning, gardening and bookkeeping on an hourly basis. The workers are often on the fringe of the labour market, and we see great value in helping them find their feet. We have therefore partnered with Flexvirk to give even more people an opportunity to be part of a secure workplace community.

“A partnership with a social enterprise is the simplest and most effective way to take social responsibility, while supporting a good cause,” says HR Manager Lone Abdene.

Flexvirk takes care of the gardening in Verdo’s two atrium courtyards in Randers, where large garden machinery cannot be used. Flexvirk provides workers and handles the operational management.

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Both incidents were initially handled by the HSE manager, who has a duty of confidentiality. The HSE manager is responsible for investigating and effecting solutions to stop the incidents, and for initiating preventive activities.

Disabilities

We will always appoint the best candidate, irrespective of any disability, but we do not register disabilities and therefore cannot report on this. However, in 2022 we were contacted by a local school seeking an internship for a wheelchair user, who had been turned down by other work-

places. Since Verdo’s site at Agerskellet 7 is fully suitable for wheelchair users, we were able to offer the internship, which of course we did.

Employee satisfaction

In September 2022, we conducted a Pulse Survey which showed that overall job satisfaction and motivation among employees had risen from 5.80 to 5.86 (on a scale from 1 to 7). We had not defined a target score for 2022, but towards 2025, our goal is to raise the employee job satisfaction and motivation score to 6.

We have also focused on eNPS (Employee Net Promoter Score), which indicates whether an employee would recommend that others apply for a job at Verdo. In 2021, this score was 10 (on a scale from minus 100 to plus 100). A goal was therefore set to increase the score to 25 in 2025. However, the latest Pulse Survey in 2022 showed this had already risen to 22. As a result, we decided to change the metric and goal for 2025, so that we measure job satisfaction and motivation instead.

Work-life balance

In the above Pulse Survey, employees reported a relatively good work-life balance. 33.2% of employees gave a score of 7 to the question (on a scale from 1 to 7). 35% gave a score of 6. Only 9% of employees gave a score below the midpoint (i.e. 1, 2 or 3).

Home working arrangements can be made in line with Verdo’s work-from-home policy.

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Employee satisfaction: Unit 2021 2022 Goal 2025 Employee Net Promoter Score eNPS 10 22 25 Job satisfaction and motivation From 1-7 5.80 5.86 6.00 >
Finn Laustsen, HSE Manager at Verdo

Physical environment impacts mental wellbeing

Good acoustics, different types of workstations, opportunity for immersion and to chat across the desks. Each Verdo employee has their own preferences and ideas about what constitutes optimal working conditions. The physical environment is therefore high on the agenda as we prepare for the labour market of the future.

If Verdo is to be an attractive workplace for experienced colleagues and talented new graduates alike in the future, the physical environment is extremely important.

Employees will be demanding more of their workplace in the future. We are therefore already investigating how to create the ideal setting. The initiatives in this area are also part of our work targeting ‘Competencies and the future workplace’ – one of the key focus areas of Verdo’s strategy over the next two years.

In collaboration with architects Arkitema, we have produced a report that has helped us to identify how to best improve the existing conditions and design the best working environment for the future. The report is based on responses from employees across the organisation at the head office in Randers.

Our physical sites

One of our biggest challenges is the aging buildings we occupy at several of our physical sites. The old concrete shells in Randers and Aalborg are poorly insulated and laid out, and do not meet the expectations and requirements of current and future colleagues in their existing form.

We want to change that.

In Randers, we will look at the interior layout and how we best balance open-plan offices and teamwork with immersion and the need for peace and quiet. We have already invested in three MuteBoxes that allow employees to hold meetings or talk on the phone in a private room. The MuteBoxes have proven popular, and we are considering investing in more.

But more needs to be done, because needs relating to physical facilities have changed significantly in recent years. We have therefore set up a project room, among other initiatives. Our electricity sales department has used this for ‘sprint projects’ – where a small group of employees sit together physically and do concentrated work on a specific project for a limited time.

The project room is the result of a changed work pattern, and is fitted out with whiteboards, desks and other facilities that facilitate a more creative process. In general, we are looking at what size to make our meeting rooms, in order to meet both current and future needs. continued on next page

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In Aalborg, our colleagues can look forward to becoming part of a brand new workplace. Verdo is combining its two North Jutland sites into a single location at Aalborg Harbour, with far better conditions and facilities than today. The new premises will be established in collaboration with Brix & Kamp design studio.

Much-needed makeover for head office canteen

There are more of us. And while that is good for daily operations, it puts extra pressure on our facilities. This applies particularly to the canteen at

our head office in Randers, where we have grown from around 80 diners to almost 150 hungry colleagues on busy days, in just a few years.

The canteen is therefore in need of a makeover in order to accommodate the many guests. This means more flexible furnishings, with tables at varying heights, better flow through the room and more plants, to improve the overall experience and indoor climate.

The changes will also make it easier to use the canteen space outside the lunch period for meetings, project work etc.

Agile hybrid workplace

Hybrid working has become the ‘new normal’ – also at Verdo. The need for physical office space has therefore also changed, and we will be exploring how to make the best use of our offices, now and in the future. No measures have yet been decided, but a project group made up of representatives from the departments concerned has been appointed to come up with specific proposals for the future workplace.

Irrespective of the outcome, we will focus on creating a comfortable process and providing a high level of information about any changes, so all employees know what is going to happen and when.

Focus on health and safety

The OHS organisation in Denmark held a joint training day across the divisions. Joint training promotes collaboration and knowledge sharing, which we see as a positive element in interdisciplinary training. The day was conducted as an internal training course at Verdo, with external trainers from professional OHS consultants.

WPAs have been carried out on a regular basis, which the OHS organisation has subsequently processed in cooperation with Verdo’s HSE manager. This has resulted in updated WPA action plans setting out the initiatives to be implemented to improve OHS. The most frequent challenges noted will be the ones we give priority to addressing first, if possible.

