Financial and sustainability discussion

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Despite higher raw material prices, acquisitions, and unfavorable currency rates, Novozymes delivered on sales and earnings growth expectations in 2011. Net profit and free cash flow grew strongly, and all financial targets were met. We also achieved all of our sustainability targets except for water efficiency.

 2011 key performance (DKK)

 

Realized 2011

Expectations
October 2011

Expectations
January 2011

Realized 2010

Sales, DKKm 10,510 9,724
Sales growth, DKK 8% ~ 8% 7–10% 15%
Sales growth, LCY 10% 10–11% 7–10% 10%
Sales growth, organic 7% 7–8% 7–10% 11%
EBIT, DKKm 2,340 2,117
EBIT growth 11% 9–11% 8–11% 25%
EBIT margin 22.3% ~ 22% 21–22% 21.8%
Net profit, DKKm 1,828 1,614
Net profit growth 13% 11–13% 8–11% 35%
Net investments excl. acquisitions, DKKm  1,316 1,300–1,400 ~ 1,400 1,326
Free cash flow before acquisitions, DKKm 1,393 ~ 1,400 900–1,000 998
ROIC incl. goodwill 21.3% ~ 21% 21–22% 22.2%
Avg. USD/DKK 536 531 553 562
EPS (diluted), DKK 5.71 5.05
Water efficiency compared to 2005 index 30% 31% 31% 29%
Energy efficiency compared to 2005 index 34% 32% 32% 30%
CO2 efficiency compared to 2005 index 47% 41% 41% 38%
Estimated reductions in CO2 emissions through our customers' application of our products, million tons 45 45 45 40

The following section presents realized financial, environmental, and social data for the year. Data and key figures can be found under Accounts, while an overview of reporting in accordance with the Global Reporting Initiative (GRI) guidelines can be found under Supplementary reporting. Our Communication on Progress with respect to the Global Compact can be found at www.novozymes.com under Sustainability.

Sales

Total sales in 2011 were DKK 10,510 million, an increase of 8% compared to last year. Exchange rates impacted sales negatively, and sales in LCY were up by 10%. Acquisitions contributed approximately 3 %-points to growth.

Costs, Other operating income, and EBIT

Total costs

Total costs excluding net financials and tax increased by 7% to DKK 8,220 million compared to 2010. Cost of goods sold and other operating costs increased due to a higher activity level, higher raw material prices, and a negative impact from acquisitions.

Gross profit

Gross profit increased by 9% compared to 2010, resulting in a gross profit margin of 56.2%, 0.5 %-points higher than in 2010. The negative impact from acquisitions in the BioAg business was approximately 0.3 %-points. Increased sales, productivity improvements, and better capacity utilization in the enzyme plants contributed positively to the underlying increase in the gross margin, whereas increased depreciation and amortization and increased raw material prices impacted negatively compared to 2010.

The gross profit margin for Enzyme Business was 58.7%, an improvement of 0.1 %-point compared to 2010.

The gross profit margin for BioBusiness was 33.3%, against 12.0% for 2010. Excluding acquisitions in the BioAg business, the gross profit margin for BioBusiness was roughly 27% for 2011.

Other operating costs

Other operating costs increased by 8% to DKK 3,618 million compared to 2010. The ratio of other operating costs to sales was 34.4%, compared to 34.6% in 2010.

  • Sales and distribution costs, including business development, increased by 11%, representing 13% of sales
  • R&D costs increased by 8%, representing 14% of sales
  • Administrative costs were up by 2%, representing 7% of sales

Other operating income

Other operating income fell by DKK 19 million to DKK 50 million in 2011 and was mainly related to milestone payments in BioBusiness and the US Department of Energy-sponsored grant related to work on cellulosic ethanol in the US.

Depreciation and amortization

Depreciation and amortization rose to DKK 786 million, an increase of DKK 107 million, or 16%, compared to 2010. The higher level of depreciation and amortization was mainly due to the higher investment level over the past years, including the acquisition of EMD/Merck Crop BioScience in February 2011.

EBIT

EBIT increased by 11% to DKK 2,340 million, and the EBIT margin was 22.3%, against 21.8% in 2010. Excluding acquisitions, the EBIT margin was roughly 23.3%. Currencies, especially the DKK/USD exchange rate, also impacted the EBIT margin negatively in 2011 compared to last year.

