Not business as usual
We remain focused on executing our strategy and developing our core business through innovation and sustainability, but it is not a matter of business as usual. We continue to challenge ourselves and to challenge convention, as we are convinced this is the best way to create value both today and tomorrow.The human race reached a new milestone in 2011: There are now 7 billion of us! This is putting pressure on natural resources, many of which – including food, water, and energy – are already scarce or will be if we keep exploiting them unsustainably. With expected annual population growth of about 80 million people, it is hard to believe that we can carry on the way we do. We need change, not business as usual.
Sustainable solutions here today
We need to use existing technologies to produce more with less, which is exactly what Novozymes’ solutions make possible. Biotechnology enables us to decouple growth from the use of natural resources, as our solutions save energy and raw materials, and reduce waste. By being innovative and delivering valuable solutions based on industrial insight, we can help our customers change the world while simultaneously growing our business profitably.
For example, biomass is one of the world’s largest renewable resources and has the potential to significantly supplement petrochemicals. Novozymes’ technology can convert biomass into sugar that can be used instead of oil as a platform in the production of fuels and chemical building blocks in everything from sneakers and textiles to computers and packaging. A viable, environmentally friendly alternative to oil is no longer just a dream – advanced biofuels are now a reality with commercial-scale facilities coming on line, providing us with a sustainable solution to one of today’s most critical resource issues.
Radical innovation for tomorrow
Bioinnovation is demanding in itself, but as both a business and individuals we also need to challenge ourselves in other areas. In 2011, we looked at how we address social responsibility and announced how we had embarked on a food–energy venture in Mozambique where we will use biotechnology to help unlock the enormous potential of agriculture in the developing world. It is expected to be a scalable and replicable project that provides a return on our investment, and goes to show that social development is not necessarily dependent on government funding. The world needs radical innovation to change, and this is one way we can help build a better world while developing our business.
A greener world
Novozymes is working for a bio-based society where resources and energy are used efficiently, pollution is reduced, and nature is preserved. We are committed to ensuring healthy returns on our investments, striking the right balance between better business, cleaner environment, and better lives – regardless of the economic climate.
This is also why Novozymes has now committed to hosting a global sustainability summit for the household care industry on a biennial basis. We want to catalyze change and innovation to make it possible for consumers to do their laundry with a reduced impact on the environment and still get their clothes clean – without extra costs. This is possible only by rethinking the entire value chain and sharing a common vision of a radically reduced footprint within the industry. Bringing together manufacturers, ingredient suppliers, and retailers to discuss industry trends, technical solutions, and consumer needs is a way to facilitate a shift toward more sustainable products. At the summit in December 2011, commitments were made to work toward greener detergent products through trade associations and technical collaborations.
We know that Novozymes holds some of the answers to the world’s most pressing problems, but we also realize that we are only part of the solution. We must all work together to challenge convention and find a way forward. Above all, we need to rethink, not do business as usual!
President & CEO
Pioneering food–energy venture in Africa
A growing population is putting pressure on natural resources, and millions of people already lack access to energy, water, food, and basic health care. Novozymes sees opportunities for using biotechnology to catalyze the development of agriculture and the food and biofuel industries in developing countries here and now. This will create new bio-based markets benefiting local communities and the environment as well as potential new business opportunities for Novozymes in the longer run.
Charcoal causes ill-health and deforestation
Hundreds of millions of women in the developing world cook food for their families using charcoal-burning stoves. Indoor air pollution causes an estimated 2 million deaths per year and sickens millions more – mostly infants and small children. In addition to the impact on global health, nearly a third of Africa’s 7 million km2 of forest has already been destroyed for charcoal, stripping the continent of vital biodiversity and sending billions of tons of greenhouse gases into the atmosphere.
As announced in 2011, Novozymes has invested in a project in Mozambique via a joint venture, CleanStar Mozambique (CSM). The idea is to develop sustainable agriculture to increase food production and provide raw materials for the production of ethanol as a replacement for charcoal as cooking fuel in urban households.
Replicable business model
CSM is helping smallholder farmers in the Sofala province implement an environmentally restorative agroforestry system that will produce a diverse mix of farm and forestry produce. The company purchases farmers’ surplus production, thereby significantly increasing their incomes. CSM will process these agricultural products into a range of food products as well as an ethanol-based cooking fuel that will be sold primarily in urban markets, such as the capital Maputo.
By 2014, the venture expects to involve 3,000 smallholders cultivating over 6,000 hectares of their own land and supply 20% of Maputo households with a clean and cheaper alternative to charcoal, thereby protecting 4,000 hectares of indigenous forests from destruction each year.
The business model is innovative in that it does not take a position in an existing value chain, but builds an entirely new and sustainable value chain from farmer to retail. It addresses some of the key problems facing sub-Saharan Africa: land degradation, food and nutrition security, and energy sustainability. Furthermore, the model is expected to have commercial potential as it is both scalable and replicable.
Innovative and complementary partnership
The venture benefits from its partners’ complementary contributions: CleanStar brings expertise in agroforestry and social venture development, while Novozymes has enzymatic and microbial solutions for numerous industries, including food, agriculture, and biofuel. The two have also partnered with a number of other companies, most notably the process design and construction company ICM, which is providing the ethanol cooking fuel production facility.
Financing agreement with Bank of America Merrill Lynch
CSM and Bank of America Merrill Lynch concluded a multimillion Certified Emission Reduction (CER) financing agreement in November 2011 to maximize the financial value of the project’s carbon emission reductions. Under the agreement, the bank will purchase and market millions of CERs (each representing a ton of CO2 saved), all generated in Mozambique and other developing countries in sub-Saharan Africa through the replacement of charcoal with clean cooking fuel. The finance and revenues received by CSM will be used to subsidize the upfront cost and ongoing warranty for the clean-burning stoves, technology that would otherwise be too expensive for low-income African consumers.