Verdo CSR 2019-2020 Eng

Verdo

CSR

CSR with Verdo

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Verdo’s business model Verdo

CSR – Corporate Social Responsibility

Verdo’s business model Resources

Activities

• People • Capital • Knowledge • Innovation • Wood • Solar

Strategic business

Development and

• Energy systems • Street lighting • Waterworks • Electrical installation

Other business

• Coal

CSR with Verdo

• Biomass

• Fibre-optic networks

• Water

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installation:

Value Operation and

Trading:

maintenance:

• Biomass

• District heating

Regulated:

• District

• Electricity

• District heating

heating

• Drinking water

• Water

• Technical

• Contributes to CO2 emissions

carbon

• Contributes to CO2 reductions

• Energy systems

• Danish and international jobs

• Street lighting

• Tax contribution in Denmark • Cultural and sports sponsorships in local communities

• Fibre-optic

• Electricity

networks

sales

• Electricity grids

Verdo’s business model

O

ur business model is based on the transformation of resources into value created. We approach CSR in recognition of the mutual impact that Verdo and the outside world have on each other – how we affect and are affected by the environment and climate, as well as by our relationship with customers, business partners and employees. This means that CSR has both a direct and indirect impact on our business model.

electricity, water and heating customers, as they help to keep prices competitive. Trading in certified fuel has given us a unique market position based on quality and competitive prices. At the same time, we are working to push the entire industry in a more eco-friendly direction. In the development, construction and operation of energy systems, we focus on our customers’ demand for flexible energy systems to optimise operations and save energy.

Consequently, we strive to not only reduce our own CO2 emissions from energy production, but also to reduce our customers’ emissions, among other things. The energy optimisation we offer our customers allows them to reduce CO2 emissions from their energy systems, street lighting business and electricity consumption.

Macro trends As an energy company, we are affected by macro trends such as Danish and international energy legislation, consumer demands and the UN’s 17 Sustainable Development Goals. This calls for responsible and CO2-reducing solutions due to the climate impact of energy production. These general drivers and trends both support and challenge growth and value creation.

Among other things, Verdo trades in certified fuels, which are produced by sustainable forestry operations under safe conditions.

The recognised certifications ensure that strict requirements are imposed on manufacturers and business partners which, in turn, allow Verdo to sustainably and responsibly source and resell certified fuels.

Operational and contingency plans Unintended interruptions of the supply of electricity, water and heating constitute a significant risk to the health, educational and emergency organisations and public institutions we supply.

To avoid interruptions, we continuously update our operational and contingency plans on heat, water and electricity supply in line with government requirements. In 2019, there were no significant unintended interruptions of supply.

Resources Our value creation is dependent on a number of resources: people, capital, knowledge and innovation as well as wood, solar, water and coal. These resources play a vital role for our long-term value creation and competitiveness as well as for the development of a sustainable business, and we therefore want to look after them and develop them. One example is our electricity and heat production at the certified biomass-fired CHP plant in Randers.

This significantly reduces CO2 emissions and contributes to a lower environmental impact.

Approach to CSR Our approach to CSR is defined in the following guidelines: •

We create and sell green energy and sustainable solutions for the benefit of people and the environment.

•

We take initiatives that benefit our employees and increase their commitment, job satisfaction and safety.

•

We actively work with diversity in recruitment.

•

We actively work to train the workforce of the future.

•

We promote sports, culture and social activities.

•

Our business operations are based on sound and ethical principles, and we conduct ourselves with decency.

•

We launch initiatives to reduce CO2 emissions.

•

We actively work with the UN’s 17 Sustainable Development Goals.

Activities We operate across our four main value chains: heating, water, technical infrastructure and trading in fuels. Our expertise is therefore centred on the development and installation of energy-efficient energy systems, street lighting and intelligent infrastructure, operation and maintenance of water and heat supply as well as trading in green electricity and fuels such as certified biomass and technical carbon.

Value creation and competitive advantages Investments in innovation and development are key to our business model and set us apart from our competitors. Synergies between the regulated and commercial business create value for our

CSR with Verdo

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Corporate Social Responsibility

CSR – Corporate Social Responsibility

V

erdo’s vision is to generate green energy that makes a world of difference. We see it as part of our responsibility to contribute to the green transformation and supply more sustainable energy. This is an ambitious but necessary vision, because according to figures from the Danish Energy Agency fossil fuels still account for more than 80% of the planet’s total energy consumption.

