Environment and climate

Our climate and environment policy

When we talk about Climate, this refers to the prevailing weather conditions in terms of temperature, precipitation, humidity, air pressure etc. measured over an extended period. You could thus describe the climate as the basic conditions to which an ecosystem is subject. Climate problems can include droughts, flooding, rising temperatures and severe storms.

When we talk about the Environment, we mean the physical surroundings and conditions that people, animals and plants live under, with reciprocal influence. Environmental impacts can include air pollution, oxygen depletion in the sea, loss of biodiversity, chemical pollution of the soil and contamination of our groundwater.

Sustainable energy is crucial to Verdo, and we are actively contributing to sustainable development. Our climate and environment policy is largely driven by national and international goals and guidelines, including greenhouse gas reduction targets, international climate commitments and the 17 UN global goals, including goal #13 in particular. 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

The climate and environment policy is effected in practice by: • 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 cost-effective.

• The company undertaking to observe applicable legislation and relevant regulatory requirements in relation to the climate and environment. Environmental initiatives and results

Restoring the environment following mining operations in Kentucky Via our US subsidiary Carbon Partners Inc., we are co-founders of Mark Energy LLC, which entered into an agreement with the state of Kentucky in 2019 to handle the decommissioning and cleaning up of a discontinued coal mine. Specifically, the task was to restore the original flora and fauna in the area. In 2021, following two years of work, this restoration of the mining area had been completed, to the benefit of nature and the local population.

Continued focus on NO x reduction at Randers CHP plant We see our CHP plant at the Port of Randers as the company activity with the greatest environmental impact. We have a daily focus on the environment in the way we manage our production of district heating and power. In relation to emissions up the chimney and discharges into municipal wastewater. A natural goal here is our environmental

Change in key figures for our CHP plant in Randers

Unit 2020 2021 Note

CO2 emissions Tonnes 2,606 3,002 1

NO x emissions

Kg 163,772 242,079 2 Consumption of wood chips Tonnes 155,435 179,187 3 Consumption of other biomass Tonnes 25,463 27,557 3 Consumption of coal Tonnes 444 739 3 Net electricity produced from green energy kWh 85,609,008 129,598,877 4 District heating MWh 530,386 576,480 5

Note 1 CO2 emissions from the CHP plant in Randers and emergency loading plant. This is 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 District heating production is measured using calibrated meters.

This section contains our statutory statement on social responsibility pursuant to section 99 a 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.

approval, which is verified by a third party.

To reduce NO x emissions from the CHP plant’s primary boilers, we have installed an NCR DeNO x system. The DeNOx system was partially commissioned in 2021, and will be fine-tuned in 2022 to find the right operating parameters at various loads. We have also purchased a new eco-reporting system that increases the quality of our data collection.

The reason CO2 and NO x emissions have increased from 2020 to 2021 is increased fuel consumption and production.

We publish our environment declarations on the Verdo website. The table below shows our actual emissions, while the environment declaration is based on standard values. The environment declaration for Verdo Varme Herning shows emissions of 22.4 g CO2e per kWh of district heating, with a renewable energy share of 92%, while the emissions for Verdo Varme Randers are 9.2 g CO2e per kWh of district heating, with a renewable energy share of 99%.

Aim of specific goals for waste sorting The whole company follows the Danish statutory order on waste, and performs waste sorting at our construction sites and our central warehouse. In our offices, we sort waste paper for recycling. We aim to set specific waste reduction targets, but we do not yet have enough data for these to be measured.

Cooperation between water utilities in Randers In the coming years, the water utilities in Randers will face major challenges in protecting groundwater and drinking water. That is why Verdo Vand partnered with the other water utilities in Randers in 2021 – Assentoft Vandværk, Dronningborg Vandværk, Kristrup Vandværk, Strømmen Vandværk and Vorup Vandværk – so that water consumers get the best solutions throughout the supply area. The cooperation between the water utilities is based on the notion that dialogue and collaboration on solutions can lead to benefits to consumers that could not be achieved if the utilities worked alone. The cooperation may consist of common solutions, such as on-call staff and administration, but also cooperation on infrastructure such as emergency supply.

Efforts and results for a positive climate footprint In 2021, we began the extensive work of preparing climate accounts based on the Greenhouse Gas Protocol, with respect to scopes 1, 2 and 3. 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 focus on scopes 1 and 2. We will also measure our scope 3 down the track.

Facts about the GHG Protocol The GHG Protocol is a voluntary, internationally recognised standard for calculating and reporting corporate greenhouse gas emissions. It covers reporting of the six greenhouse gases. All greenhouse gases are converted to CO2 equivalents (also called CO2e). The GHG Protocol specifies that climate accounts must cover emissions associated with three different areas or ‘scopes’. A distinction is made between greenhouse gas emissions from scopes 1, 2 and 3.

Unit 2021 Goal Total scope 1 emissions Tonnes CO2e 1,340 Having a greener fleet of vehicles with emissions reduced to a maximum of 430 tonnes CO2e by 2025, and 0 emissions by 2030.

