Social factors

influence developments. We therefore helped formulate the energy companies’ sector agreement on sustainable biomass, which ran from 2016 until the new legislation implementing the RE ll Directive came into force on 1 July 2021. In connection with the implementation of the new law, Verdo and a number of other stakeholders took part in the process and contributed knowledge towards the formulation of the new regulatory requirements.

To continue to ensure our fuels are sustainably procured, we further systematised our internal procedures for the use of suppliers in 2021, based on the new RE II Directive, which sets sustainability criteria and documentation requirements for wood industry waste products and other biomass used for energy purposes. This means we can continue to meet our own and our customers’ expectations of a sustainable product and a company that helps make a difference in the green transition.

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

Through our social contract, we commit to helping create an attractive foundation for a vibrant and growing business community. We create local jobs, and take responsibility for equipping our employees for the future labour market through individual development, training and opportunities to take great responsibility, while ensuring maximum flexibility for each person.

General policy for social factors Employees are Verdo’s most important resource, and we actively strive to be an attractive workplace. Our key objective is to maintain and increase our employee commitment, and we translate this into action through a number of policies:

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

• It is our recruitment policy that every position should be filled through competition among several suitable applicants. However, existing employees take precedence if they have the same qualifications as external applicants.

• We have an ambitious proportion of apprentices and trainees, the number of which must reflect the needs and opportunities in each area of the company. • We focus on the varying needs of employees at different stages of life and in different life situations. It is our policy to retain senior employees so that their experience and knowledge can benefit Verdo for as long as possible.

• All employees at Verdo have at least one annual development talk (employee development talk (MUS), group development talk (GRUS), leadership development talk (LUS) or similar) with their immediate manager.

• We strive to ensure that employment conditions, in the form of contracts and local agreements, allow everyone to organise their working hours as flexibly as possible, and thereby achieve a good work-life balance.

• Verdo wants all employees to feel that they have the same career and leadership opportunities.

There are more social factor policies in this report than in previous reports. This does not indicate a change in our policies, but rather a desire for greater transparency in our annual report and to codify existing practice.

Initiatives and results in relation to social factors We view our strategy for 2025 as ambitious. The strategy involves the transformation of Verdo as a Group. It places demands on the organisation across management layers and employees, in relation to having the right competencies to succeed in our new strategic direction. As we search for new competencies, we are finding that the labour market has a shrinking supply of the skills we seek. As a result, we have had several positions within key functions that have been difficult to fill.

Verdo’s employee turnover in 2021: • Employee turnover 22.8% • Number of terminations 116 • Number of voluntary resignations 58 • Number of forced terminations 48 • Number of short-term appointments 21

Employee turnover is measured as the number of terminations in 2021, divided by the average number of employees during the 1 January to 31 December 2021 period, multiplied by 100. The number of terminations is calculated as the number of employees who were employed on 1 January 2021, and had departed by 31 December 2021. The KPI does not take into account part-time employees, as only the number is measured.

Verdo has not previously recorded its employee turnover systematically. In future, we will measure voluntary resignations and forced terminations, as well as short-term appointments, to gain a more nuanced picture of employee turnover. In the case of voluntary resignations, employees are offered an ‘exit interview’, so we get the opportunity to

gather knowledge and feedback from the employee’s time at Verdo.

We have had less training activity in 2021 due to COVID-19. Many courses were cancelled in spring, but there was some activity again in autumn, so the number of AMU courses in 2021 is on par with 2020, but significantly less than in 2019. We therefore took the initiative in 2021 to create Verdo Academy, to ensure we have the right competencies in the company to support our strategy. The effect of this will be seen in 2022.

Trainees and apprentices Verdo has a strong focus on creating as many positions for trainees and apprentices as is possible in relation to our activities. As a result, there has been an increasing number of trainees and apprentices at Verdo for many years, but in 2021 there was a decline.

The number of apprentices has fallen both in absolute terms and as a percentage of hourly-paid workers. The reason is that the order situation has been uncertain due to COVID-19, and it makes no sense to hire apprentices if there is no guarantee of work. There was a similar decline in trainee numbers in 2021, both in absolute terms and as a percentage of salaried workers. This is due to the organisational changes implemented in 2021. There has been a focus on staff functions in particular, and the company has therefore not felt able to offer new trainees a position as extensively as in the past.