Some challenges relate to space in the offices. We completed around 200 recruitments (rehires and new hires) in 2022, and the total number of employees at Verdo rose by about 100. This has led to space problems in the existing premises, particularly at the head office in Randers. The main building dates from 1987 and was designed to meet the needs of the time. The extension from 1993 was based on the same interior design concept. Our working patterns and needs have changed significantly since then. We work more in project teams and across the organisation and companies today. Our current office layout, with many open-plan offices, is therefore no longer optimal.

In autumn 2022 a digital analysis of work patterns and needs was conducted among head office employees. The results will guide how we can best utilise the existing facilities. The report was presented to Verdo’s Manager

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Forum in December, and an interdisciplinary working group has been appointed consisting of representatives from the departments concerned. Together with an architectural firm with many years of experience in the design of workplaces and work routines, this group will continue to work on the results and make suggestions for the design of the ‘Future workplace’.

Experience gained from this work will also be drawn on in the interior design of a planned new site in Aalborg.

Flexible working conditions

One way to meet our increasing need for competencies could be to broaden our horizon. The proportion of apprentices remained fairly stable in 2022, and as apprentices provide a pathway to the later appointment of skilled

colleagues, it is important that we continue to keep an eye out for the best talents. However, we have chosen to be cautious during the year. Uncertainty in areas such as electricity has led to a risk that skilled candidates, such as electricians, will look elsewhere.

There is also always a risk of losing key competencies when employees no longer wish, or are unable, to continue in a full-time position. Opportunities for reduced working hours, such as part-time employment, flex jobs, senior jobs etc., could have an impact on the development of our workplace in this regard. Such conditions are assessed in dialogue between the employee, immediate manager and job centres.

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Verdo trains future talents

Skilled employees do not just fall from the sky. They expect and need training, guidance, and particularly trust. At Verdo, we have full confidence in our many trainees and apprentices – and we also make sure to train and guide them so they can advance and develop our company in the future.

There is a shortage of skilled labour. This sentence was repeated many times in 2022. By companies, interest groups and politicians. Verdo is also feeling the pressure, and competition for the best candidates is fierce.

We therefore also make a virtue of contributing to the talent pool by training future employees ourselves.

One of the trainees currently at Verdo is Filip Kellberg Andersen. He has been employed as an office trainee since April 2021. During that time he has tried his hand at HR, payroll, strategy, and of late, communication and marketing. It was important to him to find a trainee position where mutual respect, trust and personal development were in focus, and this is why he turned his attention to the energy group.

“When I was looking for a trainee position, Verdo was one of the names on my list. I was born and raised in Randers, and Verdo is one of the companies I have always known. It’s a company I have always had respect for, and this only increased during the recruitment process. I got the clear impression that

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they believed in my abilities. In fact, they said at the first interview that I needed more challenges than were offered in the position I originally applied for,” says Filip.

“Although I didn’t know it beforehand, it has been the right choice for me. The company’s willingness to help me in my personal development has been fantastic, even though my training has not followed a straight line.”

Electrician apprentice Nicolaj Kristoffersen has also experienced this goodwill. He has been part of Verdo’s electrician team for over four years. He has worked in various departments along the way, before ending up

in the service department, where he has found himself right at home. He also emphasises Verdo’s trust in the abilities of its apprentices and trainees.

“It’s a really good company for me to be an apprentice in. They take us seriously, and go out of their way to adapt the tasks to what we want. Our responsibilities are matched to our abilities. I believe that the independence I have at Verdo is vital for me to mature as an apprentice,” says Nicolaj, highlighting the role of management in particular:

“Both management and supervisors pay close attention to how we are going, and react quickly if something is not right. There’s a major focus on creating a strong community in the workplace and between colleagues, and they also help advance our training and development.”

Focus on professional development

It takes training to master your work. Professional development is also at the top of the agenda when training future talents. Both Filip and Nicolaj feel this.

“Verdo is the place where I have learned the most in my entire life – by far. Both professionally and personally. The educational institutions focus on theory, but I’ve found that I learn best hands-on, trying things out, and I’m 100% allowed to do that at Verdo,” says Filip. His electrician colleague, Nicolaj, adds:

“Verdo has done everything possible to give me the best foundation. Their genuine interest in what I want and their ability to make things work is exceptional. They are shaping us well, and that is reflected in our grades at school. The good results are of course also due to our own hard work, but it would not be possible without talented colleagues and journeymen who are willing to teach and help us when we make mistakes.”

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Nicolaj Kristoffersen Filip Kellberg Andersen

Annual calculation:

Apprentices and trainees

We had 9 trainees in 2022. They were IT support, data technician, office and business trainees. Last year trainees made up around 15% of all white-collar employees on average in the companies that employ trainees.

Our staff support functions and Verdo Teknik A/S take on most trainees, but the other technical business areas are expressing more and more interest in taking on office trainees, so we hope to increase the number in 2023.

We have continued to have a strong focus on what the trainees want to learn. We were recently looking for a business trainee, but the right candidate was qualified for an office trainee position, so we changed the position for this candidate.

Again in 2022, an apprentice from Verdo received a medal from the Medal Foundation under Aarhus Tradesman’s Association and the Confederation of Danish Industry, after scoring top marks in his journeyman’s exam.

For a short period over the summer in 2022, we had fewer apprentices than the goal of 10%, calculated as the number of apprentices in relation to the number of hourly paid workers in the companies where we have apprentices. But at the start of the year and around December, we were at 10%. The primary reason was uncertainty about whether we could train more apprentices given the tasks we were working on during the period. We have a consistent focus on only taking

on the number of apprentices that we can offer the right challenges and tasks.

Flex jobs

Verdo works with flex jobs in several ways. We have a special focus on retaining employees who cannot manage a full-time position due to health issues. This can be due to physical or psychological factors.

We start a dialogue with the municipality about retention as early as possible, and consider whether the condition may be permanent and whether it is particularly important that we adjust the job to match. We discuss with the municipality whether work assessments need to be conducted in other functions or involving tasks that we cannot offer. We support the employee during this assessment process, and the result is sometimes that the employee is offered a retention flex job at Verdo.

