cdp 2017 climate change 2017 information request safety... · 2017-10-31 · 1 cdp cdp 2017 climate...

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CDP CDP 2017 Climate Change 2017 Information Request

Lundbeck A/S

Module: Introduction

Page: Introduction

CC0.1

Introduction

Please give a general description and introduction to your organization. About Lundbeck: Lundbeck is a global pharmaceutical company highly committed to improving the quality of life of people living with psychiatric and neurological disorders. For this purpose, Lundbeck is engaged in the research, development, production, marketing and sale of pharmaceuticals across the world. The company’s products are targeted at disease areas such as depression, schizophrenia, Parkinson’s disease and Alzheimer’s disease. We acknowledge our responsibility to people who depend on our products and knowledge to safely manage their disease. We produce high quality products, perform pharmacovigilance, continuously evaluate the benefits and risks of our products and take proactive action as warranted. Research and development: Focus on R&D is the most important pillar in Lundbeck’s ambition to improve treatment for people living with psychiatric and neurological disorders. We are specialists in our area and have research facilities in Denmark and China, and more than 1,000 employees work in our R&D units. We cooperate closely with strategic partners all over the world, ensuring the best possible foundation for innovation and the development of new treatment solutions. Key figures: Lundbeck employs approximately 5,100 people worldwide, 1,600 of whom are based in Denmark. We have employees in 55 countries, and our products are registered in more than 100 countries. We have production facilities in Denmark, France and Italy and research centres in Denmark and China. Lundbeck generated revenue of approximately DKK 15.6 billion in 2016. Corporate Responsibility: Our Corporate Responsibility approach takes in our business responsibilities, environmental impact and social influence: • Our business responsibilities are about being fair, transparent and accountable. Lundbeck systematically monitors, evaluates and acts on opportunities and risks to our company in order to develop best practices and business standards. • Lundbeck works systematically to minimise our environmental impact. The precautionary principle guides our efforts, and we ensure continuous improvements in research, development and production, applying certified environmental management systems. • We acknowledge our social influence on people, the community and society, and strive to be known as a company that advances responsible social relations.

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Internally, Lundbeck provides sound people policies covering the Lundbeck Group. Internationally, we promote agreed conventions on human and labour rights and promote access to health through the Lundbeck Institute as well as by donations. By generating profit, we contribute to The Lundbeck Foundation, one of the largest private contributors to public research in health and natural sciences in Denmark. Our Health Safety and Environmental efforts are developed, conducted and controlled through our corporate HSE system that is certified according to ISO 14001. Climate strategy: In 2007 Lundbeck developed our Climate strategy, making a firm commitment to minimizing CO2 emissions, and confirming our ambition to be among the leaders within the pharmaceutical industry. In 2014 we revised our long term target for the third time and raised the bar to 55% reduction of our scope 1 and 2 CO2 emission in 2020 compared to 2006. This target we achieved by the end of 2016 with a 58% reduction. In 2017 we will initiate the development of a new CO2 emission target. This target will include a scope 3 target, because scope 3 has now developed to be the largest contributor to our CO2 emission, (around 50%).

CC0.2

Reporting Year

Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosed

Fri 01 Jan 2016 - Sat 31 Dec 2016

CC0.3

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Country list configuration

Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response.

Select country

CC0.4

Currency selection

Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. DKK

CC0.6

Modules

As part of the request for information on behalf of investors, companies in the electric utility sector, companies in the automobile and auto component manufacturing sector, companies in the oil and gas sector, companies in the information and communications technology sector (ICT) and companies in the food, beverage and tobacco sector (FBT) should complete supplementary questions in addition to the core questionnaire. If you are in these sector groupings, the corresponding sector modules will not appear among the options of question CC0.6 but will automatically appear in the ORS navigation bar when you save this page. If you want to query your classification, please email [email protected]. If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below in CC0.6.

Further Information

Question 0.1: For more general information about Lundbeck you can read in our Annual Report 2016 Information about our Corporate Responsibility Approach you can read our Code of Ethics and our Un Global Compact Progress Report 2016. Our Approach to Climate change and our long term target can be read in our Position on Climate Change.

Attachments

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https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/UN Global Compact Progress Report 2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/Lundbeck Code of Ethics.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/LUNDBECK_ANNUAL_REPORT_2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC0.Introduction/Position on Climate Change.pdf

Module: Management

Page: CC1. Governance

CC1.1

Where is the highest level of direct responsibility for climate change within your organization?

Board or individual/sub-set of the Board or other committee appointed by the Board

CC1.1a

Please identify the position of the individual or name of the committee with this responsibility

i. The Health Safety and Environmental (HSE) Council is the committee with the highest level of responsibility for climate change.The Executive Vice President (EVP) of Supply Operations & Engineering, member of the Executive Management (EM), is appointed by the Cheif Executive Officer (CEO) to be chairman for Lundbecks HSE Council. EM consist of 5 EVP's and our CEO. Apart from the Chairman the HSE Council consists of 3 managers (1 Executive Vice President, that is also member of EM, 1 Senior Vice President and 1 Vice President) appointed by the chairman and 3 employees elected by and among HSE representatives in the organisation. Through this all parts of the company (Supply Operations and Engineering, Research & Development and Administrative areas) are represented in the HSE Council. ii. The HSE Council acts on behalf of EM in respect to HSE matters including climate change. Decisions in the HSE Council cover all of Lundbeck. The role of the HSE Council is to: Define and evaluate corporate policies, strategies, guidelines and corporate activities and targets concerning HSE aspects including climate change. Evaluate Lundbecks HSE performance quarterly and annually at the meetings.

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Communicate corporate decisions to managers and employees at all sites. The chairman of the HSE council can bring new and corporate topics to EM for final decision making. The Council have 1 meeting every quarter of the year where e.g. status on energy reductions are discussed. Climate change issues are considered to be one of the significant environmental issues in Lundbeck and are therefore managed and controlled by the HSE Council. This means that Lundbecks Climate Strategy and our longterm CO2 emission target is decided by the HSE Council. In order to implement and coordinate the necessary energy and CO2 emission reduction initiatives, Lundbeck has set up a Technical Forum. All Lundbecks production and research sites are represented in this forum. The forum exchanges experiences and possibilities about technical issues, energy and GHG emission reduction. At all site energy teams, consisting of engineering and maintenance employees, perform energy screenings and implement energy reducing initiatives.

CC1.2

Do you provide incentives for the management of climate change issues, including the attainment of targets?

Yes

CC1.2a

Please provide further details on the incentives provided for the management of climate change issues

Who is entitled to benefit from these incentives?

The type of incentives

Incentivized performance

indicator

Comment

Chief Operating Officer (COO) Monetary reward

Emissions reduction target Energy reduction target

In the Performance Management System all managers and employees have individual goals, including climate related goals. Once a year the performance is evaluated and scored and the score is determining the size of the bonus. Our COO has the corporate responsibility for climate change. This means that evaluation of our fulfillment of the climate related short term target is influencing the size of the bonus for our COO. The short term target (3% energy and 5% CO2 reduction in 2017 compared to 2016) are created partly by breaking down the corporate long term target about GHG emission and partly by looking into energy forecasts.

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indicator

Comment

Business unit managers Monetary reward

Emissions reduction target Energy reduction target

There is an annual bonus for meeting short term targets related to energy reduction and emission reduction targets that affect scope 1 and 2 emissions. The short term target is created by breaking down the corporate long term target on scope 1 and 2 emissions to business functions. The size of the bonus is managed in our Performance Management System. In the Performance Management System all managers and employees have individual goals. Where relevant climate related goals are included. Once a year the performance is evaluated and scored and the score is determining the size of the bonus.

Facility managers Monetary reward

Emissions reduction project Emissions reduction target Energy reduction project Energy reduction target

There is an annual bonus for meeting short term targets related to energy reduction and emission reduction targets that affect scope 1 and 2 emissions. The short term target is created by breaking down the corporate long term target on scope 1 and 2 emissions to business functions. The Facility Manager is heading the Corporate Energy Forum and responsible for the cross organizational energy reduction projects. The size of the bonus is managed in our Performance Management System. In the Performance Management System all managers and employees have individual goals, including climate related goals. Once a year the performance is evaluated and scored and the score is determining the size of the bonus.

Other: Environment/sustainability managers and specialists

Monetary reward

Emissions reduction target Energy reduction target Other: Behaviour change related indicator

There is an annual bonus for meeting short term targets related to energy reduction and GHG emission reduction targets. The short term target is created by breaking down the corporate long term target on GHG emission to business functions. Environmental/substainability managers and specialists are rewarded monetary if they complete activities that supports energy reducing activities. For instance by carrying out campaigns or motivate employees in other ways to behave in an energy conscious way. The size of the bonus is managed in our Performance Management System where Environmental/sustainability managers and specialists have individual climate goals. Once a year the performance is evaluated and scored and the score is determining the size of the bonus.

Other: All employees (around 900 people) in Supply Operations and Engineering

Recognition (non-monetary)

Emissions reduction project Energy reduction project Efficiency project Other: Behaviour change related indicator

Every month an implemented initiative is rewarded and communicated to all employees in Supply Operations and Engineering. The initiative must support Lundbecks Business principles. Energy reducing activities supports many of these Business principles and can therefore also be rewarded.