Biopharma ready for growth

Novozymes has made a number of changes to better position ourselves for future growth in the biopharma industry. In autumn 2010, Novozymes decided to discontinue our antimicrobial peptide (AMP) portfolio. This process was completed in 2011 when Novozymes found a good developer for the arenicin project in Adenium Biotech and decided to include plectasin in our exploratory work on developing AMPs for industrial use.

The decision to discontinue these projects triggered a review of the role of our Swedish operation. A divestment of the Swedish plant and the cell culture ingredient business was found to be the best option for the long-term prospects of the unit, as well as making the remaining biopharma business more focused. Novozymes accepted an offer from US-based Repligen Corporation in October, and the deal was finalized in December 2011.

Headquartered in Massachusetts, Repligen is a biopharmaceutical company listed on NASDAQ with annual sales of approximately USD 30 million. Novozymes considers Repligen a strong owner of the business with its dedicated focus on biomanufacturing and commitment to bioprocessing. 

Focus on medical devices as well as drug delivery and formulation
The changes leave Novozymes with a stronger foundation in biopharma where we believe that our competencies add significant value in terms of profitable growth. We are focusing on improving medical devices as well as drug delivery and formulation, with a streamlined product portfolio consisting of our products and technologies within albumin and hyaluronic acid (HA).

2011 brought considerable progress for both technologies. Novozymes opened a new facility in China supplying the world’s first recombinant HA for medical devices as well as drug delivery and formulation, and we signed several new agreements for recombinant albumin for medical devices and drug delivery. Novozymes also ramped up the commercialization of our second-generation albumin and albumin fusion technologies, which have potential in the development of new and improved drugs in a number of therapeutic areas, as they can extend the half-life of drugs and so significantly reduce dosing frequency and increase efficacy.

Novozymes continues to see strong interest in these products and technologies from pharmaceutical companies, among others, and we are confident about the long-term value creation of our biopharma business.

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  • Changing patients’ lives with hyaluronic acid
    Novozymes' animal-free hyaluronic acid can help people who suffer from osteoarthritis, a common disease that causes severe pain in the joints.
    View more
    Changing patients’ lives with hyaluronic acid Biopharma highlights and expectations Growth despite challengesSee all videos
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Changing patients’ lives with hyaluronic acid
Novozymes' animal-free hyaluronic acid can help people who suffer from osteoarthritis, a common disease that causes severe pain in the joints.
Biopharma highlights and expectations
The pharmaceutical area is experiencing great momentum right now, and the future looks promising.
Growth despite challenges
Novozymes delivered a result within the range promised to the stock market and expects satisfactory growth also in 2012.

Net financials and Net profit

Net financial income

Net financial income was DKK 75 million in 2011, compared to DKK 6 million in 2010. Net currency hedging/revaluation gains were DKK 190 million, DKK 122 million higher than in 2010. Net interest expenses were DKK 76 million, DKK 53 million higher than in 2010, whereas other financial expenses were DKK 39 million, on par with 2010.

Profit before tax

Profit before tax increased by 14% to DKK 2,415 million from DKK 2,123 million in 2010.

The effective tax rate in 2011 was 24.3%, against 24.0% in 2010. 

Net profit

Net profit increased by 13% to DKK 1,828 million from DKK 1,614 million in 2010. The strong growth in net profit was the result of higher EBIT and improved net financials.

Cash flow and Balance sheet

Cash flow

Cash flow from operating activities increased by 17% to DKK 2,709 million, compared to DKK 2,324 million in 2010. The positive development was primarily due to higher net profit and lower corporation tax paid, which was offset by increased working capital compared to 2010.

Net investments excluding acquisitions totaled DKK 1,316 million, against DKK 1,326 million in 2010.

Free cash flow before acquisitions came to DKK 1,393 million in 2011, against DKK 998 million in 2010. The increase was the result of higher operating cash flow.

Net acquisitions amounted to DKK 1,426 million in 2011, relating to the acquisition of the US company EMD/Merck Crop BioScience on February 7 and the divestment of Novozymes Biopharma’s Lund operation on December 20.

Balance sheet

Shareholders’ equity was DKK 8,824 million at December 31, 2011, up from DKK 7,836 million at year-end 2010. Shareholders’ equity was increased by comprehensive income and decreased by dividend payments. Shareholders’ equity represented 64% of the balance sheet total, compared to 62% at year-end 2010.