Transition from black to green district heating Verdo’s transition from the use of black to green energy in district heating production began in 2002 with the gradual transition from coal to biomass at the CHP plant Randers Kraftvarmeværk. The conversion to biomass was fully implemented in 2009. From 2002 to the present day, Randers Kraftvarmeværk has reduced CO2 emissions by 99.3%. The calculation assumes an emission factor for biomass of zero according to Commission Regulation (EU) on the monitoring and reporting of greenhouse gas emissions.

Since 2016, Verdo has fired with certified biomass in accordance with the Danish Industry Agreement for Sustainable Biomass. The reason is that CO2 emissions from coal are permanent, while emissions from certified biomass are temporary due to documented, responsible reforestation and forest management and the absorption of CO2 emissions by plants and trees over time.

The transition has been crucial in reducing the CO2 footprint of district heating production and thereby the negative environmental impact.

Since 2015, Verdo has supported independent certification schemes that ensure sustainable and safe production of woodbased fuels. We do this because we believe

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CSR with Verdo

in sustainable and documentable fuel production. Today, we have several Chain of Custody certifications (CoC) – FSC®, PEFC™, SBP and the NEPCon Generic Chain of Custody.

From permanent to temporary CO2 emissions The 2018 Energy Agreement significantly boosted the development of fully and partially electrified energy systems. By installing a heat pump at the CHP plant, we have achieved increased efficiency with lower biomass consumption. In 2019, this enabled us to once again lower the price of district heating paid by our customers while also reducing our total CO2 footprint.

Green electricity In 2013, we began offering our customers green electricity as an alternative to conventional fossil fuel-based electricity.

Today, we offer green electricity to all our customers, and green electricity now covers 100% of the Group’s own consumption.

Switch to LED lighting Since 2015, Verdo has undertaken the comprehensive task of replacing conventional lighting units with more climate-friendly LED technology, which reduces the CO2 impact of lighting. We have continuously installed LED lighting in our own indoor and outdoor areas, as well as helping an increasing number of customers to replace their street lighting, indoor and outdoor lighting and effect lighting with LED lighting. This has produced energy savings of up to 70%.

Energy companies’ energy-saving efforts As an energy group engaged in heat and electricity distribution, we are required to report our energy savings to the Danish Energy Agency each year. This is

a high-priority area for Verdo, and every year since 2016 we have achieved energy savings in several areas.

Tree planting and forest preservation In 2016, Verdo helped plant the Oust Mølle Folkeskov forest, and in 2019 we took over the 39-hectare Randers Sønderskov forest. This was part of our efforts to protect source areas and water extraction in future. With our new strategy and vision, Verdo is accelerating the contribution to the green transformation by, among other things, living up to the UN’s 17 Sustainable Development Goals with a particular focus on goal no. 6 ‘Clean water and sanitation’, goal no. 7 ‘Affordable and clean energy’ and goal no. 13 ‘Climate action’.

Environment and climate

Environment and climate

T

he world is facing considerable climate change challenges.

Scientists have proved that the rise in global temperatures must stay below 1.5 °C to protect life on Earth.

Exceeding this limit is likely to have lasting consequences for nature and humans. To keep the temperature rise below 1.5 °C, the world needs to halve global carbon emissions by 2030 and reach net-zero emissions by 2050. This is explained in the IPCC Special Report on the impacts of global warming of 1.5 °C. Sustainable energy is our key focus area.

It is at the heart of Verdo and therefore a natural part of our activities. We create solutions which focus on energy efficiency and lower supply prices, CO2 and NOX reductions as well as clean and plentiful water.

In 2015, we adopted the UN’s 17 Sustainable Development Goals towards 2030.

They define a new and improved framework for how companies can contribute to solving major global climate change challenges. Verdo acknowledges that we are part of the problem, but we are also part of the solution. This is reflected in our commitment to the UN’s 17 Sustainable Development Goals.

Verdo directly or indirectly addresses all the 17 Sustainable Development Goals.

However, we have unique expertise to provide solutions to some of them. In 2019, goal no. 6 ‘Clean water and sanitation’, goal no. 7 ‘Affordable and clean energy’ and goal no. 13 ‘Climate action’ were implemented in our strategy. In 2020, we expect to implement more goals.

Policy

Goal no. 7 ‘Affordable and clean energy’ Goal no. 7 is about ensuring access to safe, clean and affordably priced energy. Our approach is to increase the use of certified biomass in the form of wood chips and keep coal consumption to an absolute minimum. This helps to reduce our CO2 and NOX emissions year after year.