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indicator

Comment

All employees Recognition (non-monetary)

Emissions reduction project Energy reduction project Other: Behaviour change related indicator

All employees can be recognized with a story in Lundecks HSE newsletter. The criteria is, that they have participated in implementing a good HSE initiative this also includes energy reducing initiatives.

All employees Recognition (non-monetary)

Emissions reduction project Energy reduction project Efficiency project Other: Behaviour change related indicator

An annual HSE award, including a gift, is given to a good HSE initiative. Energy reducing initiatives can be chosen as well as other HSE initiatives. The area that win the prize get a trophy and a gift.

All employees Other non-monetary reward

Energy reduction project Other: Behaviour change related indicator

All employees in Lundbeck are covered by a Performance Management System. Through this system individual goals, including eventually climate related goals can be set. Especially employees that are a part of the local energy team can have individual energy goals. The employee participates twice a year in performance dialogues. Once a year the employee performance is evaluated and scored and good initiatives are recognized through the scoring system. The score is used as input to promotion and salary adjustments.

Other: All employees (around 900 people) in Supply Operations in DK

Monetary reward

Energy reduction project Other: Behaviour change related indicator

Every year an implemented initiative is rewarded by a monetary gift. The initiative must support Lundbecks Business principles. Energy reducing activities supports many of these Business principles and can therefore also be rewarded.

Further Information

Page: CC2. Strategy

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CC2.1

Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities

Integrated into multi-disciplinary company wide risk management processes

CC2.1a

Please provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequency of monitoring

To whom are results

reported?

Geographical areas

considered

How far into

the future are risks

considered?

Comment

Six-monthly or more frequently

Board or individual/sub-set of the Board or committee appointed by the Board

The risk management system includes our global operations in all countries we are operating in.

> 6 years

Assessment of risks related to climate change is an integral part of our corporate risk management system. The principal aim of Lundbeck’s risk management is to strike the right balance between risk exposure and value generation. Our risk management processes are constantly updated and adapted to match internal and external requirements. This gives our Executive Management an accurate overview of activities and resources, and a clear basis for decision-making on Lundbeck’s overall risk exposure and derived opportunities. Lundbeck uses a Financial Long-term plan for long-term (several years) strategic and financial planning. Both results from Lundbecks corporate risk management system and input concerning business opportunities are used in this model. The result is presented to the Executive Management. The Chief Executive Officer brings relevant information and decisions to the Board of Directors.

CC2.1b

Please describe how your risk and opportunity identification processes are applied at both company and asset level

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RISKS on both COMPANY and ASSET level are identified and managed in a common risk management system. Our fundamental risk management principle is that risks, in addition to central monitoring and coordination, must be managed by decentralized business units as they have the most extensive knowledge of such risks and the best possibility of mitigating the exposure. The individual business units take a systematic approach to monitor, identify, quantify and respond to risks. Furthermore, we have defined reporting, decision-making and follow-up procedures and routines. The decentralized risk evaluation in the business units is regularly reported and processed by the risk management organization and evaluated by our central Risk Office. The manager of the Corp. HSE dep. has a specific focus on climate change risks at company level eg regulatory risks, and the site facility managers has focus on risks at asset level. Two input to risks is our regularly insurance inspections and our materiality assessment that confirms our focus on actions to mitigate climate change. OPPORTUNITIES are identified and managed by the same decentralized business units as a part of the daily work. Evaluation of opportunities and decisions are taken in the units. Some opportunities are implemented immediately e.g. most energy reducing activities are identified and implemented in the units. Strategic opportunities are reported up in the line organization following defined procedures for decision making or identified by management groups as risk exposure derived opportunities on the basis of the overall Risk Map. Climate change risks and opportunities, at both COMPANY and ASSET level, are also evaluated at HSE Council meetings quarterly. The project manager for the Climate Strategy reports to the HSE Council about climate related opportunities and risks. E.g. are regulatory requirements evaluated in the HSE Council. The Chairman of the HSE Council reports into the risk management system.

CC2.1c

How do you prioritize the risks and opportunities identified?

The principal aim of the risk management is to strike the balance between risk exposure and value creation. Materiality of the risks is determined by combining the individual risks probability and impact. RISKS are assessed both as gross risks and net risks. The assessment of gross risk assumes that no mitigating actions have been implemented, whereas net risk assessment takes into account implemented mitigating actions and their anticipated effect. Lundbeck strives to have as many risks mitigated as possible. Lundbecks corporate risk register provides a consolidated picture of our risk exposure by detailing each risk, risk category and type. The risk descriptions give details of the event, its current status, the status of the response, an assessment of likelihood and potential impact, and the person responsible for managing the risk. Our reporting process defines 6 risk categories: 1. Research and development 2. Market conditions 3. Infrastructure, IT and resource Risks related to climate change issues, including reputational, regulatory, physical and other climate related risks, is categorized under 3. Infrastructure. 4. Reputational 5. Legal 6. Financial The risk categories are defined into three risk types: external, actionable or strategic. Climate change risks are typically defined as external or actionable risks.

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Using this information, the Risk Office assesses the overall risk exposure and discusses it with the Executive Management. Finally a two-dimensional risk ‘heat map’ is reviewed by our audit committee and shared with the Board of Directors annually. Climate change OPPORTUNITIES are decided on the basis of the priorities in our business strategy. On the short timeline 1-2 years many decisions are taken in the decentralized units eg energy reduction plans. On the long timeline, more than 2 years, opportunities are evaluated and decided according to our Financial Long-term plan.

CC2.1d

Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future

Main reason for not having a process

Do you plan to introduce a process?

Comment

CC2.2

Is climate change integrated into your business strategy?

Yes

CC2.2a

Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process

i. The therapeutic areas Lundbeck serve as a pharmaceutical company is only marginally dependent on climate change. However, our contribution to mitigating climate change influences the way we conduct our business. Reducing greenhouse gas (GHG) emissions in a pharmaceutical business like Lundbeck is largely about being responsible and reducing costs. Both are integrated in our business strategy; In our principles and in our objectives. Our focus are on reducing energy consumption, improving energy efficiency and integrating renewable energy solutions; all factors that reduces our GHG emissions. Our Climate change activities are coordinated in our climate strategy. Here we have defined our target to reduce CO2 emissions by 55% in 2020 compared to 2006. When making important business decisions climate change issues are included through our risk management system where the individual business units report

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about identified risks including climate related risks eg. extreme weather situations. These input are evaluated and reported to executive management. Climate change related opportunities are often integrated immediately in the business units, but opportunities that potentially can influence our business strategy are reported in the line organization following defined procedures for communication and decision making. Climate change related issues are also reported in our HSE organization. Our HSE Council meets quarterly and evaluates our progress towards reaching our CO2 target and decides on new initiatives. Future risks and opportunities like changing regulation or reputational possibilities are also discussed. The chairman of the HSE Council can bring information about climate related risks and opportunities to the Executive Management (EM) to be considered in strategic decision making. ii. The most substantial business decisions in 2016 were: - to support the international agenda; the COP-21 goal of keeping global warming below two degrees until the year 2100. This we did by analysing our CO2 reduction target in forward-looking scenario models and having the target approved as a Science based target. This is strongly supporting our business strategy about being responsible. - to finalize a restructuring programme that included reductions of employees, consolidation of a site and several relocations. This included implementation of a facility guidance with less space/employee. This reduces energy costs and CO2 emissions. iii. Following Climate change aspects have influenced the business strategy: - Adaptation: Our continuous focus on efficiency in our production supports our work with "energy on demand", reduced energy consumption and GHG emissions. By reducing energy costs we optimize the resilience of our operations towards rising energy prices, - taxes and the like. - Regulatory changes: Legislation about Energy review, building efficiency and Best Available Technology set up requirements to companies. These requirements are implemented in new or existing procedures. - Experienced physical climate changes like heavy rainfall and storms have influenced our strategy around climate change adaptation of our buildings and sites so that they can withstand climate changes like heavy rainfall. Since 2012 we have invested around 12.6 MDKK in climate adaptation of our buildings. iv. Our short term business strategy i.e. 1-3 years has been influenced by climate change. - The most important component of the short term strategy is saving energy and reducing GHG emissions. By setting annual targets our GHG emissions are reduced. For 2017 our annual target is a 5% CO2 reduction compared to 2016. - Our focus on integrated approach where teams of engineers and maintenance employees challenge habits and conventional thinking to identify new ways to reduce energy use. This approach has resulted in several process optimizations and energy reductions. In 2016 we implemented a new control system for temperature and humidity which reduces our annual CO2 emission with 271 t CO2. - Our strategy about maintenance of our facilities is influenced by the need to mitigate climate change risks. We continuously develop our sites so they can resist weather events e.g. by building water reservoirs in order to avoid damages from heavy rain. v. Our long-term business strategy i.e. +4 years has been influenced by climate change: - The most important long-term component is the development of our Climate strategy including targets and focus on renewable energy. In 2016 we reached our long-term CO2 reduction target and in 2017 we will initiate the development of a new strategy and long-term Science based target. - Another component is our focus on production efficiency. Thereby we secure our ability to meet the needs of the growing number of people with psychiatric and neurological disorders and our GHG emission reduction target. An example is our cooperation with the technical university of Denmark where we develop continuous production and get a more flexible and less energy consuming production. We have also implemented principals from “Green Chemistry” in our development of new medicines. This enables us to produce more with less. In 2016 a process for a large scale production of a commercial API was optimized, which led to approx. 20% decrease of raw materials and waste. vi. In international and national energy plans it is expected that companies act responsibly. Being responsible is one of Lundbecks business principles and taking voluntary action to reduce our GHG emissions, is considered an act of responsibility. Since 2006 we have had and developed our long-term CO2 reduction target. In 2016 we decided to support the Paris agreement and the Danish INDC stronger by having our target approved as a Science based target. vii. The overall focus on production efficiency and energy savings reduces GHG emissions and operating costs. It secures our ability to produce more efficiently and thereby support our future business. This combined with our increased focus on renewable energy, will provide us with a strategic advantage over our competitors because we anticipate that fossil fuels will be increasingly regulated leading to increasing prices. Our focus on energy savings has today reduced our annual electricity costs in DK with around 25 MDKK compared to 2006.

