Verdo CSR 2021 EN

CSR C or por a t e S oc ial R e s pon s ibili t y

A green step ahead - together

Statutory statement on social responsibility and the gender composition of management pursuant to section 99 a and 99 b of the Danish Financial Statements Act. This report forms part of Verdo’s annual report, and covers the period from 1 January 2021 to 31 December 2021.

Mission Verdo operates and develops sustainable critical infrastructure for the benefit of customers and future society – based on heating, water, electricity and technical infrastructure

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CSR report 2021

C S R – C or por a t e S oc ial R e s pon sibili t y

One green step ahead – together A

t Verdo, we are very driven by a strong common purpose. We have a clear aim of contributing to positive change in society. It is also our belief that we, as a cooperative society and a supplier of critical energy infrastructure, have a special duty to take a responsible and sustainable approach to everything we do. Put briefly: We have a great social responsibility and we take this very seriously.

We have a targeted focus on our social responsibility, as part of our efforts to grow our business sustainably. By ‘sustainable’, we mean that at Verdo we strive to use our resources in a way that will not burden future generations – environmentally, socially or economically.

There are many ways companies can meet their responsibilities to create a greener and more sustainable world. At Verdo, we have committed to doing so through what we call our social contract.

We view our social contract as our birth certificate. It must serve to continually remind us to deliver the extra long-term

dimension that helps make a difference to our customers, employees, local communities and partners.

The social contract therefore has a broad aim, covering efforts in relation to both climate and the environment, and social and economic sustainability.

However, as a company that emerged from society’s need for energy, and which provides citizens with security and welfare through the supply of drinking water, power and heating, our primary focus is on sustainability within the green transition.

industry and district heating plants.

We are also one of Denmark’s largest players handling the operation and maintenance of street lighting, and we supply charging stations for electric and plug-in hybrid vehicles. It is therefore our goal to be among the energy companies that are leading the way in the green area.

This is reflected in our ‘A green step ahead – together’ vision. We work hard every day to reduce our greenhouse gas (CO2) emissions, and make a sustainable imprint on the future. Our core business is the operation and development of sustainable critical infrastructure based on heating, water and electricity. We also develop green energy plants for industry and utilities, in Denmark and abroad, and we are one of Europe’s leading suppliers of sustainable, certified biomass for

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Verdo’s business model Resources

Activities

Value creation

Development and • People • Knowledge • Raw materials • Renewable energy • Capital

V

installation: • Energy plants • Street lighting • Traffic systems • Electrical installation Operation and maintenance: • District heating • Drinking water • Energy plants • Street lighting • Fibre-optic networks Service: • Energy plants • Electrical installation

erdo adjusted the structure of the Group’s parent company, Verdo S/I, from a self-governing institution to a cooperative society with limited liability (a.m.b.a) in 2021.

This was driven by a desire to harmonise the corporate structure with the way the company is managed in practice. As a cooperative society, Verdo is owned by the consumers and is thus the common property of the local community. Our business model is based on us transforming resources into something of value.

This involves a significant reciprocal impact between Verdo and the outside world. We are therefore striving to

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Trade: • Electricity

• Future-proof heating, drinking

sales

water and electricity

• Biomass

• Green transition

• District

• Greater digitalisation

heating

• Robust infrastructure

• Technical

• Contributing to a sustainable

carbon

society – locally and nationally

• Coal

• Danish and international

reduce our own CO2 emissions in energy production, but also to reduce emissions from both our commercial and private customers.

Verdo aims to help meet and promote the UN’s 2030 Sustainable Development Goals. We are in a position where we can positively influence the realisation of the global goals, and the goals therefore serve as a guide for Verdo’s sustainability goals. In our CSR work in relation to the climate and environment, we work specifically with global goal #6 – clean water and sanitation, #7 – affordable and clean energy, and #13 – climate action.

workplaces with a focus on skills growth • Tax payments in Denmark

Based on our vision and mission, we also have a strategic focus on global goal #9 – industry, innovation and infrastructure, #11 – sustainable cities and communities, and #17 – partnerships for the goals.

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This section reports on significant risks of adverse impacts on the climate, environment and social factors Verdo’s business activities are deemed to have, and how we manage these risks, pursuant to section 99 a(3) of the Danish Financial Statements Act.

Risk assessment V

erdo’s transformation from black to green energy in district heating production began back in 2002, when the Randers CHP plant started gradual conversion from coal to biomass. Today, the CHP plant has reduced CO2 emissions by 99.3% compared to firing using coal, and continues to work towards the green transition.