Percentage of apprentices and trainees at Verdo: • Percentage of apprentices among hourly-paid workers: 16% in 2020 and 10% in 2021. • Percentage of trainees among salaried employees: 4% in 2020 and 3% in 2021.

The apprentice figure is calculated as the average number of apprentices as a percentage of the average number of hourly-paid workers in the companies that have apprentices. The trainee figure is calculated as the average number of trainees over the year compared to the average number of salaried employees (not counting managers) over the year.

Flex jobs In 2021, we increased the number of employees working in flex jobs compared to 2020. In 2020, there were only two people in flex jobs, due to COVID-19 restrictions, while we had nine people working in flex jobs in 2021, spread across several of Verdo’s sites and companies.

The people in these positions are either previous full-time employees of Verdo, who have typically suffered a disability and therefore need various accommodative measures and have been assigned reduced hours in collaboration with the job centre, or candidates who had special competencies we needed and for whom we therefore created positions. Employees in flex jobs range in age from 25 to 65.

• Number of employees in flex jobs at

Verdo: 2 in 2020 and 9 in 2021.

Employee well-being survey In 2021, we had the goal of conducting an employee well-being survey (MTU) for the whole Group with a response rate of at least 80%, which would make the results a true and fair picture. The goal was also that a number of initiatives would be defined in Q4 2021 based on the survey results and the ‘Vital Few’ identified. The initiatives will be followed up with a pulse survey in September 2022.

Verdo’s employee well-being survey was conducted in September and achieved a response rate of 80%. Based on the results, two initiatives have been decided at Group level (Management and Communication/Information). An initiative will also be defined in each department, which will be in focus up until the pulse survey in September 2022. Reporting on progress is shared on Verdo’s intranet.

Employee commitment is an important KPI in Verdo’s strategy, and part of our strategic programme for a common culture. In 2021, Verdo’s eNPS was 10, which is above the average for other comparable, private companies (-10). We see this as satisfactory, but have nevertheless set an ambitious goal that the eNPS should be above 10 in 2023, and be 25 in 2025. See the table below.

The survey is carried out by an external analysis company. The KPI is measured through the employee Net Promoter Score (eNPS). This is calculated by subtracting the percentage of ‘critics’ from the percentage of ‘advocates’ for the question “I would recommend that others apply for a job at Verdo”. eNPS is supplemented by a number of underlying KPIs.

Expectations for 2022 Verdo expects 2022 to be less impacted by COVID-19 and working from home than 2021, and to offer more social activities, such as meeting for lunch in the canteens, using meeting rooms at full capacity, and opportunities for socialising with colleagues outside working hours. Some employees will find it challenging to physically attend the workplace again. At the same time, we are paying special attention to employees who were onboarded during the COVID-19 restrictions, when some people had to work from home. These points will be in focus for managers.

We will see new forms of collaboration, such as digital and hybrid meetings as a permanent part of daily work and a take-away from the COVID-19 period.

The end of 2021 showed that recruitment in a difficult market requires a new approach. We expect to have to supplement existing processes with new initiatives in 2022, in order to continue to attract relevant candidates to an attractive workplace.

Health and safety 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.

Targets for eNPS at Verdo:

Unit 2021 Target 2023 Target 2025 eNPS Scale -100 to 100 10 >10 25

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.

Initiatives in 2021 In 2021, Verdo completed training in emergency procedures for lift vehicles in cooperation with the manufacturer, and updated signage plans and the use of signs when servicing and repairing traffic light signals. There has been a focus on introducing HSE (health, safety and environment) plans in the daily work throughout the Group, and there has been a particular effort to reduce sound levels.

As a preventive measure against hearing loss, technicians have been offered moulded hearing protection, which has significantly increased the use of such protection. Verdo has also articulated accident-preventing behaviour by conducting ‘Safe Job Analyses’ (SJAs) before tasks are performed. At the CHP plant in Randers, the analysis is carried out jointly by the person performing the work and the control room guard.