Every year, we replace an increasing number of street lights with LED technology to reduce energy consumption and thereby CO2 emissions caused by lighting.

In addition, we are committed to developing intelligent infrastructure that further promotes the green transformation. It not only makes the infrastructure more energy-efficient, but also uses data and communication via street lighting and intelligent traffic management to optimise traffic flow and reduce congestion and thereby urban CO2 emissions.

Goal no. 13 ‘Climate action’ Goal no. 13 focuses on urgent action to combat climate change by reducing the impact of greenhouse gases, among other things. That is why Verdo has long been committed to utilising surplus heat from industry. In Randers, we work with the Bilka supermarket, the crematorium and the regional hospital to offtake their waste heat from production instead of just releasing it into the atmosphere. Therefore, we welcome the 2018 energy agreement on improving the utilisation of surplus heat from businesses for the benefit of citizens and the environment. Improving the utilisation of surplus heat reduces heating costs for consumers and fuel consumption in heat production. In 2019, Verdo’s initiatives in this area corresponded to the annual heat consumption of about 40 households. In 2020, we will explore further opportunities for utilising surplus heat in Randers and Herning.

Given the increasing wood consumption – both in the energy sector and in construction – the need for sustainable forestry is increasing. This creates a natural focus on certification and documentation.

International certification schemes play an important role in this respect. The certifications reflect a joint commitment to responsible forestry. Verdo is therefore entering into partnerships with our suppliers and industry organisations to push the market and the forestry industry in a more responsible and sustainable direction.

CSR with Verdo

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Environment and climate

certified and sourced from sustainable resources by 2019. Verdo sees sustainable biomass as a green path to a fossil-free future. Biomass reduces CO2 emissions by more than 90% compared to coal. Coal therefore emits more CO2 than wood, and while plants’ absorption of CO2 takes place over decades, the process takes millions of years for coal.

We require that all sourcing of wood-based biomass is certified by reputable and independent organisations. This helps us to maintain forest ecosystems, ensure responsible and lawful work processes and provide financial incentives for countries with major forestry operations to adopt sustainable production methods.

We maintain FSC® CoC and SBP CoC certification to ensure that our fuels are sustainably sourced. In 2019, we were also NEPCon Generic CoC certified and became one of the first major biomass suppliers in Denmark to be awarded PEFC™ traceability certification.

The forest area and the products it supplies are certified by one of the world’s leading forestry certification systems.

PEFC™-certified forests protect biodiversity, climate, safety at work and local communities. The felled wood can be traced all the way from the forest to the sawmill and on to the shop or combustion plant. Certifications ensure sustainable and responsible sourcing, and that the biomass is produced under safe financial, social and environmental conditions.

Trees can play an important role in solving the planet’s climate change challenges.

Trees have an excellent natural ability to absorb CO2 from the atmosphere.

For example, a large beech tree with a diameter of 50 cm and a height of 26 meters can absorb an amount of carbon equivalent to 4.30 tonnes of CO2 in its lifetime. Photosynthesis is the forests’ natural contribution to the fight against climate change. We are already planting trees and protecting woodlands, but in 2020 we expect to increase our efforts in this area.

We have also helped to draft the energy companies’ Industry Agreement for Sustainable Biomass. It stipulates that 90% of all fuel in the industry must be

Goal no. 6 ‘Clean water and sanitation’ In Denmark, we all have access to clean drinking water – a resource most people take for granted. However, as is the case in the rest of the world, our drinking water is under threat. Verdo is therefore continuously stepping up activities aimed at protecting our groundwater and guaranteeing clean drinking water for consumers in the local community. In 2019, one of such activities was the protection of forests and the creation of non-toxic environments in local communities. In addition, we joined partnerships to develop new water filtration and purification methods. In 2019, we entered into a partnership with the waterworks Hjørring Vand and TREFOR Vand and the Danish Technological Institute on maximum pesticide removal through natural, microbiological manipulation of the existing sand filter at Danish waterworks.

Importance of certifications for Verdo

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FSC® (Forest Stewardship Council®)

Certification of forest area and forest products • Social and environmental responsibility.

• Documentation for lawfulness and compliance with EU Timber Regulation (EUTR).

• Ensures sourcing of sustainable wood-based biomass and adherence to industry agreement.

SBP (Sustainable Biomass Programme)

Certification of producer and products.

• Ensures that biomass is produced and transported responsibly.

• Ensures detailed documentation and CO2 accounts.