Our sustainable biomass, which is used in our district heating production and also sold to our customers in both the private and commercial segments, is certified through schemes that support and ensure that we meet recognised and regulatory standards. To continue to ensure we procure our fuels sustainably, in 2021 we further systematised our procedures for using suppliers based on the new RE-II Directive, which entered into force on 1 July 2021.

The new RE-II Directive sets sustainability criteria and documentation requirements for wood industry waste products and other biomass used for energy purposes.

A significant part of Verdo’s business model is the sale of coal and technical carbon through our Norwegian-US subsidiary Carbon Partners Inc. Technical carbon is used, for example, in the alloy industry and in the manufacture of solar cells. We are keenly aware that the extraction and use of coal is not sustainable. We are therefore committed at the same time to taking responsibility in

working towards the green transition of the industry and phasing out coal.

We have a values-based management foundation, and we strive to ensure all our employees follow internal standards and policies.

Responsible supplier management is an area in which we can see some risks of negative impacts on human rights and corruption. Over a number of years, we have had our suppliers in our Trading division commit to our Code of Conduct.

We have not identified any specific risks in relation to human rights or corruption in 2021. This remains a focus area, and in 2021 we formulated a Code of Conduct which will apply to the whole Group. We will commence dialogue with our strategic suppliers on this in 2022.

identified and implemented. We have a process for either employee development talks (MUS) or group development talks (GRUS) that we follow when reporting in our HR system.

We saw a declining proportion of apprentices in 2021. Given that apprentices are a pathway to recruiting competent tradesmen, it is important that we have our pipeline. We are therefore seeking to recruit apprentices as broadly as possible. Failure to retain employees who can no longer work in a full-time position represents a risk of losing resources.

Opportunities for reduced working hours, such as part-time positions or senior or flex jobs will therefore be evaluated in dialogue with the employee, job centre and immediate manager.

Social conditions are impacted by low unemployment and difficulty finding suitable candidates for advertised positions. This means higher costs for outside recruitment agencies and loss of earnings due to unfilled positions. We will therefore focus in 2022 on employer branding and further optimising our internal recruitment processes, in order to attract more qualified candidates.

We can also achieve the right mix of resources among our employees through relevant continuing training.

A risk in this respect is that the relevant continuing training needs are not

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Our climate and environment policy W

hen 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.

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.

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.

• Focusing on procuring climate-friendly, eco-friendly and energy-efficient products and solutions.

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 NOx reductions • Clean drinking water The climate and environment policy is effected in practice by: • Ensuring that information and

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• Monitoring and recording our emissions and formulating useful key figures.

• 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 NOx 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

NOx 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 NOx 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.

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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.

CO2e per kWh of district heating, with a renewable energy share of 99%.

To reduce NOx emissions from the CHP plant’s primary boilers, we have installed an NCR DeNOx 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.

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.

The reason CO2 and NOx emissions have increased from 2020 to 2021 is increased fuel consumption and production.

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

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

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).

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.

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

1.2

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

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.

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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.

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.

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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

Number

227

203

Estimated CO2e emissions from Verdo’s fleet

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.

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

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.

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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

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.

Social factors T

hrough 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

Annual report 2021

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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

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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: eNPS

Unit

2021

Target 2023

Target 2025

Scale -100 to 100

10

>10

25

• 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).

Accidents and illness

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

Unit

2020

2021

Goal

Workplace accidents1

Number

10

7

0

Sick leave

%

No data

2

Salaried employees

%

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

3

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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

Note 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.

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CSR report 2021

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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.

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

Women in management at Verdo:

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

V

erdo 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,

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CSR report 2021

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

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

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,

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.

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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.

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

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

Environment

Unit

2020

2021

Greenhouse gas (GHG) emissions Scope 1 emissions

Tonnes CO2e

2,606

1.340

Goal

Greenhouse gas (GHG) emissions Scope 2 emissions

Tonnes CO2e

4,373

1,2

Consumption of electricity

kWh

N/A

29,258,529

Consumption of district heating

kWh

N/A

1,441,300

Employee turnover

%

N/A

22.8

Proportion of apprentices

%

16

10

Proportion of trainees

%

4

3

Number of flex job employees

Number

2

9

Employee commitment

eNPS

N/A

10

Number of workplace accidents

Number

10

7

Absence due to illness

%

N/A

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%

Social

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.

CSR report 2021

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CSR report 2021

Agerskellet 7

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8920 Randers NV, Denmark

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+45 8911 4811

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info@verdo.com

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verdo.com