Verdo CSR 2020 EN by Verdo

CSR 2020

Corporate Social Responsibility Statutory statement on corporate social responsibility pursuant to section 99 a of the Danish Financial Statements Act

Annual report 2020

Verdo’s business model Resources

Activities

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

Strategic business

Development and installation: • Biomass • Energy plants • Street lighting • Waterworks • Fibre-optic networks

• Water

• Electrical installation

• Coal

• Charging stations

Value Operation and

Trade:

maintenance:

• Biomass

• District heating

Regulated:

• District

• Power

• District heating • Water • Energy plants • Street lighting • Fibre-optic networks

systems Other

• Electricity grids

Annual report 2020

• Drinking water

• Technical

• Contributes to CO2 emissions

carbon

• Contributes to CO2 reductions

• Electricity sales

• Danish and international jobs • Tax payments in Denmark • Cultural and sports sponsorships in local communities

• Traffic and parking

heating

CSR – Corporate Social Responsibility

CSR – Corporate Social Responsibility Statutory statement on corporate social responsibility pursuant to section 99 a of the Danish Financial Statements Act

erdo’s vision is to be one green step ahead – together. Contributing to the green transformation and delivering sustainable energy are part of our corporate social responsibility. It is an important vision, because worldwide fossil fuels still account for more than 80% of the planet’s total energy consumption. In 2015, the UN adopted 17 Sustainable Development Goals (SDGs) which are to be achieved by 2030. The SDGs provide a new and improved framework for how companies can help solve the big global climate challenges. Verdo acknowledges that we are part of the problem, but we are also part of the solution. That is why we have a firm commitment to the UN’s 17 SDGs. Verdo contributes directly or indirectly to all 17 SDGs. However, our special expertise enables us to contribute solutions to address specific SDGs. In 2019, we incorporated SDG 6 Clean water and sanitation, SDG 7 Affordable and clean energy and SDG 13 Climate action into our strategy. This work continued in 2020.

Annual report 2020

Environment and climate The world is facing significant climate challenges. Science has shown that we need to limit the global temperature increase to 1.5 °C to protect life on Earth. If we fail, it is likely to have lasting consequences for the environment and people. To keep the global temperature increase below 1.5 °C, we need to halve global CO2 emissions by 2030 and reduce them to zero by 2050. This is explained in the IPCC Special Report on the impacts of global warming of 1.5 °C report. 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 with a focus on energy efficiency and lower utility prices, CO2 and NOx reductions as well as ensuring a clean and abundant water supply. SDG 6 Clean water and sanitation In Denmark, we all have access to clean drinking water – a resource most people take for granted. However, like in the rest of the world, our drinking water is under threat from pollution. Verdo is therefore continuously stepping up its efforts to protect our groundwater and ensure clean drinking water for consumers in the local community. In 2020, 48 water samples were taken at waterworks and at consumers connected to the supply network under the statutory analysis

Annual report 2020

programme. All water samples complied with the water quality requirements. In addition to the samples required by law, we take water samples every two weeks for own testing using BactiQuant analysis, which provides a comprehensive quantification of total bacterial presence in one water sample. SDG 7 Affordable and clean energy SDG 7 is about ensuring access to affordable, reliable and sustainable 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 way, we gradually reduce our CO2 and NOx emissions from year to year. Every year, we replace an increasing number of street lights with LED technology to reduce energy consumption and CO2 emissions caused by lighting. In addition, we are working intensively to offer customers relevant infrastructure that promotes the green transformation. SDG 13 Climate action SDG 13 is about taking urgent action to combat climate change by, among other things, reducing the impact of greenhouse gases. That is why Verdo

has a long-standing commitment to using surplus heat from the industry. In Randers, we are working with the retailer Bilka, the crematorium and the regional hospital to recover their waste heat from production instead of releasing it into the atmosphere. The 2018 energy agreement states that, in the future, the use of surplus heat from businesses must be improved for the benefit of citizens and for the environment. Better use of surplus heat reduces consumer heating costs and fuel consumption in heat production. In 2020, Verdo’s initiatives in this area corresponded to the annual heat consumption of some 89 households. In 2021, we will explore further opportunities for utilising surplus heat in Randers and Herning. The growing wood consumption – both in the energy sector and in the construction sector – increases the need for sustainable forestry. This creates a natural focus on certification and documentation, where international certification programmes have an important role to play. The certifications reflect our joint commitment to responsible forestry. Therefore, Verdo enters into partnerships with our suppliers and industry associations to push the market and the forest industry in a more responsible direction.

