Our climate and environment policy

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

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

Sustainable energy is crucial to Verdo, and we are actively contributing to sustainable development. Our climate and environment policy is largely driven by national and international goals and guidelines, including greenhouse gas reduction targets, international climate commitments and the 17 UN global goals, including goal #13 in particular. The energy sector has a major impact on greenhouse gas emissions in Denmark. Within its economic framework, Verdo seeks to implement projects that ensure cost-effective energy efficiency and minimal climate and environmental impacts.

Verdo’s strategy contains the following goals:

Fair prices for utility services and high security of supply

CO2e and NO x reductions

Clean drinking water

The climate and environment policy is effected in practice by:

Ensuring that information and necessary resources are available to achieve goals and objectives. Operating and maintaining an effective eco-management system, focused on reducing the climate impact of the company’s activities.

Monitoring and recording our emissions and formulating useful key figures.

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

• Ensuring that relevant employees are aware of the company’s emissions and motivating employees to make suggestions that can reduce environmental impacts and negative climate effects.

Implementing the projects which prove to be cost-effective.

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

Environmental initiatives and results

Restoring the environment following mining operations in Kentucky

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

Continued focus on NO x reduction at Randers CHP plant

We see our CHP plant at the Port of Randers as the company activity with the greatest environmental impact. We have a daily focus on the environment in the way we manage our production of district heating and power. In relation to emissions up the chimney and discharges into municipal wastewater. A natural goal here is our environmental

Change in key figures for our CHP plant in Randers

Note 1 CO2 emissions from the CHP plant in Randers and emergency loading plant. This is calculated based on fuel consumption, calorific value and an emission factor, in line with monitoring plans approved by the Danish Energy Agency.

Note 2 NO x emissions from the CHP plant in Randers have been measured using an Automatic Measuring System (AMS).

Note 3 Consumption of wood chips, other biomass and coal is weighed using calibrated conveyor scales. Note 4 Net electricity production from documented sustainable biomass is calculated based on the measured net electricity production, adjusted for the documented share of sustainable biomass. Note 5 District heating production is measured using calibrated meters.

This section contains our statutory statement on social responsibility pursuant to section 99 a of the Danish Financial Statements Act, in relation to environmental factors, including what Verdo is doing to reduce the climate impact of the company’s activities.

approval, which is verified by a third party.

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

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

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

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

Aim of specific goals for waste sorting

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

Cooperation between water utilities in Randers

In the coming years, the water utilities in Randers will face major challenges in protecting groundwater and drinking water. That is why Verdo Vand partnered with the other water utilities in Randers in 2021 – Assentoft Vandværk, Dronningborg Vandværk, Kristrup Vandværk, Strømmen Vandværk and Vorup Vandværk – so that water consumers get the best solutions throughout the supply area.

The cooperation between the water utilities is based on the notion that dialogue and collaboration on solutions can lead to benefits to consumers that could not be achieved if the utilities worked alone. The cooperation may consist of common solutions, such as on-call staff and administration, but also cooperation on infrastructure such as emergency supply.

Efforts and results for a positive climate footprint

In 2021, we began the extensive work of preparing climate accounts based on the Greenhouse Gas Protocol, with respect to scopes 1, 2 and 3. We have used the Danish Business Authority’s calculation model – initially with the aim of identifying data needs and related processes, with the goal of automating data collection in the long term. Based on our climate accounts, our goal has been to define actions that can contribute to achieving national targets for combatting climate change. We have initially chosen to focus on scopes 1 and 2. We will also measure our scope 3 down the track.

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).

Having a greener fleet of vehicles with emissions reduced to a maximum of 430 tonnes CO2e by 2025, and 0

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

Towards a greener vehicle fleet

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

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

In 2021, we reduced our fleet of older diesel vehicles after optimising operations. Our CO2e emissions from the Verdo vehicle fleet have increased due to greater driving needs.

Other contributions to climate-friendly transport

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

Denmark’s first outdoor test area for smart traffic signals – DOLL Living Lab – was officially opened in autumn 2021 in Hersted Industripark in Albertslund. Verdo is one of the players behind the test centre, which has come into being through a public-private partnership. The result is Europe’s largest Living Lab for developing the LED lighting and Smart City solutions of the future. The vision is for DOLL to be the world’s leading innovation hub for developing, testing and demonstrating intelligent lighting in the field.