Verdo has also paid special attention to well-being in daily work, with the aim of avoiding job dissatisfaction and absence due to workplace conditions. Throughout the Group, the organisation has had a focus on changes in behaviour among colleagues, and investigated the reasons for any changes.

There has been a focus in 2021 on minimising the use of ladders for work tasks. Lifts or scaffolding are now primarily used wherever possible, and these help to prevent accidents. To help prevent accidents related to electrical installations and machinery, all relevant electricians and technicians have completed the ‘Safety when working on or near electrical installations’ course. Joint procurement of chemical products has been implemented, which helps minimise the number of different chemical products, and risk assessment is provided in relation to their effects during use. Finally, Verdo has started using the chemical WPA, which aims to protect chemical users from harm.

Accidents and illness: There has been a greater focus in 2021 on registering near-miss incidents, which is the direct reason for their increase in number. At the same time, the workplace has become safer, because we use what we learn from the near-miss incidents to improve the working environment through preventive actions – both in the physical setting and our daily behaviour.

Employee well-being and information during a time with COVID-19 2021 was another year marked by the COVID-19 pandemic. During the winter lockdown, many employees were sent home to work, for some or all of their hours. A number of departments introduced rotation schemes and attended the office in fixed teams to prevent the spread of infection. As the restrictions were eased, the canteen in Randers reopened, meeting rooms could again be booked at full capacity, and physical attendance at work became normal again from August. However, hand sanitiser remains part of the daily routine and is available in all locations and technician vehicles.

During the COVID-19 period, Verdo formulated rules on the scope of working from home in the ‘Policy for working from home’, and many employees have embraced the ‘5/20 scheme’ (max. five days working from home per month).

Towards the end of the year, COVID-19 infections were again on the rise, and Verdo reintroduced restrictions in the workday. As a consequence, Verdo decided to postpone the annual Christmas party from December to spring 2022.

The sudden changes we have experienced as a result of COVID-19 can put employee well-being under pressure. That is why we have had a focus in 2021 on maintaining a good psychological working environment. Even though Verdo has been partially shut down for a period, and salaried employees have been working from home, we have conducted social events online, including virtual Walk and Talks and Friday bread rolls. When we were able to meet physically again, our associations and committees made an effort over the summer to organise events such as cycling and hunting trips and participation in the DHL relay race. We have also continually provided information on our intranet about our own and the authorities’ rules and guidelines, so employees could feel secure at work. Further, we have encouraged everyone to care for their colleagues and keep an eye out for anyone in distress. HR was ready to offer advice and guidance in this regard.

Greater diversity

Statutory statement on the gender composition of management bodies pursuant to section 99 b of the Danish Financial Statements Act.

Workplace diversity remains an important issue in Denmark, and at Verdo we believe that diversity creates value and is a strength for our employees and the business that we can translate into results. Greater diversity in the management team improves the scope for

Accidents and illness

Unit 2020 2021 Goal Workplace accidents1 Number 10 7 0 Sick leave2 % No data Salaried employees3 % No data 1.23 On long-term sick leave % No data 0.68 Hourly-paid workers % No data 4.84 On long-term sick leave % No data 2.53

Note 1 The number of workplace accidents expresses the number of workplace accidents in the Group that led to more than one day of absence. Note 2 Sick leave is the number of sick days divided by working days, multiplied by 100. Long-term illness is defined as sick leave lasting more than 14 days. The number of working days is calculated as the average number of employees from 1 January to 31 December 2021, multiplied by the annual number of working days. Note 3 Figures for salaried employees are associated with some uncertainty, as not all salaried employees report sick leave, and many work from home rather than taking sick leave.

managing and assessing the various aspects that enable Verdo to live up to its values and meet the expectations of the outside world. However, we still have some work to do in this area. Around 80% of Verdo’s employees are men, and the proportion of women decreases the higher we move up the management hierarchy. 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 is a new approach designed to help eliminate gender bias in the recruitment process.

That is why, in 2021, we stepped up our efforts to redefine our diversity targets towards 2030, and we are currently looking into defining sub-targets for 2023 and 2025. The targets will apply at all management levels in the organisation.