CO2 emissions by more than 90% compared to using coal as fuel. Coal thus emits more CO2 than wood, and while plants absorb CO2 over decades, for coal it takes millions of years. Trees can play a vital role in solving global climate challenges and have a naturally excellent ability to suck CO2 from the air. For example, a large beech tree with a diameter of 50 cm and a height of 26 metres can bind carbon equivalent to 4.30 tonnes of CO2 during its lifetime. Photosynthesis is the forests’ natural way of helping the environment. We are already planting trees and protecting forest areas – in 2016, we helped to plant the Oust Mølle Folkeskov forest, and in 2019 we acquired the 39-hectare Randers Sønderskov forest. However, in 2020, these efforts were hampered by the COVID-19 pandemic. We hope to plant more trees in 2021. Efforts and results Thanks to our talented employees at the Randers Kraftvarmeværk CHP plant, the efficiency of the plant was very high in 2020, resulting in reduced fuel consumption and CO2 emissions. The high efficiency of the plant is the result of intense operating and optimisation efforts. Since 2002, Randers Kraftvarmeværk has reduced CO2 emissions by 99.2%. The conversion of Randers Kraftvarmeværk has been key to reducing the carbon footprint of our district heating production and thus mitigating the negative climate impact. In 2020, our consumption of biomass at the CHP

Certification of forest area and forest products

plant totalled 180,898 tonnes, while coal accounted for only 444 tonnes or 0.24% of our total fuel consumption. Overall, we reduced our CO2 emissions by 13% from 2,994 tonnes in 2019 to 2,606 tonnes in 2020, mainly by optimising our production planning and operational reliability. In 2020, our coal consumption increased slightly compared to last year. We only use coal as backup fuel in case of problems and to start up the boilers after a stop. Verdo focuses on reducing NOx emissions, among other things by carefully analysing and optimising the composition of the biomass. In 2020, we successfully reduced NOx emissions by 31,793 kg by reducing fuel consumption and using biomass with a lower nitrogen content. This represents a reduction of just over 16% from 2019 to 2020. In the same period, we reduced CO2 emissions by 13% or 388 tonnes, corresponding to the annual CO2 consumption of 23 Danes. According to data from CONCITO, each Dane emits an average of 17 tonnes of CO2 to the atmosphere each year. The data is based on figures from The Global Resource Footprint of Nations report, which examines the consumption of individual nations. If Denmark is to meet its goal of reaching climate-neutrality by 2050, the CO2 emissions of each Dane must be reduced to less than 2 tonnes annually.

CSR – Corporate Social Responsibility

Sustainable biomass All wood-based biomass sourced by Verdo must be certified by reputable and independent organisations. This helps to maintain forest ecosystems, ensure responsible and lawful work processes and give forestry-intensive countries economic incentives to develop sustainable production methods. To make sure that our fuels come from sustainable sources, we are FSC® CoC and SBP CoC-certified. Verdo is also one of the first major biomass suppliers in Denmark to obtain NEPCon Generic CoC certification. PEFC TM Chain of Custody Certification is one of the world’s leading forest certification systems which certify the forest area and the products it supplies. PEFC TM-certification verifies that the wood comes from forests where biodiversity, the environment, workers’ rights and local populations are protected. The wood can be traced from the forest to the sawmill and from there on to the shop or incinerator. The certifications provide assurance that we ensure that we source sustainably and responsibly, and that the biomass is produced safely from an economic, social and environmental perspective. We have also been involved in the drafting of Danish energy companies’ industry agreement on sustainable biomass. According to the agreement, 90% of all fuel used in the industry must be certified and come from sustainable sources. Verdo sees sustainable biomass as a green step towards a fossil-free future. By using biomass, we can reduce

Since 2015, Verdo has supported independent certification programmes that ensure sustainable forestry and safe production of wood-based fuels. We do this because we believe that fuel production must be sustainable and that sustainability must be documentable. Today, we hold several Chain of Custody certifications (CoC) – FSC® CoC, PEFCTM CoC, SBP CoC and Biomass Producer certification and NEPCon Generic Chain of Custody certification.