At the end of 2011, net interest-bearing debt was DKK 1,019 million, against DKK 346 million at year-end 2010.

Net debt-to-equity was 12% at December 31, 2011, following the acquisition of EMD/Merck Crop BioScience, against 4% at year-end 2010.

Return on invested capital (ROIC), including goodwill, was 21.3%, compared to 22.2% at the end of 2010. The lower ROIC is due to the acquisition of EMD/Merck Crop BioScience.

Treasury stock

At December 31, 2011, the holding of treasury stock was 9,915 million B shares, equivalent to 3.1% of the total number of shares issued. During 2011, Novozymes bought back 2,455 million shares – worth approximately DKK 400 million – within the expected DKK 400 million full-year stock buyback program to cover stock-based incentive programs for employees. The buyback program was completed on November 11, 2011.

Largest integration ever

The acquisition of EMD/Merck Crop BioScience, announced in December 2010 and finalized in February 2011, prompted the largest integration project ever undertaken at Novozymes. The transaction was unusual for Novozymes in that EMD/Merck Crop BioScience was one and a half times the size of our existing bioagriculture business. It also came just 4 months after we acquired the smaller agricultural biologicals producer Turfal in Brazil.

Based in Milwaukee, Wisconsin, USA, and in Pilar, Argentina, EMD/Merck Crop BioScience had a well-established technology and product portfolio, and its presence in the US and Argentina complemented Novozymes’ existing operations in Canada and Brazil. Sales & Marketing, R&D, Production, Finance, IT, and service functions all now had to be integrated, creating a new organization with 300 employees at five different sites in North and South America and offices in Europe and Asia.

Dedicated integration resources
Significant resources were allocated to ensure a successful integration. A number of task forces were set up focusing on specific areas, and a full-time integration director and a dedicated team began working months before the acquisition was finalized to identify the most critical objectives and activities to be handled by each task force.

Once the acquisition was a reality, former EMD/Merck and Novozymes employees worked together to ensure involvement of the whole organization and include best practices from both companies. The integration plans were completed ahead of time, and in June 2011 a new organization was announced.

Still a way to go
The next step on the journey is to fully integrate the whole, relatively new Novozymes BioAg business unit into all of Novozymes’ global business processes. The implementation of business operations software is well under way, and all R&D activities are now coordinated centrally, while Production and Sales & Marketing are adapting to Novozymes’ procedures for forecasting, budgeting, and investment planning.

Platform for growth
The acquisitions have made Novozymes one of the leading players in agricultural biologicals, an interesting niche of the USD 150 billion (~ DKK 825 billion) global market for fertilizers and pesticides. The biologicals market itself is divided into three areas – biofertility, biocontrol, and bioyield enhancement – with a combined value of roughly USD 1 billion (~ DKK 5.5 billion) a year.

Biofertility products help plants absorb more nutrients, while biocontrol products help them fight off pests and diseases, and bioyield enhancement products support plant health. These products enable farmers to optimize the use of fertilizers, increase yields, and save money, while putting less stress on the environment.

Novozymes now has improved geographical coverage, a more comprehensive product portfolio, and a technological platform that bodes well for future growth. The focus going forward is on truly leveraging the new setup while developing a pipeline that can support the business’ long-term growth ambitions.

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  • Boosting BioBusiness
    In 2011, BioBusiness welcomed 165 employees from EMD Crop BioScience, and following the integration, Novozymes became one of the world's leading companies in the area of biological solutions for the farming industry.
    View more
    Boosting BioBusiness Investments in R&D Enabling long-term growthSee all videos
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Boosting BioBusiness
In 2011, BioBusiness welcomed 165 employees from EMD Crop BioScience, and following the integration, Novozymes became one of the world's leading companies in the area of biological solutions for the farming industry.
Investments in R&D
Novozymes is dedicated to delivering innovation to our customers, and therefore continues to channel resources to our R&D organization.
Enabling long-term growth
Novozymes believes in investing freed-up resources in future growth.

Resource utilization

We strive continuously to minimize our environmental footprint through a strong focus on energy, CO2, and water efficiency.

Energy, CO2, and water efficiency in Novozymes’ production

Compared to 2005, the realized improvement in energy efficiency in 2011 was 34%, which exceeded the target of 32%. This was mainly the result of energy-saving projects implemented in Enzyme Business.