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We also believe that our climate strategy, our public communication about climate performance and the approval of our Science based CO2 reduction target enhances our reputation and improves our standing in external ratings. Viii. Both in our internal and public communication about climate performance we do include the fact that our long-term target has been approved as a Science based target and information about how this includes considerations concerning forward-looking scenarios in our target setting process.

CC2.2b

Please explain why climate change is not integrated into your business strategy

CC2.2c

Does your company use an internal price on carbon?

Yes

CC2.2d

Please provide details and examples of how your company uses an internal price on carbon

In Denmark Lundbeck have indirectly a price of carbon. In Denmark energy suppliers and other consultancies have a price on energy reductions related to scope 2. This means that it is possible to sell energy reductions to these companies. The actual price/MWh saved energy are fixed in a contract between the energy supplier and the company. When new projects in Lundbeck are identified, typically in the Engineering department, energy savings and carbon reductions are calculated and the benefit from selling the energy reductions is included in the final calculations for the project. This means that projects with large energy reduction potentials are favoured. Eg. a large investment in optimizing our control system for temperature and humidity reducing our CO2 emissions with 271 tons CO2 was reduced with around 1.2 MDKK because we could sell the energy reduction. Lundbeck have considered to develop other kinds of prices on carbon. So far the conclusion is that it has not been neccesary to implement other prices on carbon. The internal portofolie of energy reducing projects have been large and most of the projects have been approved and energy considerations are included in our building and maintenance projects, We also conduct risk assessment prior to sourcing new equipment to e.g. assess the energy consumption. In 2016 the regulation on carbon prizing changed. This means that energy initiatives must include investment in new equipment in order to be able to sell the reduction. This is considered as a disadvantage because it leads to unnecessary exchange of equipment and increase in material consumption.

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CC2.3

Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply)

Direct engagement with policy makers Trade associations Other

CC2.3a

On what issues have you been engaging directly with policy makers?

Focus of legislation

Corporate Position

Details of engagement

Proposed legislative solution

Energy efficiency

Support with minor exceptions

Via the Confederation of Danish Industries we initiated and participated in a working group with the Danish Energy Agency (The national authority on energy) and representatives from the Certifying bodies in Denmark that are certifying companies according to the legislation. The purpose was to clarify the interpretation of the Danish implementation of the Directive on energy efficiency, due to that Lundbeck and a few other companies had experienced differences in the interpretation of the Danish legislation. Lundbeck participated by delivering a document explaining the differences we had experienced and by participating in meetings. The result of the working group was an official document that clarified how the legislation must be interpreted signed by The Danish Energy Agency.

Lundbeck support the regulation in the Directive on energy efficiency, and we do consider the legislation must be implemented equally in all companies that are covered by the directive. The result of the working group promotes an equal implementation in Denmark. Unfortunately there are still differences in the interpretation in the other European countries Lundbeck operates in.

CC2.3b

Are you on the Board of any trade associations or provide funding beyond membership?

No

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CC2.3c

Please enter the details of those trade associations that are likely to take a position on climate change legislation

Trade association

Is your position on climate change consistent with theirs?

Please explain the trade association's position

How have you, or are you attempting to, influence the position?

CC2.3d

Do you publicly disclose a list of all the research organizations that you fund?

CC2.3e

Please provide details of the other engagement activities that you undertake

Lundbeck continuously engage with different kind of stakeholders: Trade associations: EFPIA, European Federation of Pharmaceutical Industries Ass.: In 2016 Lundbeck has participated in the development of a White Paper on climate change for The European Federation of Pharmaceutical Industries. Results from a survey about climate performance and targets in the pharmaceutical industry were gathered and worked as a basis for the development of the White Paper. Lundbeck participated with management of the survey, written input to the White Paper and comments to the draft versions of the document. The final draft of the White Paper commits the pharmaceutical industry to: • Establish climate change policies/strategies based on materiality and impact for individual companies • Develop actions that support science-based CO2e reduction targets • Contribute to increase energy efficiency and aim to use more energy from renewable sources • Strive to harmonize GHG reporting based on recognized calculation methodologies and publicly disclose CO2e performance. Via The Danish Association of the Pharmaceutical Industry (Lif) Lundbeck has entered a partnership with the Danish Agency for Environmental Protection. The purpose of the partnership is to influence new BREF documents. In 2016 we finalized, in cooperation with other pharmaceutical Companies, a report with recommendations to the future BREF documents about waste water and emissions. These recommendations will be used by the Danish Agency for Environmental Protection when they participate in discussions about the design of requirements in future BREFs in EU. By the end of 2016 we entered a new partnership concerning revision of Common Waste Gas Treatment in the Chemical Sector (WGC BREF'en). We expect also to participate in a future partnership when the BREF about Energy Efficiency will be revised. Other:

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UN Global Compact: UN Global Compact have 10 principles where 3 are related to environment which include climate change: - Businesses should support a precautionary approach to environmental challenges; - Undertake initiatives to promote greater environmental responsibility; and - Encourage the development and diffusion of environmentally friendly technologies. Lundbeck have signed the 10 principles in UN Global Compact and we annually provide funds to the UN Global Compact Foundation. Furthermore, we participate in the UN Global Compact Nordic Network, which is a forum for exchange of knowledge and best practice within the 10 principles, including energy conservation and climate change strategies. As part of the UN Global Compact commitment, we publicly report our CSR performance, challenges and targets.

CC2.3f

What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy?

It is described in Lundbecks HSE management system how internal and external communication is coordinated in the company. All communication with authorities, trade associations and participation in other networks is coordinated and primarily performed by the Corporate HSE department. It is solely managers and employees from the Corporate HSE department that make written input to new legislation. Lundbecks Corporate HSE department is responsible for managing Lundbecks Climate strategy and for the follow up on all Lundbecks climate initiatives and the long-term target. This means that it is the same managers and employees that are responsible for the climate strategy, that participate in the network activities and the commenting on new legislation. This ensures consistent communication about our climate strategy. Furthermore Lundbeck participate in interviews with external journalists concerning climate issues. This can indirectly influence on policy makers. Managers that participate in such interviews have always, prior to the interview, coordinated and agreed on the content of the answers with the Director of the Corporate HSE department. The internal communication concerning climate issues is coordinated and controlled through Lundbecks HSE Council and organization and through Lundbecks HSE management system that is certified according to ISO 14001 and OHSAS 18001.

CC2.3g

Please explain why you do not engage with policy makers

Further Information

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Question 2.1: In our Annual Report you can read more about our Risk Management system at page 24-26. Question 2.2a: In our Annual Report you can read more about our Business Strategy at page 10-14. Question 2.2a: In our Position document on Climate Change you can read more about our long term target. Question 2.2a: In our UN Global Compact Report you can see our annual CO2 target at page 5. Question 2.2a: Communication about climate change issues at the internet including our Science based target Question 2.2a: Approval of Science based target: The approval mail from Science based Target

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/Communication about climate change issues at the internet.docx https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/Approval of Science Based Target.docx https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/LUNDBECK_ANNUAL_REPORT_2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/Position on Climate Change.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC2.Strategy/UN Global Compact Progress Report 2016.pdf

Page: CC3. Targets and Initiatives

CC3.1

Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year?

Absolute target

CC3.1a

Please provide details of your absolute target

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ID

Scope

% of emissions in

scope

% reduction

from base year

Base year

Base year emissions covered by

target (metric tonnes CO2e)

Target year

Is this a science-

based target?

Comment

Abs1 Scope 1+2 (location-based)

100% 45% 2010 38004 2020

Yes, and this target has been approved as science-based by the Science Based Targets initiative

The wording of our approved target is: H. Lundbeck A/S commits to reduce absolute Scope 1 and 2 GHG emissions by 45% between 2010 and 2020. The 10-year target is supported by an annual 4% absolute reduction target covering total Scope 1 and 2 emissions. Our target is a combined scope 1 and 2 target. Our scope 2 baseline calculations is based on location based emission factors, because it has not been possible to get market based figures for all the countries we are operating in in the base year. Today and going forward all emission factors are market based.