FSC® (Forest Stewardship Council®)

Certification of forest area and forest products • Social and environmental responsibility • Promotes compliance with the EU Timber Regulation (EUTR) • Ensures sourcing of sustainable wood-based biomass and adherence to the industry agreement

SBP (Sustainable Biomass Programme)

Certification of producer and their 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 the industry agreement

PEFC TM (Programme for the Endorsement of Forest Certification)

Certification of forest area and forest products • Social and environmental responsibility • Promotes compliance with the EU Timber Regulation (EUTR) • Recognises other existing national certification systems • Ensures sourcing of sustainable wood-based biomass and adherence to the industry agreement

NEPCon (Generic Chain of Custody certification)

Certification of the chain of custody documentation system, where our FSC, PEFC or SBP procedures are not relevant • We use it to document the chain of custody when sourcing biomass from Danish forests – biomass that meets the requirements for alternative documentation for adherence to the industry agreement

Annual report 2020

Energy production at Verdo LED optimisation In 2020, we energy-optimised and replaced 5,000 street lights with climate-friendly LED technology, resulting in annual savings of 1,200 MWh for the municipalities involved. The lower energy consumption of LED lights also provides a sizeable CO2 reduction of about 575 tonnes. This is equivalent to the annual CO2 consumption of about 34 Danes. At our head office in Randers, we switched to LED lights in 2018, saving 43,853 kWh and just over 20 tonnes of CO2 a year. This is a natural extension of our target of 100% green power use at Verdo – a target we have now achieved. The target is inspired by SDG 7 Affordable and clean energy. Green power In 2013, we began offering our customers green power as an alternative to conventional power based on fossil fuels. Today, we offer green power to all our customers, and all power used by the Group is also 100% green. Verdo takes the green transformation seriously. Not only within the Group, but also in relation to the electricity products we offer our customers. Verdo still has some way to go as we are still following the one-leaf model. In the long term, the aim is of course to meet all the requirements of the two-leaf model. In 2021, we will continue our determined efforts to achieve this goal to make it even easier for our customers to choose 100% green power in the future.

Green power Category

Electricity product

Electricity product based on renewable energy sources and additional climate action with a significant climate impact

Action against pesticides In Denmark, we use about 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 unsafe to drink. Tests of 250 water bores across Denmark have shown excessive levels of pesticides in the groundwater. In our efforts to ensure clean drinking water, the use of pesticides on all our premises has been prohibited since 2017. The premises cover a total area of 430,000 m2, which corresponds to an area the size of 65 football fields. The action reflects our support for the ‘Giftfri Have’ pesticide-free garden project launched by the Danish Society for Nature Conservation and the Danish Association of Practical Ecology. The Municipality of Randers followed suit in 2019, and in 2020 more local players decided to back the project. In 2020, we were unable to celebrate UN International Water Day due to COVID-19. Normally, we celebrate the day with more than 500 schoolchildren in collaboration with Vandmiljø Randers and Randers Naturcenter, among others. Our goal is to share knowledge about water and also support and strengthen the involvement of local communities in improving water and sanitation management, and will therefore celebrate Water Day with an online event in 2021. New vehicle policy In 2020, we introduced a new vehicle policy for Verdo’s white-plate and yellow-plate vehicles as we want to demonstrate environmental responsibility by optimising our entire fleet.

Source: New two-leaf scheme from Danish Energy

Documentation requirements

1. Guarantee of origin 2. Individual declaration showing that the power is sourced from 100% renewable energy sources 3. Description of climate action 4. Climate action must be documentable 5. Climate impact must be documentable Electricity product based 1. Guarantee of origin on renewable energy 2. Individual declaration showing that the sources without additional power is sourced from 100% renewable climate action energy sources

Annual report 2020

‘Green Power’ or similar climate statement Yes. Information about category may be used in marketing material

Yes, but information about category must appear in marketing material.

We want to do this by: • monitoring the operating costs of our yellow-plate fleet • focusing on reducing total emissions of environmentally harmful substances in exhaust gases • encouraging our employees to consider electric or hybrid vehicles when choosing a company car. Moreover, it will only be possible to lease vehicles that meet the CO2 emission limits of 130 grams of CO2 per km. Verdo’s goal is to reduce the CO2 emissions of our entire vehicle fleet by 70% by 2030. Energy savings The energy-saving efforts of Danish energy companies require us to identify and realise energy savings each year, which must be reported to the Danish Energy Agency at the end of the year. In 2020, the total target for Verdo was 50,000 MWh. We have achieved savings of 52,075 MWh. The energy companies’ energy-saving efforts ended at the end of 2020 and will be replaced by new programmes that do not impose a commitment on the energy companies. Verdo’s activities concerning energy subsidy payments thus came to an end at the end of 2020. Conclusion Our environmental and climate efforts in the areas of CO2 reduction, fuel sourcing, green district heating and reasonable utility prices produced satisfactory results in 2020. In 2021, we intend to step up our work on the 17 SDGs. To this end, we have entered into a partnership on the goals with the Municipality of Randers. The aim is to raise general awareness of the SDGs and point out ways citizens and businesses can contribute to achieving the goals.