Likewise, we improved our CO2 efficiency by 47% compared to 2005 and thereby exceeded the target of 41%. Our performance in this area was boosted by the strategic decision to significantly increase our purchases of CO2-free electricity from wind power. These purchases are now equivalent to the output of 31 out of 91 turbines at Denmark’s flagship offshore wind farm, Horns Rev 2.

Finally, compared to 2005 water efficiency improved by 30%, slightly below the target of 31%. The start-up of a new production plant in China adversely affected the result. By way of comparison, the water efficiency improvement in 2010 was 29%.

Water was one of the focus areas that we explored further in 2011, mapping risks and opportunities at both production and solution level. When it comes to production, we are working to mitigate water-related risks, with the focus on areas with regional water scarcity risks, such as India and China.

Transportation and distribution

The transportation of our products to customers is outsourced, and in 2011, we began to look more systematically at the environmental impact of this transport. Since there is no standard for reporting transport emissions, our first priority has been to ensure data quality and establish a calculation practice. We have developed a set of standards for use by transport suppliers in reporting CO2 emissions from the transport of goods from primary production site to first point of delivery and from transport between sites. In 2011, CO2 emissions from the transport of goods were estimated at 22,000 tons; transport-related data are available in Note 42

Biodiversity

Novozymes has committed to the principles set out in the Convention on Biological Diversity, with a particular focus on the use of genetic resources. As part of our explorative efforts in 2011, an R&D-led working group established an overview of the increasing expectations of business and the strategic implications of this for Novozymes. The outcome was an R&D management standard outlining requirements in line with the Convention on Biological Diversity.

Animal testing

The use of experimental animals was reduced by 70% from 3,710 animals in 2010 to 1,119 in 2011. The main reason for this reduction was the discontinuation of biopharmaceutical projects.

Environmental compliance and complaints

Novozymes strives to comply with regulations and minimize the number of complaints. In 2011, 21 breaches of regulatory limits were registered worldwide, compared to 36 in 2010. HCFC emissions were 986 kg in 2011, down from 1,532 kg in 2010, but above the usual maintenance level of around 550 kg, due mainly to a leak at one of our sites in the US during the summer.

We received 18 complaints from neighbors in 2011, the majority related to odor and noise from nearby factories. By way of comparison, we received 21 complaints in 2010 and 33 in 2009.

We always seek to avoid significant spills, such as the release of chemicals into watercourses or soil, and there were no significant spills in 2011.

Novozymes has a pending case in the US where high nitrate levels were found a number of years ago in the groundwater around our site in Franklinton, North Carolina. Subsequent measurements were submitted to the authorities in early 2008, and no conclusion has been reached as the data are still under review by the authorities.

Novozymes powered by electricity from wind turbines
Novozymes in Denmark is now running on environmentally friendly electricity from wind turbines. Novozymes now has lower CO2 emissions than in 2005.
The sustainability trend
Sustainability is a lasting trend, even though the world's primary focus in 2011 has been on the financial crisis.
Perspectives from Executive Management
Novozymes' Executive Management reflect on the past year and what lies ahead.

Climate change impact

There is increasing commitment to reducing CO2 emissions, stimulated by regulation and retailers’ more stringent requirements, and it is a priority for Novozymes to position our enzyme technology as part of the solution to address climate change. Our target for global reductions in CO2 emissions based on LCA studies is our most important indicator, ensuring that our solutions meet our customers’ and our own high expectations.

We achieved an estimated reduction in CO2 emissions of 45 million tons through our customers’ application of our products in 2011, meeting our target of 45 million tons, which is equivalent to about three-quarters of Denmark’s total annual CO2 emissions.
 
In 2011, Novozymes developed peer-reviewed environmental life cycle assessments in the animal feed, household care, textile, and leather industries, some in collaboration with customers. In addition, we provided CO2 data on selected enzymes to customers and partners and advised them on changing their product mix and shifting to more concentrated products with lower environmental impact.

Graphics
Sustainability targets
Making more with less and setting high sustainability targets is highly relevant in economically challenging times.
Feeding the world
In the first half of this century the world population will grow to around 9 billion, and the global demand for food, feed, and fiber will nearly double.
Being ambitious about sustainability
Novozymes has set a number of ambitious targets for sustainability and environmental performance, both internally in Novozymes and through our customers' use of our products.