Abs2 Scope 1+2 (location-based)

100% 55% 2006 47200 2020

No, but we are reporting another target which is science-based

This is our original long term target. In order to have the target approved as Science based we had to change the baseline see Abs1. In our internal and external communication we keep using this target in order to keep continuity in our reporting. Our target is a combined scope 1 and 2 target. Our scope 2 baseline calculations is based on location based emission factors, because it has not been possible to et market based figures for all the countries we are operating in in the Base year. Today and going forward all emission factors are market based.

Abs3 Scope 1+2 (market-based)

100% 4% 2015 22924 2016

Yes, and this target has been approved as science-based by the Science Based Targets initiative

The wording of our approved target is: H. Lundbeck A/S commits to reduce absolute Scope 1 and 2 GHG emissions by 45% between 2010 and 2020. The 10-year target is supported by an annual 4% absolute reduction target covering total Scope 1 and 2 emissions.

CC3.1b

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Please provide details of your intensity target

ID

Scope

% of emissions in

scope

% reduction from base

year

Metric

Base year

Normalized base year emissions covered by

target

Target year

Is this a science-based target?

Comment

CC3.1c

Please also indicate what change in absolute emissions this intensity target reflects

ID

Direction of change anticipated in absolute Scope 1+2 emissions at

target completion?

% change anticipated in absolute Scope 1+2

emissions

Direction of change anticipated in absolute Scope 3 emissions at target

completion?

% change anticipated in absolute Scope 3

emissions

Comment

CC3.1d

Please provide details of your renewable energy consumption and/or production target

ID

Energy types

covered by target

Base year

Base year energy for energy type covered

(MWh)

% renewable

energy in base year

Target year

% renewable

energy in target year

Comment

19

CC3.1e

For all of your targets, please provide details on the progress made in the reporting year

ID

% complete (time)

% complete (emissions or renewable energy)

Comment

Abs1 60% 100% By the end of 2016 we had reduced our CO2 emission by 47% compared to 2010.



CC3.1f

Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years

CC3.2

Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions?

No

CC3.2a

20

Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

Level of

aggregation

Description of product/Group

of products

Are you reporting

low carbon product/s or

avoided emissions?

Taxonomy, project or methodology used to classify product/s as

low carbon or to calculate avoided

emissions

% revenue from

low carbon product/s in the reporting year

% R&D in low

carbon product/s in the reporting

year

Comment

CC3.3

Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases)

Yes

CC3.3a

Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings

Stage of development

Number of projects

Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *)

Under investigation 15

To be implemented* 1 7

Implementation commenced* 3 174

Implemented* 11 521

Not to be implemented 10

21

CC3.3b

For those initiatives implemented in the reporting year, please provide details in the table below

Activity type

Description of activity

Estimated annual CO2e

savings (metric tonnes CO2e)

Scope

Voluntary/ Mandatory

Annual monetary savings

(unit currency

- as specified in CC0.4)

Investment required

(unit currency -

as specified in

CC0.4)

Payback period

Estimated lifetime of

the initiative

Comment

Energy efficiency: Building services

Insulation of installations with heat

27 Scope 1

Voluntary

100000 144000 1-3 years

21-30 years

This initiative is primarily supporting our long-term targets (abs 1 and 2) and in minor degree our short-term target (abs 3) because the initiative was implemented during 2016 and only have minor influence on the 2016 energy consumption.

Other

Close down of fumehoods that are not necessary anymore

24

Scope 2 (market-based)

Voluntary

106000 10000 <1 year 3-5 years



Optimization of ventilation system

22


Voluntary

102000 301000 1-3 years

11-15 years


Energy efficiency:

Optimization of control of

271 Scope 1 Scope 2

Voluntary

1042000 836000 <1 year >30 years This initiative is only supporting our long-term targets (abs 1 and 2)

22

Activity type




Scope



(unit currency


Investment required

(unit currency -

as specified in

CC0.4)

Payback period


the initiative

Comment

Building services

temperature and humidity

(market-based)

because the initiative was implemented by the end of 2016.


Insulation of heating system

11 Scope 1

Voluntary

40000 60000 1-3 years

21-30 years


Other Close down of autoclave

46 Scope 1

Voluntary

125000 30000 <1 year Ongoing



Optimization of fumehood controls

21

Scope 1 Scope 2 (market-based)

Voluntary

89000 567000 4-10 years

11-15 years

This was done primarily because the control of the fumehoods needed to be repaired and modernized. Reduced energy consumption was a part of the requirements to the new control system. This initiative is primarily supporting our long-term targets (abs 1 and 2) and in minor degree our short-term target (abs 3) because the initiative was implemented during 2016 and only have minor influence on the 2016 energy consumption.

23

Activity type




Scope



(unit currency


Investment required

(unit currency -

as specified in

CC0.4)

Payback period


the initiative

Comment

Other

Minor optimizations in building facilities

64

Scope 1 Scope 2 (market-based)

Voluntary

88000 155000 1-3 years

11-15 years


Low carbon energy installation

Replacement of old windows to energy-windows

4


Voluntary

25000 1600000 >25 years

21-30 years

This activity was included in the ordinary maintenance of the buildings. This initiative is primarily supporting our long-term targets (abs 1 and 2) and in minor degree our short-term target (abs 3) because the initiative was implemented during 2016 and only have minor influence on the 2016 energy consumption.


Minor optimizations of especially HVAC systems

28


Voluntary

168922 71000 <1 year 11-15 years


Energy efficiency: Building fabric

Optimization of heat exchange in ventilation system

3


Voluntary

7530 129800 16-20 years

16-20 years


24

CC3.3c

What methods do you use to drive investment in emissions reduction activities?

Method

Comment

Dedicated budget for energy efficiency

Lundbeck has a budget for energy saving investments every year. In 2016 Lundbeck invested around 1 MDKK. Apart from the energy efficiency projects this budget is used for energy screenings. We have established dedicated teams of internal engineers and maintenance employees who challenge habits and conventional thinking to identify new ways to reduce energy use. These teams have successfully identified possibilities for closing down equipment when it is not in use, optimizing ventilation and temperature control etc. In 2017 the dedicated budget is 1 MDKK.

Internal price on carbon

In 2016 energy savings was integrated in our ordinary maintenance activities. Some of these activities require financial investments and are managed through our internal finance system for investments. If the activity include energy savings, the savings can be sold to an energy supplier and the benefit from this is included in the cost for the activity resulting in a lower return on investment. This is considered as an internal price on carbon. Due to this energy activities can be favoured over other activities. In 2016 energy efficiency projects with a total investment on 1 MDKK was identified and approved for implementation.

Partnering with governments on technology development

At our chemical factory in Lumsås, Denmark we have a partnership with the Danish Technical University about optimising equipment in the production towards continuously production. This will result in much more efficient equipment using less raw materials and less energy.

Internal incentives/recognition programs

Lundbeck uses monetary reward to managers that has a specific responsibility about energy savings. The reward consists of an annual bonus for meeting short term targets related to energy reduction and GHG emission reduction targets. The short term target is created by breaking down the corporate long term target about GHG emission to business functions. The size of the bonus is managed in our Performance Management System.

Compliance with regulatory requirements/standards

Lundbecks research, development and production sites and our headquarter are covered by our HSE system, that is certified according to ISO 14001 and OHSAS 18001. This require that HSE considerations (including energy and GHG emissions) are made every time we make investments and/or make changes. For example when old windows need to be replaced, they are replaced with low energy windows.

Employee engagement

Lundbeck involves employees in energy saving initiatives. Employees participate in; mapping energy using equipment, discussing possibilities for closing down equipment when it is not in use and running local energy campaigns in the organization. The annual achievements of the energy saving activities are published in our Health Safety and Environmental Management review, The UN Global Compact Progress report and in our internal HSE newsletter.

Compliance with regulatory requirements/standards

In 2016 compliance with regulatory requirements has indirectly been a driver for energy investments. The implementation of the Directive on energy efficiency has driven an improvement of our energy mapping. The improved mapping will improve our

25

Method

Comment

possibilities for identifying even more potentials for energy savings in the future. In July 2016 our compliance with the directive was approved by our certifying body and the authorities.

CC3.3d

If you do not have any emissions reduction initiatives, please explain why not

Further Information

Question 3.1a: In a mail from Science Based Target Initiative you can read that the target has been approved. Question 3.1a: In our Position on Climate change you can read about our original long term target. Question 3.1a: In our UN Global Compact Progress Report 2016 you can read about our annual CO2 target at page 5. Question 3.1e: In our UN Global Compact Progress Report 2016 you can read about our performance at page 11-12. Question 3.3c: The certificate documenting our compliance with the energy efficiency directive.

