Verdo CSR 2018 EN

CSR 2018

Verdo creates energy for the future. We operate across the heating, water and technical infrastructure value chains. Our competences therefore centre around the development and installation of sustainable energy systems, the operation and maintenance of utilities and infrastructure as well as trade in fuels and biomass.

Resources create value

Our value creation is dependent on a number of resources: people, capital, knowledge as well as wood, solar, water and coal. These resources play a vital role for our long-term value creation, and we therefore want to look after them and develop them.

Carbon-reducing energy source

Energy plays a key role in the lives of people and businesses, and we select our energy sources with care so as to ensure

that they are both sustainable and competitive. For example, our CHP plant in Randers is fired with sustainable wood chips. A carbon-reducing energy source contributing to a better climate.

Competitive position

We create value for our customers by having a strong position in the commercial market, thereby ensuring competitively priced electricity, drinking water and district heating. Based on our unique position as a trader in fuels, we are able to supply sustainable fuels at competitive prices and of the right quality.

Tax matters

Our financial responsibility is part and parcel of our corporate responsibility, and we therefore have a clear tax policy. We do not engage in active tax speculation.

Impact of our operations on the outside world

As an energy generator, Verdo engages in activities that affect the climate. But we are working hard to reduce our CO2 emissions. In 2009, we converted our CHP plant to biomass firing. The result is an annual reduction in CO2 emissions by 300,000 tonnes compared to using coal to generate the same amount of energy. We are replacing street lights with energy-saving LED technology. This brings energy savings of up to 90 %, thus counteracting the negative impact of the CO2 emissions associated with lighting the streets.

Requirements for partnerships

Some of our activities are dependent on our partners’ production methods and the available technology. Verdo focuses on both quality and sustainability in its partnerships. Among other things, we trade in certified biofuels as certification ensures that our fuels are produced by lawful and sustainable forestry operations so as to minimise the risk of negatively impacting people and the environment.

In our trading with overseas markets involving a significant risk of corruption and bribery, we adhere to a clear policy stipulating the correct way of concluding contracts to avoid any form of bribery and corruption.

Disaster recovery system and operational reliability

The unintended interruption of the supply of electricity, water and heating constitutes a significant risk to society. Our IT disaster recovery plans are regularly updated to meet all regulatory requirements and avoid any breakdowns and consequent interruptions in supplies to our customers. The most recent external audit of our disaster recovery plan for the electricity grid did not give rise to any non-conformities.

Data protection for customers and employees

In our day-to-day administration of sensitive customer and employee data, we ensure data protection and information security in accordance with the GDPR regulation to counter the risk of abuse of our customers’ and employees’ personal data.

Approach to CSR

Our approach to CSR is defined in the following sustainable, financial and social guidelines.

We conduct ourselves with decency

• We create green energy and sustainable solutions

We promote the use of green energy and sustainable solutions

• We choose green and sustainable solutions that benefit the environment, our world and Verdo

• We take initiatives that benefit our employees and increase their commitment and safety

• We support sporting, cultural and social activities

• Our business operations are based on healthy and responsible principles, and we take responsibility for society and the communities of which we are part.

Environment and climate

It is our ambition to meet the global demand for sustainable development towards 2030. In our efforts to deliver on this ambition, we are inspired by the principles of the UN Global Compact and the UN’s 17 Sustainable Development Goals with a special focus on goal no. 6 ‘Clean water and sanitation’, goal no. 7 ‘Affordable and clean energy’ and goal no. 13 ‘Climate action’. 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 efficiency and the lowest possible price for green energy.

Policy

Goal no. 7 ‘Affordable and clean energy’ is about ensuring access to reliable and sustainable energy at affordable prices by the year 2030. As an energy company, we work every year to reduce our CO2 and NOX emissions by firing biomass such as wood chips and alternative biofuels and minimising our coal consumption as much as possible. In this way, we are also working towards goal no. 13 ‘Climate action’, which focuses on a fast response to the threat of climate change by reducing the effect of greenhouse gases. Moreover, we insist on the sustainable and lawful sourcing of wood-based fuels, while striving to ensure reasonable district heating prices for our customers.