We also have tasks suited to people working a few hours a day or a week. If these tasks have not naturally already been assigned to existing employees, we look into whether they can be handled through our partnership with the local Flexvirk social enterprise, which seeks to help citizens on the fringe of the labour market find jobs.

At the end of 2022 we had 7 employees in flex jobs, while 2 resigned during the year.

In 2022, Flexvirk filled two mini-jobs in gardening and cleaning.

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Unit 2020 2021 2022 Goal Proportion of apprentices % 16 10 10 10 Proportion of trainees % * * 15 10 * Not calculated in the same way
Annual calculation: Unit 2020 2021 2022 Number of flex job employees Number 2 9 7

Senior jobs

Verdo has a senior policy that flexibly allows work tasks and working hours to be adjusted, where this is possible and benefits both the employee and the company.

Our collective agreements also allow the option of financing a reduction in working hours by reducing pension contributions and increasing payments to the flexible spending account (fritvalgskonto), and financing the lost earnings due to reduced hours from this account.

At the end of 2022 we had 4 employees in senior jobs, with one having commenced in 2022. The typical senior job arrangement is reduced hours with Friday off, but days off

can also be spread throughout the year in line with the rules for holidays.

Considering the average age of Verdo employees (44-46), it is important that we can flexibly adjust our employment conditions via senior job arrangements, so we can retain employees. All other things being equal, we should expect more senior job arrangements in the future.

In addition to senior job arrangements, we have eligible employees who instead choose to reduce their working hours without changing their pension contributions or using their flexible spending account (fritvalgskonto).

Senior job helped Jens Christian back to work

Verdo loses key knowledge and life experience when older, experienced employees choose to leave the labour market. We have therefore offered senior jobs since 2015, whereby we make an individual agreement on withdrawal with each employee – with reduced working hours, reduced responsibility or a combination of both. This allows us to retain seniors and continue to profit from their value and experience. It also helps us address recruitment challenges, at Verdo and in the broader labour market.

64-year-old Jens Christian Kulhmann is one of our employees on the scheme. He has worked as an electrician at Verdo for many years, with street lighting in the Herning area. However, he suffered from stress last year and was on sick leave for a long period. A senior job allowed him to return to work. Since July 2022, he has been working 28 hours, from Monday to Thursday, and has every Friday off.

“Working fewer hours makes a difference. It has helped relieve my stress, because I now have

more time for myself and can take better care of my house and garden. I also like camping, and now I can drive off with my caravan on Thursday,” says Jens Christian Kuhlmann, who will cease working completely in March 2023 as he has been granted an early pension.

Senior jobs

Our oldest employee is 71 years old, and we have many employees over the age of 60. Our senior employees are highly respected in the organisation and must be accommodated in the best possible way. All employees over 60 are therefore invited to a seniors day, where qualified staff offer advice on everything from diet and pension to mental health. An initiative we are continually refining based on input from our employees.

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Gender diversity among employees*:

New career universe

Given the greater competition in relation to securing the right competencies, Verdo partnered with Jobindex and KOMO A/S in early 2022 to establish a new career universe. The new career universe at job.verdo.com went live in November 2022. Several employees have contributed stories and videos. We are proud of the end result and have already received positive feedback from job seekers.

Training at Verdo Academy

We launched Verdo Academy in 2022. The academy offers a range of internal courses with internal or external instructors, as well as some external courses with open classes (which include participants from other companies).

We offered the following courses in 2022 – corresponding to 478 days of training:

Basic management training based on the ‘Management in practice’ academy module (offered twice, with a total of 20 participants, all of whom passed the mandatory exam and earned ECTS credits)

• Project management training based on the ‘Project management’ academy module (offered once, with 20 participants)

Digital Masterclass with DI2X (17 participants)

• Sales psychology based on the ‘Sales psychology and basic sales’ academy module (offered once, with 13 participants)

• Change management – internal half-day workshop (6 participants)

• Value work for managers – internal 3-hour workshop offered on several occasions (45 participants in total)

Value work for employees – internal workshops in the departments for all employees

• NLP training at Tradium, to be held in autumn 2022 and spring 2023

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*
** Not calculated in 2021
The total number of employees was calculated to be 530.
Unit 2021 2022 Goal Total proportion of female employees % 18.2 19.2 N/A Gender pay gap % ** 11.25 6.00

Gender diversity

We see an imbalance in relation to gender diversity at Verdo. This is a challenge we are aware of, and are continuing to work to overcome. The imbalance is due to the fact that Verdo is a predominantly technical organisation and the sector has historically been dominated by men, and this continues to this day.

We acknowledge that the roles in our sector are most commonly filled by men, but that is not stopping us from making an effort to attract more women. We are therefore working proactively to remove gender-based bias from our job postings, and we have chosen to show many images of women on our career site, and present female employees in our cases and videos as far as possible.

We also raise the issue with our headhunters in the recruitment process. We ask them to present candidates of both genders. In our own HR department we are also always looking for suitable female candidates among the piles of applications, so we can put together a broad field of candidates.

Absence due to illness

In 2022, we monitored the monthly trend in absence due to illness as a fixed KPI, presented to Group Management. In 2022, the monthly figure was between 2.1% and 3.2% for salaried employees, and between 2.7% and 9.3% for hourly paid workers.

For 2022 as a whole, absence due to illness was 2.54% for salaried employees, and 4.9% for hourly paid workers.

These figures are higher than our maximum targets of 2% for salaried employees and 4% for hourly paid workers. However, this goal does not include long-term sick leave. If we adjust the 2022 figures for long-term sick leave, the result is 1.4% for salaried employees and 3.9% for hourly paid workers. Long-term sick leave thus constituted 1.11% for salaried employees and 0.99% for hourly paid workers.

This means that we were just within our target for both employee groups in 2022.

The figures have been calculated on the basis of working hours, but do not take overtime into account. The Danish Business Authority guidelines state that this must be counted as working time.

We will calculate absence due to illness in line with the Danish Business Authority guidelines in 2023.