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC3.TargetsandInitiatives/UN Global Compact Progress Report 2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC3.TargetsandInitiatives/DK006533-1 H.Lundbeck AS ISO 14001 1212 DANAK UK 20.06.2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC3.TargetsandInitiatives/Approval of Science Based Target.docx https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC3.TargetsandInitiatives/Position on Climate Change.pdf

Page: CC4. Communication

CC4.1

26

Have you published information about your organization’s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s)

Publication

Status

Page/Section reference

Attach the document

Comment

In mainstream reports (including an integrated report) but have not used the CDSB Framework

Complete p. 4, 5, 11, 12 https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC4.1/UN Global Compact Progress Report 2016.pdf

It is legally required that we report about our climate performance along with our annual reporting. Furthermore we have signed UN Global Compact and via this we are required to report on the 10 principles in UN Global Compact.

In voluntary communications

Complete p. 1-5

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC4.1/Communication about climate change issues at the internet.docx

At our homepage (www.lundbeck.com) we communicate about our Position, performance, recognitions and data. The attached document is a combination of copied text from the internet and screen dumps.

In voluntary communications

Complete p. 1 https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC4.1/Position on Climate Change.pdf

Our Position on Climate Change is available at our homepage.

Further Information

Module: Risks and Opportunities

Page: CC5. Climate Change Risks

CC5.1

Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

27

Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments

CC5.1a

Please describe your inherent risks that are driven by changes in regulation

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Fuel/energy taxes and regulations

Regulation concerning fuel/energy taxes motivates the company to reduce the use of energy. In the coming years it is likely that the energy prices will raise in the countries Lundbeck has production and that regulatory incentive towards favoring renewable energy use will come. E.g. in Denmark we expect in the future to see price

Increased operational cost

3 to 6 years

Direct Very likely Low

Today our total energy costs only constitute about 0.5% of our revenue (around 78 MDKK compared to our revenue at 15,634 MDKK). We expect that energy prices and taxes will rise in the future in most parts of the world, but the risks from these changes are considered low, because it constitutes a very small part of our total operational costs. Even though the prices were doubled to

At all Lundbecks sites for research, development and production we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation, including legislations related to climate issues. Already when coming regulation is identified, Lundbeck consider what consequences (positive or negative) the regulation may

The costs associated with energy saving activities differ from year to year. In 2016 we invested 1 MDKK in energy activities and because we have established dedicated teams of internal engineering and maintenance employees that spent around 5-10% of their working hours on energy optimization, the cost for internal resources (man hours) equals to

28

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

differentiation between night and day because intelligent grid solutions will be implemented. This means risks of increased operational costs because the electricity will be more expensive during daytime where we produce.

around 156 MDKK, which we believe is unlikely to happen, the energy cost will still be low compared to our revenue.

have, and necessary actions are taken. Relevant managers and employees are informed about the changes and if necessary, procedures are optimized in order to meet the changes. When it comes to energy, we are minimizing the negative financial impact by reducing our energy consumption. One example is our continous implementation of "Energy on demand" where we only use energy when it is needed. We are also selling our energy savings in DK for 0.45 DKK/kWh to energy suppliers. An important tool in this work is our CO2 strategy

around 1 MDKK. In 2017 we expect to spend 1 MDKK on energy projects and again around 1 MDKK on internal ressources (man hours). Costs related to tracking legislation are considered as ordinary costs that is necessary for running an efficient business.

29

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

including our long term reduction target. Our strategy secure that we have a high focus on energy efficiency at all our sites. Since 2006 our energy reduction activities have reduced our annual electricity costs with around 25 MDKK. In order to reduce the financial impact of changing energy prices Lundbeck also seek to make contracts with energy suppliers including fixed energy prices for a number of years. These activities ensure that the risk continously is kept at a very low level.

Product efficiency regulations

Danish regulation have requirements

Reduction in capital availability

Up to 1 year

Direct Virtually certain

Low Investments in new buildings can rise due to

At Lundbecks sites for research, development and

The costs associated with investments in

30

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

and standards about energy efficiency in new buildings. Also the IE directive require that we work with energy efficiency in our chemical production because of the cross-cutting BREF document about energy efficiency. Finally the European directive on energy efficiency was implemented in national legislation in 2014. It require that we perform energy review at our Danish and Italian sites. These legislations influence on both the cost for investment in new buildings and our operational

regulatory requirements. The size of the investment differs a lot, because it depends on the type of building. It will always have a financial impact on the short run, but energy investments will usually be paid back on the long run. So far pay back periods usually have been from 0 to less than 3 years with the exception that process or building optimizations that include energy optimizations can have much longer pay back periods. Costs related to energy screenings and energy saving activities are considered very low. Costs in 2016 related to implementation of the energy review

production we have implemented systematic procedures in order to identify existing and coming HSE legislation, including legislations related to climate issues. When regulation is identified, Lundbeck consider the consequences of the regulation and necessary actions are taken in order to meet the changes. E.g. we have been able to reduce our costs related to an EU energy directive, because we have been able to include it in existing HSE systems. The energy requirements for new buildings, energy review and energy efficiency

energy savings differ from year to year. In 2016 we spent 1 MDKK on energy investments. In 2017 the spend is expected to be 1 MDKK. The cost for having established energy teams is around 1 MDKK a year, but in 2015 this cost was payed back during the year because of reduced energy costs. The investment in energy saving systems in the new office building is not related to regulatory requirements, but a good investment and in line with our strategy. Costs related to tracking legislation are considered as ordinary costs that is necessary for

31

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

costs. The cost does rise, but we expect most of the costs will be payed back on the long run, because the general result is lower energy use at our sites.

is estimated to 200,000 DKK.

have motivated the company to implement a procedure for energy review and for energy considerations in new or rebuilding activities. The procedure is used at all research, development and production sites. An example on how we implement energy conscious buildings is our office building in Denmark. Here we have established intelligent light control, hybrid ventilation and night cooling. We presume this has reduced the energy use in this building by 5% a year. An example on our work with energy review and optimization is our establishment of energy teams at

having an efficient business. Costs in 2016 related to implementation of the energy directive is estimated to 200,000 DKK, but in the future these costs will be reduced to around 50,000 DKK/year.

32

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

our sites. The energy teams screen the energy consumption and implement “Energy on demand”. E.g. have these activities resulted in 1.8% reduction of the energy consumption at our headquarter in 2016 compared to 2015. Our energy saving activities continuously reduces our energy costs and through this keeps the impact of this risk at a low level.

International agreements

New International agreements can affect the development of national legislation and national plans concerning energy prices, energy reduction and the use of


>6 years Direct More likely than not

Low

Changes in international agreements are closely related to the financial risks associated with rising energy prices, taxes and the like. Today our total energy costs only constitute about 0.5% of our

At Lundbecks sites for research, development and production we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation, including legislations

Costs related to tracking new and coming legislation, National, European and International plans and our reporting activities are considered as ordinary costs that is necessary for having an efficient

33

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

renewable energy. Denmark is leading in regard to regulation on energy reduction and renewable energy. Therefore it is not expected that International agreements will affect the national plans in Denmark on the short run, but we cannot exclude that they will be affcted on the long run. We cannot either exclude that national plans and regulation in the other countries we operate in will be affected by international agreements like the Paris Agreement.

revenue (around 78 MDKK compared to our revenue on 15,634 MDKK). We do expect that energy prices and taxes will rise in the future, but the risks from these changes are considered low. Even though the prices were doubled, the energy cost will still be low compared to our revenue.

related to climate issues. Once a month we search the internet for new and coming legislation. Already when upcoming regulation is identified, Lundbeck consider what consequences (positive or negative) the regulation may have, and necessary actions are taken. Relevant managers and employees are informed about the changes and if necessary, procedures are optimized in order to meet the changes. Furthermore Lundbecks Corp. HSE department are tracking the development in National, European and

business. It is costs we have, because it is activities we have as a part of our general attitude and strategies and neccesary for driving our business efficiently.

34

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

International plans concerning climate change to consider an eventually impact on Lundbecks CO2 strategy and our business. These activities makes it possible to implement neccesary changes in our business in the most efficient way and through this keep the risk at a low level. E.g. we have been able to reduce our costs related to an EU energy directive, because we have been able to include it in existing HSE systems. In general the risk is low because our energy costs only constitute around 0.5% of our revenue.

Carbon taxes Regulation concerning

Increased operational

1 to 3 years

Direct Very likely Low Today our total energy costs only

Lundbecks CO2 strategy including

The costs associated with

35

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

carbon taxes motivates the company to reduce the use of energy. It is likely that carbon taxes can rise in the future. In Denmark we already have high carbon taxes. This has an impact on the operational costs. At the same time this reduces the pay back time on energy projects and through this makes energy projects good business.

cost constitute about 0.5% of our revenue (around 78 MDKK compared to our revenue on 15,634 MDKK). We expect that taxes will rise in the future in most parts of the world, but the risks from these changes are considered low, because it constitutes a very small part of our total operational costs. Even though the taxes were doubled, the energy cost will still be low compared to our revenue.

the long term target point out, that Lundbeck will continue having a high focus on energy efficiency at all our sites. We will continue to identify and carry out energy saving activities that is beneficial for the company. This will keep our energy use at a low level and continously help the company to avoid serious consequences from rising carbon taxes. Since 2006 our energy reduction activities have reduced our annual electricity costs with around 25 MDKK.

investments in energy saving activities differ from year to year. In 2016 the investment was 1 MDKK and 1 MDKK for internal resources e.g. our energy teams. In 2017 we expect to spend 1 MDKK on energy projects and 1 MDKK for our internal ressources.