CSR – Corporate Social Responsibility

Social conditions and working environment Statutory statement on corporate social responsibility pursuant to section 99 a of the Danish Financial Statements Act We see it as part of our corporate social responsibility to contribute to growth, knowledge sharing and development, create new local jobs, support sports, culture and associations through sponsorships and support the local community as a whole – both in the Municipality of Randers, where Verdo is one of the largest employers, and in the Municipality of Herning. Policy for social activities Verdo wants to retain and develop our existing workforce while at the same time attracting new employees and thus giving back to the local community we are part of by creating new jobs. That is why we are working actively to be an attractive workplace by promoting sports, cultural and social activities among our employees. Social activities In most areas, 2020 was a year in the shadow of COVID-19. Bans on large assemblies and lockdowns significantly impaired our ability to organise social initiatives and activities for our employees.

Verdo’s dedicated employees usually participate in local running and cycling events. We call the initiatives ‘Den Gode Energi’ or Good Energy. This has been extremely difficult in 2020, and most of the events we normally participate in have either been cancelled or postponed due to COVID-19. In 2020, we continued our internal dialogue meetings, where all employees can put questions to the CEO. However, the meetings were primarily held online as most employees were working from home for much of the year. The purpose of the dialogue meetings is to contribute to a more open and transparent organisation, and the initiative gained strong internal support. Verdo participated in the ‘Knæk Cancer’ campaign to run, walk or cycle to raise awareness of cancer. To stay in touch, we also held virtual coffee meetings and walkand-talk meetings. In 2020, our hunting club was able to go hunting despite the COVID-19 restrictions. Verdo’s cycling club managed to arrange a cycling race starting at our head office in Randers, and after the race we got together over beers and sausages. Furthermore, we moved the Good Energy initiative to Instagram, where

employees could share pictures of their home office with their colleagues. During the pandemic, we also increased the news communication to our employees with daily and weekly Corona News, which helped to navigate the events of the crisis and illustrate its impact on the employees’ everyday lives. We have many other staff benefits that continue regardless of lockdowns and restrictions, including training opportunities, health insurance, attractive pension schemes and personal pension talks for white-collar and hourly paid workers. Verdo has always made a point of working with educational institutions to set up traineeships, apprenticeships and internships. In addition, we are working with the Municipality of Randers to meet the need for testing the ability to work of unemployed citizens and citizens on long-term sick leave. Health and safety Half of our approx. 550 employees work on construction sites, in warehouses and in production on a daily basis. Therefore, we have health and safety standards and are committed to reducing the number of workplace accidents. We also give high priority to the psychological working

Annual report 2020

Increased number of apprentices and trainees Verdo has always been a supporter of training and education and has set up attractive internships and apprenticeships for the talents of the future. In recent years, we have welcomed a growing number of apprentices into our business, much to our delight. In 2020, the target for Teknik was for apprentices to account for 15% of the total number of technicians. This target was achieved for the third year in a row. In Energy, apprentices accounted for 14% in both Verdo Energy Systems A/S and Verdo Energiteknik A/S. Verdo Energy Systems A/S and Verdo Energiteknik A/S had 12% apprentices, which is equivalent to 7 out of 58 hourly paid workers. The two companies were merged on 1 January 2021. In 2020, we set up two new flexi jobs to retain staff, but job training opportunities were hampered by COVID-19. The benefits of internships are assessed to be insignificant due to the large number of employees working from home, and so we only had six interns in 2020. Focus on health and safety Overall, Verdo has seen a small increase in workplace accidents and near-misses of 11%. Given our goal of reducing the number of workplace accidents, this is an unsatisfactory development. In 2019, we recorded