Total scope 2 emissions¹ Tonnes CO2e

Scope 3 emissions from our scope 1+2 calculation² Tonnes CO2e 1.2

311.1

Consumption of electricity kWh 29,258,529 Consumption of district heating kWh 1,441,300

We have used the Danish Business Authority’s model to calculate CO2 emissions. Note 1: Verdo has purchased a green power certificate equal to our total electricity consumption. We have applied an electricity emission factor of 0 g CO2e per kWh of electricity. Our own consumption of district heating comes from our CHP plant in Randers and the CHP plant in Herning. We have used the environment declaration from Herning of 22.4 g CO2e per kWh district heating, and from Randers of 9.2 g CO2e per kWh district heating. Our consumption of district heating in other locations is insignificant. Here we have used the environment declaration from Randers. Note 2: Scope 3 emissions derive from the calculation of scopes 1 and 2. We have not prepared climate accounts for our scope 3.

Towards a greener vehicle fleet

One of our largest negative climate impacts is from our vehicles. Verdo aims to reduce the total CO2 emissions of its vehicle fleet by 70% compared to 2020 levels, by 2030. Petrol and diesel cars are being phased out as the time comes to replace them, unless it will benefit economics, the climate and the environment to do so faster.

We bought our first plug-in van in 2021, and invested in three electric vehicles and three plug-in hybrid vehicles for use in the field. In 2022, we have ordered a plug-in hybrid vehicle and two electric vehicles.

In 2021, we reduced our fleet of older diesel vehicles after optimising operations. Our CO2e emissions from the Verdo vehicle fleet have increased due to greater driving needs. Unit 2020 2021 Goal Number of electric vehicles Number 5 8 Having a greener fleet of vehicles with emissions reduced to a maximum of 430 tonnes CO2e by 2025, and 0 emissions by 2030.

Number of plug-in hybrid vehicles Number 0 0

Petrol cars Number 2 2

Diesel cars Estimated CO2e emissions from Verdo’s fleet Number 227 203 Tonnes CO2e 1,433 1,625

Note: The estimate for our CO2e emissions is based on the Danish Business Authority’s calculation model, where we calculate our emissions based on our total fuel consumption, multiplied by the standard emission factor.

Other contributions to climate-friendly transport In 2020, we launched Charge, our electric charging station concept. Charge flowed out of Verdo’s goal of making a sustainable imprint on the future by developing green products. Charge provides charging facilities for plug-in hybrid and electric vehicles at home, for both private individuals and companies. We are thereby contributing to the green road transport agreement covering one million green cars, greener fuels and a major reduction in CO2 emissions, which is bringing Denmark a big step closer to its 2030 climate goal. This goal requires expansion of Denmark’s charging infrastructure. In 2021, we have spread the Charge concept to municipalities, housing associations and educational institutions, among others. We will continue this work in 2022 and beyond.

Denmark’s first outdoor test area for smart traffic signals – DOLL Living Lab – was officially opened in autumn 2021 in Hersted Industripark in Albertslund. Verdo is one of the players behind the test centre, which has come into being through a public-private partnership. The result is Europe’s largest Living Lab for developing the LED lighting and Smart City solutions of the future. The vision is for DOLL to be the world’s leading innovation hub for developing, testing and demonstrating intelligent lighting in the field. Smaller climate footprint through green power Inspired by UN global goal #7 – affordable and clean energy – we realised our goal in 2019 that the internal power consumption of the entire Verdo Group should derive from green energy sources. All our electricity customers today also receive green power automatically without any premium. We have thereby ensured that the power going to all of Verdo’s customers comes from renewable energy sources. But our green aspirations in electricity sales do not stop there.

We have linked the 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 trees in public Danish forests in collaboration with the Growing Trees Network Foundation. Planting trees helps protect our groundwater, reduce CO2 emissions and preserve vital biodiversity in nature.

Verdo Go Green A/S donated 2,000 trees in 2021. Of these, 1,000 will be planted in Durup Folkeskov near Skive, and the other 1,000 in Rugballegaard Folkeskov near Horsens. The trees are expected to be planted in spring 2022. Social responsibility through sustainable energy production Electrification of energy production is one of the key focus areas in the energy sector’s contribution to the green transition and the goal of achieving a 70% reduction in CO2 by 2030. Industrial electric heat pump plants can typically replace fossil fuel plants such as gas boilers in utilities, and exploit green power as fuel. Heating plants have very diverse needs. One of the key activities in Verdo Energy Systems’ business model is to integrate the right solution for the given plant, so it can produce the cheapest and greenest heat for consumers. Verdo provides the expertise needed to contribute to the green transition of energy production.

As another outworking of our aim to contribute actively to the green transition and create a positive climate impact, 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 by recognised and independent organisations. We thereby help maintain forest ecosystems and ensure responsible and lawful work processes. To ensure that our fuels are sustainably procured, we are certified under relevant standards for traceability of sustainable wood-based biomass. We have FSC®, PEFC™, SBP and NEPCon Generic Chain of Custody certifications. Through these certificates, we ensure traceability all the way from forest to the final recipient, who could be a private customer, a store or a heating plant.

At the same time, we want to