Workplace development

Satisfaction and development opportunities

Employee satisfaction and employee perception of development opportunities are the most important indicators of our employees’ well-being. Every year, Novozymes’ employees have the opportunity to express their opinions in our annual People’s Opinion survey. Employees’ satisfaction and motivation as measured by the survey scored 77 in 2011, exceeding both our target of 75 and our 2010 score of 76. When it came to opportunities for professional and personal development, we scored 74 in 2011, again exceeding both our target of 70 and our 2010 score of 73. The survey showed that our employees identify with the new set of values launched last year, and this seems to have had a positive impact on employee satisfaction.

Diversity management

Employment at Novozymes is based on merit and is offered without any distinction, exclusion, or preference. We are committed to developing a diverse workforce, fostering innovation and a diverse working culture, which are vital ingredients for a successful global company. In 2011, we focused on our recruitment and appointment processes aiming to increase the diversity in the pool of candidates and successors to senior managerial positions. We track our performance and the effect of our initiatives annually. The status and progress of Novozymes’ diversity initiatives are reviewed by the Board of Directors as part of the annual organizational performance process.  

Turnover and absence rate

The target for employee turnover is between 4% and 9%, reflecting the present job market and Novozymes’ aim to attract and retain employees. With a realized employee turnover of 8.3% for 2011, this target was met. The 2011 target for absence from work was below 3%, and with a rate of absence of 1.9%, this target was also achieved.

Health and safety

The frequency of occupational accidents in 2011 was 4.3 per million working hours, so the target of a frequency below 4.5 was met. Implementation of the behavior-based safety program “Dare to Care,” launched in 2010, continued into 2011 at several sites and had a positive effect in terms of fewer serious accidents. This is reflected in the decrease in the number of average days of absence per accident from 14 in 2010 to 11 in 2011. We await the results of future implementation of “Dare to Care” at newly acquired sites, where the frequency of occupational accidents is currently higher and explains the slight increase in the frequency from 4.1 in 2010. 

Total days of absence as a consequence of occupational diseases decreased significantly from 479 in 2010 to 11 in 2011 because occupational diseases were less serious and required less sick leave.

Social minimum standards – Compliance

In 2011, Novozymes decided to align our social minimum standards with the two human rights principles and four labor standards principles of the UN Global Compact. At the same time, organizational responsibility for human and labor rights at Novozymes was assigned to our regional directors for People & Organization, and a new self-assessment process was implemented, inspired by the UN’s Guiding Principles on Business and Human Rights. The outcome of the 2011 process did not lead to any corrective actions, but most regions have defined focus areas to be addressed in regional or corporate strategies and plans.

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  • Loving what we do
    Although surveys reveal that Novozymes' employees are satisfied and motivated in what they do, the focus on maintaining high job satisfaction and motivation continues.
    View more
    Loving what we do Boosting BioAg competencies in R&D Perspectives from Executive ManagementSee all videos
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Loving what we do
Although surveys reveal that Novozymes' employees are satisfied and motivated in what they do, the focus on maintaining high job satisfaction and motivation continues.
Boosting BioAg competencies in R&D
The integration of know-how and manpower from EMD Crop BioScience provides a strong platform from which to further expand our presence in bioagriculture.
Perspectives from Executive Management
Novozymes' Executive Management reflect on the past year and what lies ahead.

Socioeconomic impact

In 2011, 58% of Novozymes’ generated value was returned to society, for example through wages and pensions to our 5,824 employees, corporate income taxes in the communities, and value generated for our shareholders. The remaining 42% of Novozymes’ revenue was spent on purchasing goods and services from local and international suppliers.

Suppliers

Following the implementation of our supplier performance program, we continue to assess new and existing suppliers in our supplier evaluation system, with target coverage of at least 90% of total spend at all times. In 2011, we finalized all 168 open supplier action plans for noncompliant suppliers through dialogue on mitigating actions or, in a few cases, discontinuing further purchases. We also continued the work on enhancing our suppliers’ sustainability performance through clearer supplier requirements to be implemented at the beginning of 2012, along with internal training for purchasers and auditors. In addition, we completed an assessment of the raw materials with the greatest environmental impact in order to identify areas for improvement in raw material sourcing.