a total of nine workplace accidents, resulting in a total of 103 days of absence. Days of absence fell to 93 days in 2020, but the number of workplace accidents rose to 10. Moreover, we recorded 98 near-misses in 2020. To reduce the number of workplace accidents among our technicians, they have all received safety training via instruction videos, followed by a test. Climate-friendly canteen food Verdo’s green sustainability agenda also extends to our canteen at the Agerskellet location in Randers, which not only provides meals to our employees there but also to the CHP plant at the Port of Randers. In addition to being climate-friendly, healthy organic food is also good for the physical and mental well-being of our employees. We strive to use Danish organic produce wherever possible. We are aware that meat production has a considerable climate impact. To minimise this impact, we use meat sparingly in our canteen and focus on animal welfare when sourcing meat. Moreover, we are always looking for new ways to reduce and reuse surplus food. Our food waste is sent to a processing plant in Hedensted, where it is used in the production of biogas. This work continued in early 2020, but when the pandemic hit in March 2020, the canteen was closed completely for a while, later operating on a reduced and more flexible schedule. As a result, comparisons with previous years are not possible. Women and men in management Statutory statement on the gender composition of management bodies pursuant to section 99 a 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 convert into results. A highly diverse management team improves the scope for managing and assessing the various aspects that enable the company to live up to its values and the expectations of the outside world. However, we still have some work to do in this area. 80% of Verdo’s employees are men, and the share of women gets smaller, the higher up the management hierarchy you get. We are not the only company in the energy sector to face such challenges, but we are determined to do what we can to overcome them. That is why, in 2020, we stepped up our efforts to redefine our diversity targets towards 2030, and we

are currently looking into defining subtargets for 2023 and 2027. The targets must apply at all management levels in the organisation. In 2020, the number of female middle managers at management level 1 grew from 9.5% to 12.5%. This means that we still have some way to go to reach our target of 25% female managers at management level 1. Female managers at management level 2 are typically found in staff functions, where the diversity of the recruitment base is usually broader. Here we saw an increase from 17.5% in 2019 to 20% in 2020, thus achieving our target of 20% for 2020. At management level 3, one in seven directors is a woman. This is equivalent to 14% and therefore above our target of 10%. In connection with the recruitment of Verdo’s new CEO, we had a specific requirement that the final pool of candidates should include female candidates. This is a new approach designed to help eliminate gender bias in the recruitment process.

CSR – Corporate Social Responsibility

environment and to well-being. Verdo conducts workplace assessments to determine the extent of any work-related sickness absence. If we identify cases of work-related sickness absence, we draw up a clear action plan to reduce sick leave and increase well-being among our employees. In 2020, our Næstved location was awarded a green smiley by the Danish Working Environment Authority. It is a relatively new location, where there has not previously been a special focus on a good and safe working environment. There is now, and the employees have welcomed the change. In 2020, we also introduced a variety of measures to prevent COVID-19 infection among our office workers and technicians. Several instructions were prepared on safe practices and conduct among ourselves and when dealing with people outside the company to prevent infection in the workplace. In 2020, we also completed a new workplace assessment survey in Verdo A/S, Verdo Varme Herning A/S, Verdo Tele A/S and Verdo Teknik A/S.

Women on the Supervisory Board Verdo also wants to increase the number of women on the Supervisory Board. This represents a particular challenge because Verdo is a consumer-led company and thus has no say in who is elected to the Supervisory Board. Nevertheless, we encourage our female talents to run for the employee-elected positions on the Supervisory Board. The Board of Representatives has a total of 45 members from Herning and Randers, nine of whom are women. This corresponds to 20%. Only one of the 12 members of Verdo’s Supervisory Board is a woman, corresponding to 8%. For several years, Verdo has been calling on the Board of Representatives to focus on the underrepresented gender when appointing 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 the employee-elected members of the Supervisory Board, where two out of the four members are women, i.e. 50%. Some of our subsidiaries have their own supervisory boards. The members are recruited from among the members of the Group Management, which means that they are subject to the same gender diversity target. Women are represented in 13 of our 18 subsidiaries, which usually have one woman and two men. The share is unchanged from 2019. Our focus on improving the gender balance on our supervisory boards continues in 2021.