Smaller climate footprint through green power

Inspired by UN global goal #7 – affordable and clean energy – we realised our goal in 2019 that the internal power consumption of the entire Verdo Group should derive from green energy sources. All our electricity customers today also receive green power automatically without any premium. We have thereby ensured that the power going to all of Verdo’s customers comes from renewable energy sources. But our green aspirations in electricity sales do not stop there.

We have linked the leaf labelling scheme to all electricity products by default, to make it easier for customers to choose green. This means that power is 100% based on renewable energy sources, as we purchase certificates corresponding to the customer’s electricity consumption. We also plant trees in public Danish forests in collaboration with the Growing Trees Network Foundation. Planting trees helps protect our groundwater, reduce CO2 emissions and preserve vital biodiversity in nature.

Verdo Go Green A/S donated 2,000 trees in 2021. Of these, 1,000 will be planted in Durup Folkeskov near Skive, and the other 1,000 in Rugballegaard Folkeskov near Horsens. The trees are expected to be planted in spring 2022. Social responsibility through sustainable energy production Electrification of energy production is one of the key focus areas in the energy

Having a fleet of vehicles with emissions reduced to a maximum of 430 tonnes CO2e by 2025, and 0 emissions by 2030. 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 influence developments. We therefore helped formulate the energy companies’ sector agreement on sustainable biomass, which ran from 2016 until the new legislation implementing the RE ll Directive came into force on 1 July 2021. In connection with the implementation of the new law, Verdo and a number of other stakeholders took part in the process and contributed knowledge towards the formulation of the new regulatory requirements.

To continue to ensure our fuels are sustainably procured, we further systematised our internal procedures for the use of suppliers in 2021, based on the new RE II Directive, which sets

Social factors

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

General policy for social factors

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

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

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

We have an ambitious proportion of apprentices and trainees, the number of which must reflect the needs and opportunities in each area of the company.

• We focus on the varying needs of employees at different stages of life and in different life situations. It is our policy to retain senior employees so that their experience and knowledge can benefit Verdo for as long as possible.

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

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

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

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

Initiatives and results in relation to social factors

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

Verdo’s employee turnover in 2021: Employee turnover 22.8%

• Number of terminations 116

• Number of voluntary resignations 58 Number of forced terminations 48

• Number of short-term appointments 21

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

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

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

Trainees and apprentices

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

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

Percentage of apprentices and trainees at Verdo:

• Percentage of apprentices among hourly-paid workers: 16% in 2020 and 10% in 2021.

• Percentage of trainees among salaried employees: 4% in 2020 and 3% in 2021.

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

Flex jobs

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

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

Number of employees in flex jobs at Verdo: 2 in 2020 and 9 in 2021.

Employee well-being survey

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

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

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

The survey is carried out by an external analysis company. The KPI is measured through the employee Net Promoter Score (eNPS). This is calculated by subtracting the percentage of ‘critics’

Targets for eNPS at Verdo: 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.

The Verdo Group therefore has an OHS organisation with a Group OHS committee and local OHS committees and groups, covering all employees and actively working to: support and develop employee awareness of the importance of occupational health and safety in their daily work, for themselves and others increase specific employee knowledge and insights about occupational health and safety develop and maintain a fast-working network in the OHS organisation clarify the responsibility of each employee for maintaining and developing the working environment

• impose requirements on subcontractors working for the Group to comply with applicable OHS legislation.

Initiatives in 2021

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

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

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

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

Accidents and illness:

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

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

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

Accidents and

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 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.

Note 1 The number of workplace accidents expresses the number of workplace accidents in the Group that led to more than one day of absence.

Note 2 Sick leave is the number of sick days divided by working days, multiplied by 100. Long-term illness is defined as sick leave lasting more than 14 days. The number of working days is calculated as the average number of employees from 1 January to 31 December 2021, multiplied by the annual number of working days.

Note 3 Figures for salaried employees are associated with some uncertainty, as not all salaried employees report sick leave, and many work from home rather than taking sick leave.

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.

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.