• Ensures sourcing of sustainable wood-based biomass and adherence to industry agreement.

PEFC (Programme for the Endorsement of Forest Certification)

Certification of forest area and forest products • Builds on social and environmental responsibility.

• Ensures access to wider market of certified products.

• Recognises existing national certification systems.

• Ensures sourcing of sustainable wood-based biomass and adherence to industry agreement.

NEPCon (Generic Chain of Custody certification)

Certification of traceability documentation system where our FSC, PEFC or SBP procedures are not relevant.

• We use it to document traceability when sourcing biomass from Danish forests – biomass that meets the requirements for alternative documentation for adherence to industry agreement.

CSR with Verdo

Environment and climate

Efforts and results In 2019, we measured the highest-ever efficiency at the CHP plant Randers Kraftvarmeværk thanks to our skilled employees. This resulted in reduced fuel consumption and CO2 emissions. The efficiency improvements were achieved through considerable operational and optimisation efforts.

of CO2 to the atmosphere per year. This is based on figures from the Global Resource Footprint of Nations report, which is based on consumption in each country surveyed. If Denmark is to meet its target of becoming climate-neutral by 2050, each person must reduce its emissions to less than 2 tonnes per year.

In 2019, our consumption of biomass at Randers Kraftvarmeværk totalled 206,587 tonnes, while coal accounted for only 399 tonnes or 0.19% of our total fuel consumption. Overall, we reduced our CO2 emissions by 10% from 3,314 tonnes in 2018 to 2,994 tonnes in 2019. Our success in reducing CO2 emissions in 2019 is mainly due to improved production planning and operational reliability.

LED optimisation In 2019, we energy-optimised and replaced 14,000 street lights with LED technology, reducing annual energy consumption by 3,332 MWh in the municipalities concerned. The lower energy consumption of LED lighting also resulted in significant CO2 reductions of about 666 tonnes. This equates to the annual CO2 emissions of 40 Danes. We have used LED lighting at our head office since 2018, saving 43,853 kWh and just over 20 tonnes of CO2 every year. This is a natural extension of our goal that all the electricity used at Verdo must be 100% green. At the end of 2019, we achieved this goal, which is inspired by UN goal no. 7 ‘Affordable and clean energy’.

In 2019, we saw a minimal increase in coal consumption compared to last year. We only use coal as backup fuel if problems arise. While the conveyor belt for biomass underwent major repair work, we had to use coal to keep the heating on in our heating customers’ living rooms.

Verdo is committed to reducing NOX emissions, for example by carefully analysing and optimising the composition of the biomass we use. In 2019, we successfully reduced NOX emissions by 57,446 kg by reducing fuel consumption and the amount of nitrogen in biomass. That is a reduction of nearly 23% from 2018 to 2019.

At the same time, we reduced CO2 emissions by 10% or 320 tonnes. This corresponds to the annual CO2 emissions of 19 Danes. According to figures from Concito, each Dane emits an average of 17 tonnes

Green electricity Verdo takes the green transformation seriously. Not only in our Group, but also in relation to the electricity products we offer our customers. Therefore, our focus for 2020 is to reach the highest category within green electricity to make it easier for our customers to choose 100% green electricity.

We love trees Trees are nature’s CO2 vacuum cleaner.

According to figures from the Danish Nature Agency, one hectare of healthy

forest absorbs and binds between 8 and 13 tonnes of CO2 per year, depending on the species of wood. This almost corresponds to the annual CO2 emissions of the average Dane.

In 2019, we contributed 1,250 trees to the nationwide tree planting project ‘Danmark planter træer’. The trees are now waiting to be planted outside Randers. Since 2019, we have partnered with the Growing Trees Network Foundation to plant new trees.

The partnership continues in 2020.

Forest acquisitions and planting Afforestation and forest acquisition are part of our strategy and support for UN goal no. 6 ‘Clean water and sanitation, goal no. 13 ‘Climate action’ and goal no. 15 ‘Life on land’. In addition to clean drinking water and CO2 storage, more forest provides habitats for plants and animals as well as new recreational areas. In 2019, we acquired the Randers Sønderskov forest to protect the source area in the forest and the supply of clean drinking water to our customers. The source area in Randers Sønderskov is located in an urban area close to a gravel pit. The source area is therefore at risk of contamination if the forest is not protected. In 2020, we will expand the forest and plant 2,000 new trees.

Verdo extracts 1,000,000 m3 of water annually from the source area around Oust Mølle Folkeskov forest in Randers.