Total tax contribution

Globally, Novozymes contributes to society through taxes paid and collected. In 2011, the total tax contribution was approx. DKK 1,900 million. Taxes incurred as corporate income taxes, other taxes, and duties came to approx. DKK 925 million. Collected and withheld tax contributions on dividends and wages amounted to approx. DKK 975 million. Novozymes’ overall tax strategy and transfer pricing policy support a positive tax contribution to society and governments in the countries where Novozymes operates.

Business integrity

In 2011, Novozymes updated our booklet on business integrity Bribery – No thanks! to reflect our desire to comply with best-in-class principles. The updated booklet was used for an internal awareness-raising campaign linked to our new set of values. Workforce training in business integrity through e-learning also continued, and we reached 71% coverage. The booklet is available at www.novozymes.com under About us.

Supporting the Millennium Development Goals

In 2011, we stepped up our efforts to contribute to the UN Millennium Development Goals (MDGs) as one outcome of our explorative focus on socioeconomic impact assessment of our business this year. Our venture in Mozambique (read article under Letter from the CEO) has been designed in a way that contributes broadly to all eight MDGs. For example, the venture helps:

  • Eradicate poverty (MDG #1) by moving families from subsistence to commercial incomes (500 families in 2011)
  • Reduce child mortality (MDG #4) through reduced indoor pollution
  • Improve environmental sustainability (MDG #7) through reforestation
  • Bring together a number of partners with a combined interest in business and socioeconomic development in a global partnership for development (MDG #8)

For further information on the venture’s contribution to the MDGs, please see our Communication on Progress at www.novozymes.com.

Through the implementation of our new corporate citizenship initiative, Novozymes contributed, in particular, to improving education (MDG #2) and environmental sustainability (MDG #7) by reaching approx. 9,800 learners, directly and indirectly, of whom approx. 30% were from emerging markets. 

Reaching out to communities and future scientists

Novozymes launched a new group-wide corporate citizenship strategy, Citizymes, in 2011. The strategy is closely aligned with our core business and focuses on improving scientific literacy.

Building on our strengths in technology and science
By giving something back to our communities around the world, we retain our license to operate, enhance our ability to attract the brightest scientific talent in the future, and give employees a chance to make a difference, which also has a positive impact on job satisfaction. Novozymes focuses on community activities that increase scientific understanding and awareness of environmental responsibility in our local communities as well as in the next generation of scientists and innovators.

Supporting the UN Millennium Development Goals
Given Novozymes’ commitment to supporting sustainable development, we aim to contribute to the UN 2015 Millennium Development Goals (MDG) through our corporate citizenship activities. Our strategy specifically targets MDG #2 (universal education) by helping communities access education and improving their scientific literacy, and MDG #7 (environmental sustainability) by raising communities’ awareness of the value and importance of environmental responsibility.

Global direction, local flexibility
Previously, each of Novozymes’ local sites managed community engagement independently. With the new initiative, we are concentrating our community efforts into broader programs that increase our reach and impact by drawing on our core scientific competencies. We aim to have at least one major corporate citizenship program in each region that meets local stakeholder needs while still supporting the overall strategic focus. Each year, we will measure the number of learners (including students, teachers, and families in our communities) reached through our corporate citizenship activities and follow up on feedback from the communities and employees involved.

Our experience is that local authorities and policymakers appreciate our engagement in educational programs focusing on science, especially in countries with a strong tradition of community relations work. Community initiatives like these are also supported and appreciated by investment groups such as Dow Jones Sustainability Indexes (DJSI). This was reflected in our improved score for corporate citizenship from DJSI in 2011 – a result that may also help us retain our Gold Class rating in SAM’s Sustainability Yearbook.

Biotech education in Brazil
In Brazil, Novozymes employees have been training science teachers at secondary schools for several years and have even developed an updated science curriculum. Working with the municipal education department in Araucária, our employees coach teachers in new ways of teaching science, such as lab exercises, in order to inspire children to learn more about science – in particular biotechnology and its environmental benefits. Now a permanent fixture due to its great success, the program covered more than 2,000 learners including children and teachers at 12 schools in 2011, and the objective for the coming years is to further expand the program.