51 Accidents and illness Unit 2020 2021 2022 Goal Accidents at work Number 10 7 4 0 Salaried employees % * 1.23 2.54 2 On long-term sick leave % * 0.68 1.11 0 Hourly paid workers % * 4.84 4.91 4 On long-term sick leave % * 2.53 0.99 0 * No data based on the same definitions

Good governance

This section contains the statutory statement on social responsibility pursuant to section 99a of the Danish Financial Statements Act, in relation to combatting corruption and bribery and respect for human rights. The section describes Verdo’s policies and principles in this area.

The section also contains the statutory statement on the proportion of the underrepresented sex in the supreme governing body, pursuant to section 99b of the Danish Financial Statements Act.

The statutory statement on the policy for data ethics pursuant to section 99d of the Danish Financial Statements Act can also be found here.

Verdo and good governance

In 2022, Verdo established a robust governance team and elevated its sustainable development work to the Group’s strategic level. We base our work on the UN principles for corporate responsibility.

When it comes to sustainable development, we are seeing a paradigm shift in requirements and expectations – in society and at Verdo. Management and anchoring are key elements in Verdo’s progress, and in this area too we will ensure structures, processes and guidelines are in place that define our work and lead to good governance.

We have therefore adopted a policy that will contribute to ensuring responsible management in our value chains. It took effect at the start of 2022 as part of our overall sustainable development policy.

With the implementation of the policy and the adoption of sustainability as a special strategic focus area in Verdo’s corporate strategy, development is anchored at the top of the organisation, while also being spread to all business areas.

Strong interdependence of Verdo’s strategic focus areas increases chances of success

Many of Verdo’s employees underwent training in Digital Transformation at DI2X (the Digitalisation Institute) in 2022. The aim has been to ensure that Verdo can focus on and optimally execute its three selected must-win battles towards 2025: Competencies and the future workplace, stronger sustainable development, and digitalisation and data. Digitalisation expert and course instructor, Pernille Kræmmergaard, sees a natural connection between the three strategic focus areas, which she believes will increase the likelihood of achieving good results.

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Digitalisation expert: Digitalisation expert at DI2X, Pernille Kræmmergaard

Results 2022

25 %

reports to Verdo’s whistleblower scheme in 2022

is the proportion of women on Verdo’s Board of Representatives in 2022, compared to 20% in 2021

33 %

women on the boards of our foreign companies

Verdo’s corporate strategy was updated in 2022 to include three new focus areas – defined in the group strategy as must-win battles – which aim, among other things, to strengthen our work with sustainability. For each focus area, success criteria have been defined towards 2025. These are continuously followed up at management level.

In connection with the ‘Digitalisation and data’ strategic focus area, many Verdo employees underwent training at DI2X (the Digitalisation Institute) in 2022, to learn how to work with digital transformation. Verdo has also continuously appointed new profiles with digital competencies, to help define the company’s digital maturity and create the future Verdo. We asked Pernille Kræmmergaard, founder and CEO of DI2X, how she views Verdo’s work with the strategic focus areas:

“As I see it, Verdo’s three strategic focus areas are inextricably linked. With the added note that in my opinion – not surprisingly – digitalisation is the cornerstone. Digitalisation is essential in order to be an attractive workplace, today and in the future, and create new opportunities for employees. And when we talk about sustainability, I find it hard to see how any company can deliver on that agenda without having their data in order, and being able to document this. The ability to utilise digital technologies is simply crucial in order for companies to deliver on their ESG goals. I believe Verdo

has understood this, which improves its chances of achieving the desired results from its strategic focus areas,” says Pernille Kræmmergaard.

Verdo’s strategic focus areas:

Competencies and the future workplace (must-win battle #1)

• Right competencies for future aims

• An attractive place to work – today and in the future

Stronger sustainable development (must-win battle #2)

• Create competitive advantages

• Ahead of legislation

• Green and responsible supply chains

• Develop green products and green digital services

Digitalisation

and data

(must-win battle #3)

• Accelerate Verdo’s digital transformation

• We create digital customer experiences and a digital mindset and become a data-driven organisation.

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Our policy for responsible governance in our value chains

Verdo supports and respects the ten principles of the UN Global Compact. The principles provide a joint ethical and practical framework for corporate social responsibility and are based on international conventions and agreements. For example, the OECD Guidelines, the ILO Conventions on International Labour Standards, the UN Guiding Principles on Business and Human Rights (UNGP) and the Rio Declaration are all represented in the principles.

The principles of the UN Global Compact are grouped into human rights, labour, environment and anti-corruption.

We address the principles regarding human rights, labour and anti-corruption in our ‘Policy for responsible governance in our value chains’, and ensure compliance through our Code of Conduct.

Respect for human rights

At Verdo, we strive to integrate and respect the universal human rights enshrined both in national legislation and international conventions. They cover discrimination, forced labour, child labour, healthy and safe working environment and worker rights, and several other factors.

All employees must be treated equally and with dignity and respect, and Verdo commits to not discriminate in any way based on race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status or background. We also make no distinction on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs.

Verdo’s partners and suppliers must comply with the adopted human rights conventions.

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Board involvement in sustainability work is vital

Verdo’s Supervisory Board is responsible for the company’s overall strategy, and thus for ensuring that the strategic direction – now and in the future – targets needs and opportunities locally, nationally and globally, while balancing the green transition, security of supply and profitability.

Since Verdo works with the green transition and critical infrastructure, much of the strategy work focuses on sustainability – a focus that will no doubt become even more pronounced in future. The Supervisory Board has continually been involved in the work to move Verdo in a more sustain-

able direction, and was involved in the decision to make sustainability one of the strategic focus areas – a must-win battle – in Verdo’s corporate strategy up until 2025, at which time the strategy will be revisited.

We asked a few of Verdo’s board members why board involvement in sustainability is important, and how they envisage that board involvement can provide value for the company.

Keld Christensen, Board Member

As a member of Verdo’s Supervisory Board, it is important to help ensure that Verdo remains sustainable in the future. The board has discussed, for example, which heat sources can ensure a continued green and sustainable future as the date for ceasing operations at the CHP plant in Randers approaches. Based on our current experience in relation to the energy crisis and security of supply, we are also discussing a broader future heat supply, and are looking at what solutions are being worked on in this area in other towns and countries with great interest.