This makes it imperative to protect the groundwater in the area. Therefore, we have planted 24,000 trees in Oust Mølle Folkeskov since 2016, which helps to store CO2 and protect the drinking water supply

Energy production in Verdo

CO2 emissions tonnes NOX emissions kg

2019 2,994 195,565

2018 3,314 253,011

2017 1,657 235,389

2016 2,531 243,976

2015 1,799 259,861

Consumption of wood chips tonnes Consumption of straw and other biomass tonnes

180,772

179,494

189,439

209,606

188,584

25,815

34,157

31,580

31,771

33,008

399

376

291

533

436

120,467,832

135,891,773

129,184,956

165,458,533

160,008,887

Consumption of coal

tonnes

Net electricity generation based on green energy

kWh

CSR with Verdo

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Environment and climate

near the large groundwater reservoir. The forest helps to protect the clean drinking water against contamination, while creating a recreational area for the city’s citizens.

Action against pesticides In Denmark, we use around 20 tonnes of pesticides in our gardens every year. One drop of pesticide in the groundwater is enough to make 10 million litres of water undrinkable. Tests of 250 water bores across the country have shown excessive levels of pesticides in the groundwater.

As part of our efforts to ensure clean drinking water, we have banned the use of pesticides at all our sites since 2017. These sites cover 430,000 m2 , which corresponds to an area the size of 65 football pitches.

We support the ‘Giftfri Have’ anti-pesticide project launched by the Danish Society for Nature Conservation and the Danish Society of Practical Ecology. In 2019, the Municipality of Randers followed suit, and we hope that more local players will support the project in 2020.

In 2019, we once again celebrated the UN’s International Water Day in cooperation with the organisations Vandmiljø Randers and Randers Naturcenter, among others.

500 young school children participated in the star race and learned more about water. Our aim is to share our knowledge of water and to support and strengthen the participation of local communities in improving water and sanitation management.

2009 Transition completed with a CO2 reduction of 99.3%

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CSR with Verdo

Conclusion Based on our environmental and climate-related efforts in 2019 within CO2 reduction, the sourcing of fuels, the protection of our source area and green district heating as well as fair supply prices, results were satisfactory, and we complied with our policy. In 2020, we will step up our efforts in relation to the UN’s Sustainable Development Goals. To this end, we have entered into a partnership on the goals with the Municipality of Randers. The aim is to make the UN’s Sustainable Development Goals relevant for everybody and increase awareness among citizens and businesses of how we all can contribute to achieving the goals.

Plants 24,000 trees in Oust Mølle Folkeskov forest

Offers green electricity to all customers

Transition from coal to biomass

2001

Energy savings ‘Energiselskabernes energispareindsats’ obliges us to find and realise a number of annual energy savings, which must be reported to the Danish Energy Agency. In 2019, Verdo’s overall savings target was 41,830 MWh. We have achieved savings of 33,502 MWh. In so doing, we have reached 80% of our overall energy savings target.

Verdo Go Green A/S realises the majority of its energy saving projects in production companies. In 2019, the project portfolio was characterised by few but large projects. Due to the extraordinarily wet autumn of 2019, some of these projects had yet to be completed by the end of 2019. We expect to make good on the lack of energy-saving projects in 2020.

2013

2016 Fires with certified biomass

2016

Acquires Randers Sønderskov forest to protect the source area

2018 Focus on electrification

2019

70% reduction in CO2 emissions from Verdo’s car fleet

2019 Obtains PEFC certification and introduces UN climate goals

2030

Environment and climate

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Social conditions and working environment

Social conditions and working environment

V

erdo is one of the biggest workplaces in the Municipality of Randers.

We see it as part of our civic responsibility to contribute to growth, to create new jobs locally and to give something back to the local community.

Policy Verdo wants to retain and develop our existing workforce, but we also want to attract new employees and give something back to the communities in which we operate. That is why we are actively working to be an attractive place to work.

Good energy Every year, Verdo’s dedicated employees participate in local running and cycling events. We call the initiative ‘Den Gode Energi’ (good energy). It emphasises the fact that good energy is fundamental to everything we do – both when it comes to energy production in the literal sense and to our employees. Activities include the ‘Fjordløbet’ race in Randers and the DHL Relay race in Aarhus, Aalborg and Copenhagen. In addition, we offer many other employee activities such as team building events, development and training opportunities, health insurance, advantageous pension schemes, personal pension interview for salaried employees and a canteen focusing on healthy and climate-friendly food. It has always been

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important for Verdo to work with educational institutions on apprenticeships, traineeships and internships. We also work with the local municipality to meet the demand for work experience for citizens on sick leave and unemployed citizens.

