Novo Nordisk is a global healthcare company with nearly 90 years of innovation and leadership in diabetes care. The company also has leading positions within haemophilia care, growth hormone therapy and hormone replacement therapy. Headquartered in Denmark, Novo Nordisk employs more than 30,000 employees in 74 countries, and markets its products in 180 countries.
Challenge: To meet ambitious targets
In 2002, Novo Nordisk updated its environmental strategy and identified climate change as an upcoming issue. The company began reporting to the first CDP in 2003. Anne Gadegaard, Director, Global TBL Management, comments, "As a pharmaceutical company, while not carbon intensive in terms of volume, we realised our external stakeholders would expect us to take action. The investor backed CDP questionnaire re-enforced our awareness of the importance of climate change as an issue and the questionnaire helped us set the agenda."
In terms of the Greenhouse Gas (GHG) Protocol, Novo Nordisk’s first priority was to get its own house in order, focusing on the areas in which the company has direct control over performance. In 2006, Novo Nordisk set an ambitious target for CO2 emissions from global production: To achieve an absolute reduction of 10% by 2014 compared with 2004 emission levels. In light of the projected significant growth in production capacity, the absolute target represents a relative reduction of approximately 65%. It requires that growth in production is decoupled from growth in energy consumption and calls for both incremental advances and radically innovative solutions.
Solution: Organisation wide engagement leading to emissions reduction
In 2008, CO2 emissions decreased for the first time since the launch of the climate strategy in 2006. The company’s total energy consumption decreased by 9% in 2008, which translated into a decrease in the energy-related emissions of CO2 from 236,000 tons in 2007 to 215,000 tons in 2008. In 2010, the annual CO2 emission was below the 2004 (210,000 tons) baseline year, at 95,000 tons or 174,000 tons if not taking purchase of Renewable Energy Certificates (RECs) into account. Since 2003, CO2 emissions from Novo Nordisk's production have decreased to an index 20 compared to growth in sales.
Reductions have been achieved through a continued effort in Novo Nordisk’s LEAN programme – called cLEAN® - and secondly the highly prioritised energy-saving programme. This energy saving programme has until now resulted in an estimated 31,000 tons reduction in CO2 emission. Thirdly, energy savings at Danish production facilities are earmarked to purchase of RECs certificates from a new wind farm in the North Sea – Horns Rev II. In 2010, all electricity supplies for production sites in Denmark were converted to wind power from Horns Rev II through RECs (Renewable Energy Certificates).
The mechanisms that have facilitated absolute emissions reductions at Novo Nordisk are having a top management committee involved, securing resources, getting data and setting targets to manage the program. The CDP process is a key instrument in cross-organisational dialogue on climate action. For example, the Risk Management department has an annual meeting to understand climate change. It discusses how to adapt, risks and challenges, and uses the CDP response to understand how important this is.
Anne Gadegaard notes "If you are a first time responder, or a company who has not gone through this process, we would point to CDP as a very good way to get started with evaluating the impact of climate change for your company. The CDP is a good set of questions for you to discuss internally and identify if this is an issue. As the CDP questionnaire includes all the relevant climate questions, it can be used as a process tool to identify climate impact in your organisation."
Benefit: Improving carbon footprint, reputation and trust
In 2010, Novo Nordisk updated its climate strategy. Looking towards 2020 Novo Nordisk aims at extending the scope of its climate strategy beyond energy related emissions from global production facilities to also include emissions from company cars, business travel and product distribution.
CDP reporting helps inform the development of Novo Nordisk’s climate strategy. Anne Gadegaard explains how, "After eight years, the CDP questionnaire still informs what we are doing. We use CDP as an annual test to see whether we are still asking ourselves the right questions in terms of climate change. The CDP questionnaire can be used as an aid to finding out what you can do as a company to assess the risk of climate change to your future activities, improve your climate footprint and, consequently, reputation. We have seen the evolution of the questionnaire. Initially, the focus was on disclosure, now the investors and CDP are looking at performance. There has been a maturity in the questions, covering risks, supply chain and performance. We find the CDP questions challenging, but that is good as even though it takes time to assess and reply to all the questions, it keeps you on your toes.”
The Climate strategy 2020 is aimed at maintaining a leadership position in the field of climate action and is expected to create substantial value to the company.
During 2005-2010, Novo Nordisk invested approximately 17 million USD in the energy saving programme. Since 2005, the energy savings have realised a total of 34 million USD in cost savings corresponding to a 16% reduction in global energy consumption. And the company also values savings in intangible benefits such as reputation and trust with key stakeholders.
"For us this is about more than just climate change, it is about continued business. This is about securing the business process and identifying new opportunities,” comments Anne Gadegaard. “This is where the CDP questions are much better than other investor questionnaires, more mature."
Novo Nordisk’s ambition is to maintain its position in the top five of the pharmaceutical companies reporting to CDP. Anne Gadegaard ends, "The ratings and brand of being an active climate change company is important. It can be used as leverage to implement further changes in the organisation. We have fully embedded and deployed the CDP process into our business operations and it is an efficient means of communication."