Bo Svoldgaard, Board Member

Verdo’s Supervisory Board has been informed regularly, at board meetings and otherwise, about initiatives and activities related to sustainability. The subject is also addressed and discussed in connection with the general follow-up on goals and sub-goals in Verdo’s strategy. It is important that the Supervisory Board, together with Verdo’s Executive Board, support our focus on sustainability. Responsibility is the keyword here, as sustainability work typically requires an extra effort. An effort that Verdo is happy to make.

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Labour concerns the work performed by employees at Verdo, or on behalf of Verdo’s suppliers or subcontractors. Verdo follows the ILO conventions and complies with the existing national legislation regulating the labour market.

Verdo offers terms of employment and working conditions that comply with national legislation, including the freedom of employees to organise themselves in peaceful associations at their own discretion. We work to eliminate discrimination in our working and employment relationships.

We give priority to our employees’ social, mental and physical well-being in the workplace. We weight health and safety at work highly. Our employees are our most important resource. The personal development of employees is therefore a high priority. We also undertake to ensure working hours that comply with the existing legislation and/or the ILO Convention.

Verdo also follows the UN guidelines on child labour, and does not tolerate any form of child labour.

· Nor does Verdo tolerate any form of human trafficking or modern slavery, including forced labour, debt bondage or bonded labour. Employment relationships must be voluntary and based on mutual consent without any threat of punishment.

· Verdo respects employees’ right to receive fair wages in order to ensure a decent life for themselves and their families. In addition, we comply with all other acts and regulations governing wages, benefits and compensations.

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Labour

Anti-corruption and anti-bribery

Verdo has a zero-tolerance policy towards activities of a corrupt or dishonest nature. We undertake to refrain from all forms of corruption and bribery, be it direct or indirect, including extortion, fraud, facility payment or money laundering. We also distance ourselves from all types of abuse of entrusted power for the purpose of private gain, such as embezzlement, fraud and abuse of office.

Verdo has a constant focus on this area, and we are aware that we operate in countries where there is a greater risk of bribery and corruption than in Denmark.

As a natural extension of Verdo’s purpose and mission, we are committed to continually delivering the extra long-term dimension that makes a difference for our consumers. As part of this long-term dimension, Verdo supports community development in its local areas. We contribute to creating an attractive foundation for a diverse and growing business community.

We make an effort to understand and deliver on our customers’ needs, so we can make it easy to be a customer with us.

Verdo respects our customers’ right to privacy and complies with existing data protection legislation, including GDPR.

Participation in sustainable network

The ‘sustainable network’ facilitated by Green Power Denmark has been given a special strategic focus at Verdo.

All participants have the same background –the energy sector. That is why this network has received particularly strong support from Verdo – with the Strategy Manager, Head of Communication and Marketing and Sustainability Manager all being involved.

The network aims to explore sustainability standards across the sector, and create a greater common sustainability understanding and language among its members. The network pursues some of the most pressing and agenda-setting sustainability issues. These include regulation (e.g. the EU taxonomy and CSRD), green accounting, minimum standards, organisational change

and anchoring, communication on sustainability, greenwashing and so on.

The ‘sustainable network’ is for employees working with sustainability at a strategic level, but also touches on more operational matters in an attempt to concretise the key issues and tasks we face as energy companies. It thus offers highly value-creating, relevant and effective knowledge sharing.

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Governance initiatives and results

Responsible supply chain management – Code of Conduct is central

We fulfil our policy for responsible governance in our value chains towards suppliers and partners through our Code of Conduct and Verdo’s procurement policy.

New, more ambitious goals were set in 2022 to ensure a focused and effective roll-out of the Code of Conduct. With its development and implementation, all Verdo’s strategic suppliers will eventually have to meet a number of requirements to help ensure responsible behaviour towards the climate, environment and people, throughout the supply chain, from resource extraction to delivery.

The revised Code of Conduct will be introduced during 2023, and will gradually be made more stringent until it is fully phased in. The requirements will be escalated over time to ensure alignment with further requirements from the

EU, which we await the implementation of in Denmark. The gradual phase-in is part of a respectful and responsible partnership, where we give suppliers the opportunity to incorporate the requirements into their deliveries.

Verdo’s Code of Conduct will continue to evolve, and as we revisit our materiality analysis each year – for the Group overall and in each business area – we will add relevant updates.

Verdo’s overall sustainable development policy and our Code of Conduct can only be effected through a joint effort. It is therefore vital that Verdo’s employees are familiar with the elements. In 2023, we will give greater focus to introducing employees to the new Code of Conduct, and highlighting how the Group can help our suppliers meet the requirements.

Double focus on materiality

One of the key tasks facing Verdo is to ensure a structured and continuous approach to defining our materialities.

Assessing our materialities in terms of opportunities and risks is nothing new, but a new requirement in the EU’s CSR Directive gives greater focus to double materiality, i.e. the sustainability risks and opportunities we face – particularly the impacts we have on people, the environment and society. The ‘double’ element means that we also look at these risks and opportunities as external impacts on Verdo, and also from an economic perspective.

Defining our priorities based on the double materiality principle helps us constantly focus our efforts where they have the greatest effect and the least negative impacts (climate, environmental and social) – for society and for Verdo.

In consultation with PwC, we have assessed our double materiality and begun implementing this principle in 2022 – in our Group strategy, through our strategic focus areas (must-win battles), and in the various business plans that define the framework for our future efforts.

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ESG on the agenda

Working with sustainability is nothing new for Verdo. But in 2022, the way we run our business and develop it became much more strategically anchored.

This included an ESG focus day, looking at how we meet the requirements in the CSR Directive and EU taxonomy. In short, setting the framework for our sustainability efforts.

The focus day was facilitated by Verdo’s Sustainability Manager, Line Risgaard Mortensen, in close cooperation with PwC.

“The ESG approach gives us a good foundation for working strategically with sustainability. In the longer term, we will be working within a common framework in Denmark and in the EU, such that our sustainability efforts have a more common direction and we speak the same language as our partners,” notes Line Riisgaard Mortensen.