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

As a water utility, we are inspired by UN goal no. 6 ‘Clean water and sanitation’. In Denmark, we all have access to clean drinking water – a resource many people take for granted. However, as is the case in the rest of the world, our drinking water is unfortunately also under threat. We are therefore continuously stepping up activities

aimed at protecting our groundwater resources and thereby guaranteeing clean drinking water for our customers. In 2018, one such activity was woodland protection.

Efforts and results

In 2018, our consumption of biomass totalled 216,472 tonnes, while coal accounted for only 1,983 tonnes or 0.9 % of our total fuel consumption. This reduced CO2 emissions from 39,977 tonnes in 2017 to 7,028 tonnes in 2018, equating to a reduction of 32,949 tonnes of CO2 – or 82 % – in a single year.

The primary reason for the significant decrease is our divestment on 1 January 2018 of Grenaa Kraftvarmeværk, for which reason the CHP’s fuel

consumption and emissions are not included in the figures for 2018.

However, looking at the fuel consumption and emission figures for Randers Kraftvarmeværk in isolation, no significant change was seen from 2017 to 2018, except for a slight increase in coal consumption and CO2 emissions equivalent to four hours of full-load operation.

This was due to the malfunctioning of the wood chip conveying system, which meant that we had to use coal so as not to risk interrupting the supply of district heating for customers.

Energy production by Verdo, including Grenaa Kraftvarmeværk

Energy production by Verdo, excluding Grenaa Kraftvarmeværk

With reference to UN goal no. 7 on ‘affordable energy’, in 2018 we reduced the district heating price for our customers for the third consecutive year. In order to ensure sustainable sourcing of our fuels, we have been granted FSC® CoC certification as well as SBP CoC certification, and in 2018 we worked towards implementing the PEFC standard in 2019.

In 2018, we replaced 6,500 street lights with LED technology. This will result in an annual reduction of 1,600 MWh and 800 tonnes of CO2. In addition, we changed the lighting at our head office to LED, saving 43,853 kWh and just over 20 tonnes of CO2 a year.

Stepping up our efforts aimed at ensuring clean drinking water, in 2018 we entered into an agreement on the acquisition of the woodlands Randers Sønderskov, which cover a total of

Importance of certifications for Verdo

FSC® (Forest Stewardship Council®)

License code: FSC® C125676

39 hectares. This is to protect the source area around our waterworks in Vilstrup. The source area at Randers Sønderskov is situated in a semi-urban area and close to a gravel pit and is therefore at risk of contamination if the woodlands are not protected.

According to ‘Energiselskabernes energispareindsats’, as an energy company within electricity and heating distribution we are obliged to find and realise a number of annual energy savings, which must be reported to the Danish Energy Agency. Verdo’s target for 2018 was 34,860 MWh, and having realised savings of 38,600 MWh, the target was met.

Conclusion

Based on our environmental and climate-related efforts in 2018 within CO2 reduction, the sourcing of fuels, the protection of our source area and

reducing the price of district heating, results were satisfactory, and we complied with our policy.

SBP (Sustainable Biomass Program)

PEFC (Programme for the Endorsement of Forest Certification)

Certification of forest area and forest products

• Social and environmental responsibility

• Documentation for lawfulness and compliance with EU Timber Regulation (EUTR) Ensures procurement of sustainable wood-based biomass and adherence to industry agreement

Certification of producer and products

• Ensures that biomass is produced and transported responsibly

• Ensures detailed documentation and CO2 accounts

Ensures procurement of sustainable wood-based biomass and adherence to industry agreement

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 procurement of sustainable wood-based biomass and adherence to industry agreement

Employees and social conditions

Verdo is one of the biggest workplaces in Municipality of Randers. We therefore feel positively obliged to contribute to growth, to create new jobs locally and to give something back to the communities in which we operate.

Policy

As an attractive place to work, we want to be able to retain and develop our existing employees and attract new employees. Moreover, we want to help meet the demand from educational institutions for apprenticeships, traineeships and internships and offer work experience arrangements for citizens on sick leave or who are unemployed.

Close to half of our 534 employees spend their working days on construction sites, at storage facilities and in production, where the physical work environment is extremely important. We are therefore 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 and conduct regular workplace assessments (WPAs). Among other things, 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.

We believe in the power of diversity in the workplace and are therefore working to increase the number of female managers at several levels.

Efforts and results

In 2018, a wide range of activities were again organised for Verdo employees, and many participated in running and cycling events or accepted the offer of Verdo-sponsored tickets for the home games of Randers FC.