Working environment and safety Half of our approx. 550 employees spend their working days on construction sites, at storage facilities and in production.

Therefore, we place high demands on the physical working environment and on safety. We are strongly focused on our employees’ working environment and on bringing down the number of accidents at work. We also give priority to our psychosocial working environment and employee well-being in general. Verdo conducts workplace assessments (WPAs), where we look at work-related absence and commit to reducing any such absence and increasing the job satisfaction of our employees through the formulation of clear action plans.

Diversity We believe in the power of diversity in the workplace and are working to increase the number of female managers. In 2020, there will be an even greater focus on diversity in Verdo, and we will develop new targets for how we can attract employees in future based on a broader understanding of diversity than age and gender. These

could be parameters such as educational and professional background, origin and international experience.

Efforts and results In 2019, a wide range of activities were again organised for Verdo’s employees, and many participated in running and cycling events. We participated in a number of educational and career fairs to engage with future talents with an interest in the energy sector. We held a number of energy and climate-themed events for schoolchildren aimed at providing insights into how electricity and heating are generated and supplied to their homes. Verdo wants to share our competences and knowledge with tomorrow’s climate ambassadors.

More apprentices and trainees In recent years, Verdo has welcomed an increasing number of apprentices. We are very pleased with this development.

In 2019, the target for Teknik was for apprentices to account for 20% of the total number of technicians. We have achieved this target for the second year in a row. In Energy, the figure was 14% for both Verdo Energy Systems A/S and Verdo Energiteknik A/S. In 2019, the overall target was four trainees for the Group. However, we had a total of 12 trainees. In 2019, we also increased activities aimed at employees in flexjobs and employees undergoing job training, with an overall increase

Social conditions and working environment

of 50% from 2018 to 2019. Verdo has always supported training and education initiatives and offered attractive internships and apprenticeships to the talents of the future.

Focus on working environment Overall, Verdo has seen an 11% decrease in accidents at work and near misses.

Generally, this is a positive trend in terms of our goal of reducing the number of accidents at work. In 2019, we registered eight accidents at work, which resulted in a total of 103 days of absence. Moreover, we registered 115 near misses. So as to reduce the number of accidents at work among our technicians, they have all received safety training via instruction videos, followed by a test.

In 2019, meat accounted for 9% of the total amount of ingredients used in our canteen – a 5% drop from 2018. We thus achieved our target for the year of a reduction in meat consumption to less than 10% of the total amount of ingredients used. One of our other focus areas is to minimise food waste, and in 2019 our food waste amounted to just under 5,000 kg. We are constantly working to reduce and reuse any leftover food. We therefore collect leftover food and send it to Daka in Hedensted, where it is reused in the production of biogas. Verdo’s 5,000 kg of food waste has helped to reduce CO2 emissions by 3,556 kg. This is equivalent to 168 days of heating in an average Danish household.

Climate-friendly canteen Verdo’s focus on sustainability and the environment also extends to our canteen.

Healthy food is good for your physical and mental health and thus for the well-being of our employees.

In 2019, 42% of the food we served in our canteen was organic, and 54% of the ingredients were produced in Denmark.

We are aware that meat production has a negative impact on the environment.

To limit this impact, we are mindful of the role of meat on our menus and source high animal welfare meat where possible.

Number of employees undergoing job training and education 2019

2018

2017

Apprentices, young people

34

24

29

Apprentices, adults

4

4

4

Trainees (office and technical designer)

12

12

8

Students (interns and student assistants)

13

9

18

Employees in sheltered jobs or flexjobs

7

4

3

Employees undergoing job training

8

3

6

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Social conditions and working environment

Women and men in management Diversity in the workplace remains an important issue in Denmark. We believe that diversity creates value for Verdo.

It is a strength for our employees and our business which we can convert into results. A highly diverse management team increases the ability to manage and assess the considerations that enable the company to live up to its values and the expectations of the outside world.

Verdo offers management training and individual programmes which support the personal development and specific managerial responsibilities of managers. In 2019, we focused on encouraging female talent to attend our in-house project management course. We did this because 80% of Verdo’s employees are male and the number of women declines the further up in the organisation you go. The project management course consisted of four classes over a two-year period, and 10% of the total number of participants were female. In 2019, we intensified our focus on inviting female talent, which increased the share of women from 6% to 20% in the latest class.