Thirty employees from various levels and business areas participated in the focus day at Verdo, to ensure that all perspectives were covered, and to reach a common understanding of Verdo’s total impact on the environment and society.

“It’s important to involve employees in such a process. To bring all perspectives into play and ensure that sustainable practices become integrated into all business areas,” says Line Risgaard Mortensen.

The focus day was another step towards creating a common ESG mindset at Verdo, which aims to flesh out our ESG objectives in a strategy with concrete goals, actions and results.

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Line Risgaard Mortensen, Sustainability Manager at Verdo

Governance through materiality

Part of our corporate governance at Verdo involves regularly assessing the overall risks associated with our business activities. This is based on a double materiality analysis, where we assess how Verdo’s activities impact society and how society impacts Verdo’s activities. The materiality analysis is based on the F-ESG (financial, environmental, social, governance) perspective. This is how we must continue to ensure responsible corporate governance in the future.

The materiality analysis will be increasingly incorporated into a structured approach in future, as part of a management system for social responsibility and sustainable development. We initiated this work in 2022, and will continue it in the years ahead.

Data must ensure transparency

A key element in ensuring transparency in Verdo’s sustainable development efforts is to document our progress using data. This process is well underway, but we are still a long way from fully realising the great potential in working with data. We must therefore develop a greater understanding of the importance of data assurance and quality across the Group in 2023. We must also specify which data points we want to monitor – and set goals based on current baselines.

Data ethics considerations

Verdo has not formulated a data ethics policy, as we do not currently collect and process data in a way that, in our view, requires consideration beyond compliance with applicable law, including GDPR, and Verdo’s general guidelines.

For example, Verdo has policies on GDPR and IT use, and we are constantly working to ensure regulatory compliance. Verdo does not work with advanced technologies such as algorithm-based decision-making processes. We therefore deem that the risk of bias towards employees, suppliers and consumers in society is minimal.

At Verdo, we are aware that the deployment of new technologies could give rise to data ethics considerations, and create a greater need for internal control and competency training at all levels. We will therefore continually assess the need for policy in this area, in line with our overall focus on responsibility and ethics in Verdo’s value chains as a whole.

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New procurement strategy at Verdo

To improve the way procurement is handled, Verdo formulated a new procurement strategy in 2022. This is already having a clear impact on our work, and helps set a clear direction for how we view and evaluate suppliers. The new procurement strategy dovetails directly with Verdo’s strategic focus area of stronger sustainable development (must-win battle #2).

Verdo’s new procurement strategy sets the future direction towards 2025, and is based on our current situation, including strengths, weaknesses, opportunities and threats. Our strategic direction includes the following aim:

“We strive to be a value-creating, digitalised and attractive procurement department that supports collaboration and profitability at Verdo”

This aim commits us to our business and our employees. It also provides a framework for how we can work towards broadly maturing the procurement department, by developing concrete supplier strategies that focus on CSR and sustainability, and achieving the procurement savings that have been identified across Verdo.

The procurement strategy is being implemented through five strategic initiatives:

Organisation: Create clearly defined roles, responsibilities and mandates in the procurement department and for decentralised procurement tasks

Category management: Develop a widespread, more cohesive, category structure across the business and support staff

Strategic procurement: Have a clear direction and develop concrete supplier strategies with a focus on CSR and sustainability

· Operational procurement: Take responsibility for the operational procurement process and continually train purchasers and super users

Data and digitalisation: Take ownership for building maturity in relation to digitalisation and data, for the benefit of the whole organisation

The core strategy is based on placing demands on suppliers in relation to sustainability and offering transparency in relation to procurement and CO2 emissions. For example, we will be implementing Verdo’s Code of Conduct during 2023, which will be of key importance to our partnerships with many of our strategically important suppliers.

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The underrepresented gender

Diversity is essential in order to fully understand our customers, partners and employees – while also being aligned with social trends.

We are confident that having employees of different ages, from different backgrounds, and with different perspectives and beliefs adds more depth and provides the best foundation for a strong culture and a solid business.

At Verdo, we don’t have a special attitude towards female leaders. We recognise that gender diversity often leads to better results. But that doesn’t mean we will appoint a woman because of her gender. We appoint the person best qualified for the job.”

We therefore have a strong focus – among other diversity parameters – on improving the gender ratio at Verdo. The ratio between men and women is 80/20 – and has been for many years. Women are therefore clearly the underrepresented gender at Verdo.

* Level 1 is managers and team leaders to whom employees report directly. The proportion of female managers here was unchanged from 2021.

** Level 2 is middle managers who report to level 3. The number of female middle managers at level 2 was unchanged from 2021. The percentage change is therefore primarily because there were fewer middle managers at level 2 overall in 2022 than in 2021.

*** Level 3 (division and support staff directors) is Verdo’s top management level. The number of female directors at level 3 is also unchanged from 2021. The percentage increase here is again due to a change in the total number of directors.

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of female managers at Verdo: Unit 2021 2022 Goal Female managers at level 1* % 13 13 25 Female middle managers at level 2** % 16 22 25 Female directors at level 3*** % 17 20 33
Number

We have previously discussed the unequal distribution of male and female employees under ‘Gender diversity’ (Social). If we look at the numbers for female managers at various levels in the Group, the proportions are 13% at level 1, 22% at level 2 and 20% at level 3.

The change from 2021 to 2022 is mostly positive, but we are still some way off achieving our ambitious 2025 goals. Our initiatives include seeking to attract more female managers and motivating more existing female employees to pursue management positions by encouraging all Verdo employees to undergo further training. Studies show that continuing education holds promise as a pathway for women into the management role.

* Percentage of women on the Supervisory Board excludes employee representatives.

** No Board of Representatives election

Note 1: The Supervisory Board had 12 members in 2021, including 1 woman.