We participated in a number of educational and career fairs to attract ‘smart and professional hands’ and graduates with an interest in the energy sector. We held a number of energy-themed events for schoolchildren aimed at providing insights into how electricity and heating are generated and supplied to their homes.

Increased intake of apprentices and trainees

We have generally been welcoming an increasing number of apprentices in recent years. However, numbers declined from 2017 to 2018. In 2018, the target for Verdo Teknik A/S was for apprentices to account for 20 % of the total number of technicians.

Averaged over the year, this target was met. For Verdo Energy Systems A/S the figure was 13 %, and for Verdo Energiteknik A/S it was 11 %. In 2018, the target was four trainees for the group as a whole. However, we had a total of 12 trainees.

Focus on working environment

In 2018, we registered a total of nine accidents at work, which resulted in a total of 38 days of absence. Moreover, we registered 115 near-accidents. 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.

To ensure a healthy working environment, in 2018 we also mapped the psychosocial working environment in all departments by means of workplace assessments (WPAs). Where a need for action was identified, the problem was described in detail and analysed, and an action plan was prepared and followed up on.

Women and men in management

Diversity in the workplace is a strength for our employees and our business which we can convert into results. In 2018, we therefore continued our work to increase the number of female managers in Verdo.

We saw a positive development for level-2 management positions in that the number of female managers went from 22 % to 23 %, thereby meeting our target of 20 %. Level 2 comprises staff functions, for which the recruitment base is generally wider and more diverse than for level-1 management positions.

Verdo also wants to increase the number of women members of the Supervisory Board. Elections to the Board of representatives were held in 2018. Seven women were elected out of a total of 29 members, corresponding to 24 %. Two women were elected to the Supervisory Board, including one employee representative, taking the total share of women on the Supervisory Board to just under 17 %.

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 diversity target. The target was not met by any of the subsidiaries. Verdo offers management training and individual programmes which support the personal development and specific managerial responsibilities of managers at management levels 1 and 2. In 2018, the management training was supplemented with individual mentor programmes for new managers and project managers. Female talents are encouraged to participate in external management courses, supplemented with internal career guidance.

Sponsorships

As a company, we are under a certain responsibility, and we would like to give something back to the communities which we are part of.

We support the world of sport, most notably as the main sponsor of Randers FC, a sponsorship which dates back to the early days of the club. We also sponsor women’s and men’s handball, basketball and e-sport teams.

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 relations with the rest of society. We therefore reach out where we feel that we can make a small difference for a group of people who – for health or financial reasons – are normally unable to go to the theatre or to watch a football match. What we offer is a modest helping hand, but with great effect.

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. Judging from the positive feedback which we have received, we have succeeded in giving something back to society via our sponsorships.

Diversity – women in management

Respect for human rights

Human rights constitute one of the cornerstones of the UN Global Compact’s ten principles. We support and respect the principles across our business model.

Policy

In Verdo, we strive to integrate and respect the universal human rights. Respecting human rights is part and parcel of ‘decency’, and our most important value is ‘We conduct ourselves with decency’. 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.

Efforts and results

In 2018, Verdo introduced dialogue meetings, at which all employees can ask questions of their divisional director, the aim being to create a more transparent and open organisation. Many employees seized this opportunity, and feedback was positive.

Our values have been condensed into three strong values.

We conduct ourselves with decency

• We see things from our customer’s perspective

We treat each other with respect and trust

• We are always one step ahead

The Verdo Code of Conduct for Suppliers stipulates that international

Anti-corruption and bribery

Corruption 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 to 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.

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

• Facility payments (‘sweeteners’) 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 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.

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

suppliers to Trading must live up to the human rights as regards, for example, working hours, the prohibition of child labour, health matters and the environment.

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.

of preventing bribery and corruption. All Trading employees with procurement responsibilities are required to adhere to the general guidelines for the procurement of wood-based fuels (‘Overordnede retningslinjer for indkøb af træbaserede brændsler ’) from 2015. Moreover, all suppliers to Trading are also required to adhere to the Verdo Code of Conduct for Suppliers, and on Verdo’s request, suppliers must at all times be able to document their compliance with the code of conduct. We continuously follow up on the policy.

Conclusion

Verdo enforces its policy of zero tolerance to 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.