General environmental regulations, including planning

International regulations like REACH (Chemical regulation) and regulation about


1 to 3 years

Direct Very likely Low

Environmental regulation can require investments in the production equipment and

In order to minimize the financial implications related to environmental

The cost of an eventual change of the production differs, but we are convinced that it is beneficial to act

36

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Best Available Technology (BAT) like the IE Directive do affect the energy efficiency of a production. E.g. REACH require Lundbeck to have confined production which increases the need for ventilation and BAT require optimization of our air emission system and substitution of dangerous chemicals. These requirements do in many cases increase our energy consumption.

then reduce the available capital in the company on the short run. Some intentions in the environmental regulation like REACH, BAT and recycling of solvents will rise the energy consumption and energy costs, but e.g. recycling of solvents also decreases our cost significantly because raw material costs decreases. Because our total energy costs only constitute around 0.5% of our revenue, an eventual increase in energy consumption will have very little impact on our revenue. The cost and resource demand for implementing new technologies in

legislation we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation. When coming legislation is identified, Lundbeck consider what consequences the regulation may have. We start immidiately a proces where we identify the most neccesary changes and plan how the changes can be implemented in the most efficient way. In this way it is possible to keep the investments and eventually interuptions in the production at a low level.

proactively. If regulatory requirements aren’t identified until the authorities monitor the company, the changes often have to be implemented fast with bigger investments and consequences for production. Costs related to tracking legislation are estimated to 66,000 DKK, but are considered as ordinary costs that is necessary for having an efficient business.

37

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

order to comply with the environmental legislation is expected to have a larger impact on the short run.

Emission reporting obligations

In Denmark we are obliged to report about our climate performance in a public annual report. Both in Denmark, Italy and France where we have production, we are also legally required to report about energy management to the authorities.


Up to 1 year

Direct Virtually certain

Low

The time use for the regulatory required reporting is low, because we would make our data collection and reporting even though we did not have regulatory requirements on reporting. We estimate that the cost related to regulatory requirements on climate change is around 3,500 DKK.

Because of our statement about reporting publically about our environmental impacts, we have implemented a corporate procedure about collecting HSE data including energy data and most of the data required by the authorities. This means that the HSE departments at all our research, development and production sites collect local HSE data and send them to the corporate HSE department. The data are then verified by

The costs related to comply with regulatory reporting is not considered extra costs because we would do the reporting even though it wasn't a requirement. Our reporting to the environmental authorities in Denmark has become easier, as they accept our CDP response as climate reporting. The cost for the CDP response is estimated to 0.1 MDKK. The tracking of legislation and International plans is activities that are necessary for driving our

38

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

external auditors (Deloitte) and used for regulatory required reporting, voluntary reporting and other kinds of stakeholder reporting. Furthermore we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation, including legislations related to reporting requirements. Already when coming regulation in draft is identified, Lundbeck consider what consequences the regulation may have, and necessary actions are taken. Eg have we implemented the

business efficient and not considered extra costs.

39

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

new EU Energy efficiency directive in our HSE system. These activities ensure that the risk continously is kept at a very low level.

CC5.1b

Please describe your inherent risks that are driven by changes in physical climate parameters

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Uncertainty of physical risks

Extreme weather situations that can damage buildings can occur at Lundbecks own sites. This initiates activities that secure production


Up to 1 year

Direct Likely Low-medium

Lundbecks own sites are not considered located in high risk areas. Nevertheless we have experienced weather situations during the last three years at

At all our production sites inspections from our insurance company are performed. The reports from these inspections are a valuable input for identification of critical facilities or

In 2012 and 2013 the total cost for repairs was around 8 MDKK. In 2013 to 2016 we have spend 4.6 MDKK on preventive activities. In 2016 we finalized the last preventive activities on our

40

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

facilities and buildings so they can resist situations with for example heavy rainfall or storms.

two sites affecting our business in minor degree. In USA we had to shut down our site for a few days due to a heavy storm and in Denmark heavy rain and storm caused damage to our buildings. A worst case scenario would be a big damage to our production facilities at the headquarter site in Denmark. A loss related to such a situation is estimated to app. 500 MDKK.

buildings at our sites and are used as input in our facility management plans. Furthermore we have made a criticality analysis at our headquarter in Denmark, indicating where we find the biggest risks at the site and what buildings that are most exposed to damages from extreme weather situations. The criticality analysis has resulted in the implementation of an action plan including activities that secure our buildings towards heavy rainfall and storms. One specific example is that we have build a new park area containing a catch basin, and

action plan. Forward new buildings and equipment will be secured when they are implemented and therefore integrated in the total cost for the project. The spend on preventive activities can be related to the cost of management and implementation of our action plan.

41

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

in connection with the building of a new office building we have established another underground catch basin that can consume twice the amount of water from a normal rain situation. We have also implemented pump installations and secured fragile installations like power stations. The action plan contains more activities which is planned to be implemented during the coming years. These activities keep the financial risks at a low level, because we can avoid e.g. to close down production facilities due to extreme weather situations.

42

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Uncertainty of physical risks

Physical risks like exposure to extreme weather events can affect Lundbecks partners and suppliers. Most of our suppliers and partners are situated in Europe and USA at locations where extreme weather situations are unlikely to have a character that affect product reliability. A part of our suppliers and partners are located outside Europe and USA where it cannot be excluded, that extreme weather situations can

Reduction/disruption in production capacity

1 to 3 years

Indirect (Supply chain)

About as likely as not

Medium

Untill now Lundbeck have not experienced problems with supplier and partner reliability due to extreme weather situations. Because we cannot exclude, that extreme weather situations can affect supplier reliability we have very strong methods in place to manage such situations. In a worst case scenario the financial impact due to missing deliveries is estimated to app.1,000 MDKK.

In order to keep the risks related to break down at our suppliers and partners low, we have implemented a system where we carefully monitor supply and maintain an inventory that will help us overcome any breakdown in production. To mitigate production risks we currently have production and packaging facilities at four independent sites. In this way we have enhanced production flexibility. We have also second sources in place for critical products for our active ingredients additionally both of our chemical plants are capable of

Lundbeck do have operational costs related to keep our inventory of products and for driving the system where we systematically monitor and audit our suppliers. In 2016 we performed 167 audits estimated to around 5 MDKK. These costs cannot be referred to have direct relation to risks related to extreme weather situations. Suppliers can have production delays or break down due to many other reasons. Lundbeck would have these risk reducing activities even though there were no risks related to extreme weather situations.

43

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

affect supplier reliability.

manufacturing the active ingredients we buy at our suppliers. Furthermore we ensure suppliers and partners adherence to our company’s ethical standards and we annually conduct multiple audits of Lundbecks suppliers which include an evaluation of their exposure to physical risks. Audit activities are planned and executed in accordance with the current risk picture. Our audit process is based on Lundbecks CSR policy and the UN Global Compact Principles. All suppliers are asked to sign a mutual commitment to comply with

44

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

human rights, employee rights, environmental protection and anti-corruption in our contracts e.g. to have a precautionary approach to environmental challenges like climate change. These activities reduce risks to our business and continuously keep them at a low level.

CC5.1c

Please describe your inherent risks that are driven by changes in other climate-related developments

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Reputation

Bad press is a minor risk for Lundbeck. We believe that bad press can reduce


>6 years Direct Unlikely High

If our reputation deteriorates it can lead to loss of talented employees and

Lundbeck seek to motivate and retain our employees through individual

Costs related to recognition, development and improving the working

45

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

our ability to attract and retain talented employees and investors and decrease our stakeholders e.g. authorities confidence in our capabilities. Especially the environmental authorities confidence in our capabilities is important because it often improves the communication with the authorities and following increases flexibility and reduces processing time for necessary approvals. All our production sites are covered by environmental approvals and therefore affected by our relation to the environmental authorities. Currently, we do not consider climate issues as the most significant factor in relation to bad

loss of authorities confidence in our capabilities. The cost related to loss of employees is around 5 MDKK (estimated on the basis that 1% of our vacancies cannot be filled again). Potential less confidence at authorities can delay approval of the production of new medicines and following delayed launch and finally reduced sales period because patents are taken early in the development phase. A worst case scenario is estimated to a delay on 6 month. A reduction of the sales period with 6 month is estimated to 3,000 MDKK and can be used as indicator on an estimated financial

recognition and development opportunities. We also monitor employee satisifaction in order to improve the working environment. Lundbeck also believe that a clear attitude to public reporting and a responsible business strategy is important for a good reputation. Therefore we have stated in both our corporate responsibility strategy and in our CO2 strategy, that we want to report publicly about our initiatives concerning climate changes. E.g. we communicate about climate changes in our CDP response and our Corporate responsibility report. Lundbeck is also recognised by the

environment can not be related to climate change, because it is activities we would do anyway in order to have a strong business. Except from our response to CDP our public reporting activities are neither considered extra costs because of climate change issues. The cost for the CDP response is estimated to 0.1 MDKK. The costs associated with energy saving activities differ from year to year. In 2016 we did spent 1 MDKK and in 2017 we expect to spend 1 MDKK on energy savings. Apart from that we spend around 1 MDKK/year on internal ressources, because we have dedicated energy teams at all sites

46

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

press, but as climate change becomes more pronounced, we believe that it can have a greater impact on our future risk picture.

implication. FTSE4Good index series and comply fully with the Climate Change Criteria. These initiatives aim to show potential employees, authorities and other stakeholders our effort in managing risks concerning climate changes. We do take climate changes seriously and since 2006 we have had an ambitious CO2 target and reduced our CO2 emission by 58%.

that carry out energy screenings and -savings.