We are not the only company in the energy sector to be facing these challenges, but we are determined to do something about them. As a result, we plan to step up efforts in 2020 to redefine our diversity targets towards 2030, including sub-targets for 2023 and 2027. The targets apply at all levels of management in the organisation.

In 2019, we saw a positive development in the number of female middle managers at management level 1, with an increase from 6% to 9.5%. In so doing, we have almost reached our target of 10% female managers at management level 1. This indicates that our efforts in 2019 have paid off. Female managers at management level 2 are typically found in staff functions, for which the recruitment base is often wider and more diverse. In this area, we saw a decline from 23% in 2018 to 17.5% in 2019. This means that we did not meet our target of 20% for 2019. At management

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level 3, one in eight directors is female.

This corresponds to a share of 13% and is therefore below our target of 25%. In 2019, we therefore had a sharp focus on the recruitment process at the upper levels of management. Thanks to this focus, we are able to welcome a new female general counsel to Verdo’s Executive Board in 2020. In connection with the recruitment of Verdo’s new CEO, it was a specific requirement on our part that the shortlist had to include female candidates. This is a new approach which should help to remove gender bias in the recruitment process.

Verdo also wants to increase the number of female members of the Supervisory Board. This is a challenge because Verdo is a consumer-governed company and thus has no influence over who is elected to the Supervisory Board. Nevertheless, we encourage our female talents to apply for employee-elected positions on the Supervisory Board. Elections to the Board of Representatives were held in 2019 in Herning. Two of the 16 newly elected members were women. The Board of Representatives consists of a total of 45 members from Herning and Randers, nine of whom are women. This equates to a share of 20%. Only one of the 12 members of Verdo’s Supervisory Board is female, taking the total share of women on the Supervisory Board to 8%. For several years, Verdo has encouraged the Board of Representatives to focus on the underrepresented gender when electing members to the Supervisory Board. We will step up these efforts until the next election to the Board of Representatives in 2022.

The situation is different for employee-elected members of the Supervisory Board, where two out of the four members are women, corresponding to a share of 50%. A number of subsidiaries have their own supervisory boards. Members of these supervisory boards are recruited from among members of the management team in the Verdo Group, which means that they are subject to the same gender balance target. In 2019, we achieved a gender balance in 13 of our 18 subsidiaries. This is a significant increase from 2018, when

none of the companies had achieved a gender balance. This focus continues in 2020.

Sponsorships and partnerships With our partnership and sponsorship policy, we want to promote knowledge of sustainability and green energy issues and to create value for the local communities in which we operate. Sports and culture help bring people together in communities that generate value for the individual and society. That is why we have supported the world of sports for many years, most notably as the main sponsor of Randers FC, a sponsorship which dates back to the early days of the club. We also sponsor handball, Herning Blue Fox ice hockey and various local events. We strive for diversity in our sponsorships. Therefore, we support ‘Værket’ and its wide range of cultural events in the form of opera and ballet, music, theatre and shows for the whole family. Active citizenship and social responsibility are all about our value-adding relations with the rest of society. We therefore reach out where we feel we can make a difference. Even a modest helping hand can have a big impact on the individual and the local community. In 2020, we will work on increasing the breadth of our sponsorships. This will mean that some of those recipients who have received a lot of money in the past will receive slightly less, which will allow us to support small initiatives in the local community.

Conclusion Our employee benefits contribute to Verdo’s attractiveness as a workplace, as well as having helped to ensure that our active efforts to recruit more apprentices and students have borne fruit. We have recruited more female managers, but unfortunately did not meet our target at all levels. Judging from the positive feedback we have received, we have succeeding in giving something back to the local communities we are part of via our sponsorships.

Social conditions and working environment

Diversity – women and men in management Diversity

2019

2018

2017

Female middle managers – level 1 (target of 10%)

9.5%

6%

3%

Female managers – level 2 (target of 20%)

17.5%

23%

22%

Female directors – level 3 (target of 25%)

13%

13%

13%

Female CEO – level 4

0%

0%

0%

CSR with Verdo

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Respect for human rights

Respect for human rights

H

uman rights constitute one of the cornerstones of the UN Global Compact’s ten principles and the UN’s 17 Sustainable Development Goals.

We respect and are inspired by both across our business model.

anonymise personal data have also been implemented in our settlement system.

Verdo is continuously working with GDPR to improve internal procedures and systems to maintain the company’s GDPR compliance.