Annual report 2020

Sponsorships and partnerships With our partner and sponsorship policy, we want to promote awareness of sustainability and green energy and create value for the communities we operate in. Sport and culture help bring people together in communities that create value for the individual person and society. That is why we have supported sport for many years, most notably as the main sponsor of Randers FC, a sponsorship which dates back to the early days of the club. In 2020, we added Randers HK’s women’s handball team, the Herning Blue Fox ice hockey team and various local events to our list of sponsorships. We strive for diversity in our sponsorships, which is why we also support culture. In 2020, we did so through our sponsorship of the Værket venue in Randers and its wide range of cultural events, from opera and ballet to music concerts, theatre productions and shows for the entire family. We also

Annual report 2020

raised money for the ‘Broen’ project – a social project for disadvantaged children in Randers. In the future, we will give priority to supporting activities for disadvantaged children. For us, citizenship and social responsibility are about building a mutual and value-creating relationship between Verdo and the rest of society. We therefore get involved where we can make a difference. Even a small helping hand can have a big impact on the individual person and the local community. As a result, we will work to ensure a greater breadth in our sponsorships in 2021. This will mean that we will have to slightly scale back our support to some of those who have received large donations in the past to enable us to support small players and passionate individuals in the local community. Conclusion Our employee benefits help to make Verdo an attractive place to work and

have ensured successful recruitment of more apprentices and students. We recruited more female managers in 2020, but unfortunately did not meet our target at all levels. The same applies to our supervisory boards, where the gender distribution is very unequal. For several years, we have encouraged our female talents to run for the employee-elected positions on the Supervisory Board. Likewise, Verdo has been calling on the Board of Representatives to focus on the underrepresented gender when appointing the Supervisory Board. Based on the positive feedback we have received on our sponsorships, we have succeeded in giving something back to the local communities we are part of. We make a difference to culture, sport and in respect of our corporate social responsibility.

Human rights are one of the cornerstones of the 10 principles of the UN Global Compact and of the UN’s 17 SDGs. We respect and are inspired by both across our business model. Verdo’s key value is ‘We conduct ourselves with decency’. As a result, our organisation is characterised by openness, respect and a sense of equality among our employees and in the dialogue between the management and the employees. It also means that we strive to integrate and respect the universal human rights. At Verdo, human rights translated into employee rights also include, for example, health cover in connection with illness and a pension scheme. Efforts and results For several years, Verdo has worked purposefully to ensure compliance with the updated General Data Protection

Regulation (GDPR). In addition, we have developed a number of in-house procedures for dealing with security breaches. To ensure efficient processes throughout the business, we have conducted awareness training for our employees and posters have been put up to maintain a continuous focus on GDPR. Moreover, we have implemented personal data anonymisation methods in our settlement system. In 2020, the project entered an operating phase, and we have therefore primarily worked to improve in-house processes and maintain GDPR compliance. As a natural extension of our compliance efforts, we have sharpened our focus on the new whistleblower directive. It allows employees to report information about unlawful behaviour or serious irregularities without fear of retribution. The scheme will help to increase credibility and employee confidence in the

management and the company’s business processes. However, it is important to see the scheme as a supplement to the existing dialogue and openness in the company. The Verdo Code of Conduct for Suppliers stipulates that our international suppliers must respect human rights as regards, for example, working hours, prohibition of child labour, health matters and the environment. We continuously assess these requirements to determine whether additional requirements should be imposed on suppliers.

CSR – Corporate Social Responsibility

Respect for human rights

Conclusion Human rights are respected by both the Verdo management and 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 anti-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 anti-corruption and anti-bribery policy is therefore inspired by the principles of the UN Global Compact. The policy contains guidelines on how to conclude contracts without offering or providing bribes, facility payments, gifts or entertainment. The policy is as follows: Bribery: The abuse of entrusted power for private gain is unacceptable.

Facility 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 aims to increase awareness of corruption among employees and business partners and understanding of how we combat corruption and bribery in our business activities. At the same time, we require that our trading partners 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 address anti-corruption and anti-bribery. In Verdo’s opinion, it is expressly necessary to address these matters in Trading. Similarly, Trading’s trading partners are under an obligation to adhere

to the principles of anti-bribery and anti-corruption. All Trading employees with procurement responsibilities are required to adhere to the Group’s general guidelines for the procurement of woodbased fuels (‘Overordnede retningslinjer for indkøb af træbaserede brændsler’) from 2015. All Trading suppliers are also required to follow the Verdo Code of Conduct for Suppliers. The supplier must be able to demonstrate compliance with the guidelines at all times at Verdo’s request. We continuously follow up on the policy and our suppliers’ compliance. In 2020, we reviewed our Code of Conduct to step up our efforts in this area. 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.

Annual report 2020

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8920 Randers NV, Denmark

+45 8911 4811

info@verdo.com

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