The target of 25% in 2021 has not been achieved, as there were no changes to the composition of the Supervisory Board in 2021. Elections to Verdo’s Board of Representatives and

Supervisory Board will be held in spring 2022. Some members of the Supervisory Board will therefore be up for election, and there could be changes in relation to achieving the target.

Women in management at Verdo:

¹Percentage of women on the Supervisory Board excludes employee representatives. The percentage including employee representatives is 12.5%

Unit 2020 2021 Target 2025

Total proportion of female employees Number Female managers at level 1 % 12.5 13 25 Female middle managers at level 2 % 20 16 25 Female directors at level 3 % 14 17 33 Proportion of women on the Supervisory Board¹ % 8 12.5 25 Proportion of women on the Board of Representatives % 20 20 30

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

Global Compact

– Verdo’s work with the UN principles for corporate responsibility

Verdo supports and respects the ten principles of the UN Global Compact for corporate responsibility. 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.

Respect for human rights At Verdo, we strive to integrate and respect the universal human rights set out in national law and international conventions, covering discrimination, forced labour, child labour, a safe and healthy working environment, labour rights and 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. Furthermore, no distinction must be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs. It is Verdo’s policy that our partners and suppliers must comply with the adopted human rights conventions.

Employee conditions Employee conditions concern the work performed by employees at Verdo, or on behalf of Verdo by 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 work and employment relationships (see the section below on remuneration).

As noted earlier in this report, we have a strong focus on the social, psychological and physical well-being of employees 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 the right of employees to receive a fair wage, in order to give themselves and their families a decent existence. We observe at least the minimum wages set by legislation or, where appropriate, an industry standard

established on the basis of collective negotiations – whichever is highest. In addition, we comply with all other acts and regulations governing wages, benefits and compensations.

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, facility payment 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.

To date, we have primarily considered this in our Trading division, as this is where we have identified risks.

In 2021, we focused on disseminating the Code of Conduct to the entire Verdo Group – in part through collaboration with Verdo’s purchasing managers.

Our focus on responsibility and ethics in Verdo’s value chains will continue in 2022. We will help to build understanding of the importance of this by working with our suppliers on compliance with Verdo’s guidelines and requirements in the Code of Conduct.

Statutory statement on data ethics under section 99 d of the Danish Financial Statements Act.

Data ethics

Report on the company’s data ethics policy

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.

ESG table

Environment Greenhouse gas (GHG) emissions Scope 1 emissions

The following table summarises Verdo’s ESG key figures, all of which have been presented along the way in this CSR report. ESG stands for Environment, Social and Governance. At Verdo, Environment covers both environmental and climate factors, in line with the definitions previously stated

Unit 2020 Tonnes CO2e 2,606 2021 1.340 Goal

Greenhouse gas (GHG) emissions Scope 2 emissions Tonnes CO2e 4,373

Consumption of electricity kWh N/A 1,2

29,258,529

Consumption of district heating kWh N/A Social Employee turnover % N/A Proportion of apprentices % 16 Proportion of trainees % 4 Number of flex job employees Number 2 Employee commitment eNPS N/A Number of workplace accidents Number 10 Absence due to illness % N/A 1,441,300

22.8 10 3 9 10 7 Hourly-paid workers: 4.84% Salaried employees: 1.23%

Women in management % Level 1: 12.5% /2: 20% /3: 14% Level 1: 13% /2: 16% /3: 17% 0

Verdo has an increasing focus on ESG efforts, but is not yet ready to set concrete targets until we have assessed the possibilities for future initiatives. In 2022, we will also work to develop goals in relation to Governance.

2021

Financial statements

The Supervisory Board and the Executive Board have today considered and approved the annual report of Verdo A/S for the financial year 1 January - 31 December 2021.

The annual report has been presented in accordance with the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the financial statements give a true and fair view of the Group’s and the company’s assets, liabilities and financial position as at 31 December 2021 and of the results of the Group’s and the company’s activities and the consolidated cash flows for the financial year 1 January - 31 December 2021. There are material uncertainties in recognition and measurement regarding factors in some subsidiaries. This leads to corresponding uncertainty when recognising and measuring in the consolidated financial statements and the parent company. Please refer to note 1.

The financial statements, including the auditor’s report (pages 81-110), have been taken directly from the official annual report (excluding some minor matters).