Note 2: The Supervisory Board had 10 members in 2022, including 1 woman. The number of board members changed following a transition process adopted in 2019 to take account of Herning’s entry into the Board of Representatives, through to the Board of Representatives election in spring 2022. Following the election in 2022, the Board of Representatives had 71 members (70 at time of publication of this report, as one member resigned after 31 December 2022). Eighteen of these are women. Five female candidates stood for election to the Supervisory Board. One woman was elected to the board. This is also why Verdo failed to reach the target (for 2024) already in 2022.

Note 3: A midterm election for the Supervisory Board will be held in spring 2024. Four board member positions are up for election. This opens the door for an increase in the proportion of female board members.

Note 4: There will be an ordinary election for the Board of Representatives in spring 2026. This opens the door for an increase in the proportion of female members on the Board of Representatives. In 2021, it was also decided to increase the total number of members on the Board of Representatives from 51 to 85, which affects the figures in the table above.

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women
Supervisory
and Board of Representatives: Unit 2021 2022 Goal 2024 Goal 2025 Women on the Supervisory Board* % 8.33¹ 10² 20³ 30 Women on boards – foreign companies % N/A 33 25 25 Women on the Board of Representatives % 20 25 ** 30⁴
Number of
on the
Board
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The 2022 election resulted in a younger Board of Representatives with more female representation

Verdo held elections for the Board of Representatives and some of the seats on the Supervisory Board in spring 2022. A concerted effort was made at this time to attract more female members and young people to the Board of Representatives. Verdo’s consumers are a broad mix of ages and genders, and we therefore want our Board of Representatives to better reflect this diversity.

While we are still some way off achieving gender and age balance, there was clear progress after the election. Around 25% of the members of the Board of Representatives are now women (18 out of 70). This is an increase of 10 percentage points compared to the previous board.

The average age has also dropped by about 5 years.

We asked some of the new members of the Board of Representatives what made them stand for election, and whether the role is meeting their expectations.

I work in the energy sector and therefore also have a lot of experience from the ‘other side of the table’. I think that the role of boards of representatives is often overlooked by people my age. That’s unfortunate, because it’s a really interesting way to gain insight into and influence some of the companies at the heart of Danish infrastructure and the green transition. I also see it as a good way to gain new experience and expand my network.

I think Verdo is undergoing an exciting transformation, where some things are being tidied up and focus sharpened. It’s interesting to be a part of this, and follow developments a little more closely than via the local media. I also look forward to getting to know some of the other members better.

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Oliver Jørgensen Planner

I graduated in summer 2021. During most of my time at university I have had a desire to gain experience with board work, so when I heard that there was an election for the Board of Representatives at Verdo, I knew I had to give it a try. Verdo is a key player in the Randers cityscape, and with the energy and climate crises being more pressing than ever, it was a clear opportunity to get closer to the action as a consumer.

Being part of a Board of Representatives offers insight into how a company the size of Verdo works, and the strategic considerations behind any new ideas and initiatives. As a consumer, it has also been interesting to witness how Verdo tries to stay one step ahead of everyday and future challenges. Also, the Board of Representatives is made up of members from very different backgrounds. This has led to many interesting discussions, about the development of the sustainable and green energy sources of the future etc.

Lone Maarup Christensen HR employee

I know some people on the Supervisory Board, and was encouraged to stand for the Board of Representatives. I chose to do so in order to gain knowledge of an interesting new area – the energy sector – and expand my knowledge of Verdo.

As a member of the Board of Representatives, I also get to expand my network and meet people I would not normally meet. Verdo also takes good care of us, also when it comes to preparing for the Board of Representatives meetings. So it is a very positive experience overall.

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Anne Brandborg Oliver Jørgensen Lone Maarup Christensen

Whistleblower scheme

Verdo is an organisation with an open company culture, and we strive to uphold good business ethics. However, we recognise that unethical behaviour occurs in most organisations, and that having an open company culture is not always enough to eliminate this.

To combat unethical behaviour more effectively, we have therefore implemented a whistleblower scheme, as employees and other affiliated parties are often the first to notice unethical behaviour. Employees can use the whistleblower scheme to report concerns about actual or suspected matters that could impact Verdo or the well-being of its employees. Examples include breaches of Verdo’s Code of Conduct or violations of the law, including issues related to bribery and corruption, competition law, fraud, financial crime, harassment and discrimination, international trade control, protection of personal data, rights and protection of individuals, serious damage to the environment and conflicts of interest.

No reports were lodged via the whistleblower scheme at Verdo in 2022.

New goals – Governance

We will set several new baselines for ESG goals under Governance in 2023.

We are ensuring due diligence by preparing for compliance with the CSRD and associated new ESRS standards, by focusing on known materialities.

In 2023, we will work at more depth with materiality in the various business areas, thereby ensuring sustainable business development, while also preparing a gap analysis in relation to the standards. We will thereby ensure that Verdo is ready to do reporting in 2025 as prescribed under CSRD, which is replacing the NFRD and the way we report on social responsibility today.

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Aims and development

Verdo experienced a paradigm shift in 2022, whereby the strategic focus on CSR became a central part of business development.

This is a natural extension of the change already initiated at Verdo, which is being further reinforced by the general trend in society whereby EU directives (to be implemented through national legislation) reflect the growing awareness that more is needed if we are to ensure a sustainable future.

We are conscious of our responsibility to quickly acquire knowledge and build competencies that can contribute to reducing CO2 emissions and ensuring a responsible use of the planet’s resources. We also strive to stay one step ahead of legislation setting the framework for future reporting on sustainable development.

As an energy company, we face a major task in adapting our own business, but our aspirations go beyond that. We want to contribute positively to developing the local community, and also the rest of the world, through energy-efficient solutions that reduce CO2 emissions.

This requires competent and motivated employees, and expertise in the development of new technologies – solutions that reduce CO2 emissions and conserve resources, data understanding and assurance, and communication and digitalisation.

Our three new strategic focus areas – ‘Competencies and the future workplace’, ‘Stronger sustainable development’ and ‘Digitalisation and data’ – give us a strong foundation for the changes in the coming years.