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Stepping up on the world stage
Novozymes believes in a bio-based economy that can pave the way for a sustainable tomorrow. But we cannot do this alone. We are committed to connecting with influential politicians, partners, and industry representatives.
A sustainable partnership: Biomass from Novozymes used as free fertilizer
Novozymes has worked closely together with farmers across the globe for more than 20 years, supplying them with NovoGro® – a free biomass to fertilize their fields.
Novozymes pioneers food–energy venture in Africa
Novozymes and CleanStar Ventures are jointly establishing an integrated food–energy business in Mozambique that will replace thousands of charcoal-burning cook stoves.

Sustainability leadership

Analysts and rating agencies continuously assess companies’ overall sustainability performance, and we use the most relevant ratings to benchmark ourselves against sustainability leaders. In particular, the rating from Dow Jones Sustainability Indexes and the underlying evaluation completed by Sustainability Asset Management (SAM) are the yardsticks for our target of obtaining a Gold Class rating from SAM in its Sustainability Yearbook. Based on our 2010 performance, we obtained a Gold Class rating in SAM’s Sustainability Yearbook 2011 and thereby achieved our target. Moreover, we reconfirmed our position as biotech sector leader in the Dow Jones Sustainability Indexes based on the rating of our 2011 performance.

Novozymes featured in the Carbon Disclosure Project’s annual Nordic Leadership Index for the second time in 2011, rising into the top 10 in a field of more than 260 listed companies. Our score indicates good internal data management and understanding of climate-related risks and opportunities affecting us.

Global and regional engagements

In 2011, Novozymes engaged in a series of advocacy activities and task forces based around implementation of the UN’s new climate strategy on access to energy, notably in the context of the Rio+20 conference on sustainable development in June 2012. These included:

  • The ICC Green Economy Task Force, and Energy and Environment Committee
  • The UN Global Compact Sustainable Energy for All initiative
  • The UN Global Compact Caring for Climate Working Group
  • The World Business Council for Sustainable Development’s Changing Pace initiative

In addition, we joined local Global Compact networks in the US, Brazil, China, and India.

The UNDP Nordic Office and the Nordic Network launched a mentor program in which Novozymes is to mentor Air Greenland. The purpose of the program is to give mentees inspiration and guidance on how to effectively integrate the Global Compact’s 10 principles in their daily practices and produce a Communication on Progress, and to test and inspire the mentor.

Novozymes in UN Global Compact LEAD

The UN launched a new platform for corporate sustainability leadership in January 2011 called Global Compact LEAD. Novozymes has been a signatory to the UN Global Compact since 2001and has now become a LEAD participant along with 53 other companies. Being part of LEAD will help Novozymes drive the world toward sustainability.

Strategic platform for driving sustainability
LEAD provides an important platform for sharing knowledge with other companies committed to sustainability. The participants have pledged to work toward implementing sustainability by achieving higher levels of performance, impact, and collective action between companies. For example, we will be able to present our insights and solutions to key stakeholders before and during the upcoming Rio+20 conference on sustainable development in 2012, as well as in the task forces focusing on the implementation of the UN’s new climate strategy on access to energy and energy efficiency.

Influencing regional sustainability agendas
In line with the LEAD objective of demonstrating local leadership, Novozymes has put more internal resources in place regionally and become much more active locally in recent years. We have long been a member of the Global Compact Nordic Network, which was one of the first local networks established, and in 2011 we also joined local Global Compact networks in the US, India, Brazil, and China. Via these networks, Novozymes is better positioned to influence the local sustainability agenda in collaboration with our peers by reaching out to stakeholders such as public authorities, NGOs, and customers. 

Sustainability integration
We gain inspiration from other companies through our participation in networks and working groups on themes that are high on our agenda. This is an important part of the trend-spotting process that precedes our strategic development and target-setting work.

Based on our experience in integrating sustainability into business strategy, Novozymes participated during the year in the LEAD initiative to define best practices for the role and responsibilities of boards in overseeing corporate sustainability and integrating sustainable business practices.

Communication on Progress
Novozymes reports annually on progress in our implementation of the Global Compact’s 10 principles in a Communication on Progress (COP), which is published on www.novozymes.com under Sustainability, and also feeds relevant information into The Novozymes Report. The COP addresses our efforts on specific leadership, implementation, and performance criteria, and has been designed to meet the requirements of the new Advanced level and Blueprint for Corporate Sustainability Leadership launched in 2010. As a natural consequence of our involvement in the LEAD initiative, we have extended our UN Global Compact reporting to cover our support of broader UN goals and engagements.

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