CC5.1d

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC5.1e

47

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC5.1f

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

Further Information

Page: CC6. Climate Change Opportunities

CC6.1

Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments

CC6.1a

Please describe your inherent opportunities that are driven by changes in regulation

48

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

International agreements

New International agreements can affect the development in national legislation and national plans concerning energy prices, the use of renewable energy, product efficiency and building requirements. At Lundbeck we already focus on minizing our energy consumption and through this keep these cost at a low level. At some locations we have also started to use renewable energy sources. We believe this will be an advantage compared to other

Reduced operational costs

>6 years Direct More likely than not

Low

We believe that reduced operational costs affect our revenue positively. If we did not implement energy savings our operational costs would increase because increased taxes and prices and through this reduce our revenue. Due to our work with energy savings we have reduced our annual energy costs with around 25 MDKK and through this reduced the operational costs. We will continue to reduce our energy consumption and the following costs in the coming years. Since 2006 we have reduced our energy consumption by 32%. Implementation of

The headquarter of Lundbeck is placed in Denmark where there already is an ambitious climate strategy and regulation, that Lundbeck comply with. In order to implement new regulation and adapt to national and international plans in the most efficient way, we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation, including legislations related to climate issues. One specific example is that we once a month search the internet for

The annual costs on energy saving activities differ. In 2016 we did spent 1 MDKK and in 2017 we expect to spend 1 MDKK on energy savings. Apart from that we spend around 1 MDKK/year on internal ressources, because we have dedicated energy teams at all sites that carry out energy screenings and -savings. Costs related to tracking legislation are considered as ordinary costs that is necessary for having an efficient business. We track legislation because it is necessary for

49

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

companies. renewable energy sources have untill now only had positive financial impact and also contributed to reduced operational costs because of reduced costs on bio oil compared to fossil fuels.

new and coming national and EU legislation. If the legislation or plans are relevant for Lundbeck we consider what consequences it may have, and necessary actions are taken. We also have a constant focus on producing more for less and through this reduce our operational costs. We believe this make our company less vulnerable towards more strict regulation and that it can become an advantage for Lundbeck compared to companies, who has not prepared for more ambitious climate

driving our business and required by our internal systems.

50

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

agreements and more strict regulation on climate changes.

Voluntary agreements

The amount of voluntary agreements and voluntary analyses made for investors, like UN Global Compact, CDP and FTSE4GOOD are very likely to increase in the future. Our participation in these activities can improve the reputation of our company and reduce the risk of bad press. This can improve our possibilities to attract and retain talented employees and our stakeholders confidence in our capabilities.

Increased stock price (market valuation)

>6 years Indirect (Client)

Likely Low

Having the right and talented employees and a good reputation is important for our competitiveness and the continuous development of the company. If we did not support voluntary agreements we believe we would damage our reputation. Bad reputation can lead to loss of talented employees which is estimated to around 5 MDKK/year (1% of our employee turnover).

Lundbeck have stated in both our corporate responsibility strategy and in our CO2 strategy, that we want to report publicly about our initiatives concerning climate changes. As a consequence of that we have implemented a corporate procedure about collecting HSE data including energy data. The HSE departments at all our research, development and production sites collect the local HSE data and send them to the Corporate HSE

Except from our response to CDP our voluntary reporting are not considered extra costs in regards to climate change issues. The cost for the CDP response is estimated to 0.1 MDKK.

51

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

department. The data is used for internal and external voluntary and compulsary reporting and other kinds of stakeholder reporting.

CC6.1b

Please describe your inherent opportunities that are driven by changes in physical climate parameters

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Change in precipitation extremes and droughts

Lundbecks suppliers, partners and our own sites can be affected by extreme weather situations. Like for all companies this can in worst case lead to stock outs in the production. Lundbeck has set

Reduced operational costs

3 to 6 years

Direct About as likely as not

Low

Reduced operational costs affect our revenue positively. By having managment methods that secure our sites and our supply chain eg that we have second sources for our

In order to overcome situations with breakdown we carefully monitor supply and maintain an inventory that will help us overcome any breakdown in production. We have second sources in place

The activities that relate to securing our supply chain and the deliveries from our suppliers and partners are not considered cost related to climate changes. It is activities we do due to other business related reasons. The

52

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

up several systems to avoid stock outs e.g. we have second sources in place for critical products and our own chemical plants are capable of manufacturing the active ingredients we buy at suppliers. We believe that by having these systems we have an advantage on the long run because we can avoid stock outs and because of that be more attractive to the customers.

active ingredients, we can avoid expensive consequences from extreme weather events. This can be an advantage compared to other companies that do not have such systems in place. Extreme weather events can give rise to breakdown at our own sites, suppliers and partners and result in rebuilding activities and stock outs. A worst case scenario is a breakdown in our production at our headquarter site. This may cause a financial impact on around 500 MDKK.

on main products for our active ingredients and both of our chemical plants are capable of manufacturing the active ingredients we buy at our suppliers. Lundbeck also seek to enhance our production flexibility by having five independent productions and packaging sites. Risks related to break down at our suppliers and partners are minimized by ensuring adherence to our company’s ethical standards including having a precautionary approach to environmental challenges like climate change. We annually conduct multiple audits in accordance with the current risk

preventive solutions we implement in order to secure our own sites against extreme weather situations were from 2013 to 2016 4.6 MDKK. In 2016 we finalized the last preventive activities on our action plan. Forward new buildings and equipment will be secured when they are implemented and therefore integrated in the total cost for the project. The spend on preventive activities can be related to the cost of management and implementation of our action plan.

53

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

picture and by having a close dialogue it is possible to initiate necessary actions if extreme weather events should occur. At all our production sites inspections from our insurance company are performed. This provide valuable input for identification of critical facilities or buildings and are used as input in our facility management plans. At our headquarter we have also made a criticality analysis, showing the biggest risks at the site. This has resulted in implementation of activities that secure our buildings towards heavy rainfall and storms e.g. we have build a new park area

54

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

containing a catch basin. All these activities make Lundbeck less vulnerable towards the consequences of climate changes and can turn into an advantage.

CC6.1c

Please describe your inherent opportunities that are driven by changes in other climate-related developments

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Reputation

A good reputation is important for our competitiveness and the continuous development of the company. Reputation is a driver for opportunities for Lundbeck due to the fact that we believe it can increase our ability to attract and

Increased stock price (market valuation)

3 to 6 years

Direct More likely than not

Low

If our reputation deteriorates it can lead to loss of talented employees and loss of confidence in our capabilities at our stakeholders. Loss of employees is around 5 MDKK

Lundbeck believe that a clear attitude to public reporting and a responsible business strategy is important for a good reputation. Therefore we have stated in both our corporate responsibility strategy and in our

Except from our response to CDP our public reporting activities are not considered extra costs due to climate change issues. The cost for the CDP response is estimated to 0.1 MDKK. The costs associated with

55

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

retain talented employees and investors and increase our stakeholders e.g. the authorities confidence in our capabilities. Especially the environmental authorities confidence in our capabilities is important because it often improves the communication with the authorities and following increases flexibility and reduces processing time for necessary approvals. All our production sites are covered by environmental approvals and therefore affected by our relation to the environmental authorities. By having a clear attitude to public reporting and a responsible business strategy we believe we have a good reputation,

(estimated on the basis that 1% of our vacancies cannot be filled again).

CO2 strategy, that we want to report publicly about our initiatives in regards to climate changes. Two examples on how we communicate about climate changes are our CDP response and our Corporate responsibility report. Lundbeck is also recognised by the FTSE4Good index series and comply fully with the Climate Change Criteria. These initiatives aim to show potential investors and other stakeholders our effort in managing risks concerning climate changes. We do take climate changes seriously and we have been working targeted with energy reduction since 2006 and have an

energy saving activities differ from year to year. In 2016 we spent 1 MDKK and in 2017 we expect to spend 1 MDKK on energy savings. Apart from that we spend around 1 MDKK/year on internal ressources, because we have dedicated energy teams at all sites that carry out energy screenings and -savings.

56

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

which can help to avoid loss of employees and improve the authorities confidence in our capabilities.

ambitious CO2 target and strategy. So far we have reduced our CO2 emission with 58% since 2006.