Ahead lies a detailed mapping of our greenhouse gas emissions, while the various parts of the company work to make a green impact, internally and in society around us – for example by developing the district heating of the future and increased exports of efficient energy plants. The expanded use of data is key to developing the business and new solutions, and ensuring transparency and documenting the progress along the way.

Similarly, all Verdo’s strategic suppliers will eventually have to meet more stringent requirements for responsible behaviour towards the climate, environment and people, throughout the supply chain, from resource extraction to delivery. The new goals were set in 2022. It is now time to implement them in the business.

We see our relationships with the outside world as central to our contribution to the long-term positive development of society which is so urgently needed. Cooperation and partnerships therefore remain key for Verdo.

We are already involved in many partnerships, such as our climate partnership with Randers Municipality and our collaboration with researchers on the development of carbon capture. Yet we look forward to even more partnerships, whereby we are stronger together as we address the issues that will enable us to achieve the green transition.

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Data foundation – reporting form

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Unit 2020 2021 2022 Goal 2023 Goal 2025 Environment Direct emissions – scope 11 Tonnes CO2e N/A N/A 12,728 * * Indirect emissions – Scope 2 Location-based² Tonnes CO2e N/A N/A 1,342 * * Indirect emissions – Scope 2 Market-based² Tonnes CO2e N/A N/A 72 * * Emissions outside Scopes 1-3 Direct biogenic emissions³ Tonnes CO2e N/A N/A 280,084 -Social Employee turnover4 % N/A 22.8 18.4 15Proportion of apprentices5 % 16 10 10 10Proportion of trainees5 % N/A N/A 15 10Number of flex job employees6 Number 2 9 7 -Employee commitment/satisfaction⁷ eNPS N/A 10 22 - 25*** Job satisfaction and motivation8 (Pulse Survey) From 1-7 N/A 5.80 5.86 - 6.00*** Accidents at work9 Number 10 7 4 0Absence due to illness – salaried employees¹⁰ % N/A 1.23 2.54 2On long-term sick leave10 % N/A 0.68 1.11 -Hourly paid workers10 % N/A 4.84 4.91 4On long-term sick leave10 % N/A 2.53 0.99 -Total proportion of female employees11 % N/A 18.2 19.2 -Gender pay gap12 % N/A N/A 11.25 -Employee development/Verdo Academy¹³ Number N/A N/A 478 -Senior jobs14 Number N/A N/A 4 - -

* We will set goals in 2023 based on the 2022 baseline.

** goal 2024

*** goal 2025

**** goal 2026

Note 1: We have used the GHG protocol to calculate our climate accounts. We have not included volatile emissions for 2022. We will work to identify these in 2023, and also restate the figures retrospectively for 2022.

Note 2: Verdo has purchased green power certificates equal to our total electricity consumption. We have therefore used an emission factor for electricity of 0 g CO2e per kWh for our market-based emissions.

Note 3: Biogenic CO2 emissions from the combustion of biofuels (e.g. biogas, bioethanol, biodiesel) are calculated outside scope 1, 2, and 3. Under the GHG protocol, emissions from combustion of biomass are considered to be net zero for scope 1 direct emissions, as the biomass absorbs CO2 during its growth phase equivalent to the amount released during combustion.

Note 4: Calculated as voluntary resignations + forced terminations (in FTEs) during the year in relation to FTEs employed on 1 January.

Note 5: Calculated as the number in relation to the number of hourly paid workers in the companies where we have apprentices/trainees.

Note 6: Counted at the end of 2022.

Note 7: eNPS (Employee Net Promoter Score) indicates whether an employee would recommend that others apply for a job at Verdo – on a scale from minus 100 to plus 100.

Note 8: Pulse Survey – job satisfaction and motivation among employees on a scale from 1 to 7.

Note 9: Counted at the end of 2022.

Note 10: Calculated for the number of working hours, but without taking overtime into account. The Danish Business Authority guidelines state that this must be counted as working time. We will calculate absence due to illness in line with the Danish Business Authority guidelines in 2023.

Note 11: Calculated as a percentage of all employees.

Note 12: Calculated as the difference between the average gross hourly earnings of male and female employees, as a percentage.

Note 13: Counted at the end of 2022.

Note 14: Counted at the end of 2022.

Note 15: Calculated as the percentage of strategic suppliers who have signed the Code of Conduct (strategic suppliers are defined as 80% of spending)

Note 16: Calculated as the percentage of employees with a purchasing role

Note 17: Calculated as a percentage of all board members. Percentage of women on the Supervisory Board excludes employee representatives

Note 18: Calculated as a percentage of the entire Board of Representatives

Note 19: Level 1 is managers and team leaders to whom employees report directly. The proportion of female managers here was unchanged from 2021.

Note 20: Level 2 is middle managers who report to level 3. The number of female middle managers at level 2 was unchanged in 2022 from 2021. The percentage change is therefore primarily because there were fewer middle managers at level 2 overall in 2022 than in 2021.

Note 21: Level 3 (division and support staff directors) is Verdo’s top management level. The number of female directors at level 3 is also unchanged from 2021. The percentage increase here is again due to a change in the total number of directors.

Note 22: Calculated based on CEO remuneration, excluding company car, compared to median employee salary.

Note 23: Calculated as number of reports.

71 Unit 2020 2021 2022 Goal 2023 Goal 2025 Governance Supplier signed Code of Conduct¹⁵ % N/A N/A N/A 80Employee intro to Code of Conduct¹⁶ % N/A N/A N/A 100Women on the Supervisory Board17 % N/A 8.33 10 - 20** 30**** Women on boards of foreign companies % N/A N/A 33 - 20** 30**** Women on the Board of Representatives18 % N/A 20 25* - 30**** Female managers at level 119 % N/A 13 13 - 25*** Female middle managers at level 220 % N/A 16 22 - 25*** Female directors at level 321 % N/A 17 20 - 33 *** CEO and employee pay gap²² % N/A N/A 85.8 -Whistleblower scheme – internal23 Number N/A N/A 0 0Whistleblower scheme – external23 Number N/A N/A N/A 0 -
72 Agerskellet 7 8920 Randers NV +45 7010 0230 info@verdo.com verdo.com
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