Verdo’s most important value is ‘We conduct ourselves with decency’. This means that we strive to integrate and respect the universal human rights.

In Verdo, human rights translated into employee responsibility also include health cover in connection with illness and a pension scheme. The organisation is characterised by openness and a sense of equality among our employees and in the dialogue between the management and the employees.

As a natural extension of our compliance work, we have enhanced our focus on the new whistleblower directive. It allows employees to report information about unlawful behaviour or serious irregularities without having to fear dismissal.

In 2020, we expect to draw up a policy and organisation for the area. The aim of the scheme is to increase credibility and employee confidence in our management and business procedures. However, it is important that the scheme be seen as complementary to the existing internal dialogue and openness.

Efforts and results In 2019, Verdo worked hard to ensure compliance with the updated General Data Protection Regulation (GDPR).

In 2019 alone, we spent around 8,000 in-house hours to shed further light on which personal data are being processed and which data processing agreements we have entered into. In addition, we have developed a number of internal procedures for dealing with security breaches. To ensure a successful process throughout the business, we have carried out awareness training for our employees, and posters have been put up to maintain a constant focus on GDPR. Methods to

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Annual report 2019

In 2019, we continued our internal dialogue meetings in which all employees can ask questions of the CEO, the aim being to contribute to a more open and transparent organisation. Many employees seized this opportunity, and feedback was very positive.

In 2019, our values were condensed into three guiding values. Verdo’s fundamental value, with which we first and foremost identify, has not changed: We conduct ourselves with decency. But we also give priority to our three underlying values,

which oblige us to: • see things from our customer’s perspective.

• treat each other with respect and trust.

• always be one step ahead.

The Verdo Code of Conduct for Suppliers stipulates that international suppliers must live up to the human rights as regards, for example, working hours, the prohibition of child labour, health matters and the environment. We continuously evaluate these requirements to assess whether additional requirements should be imposed on our suppliers. The most recent evaluation took place in 2019 to improve our ability to ensure, and not least document, compliance with the Verdo Code of Conduct and our CSR requirements.

Conclusion The human rights are observed by both the Verdo management and the Verdo employees. Our dialogue is open and characterised by a sense of equality, and our values aim to ensure that employees and managers treat each other with respect and trust.

Anti-corruption and bribery

Anti-corruption and bribery

C

orruption and bribery are real challenges in many parts of the world and constitute an important obstacle to economic development in the countries where such practices are widespread. Moreover, these practices also constitute an obstacle to agreements being made in open competition and in an ethically and legally sound manner.

Policy Verdo pursues a policy of zero tolerance for corruption and bribery. We operate across national borders, and our very clear anti-corruption and anti-bribery policy is therefore inspired by the principles of the UN Global Compact. The policy contains guidelines on how to ensure the correct formation of contracts without any forms of bribery, facility payments, gifts or entertainment.

The policy is: • Bribery: The abuse of entrusted power for private gain is unacceptable.

• Facilitating payments (‘grease payments’) are unacceptable. If observed, such practices must be registered.

• Gifts and entertainment: No gifts, entertainment or services clearly intended to influence a decision may be given or received.

The policy is intended to increase awareness of corruption among our employees and business partners and create an understanding of how we combat corruption and bribery in our business activities.

At the same time, we require our trading partners to adhere to the guidelines.

Conclusion Verdo enforces its policy of zero tolerance for corruption and bribery to ensure that contracts are made in open competition and in an ethically and legally sound manner. So far, Verdo has not observed any breaches of the policy.

Efforts and results Verdo has carefully considered the markets and parts of the business in which it is particularly important to think about anti-corruption and anti-bribery. In Verdo’s opinion, it is expressly necessary to think about these matters in Trading. Similarly, Trading’s trading partners are under an obligation to adhere to the principles of preventing bribery and corruption. All Trading employees with procurement responsibilities are required to adhere to the Group’s general guidelines for the procurement of wood-based fuels (‘Overordnede retningslinjer for indkøb af træbaserede brændsler’) from 2015.

All Trading suppliers are also required to comply with the Verdo Code of Conduct for Suppliers. The supplier must be able to demonstrate compliance with the guidelines at all times upon Verdo’s request. We continuously follow up on the policy and the suppliers. In 2019, we updated our Code of Conduct with the aim of stepping up efforts in this area.

Annual report 2019

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Verdo

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CSR with Verdo

Agerskellet 7

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8920 Randers NV

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+45 8911 4811

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info@verdo.com

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verdo.com