CC6.1d

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC6.1e

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC6.1f

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

57

Further Information

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading

Page: CC7. Emissions Methodology

CC7.1

Please provide your base year and base year emissions (Scopes 1 and 2)

Scope

Base year

Base year emissions (metric tonnes CO2e)

Scope 1 Sun 01 Jan 2006 - Sun 31 Dec 2006

14282

Scope 2 (location-based) Sun 01 Jan 2006 - Sun 31 Dec 2006

32996


CC7.2

Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

58

Please select the published methodologies that you use

The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)

CC7.2a

If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

CC7.3

Please give the source for the global warming potentials you have used

Gas

Reference

CO2 Other: We use both national and local supplier emission factors. Baseline emission factors are based on Location based emission factors only. Since 2015 we have used Market based emission factors for annual reporting of CO2 emission. Please see our attached annual emission factors 2016.

HFCs Other: R134a and R407c. EPA, class I and II ozone-depleting substances. http://www.engineeringtoolbox.com/refrigerants-properties-d_145.html Please se attachment: Global warming potential - R134a and R407c

CC7.4

Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page

59

Fuel/Material/Energy

Emission Factor

Unit

Reference

Electricity 0.5732 metric tonnes CO2 per MWh

Location-based: Denmark: https://www.ecohz.com/wp-content/uploads/2016/05/european_residual_mixes_2015_-_aib_final_2016-05-13_web.pdf


Location-based: Italy: https://www.ecohz.com/wp-content/uploads/2016/05/european_residual_mixes_2015_-_aib_final_2016-05-13_web.pdf


Location-based: USA: https://www.epa.gov/energy/emissions-generation-resource-integrated-database-egrid

Other: District heating 0.122 metric tonnes CO2 per MWh

Location-based: Denmark: http://www.key2green.dk/n%C3%B8gletal-varme

Methane 0.20432 metric tonnes CO2 per MWh

Italy and France: http://key2green.dk/n%C3%B8gletal-naturgas

Methane 0.18106 metric tonnes CO2 per MWh

USA: http://www.eia.doe.gov/oiaf/1605/coefficients.html

Town gas or city gas 0.17 metric tonnes CO2 per MWh

Denmark: http://www.hofor.dk/baeredygtige-byer/beregn-co2/miljoedeklaration-bygas-2/

Other: Bio oil 0.00186 metric tonnes CO2 per MWh

Denmark: http://nlmv.dk/

Diesel/Gas oil 0.2664 metric tonnes CO2 per MWh

Denmark: http://www.key2green.dk/n%C3%B8gletal-varme

Liquefied petroleum gas (LPG)

0.235 metric tonnes CO2 per MWh

Denmark: http://www.engineeringtoolbox.com/co2-emission-fuels-d_1085.html


Market-based: Denmark: http://energinet.dk/DA/KLIMA-OG-MILJOE/Miljoedeklarationer/Sider/Til-groent-regnskab.aspx

60

Fuel/Material/Energy

Emission Factor

Unit

Reference


Location-based: France: https://www.ecohz.com/wp-content/uploads/2016/05/european_residual_mixes_2015_-_aib_final_2016-05-13_web.pdf


Market-based: France: https://www.edf.fr/en/the-edf-group/responsible-and-committed/corporate-social-responsibility/doing-even-more-to-reduce-co-sub-2-sub-emissions

Other: District heating 0.1024 metric tonnes CO2 per MWh

Market-based: Denmark: http://www.veks.dk/da/service/miljoe/miljoedeklaration


Market-based: Italy: META ENERGIA. National Italian Environmental Authority (ISPRA)


Market-based: USA: https://pseg.com/info/environment/sustainability/pdf/sustainability_report.pdf

Further Information

CC7.1: Lundbeck have no structural changes in our organisation in 2016 that trigger a recalculation of base year emissions, as our organization has made no changes through acquisitions and/or divestments, the methodology or boundary used to calculate our emissions. Hence we need not to recalculate our base year emissions in order to directly compare it with our current emissions. Our Scope 2 base year is calculated only according to the location-based method. We have not recalculated a market-based method for our base year total for our Scope 2 emissions, as we have no available specific information from 2006. CC7.3: Attachment "Lundbeck Emission factors 2016" to calculate CO2 emissions. Attachment Global warming potential R134a and R407c" to calculate CO2e from HFCs. CC7.4: CO2 emission values from: Scope 2 (electricity and district heating) are found and calculated annually. This is calculated both using the location-based and market-based approach (Location based approach only used for baseline data). Emission factors for (scope 1) Methane, Citygas, Gas oil, LPG and Bio oil are all constant. Available emission factors originate from the external suppliers of energy and national databases. Sources for emission factors is attached "Lundbeck emission factors 2016".

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/Final - Calculating Emission factors from energy to CO2 2016.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/Global warming potential - R134a and R407c.docx

61

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC7.EmissionsMethodology/Lundbeck emission factors 2016.xlsx

Page: CC8. Emissions Data - (1 Jan 2016 - 31 Dec 2016)

CC8.1

Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory

Operational control

CC8.2

Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e

6626

CC8.3

Please describe your approach to reporting Scope 2 emissions

Scope 2, location-based

Scope 2, market-based

Comment

We are reporting a Scope 2, location-based figure

We are reporting a Scope 2, market-based figure

Lundbeck have used the Scope 2 accounting method (GHG Protocol Scope 2 Guidance, January 2015)

62

CC8.3a

Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e

Scope 2, location-

based

Scope 2, market-based (if

applicable)

Comment

18967 13317 The market based approach is used in our annual reporting of CO2 emissions. The location based approach is used only for CDP reporting purposes.

CC8.4

Are there any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure?

Yes

CC8.4a

Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure

Source

Relevance of

Scope 1 emissions from this source

Relevance of

location-based Scope 2 emissions

from this source

Relevance of

market-based Scope 2 emissions

from this source (if

applicable)

Explain why the source is excluded

63

Source

Relevance of

Scope 1 emissions from this source

Relevance of

location-based Scope 2 emissions

from this source

Relevance of

market-based Scope 2 emissions

from this source (if

applicable)

Explain why the source is excluded

Global sales offices in Europe, Africa, Asia and North/South America are excluded.

Emissions are not relevant



Technically our sales offices are not included in our GHG inventory in our CO2 Strategy - hence we report them as exclusions. The emissions from sales offices are 'not relevant' to Lundbeck, as they do not make up a large proportion of our overall emissions. Our estimate is that no more than 10% originates from energy consumption in our global sales office buildings. Data from global sales offices are not included due to the vast number of very small facilities making it difficult to gather data. The challenge is difficulties in retrieving information and unreliable data. CO2 emissions are only accounted for sites with research, development and/or production and headquarter functions. In total 5 sites (2 in Denmark, 1 in Italy, 1 in USA and 1 in France). This covers about 40% of the organization (regarding employees FTE), but 90% or more of the total energy consumption.

CC8.5

Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations

Scope

Uncertainty range

Main sources of

uncertainty

Please expand on the uncertainty in your data

Scope 1 More than 2% but less than or equal to 5%

Assumptions Metering/ Measurement Constraints Data Management

The associated CO2 is calculated on the basis of the amount of fuel consumed using local official conversion factors where possible. Natural gas: Emission factors used in Italy and France are the same as Denmark. Uncertainty in manual reading of consumption and possible transcription errors.

64

Scope

Uncertainty range

Main sources of

uncertainty

Please expand on the uncertainty in your data

Scope 2 (location-based)

More than 2% but less than or equal to 5%

Assumptions Metering/ Measurement Constraints

The main sources of error may include estimate of facility specific purchased energy emission factors. Where possible Lundbeck use national country-specific emission factors for account to national differences in the energy supply mix. These factors can be difficult to find. If local emission factors have been difficult to find, and because some sources may not be the best available. Uncertainty in manual reading of consumptions.


Less than or equal to 2%

Data Management

The consumption of energy is based on online meter readings at Lundbeck, online databases at suppliers and local emission factors provided by the supplier. As this is new to Lundbeck having to disclose both location based and market based emission factors separately we are still not very mature in this method. Hence the higher level of uncertainty locating the source and collecting the correct emission factors.

CC8.6

Please indicate the verification/assurance status that applies to your reported Scope 1 emissions

Third party verification or assurance process in place

CC8.6a

Please provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

65

Verification

or assurance

cycle in place

Status in

the current

reporting year

Type of verification

or assurance

Attach the statement

Page/section reference

Relevant standard

Proportion of reported

Scope 1 emissions verified (%)

Annual process

Complete Limited assurance

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC8.6a/Lundbeck signed auditor verification statement 2016.pdf

Verification statement from Deloitte. One page. Attachments: "Lundbeck signed auditor verification statement 2016.pdf"

ASAE3000 100

Annual process


https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC8.6a/Verification CDP 2016_final.pdf

Supplementary information from Deloitte on the CDP Verification template to address all issues required.

ASAE3000 100

Annual process


https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC8.6a/Final - Energy and CO2 data 2016 final.xls

Attachment: "Final - Energy and CO2 data 2016 final.xls" - as documentation of calculations on Scope 1 emissions.

ASAE3000 100

CC8.6b

Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emission Monitoring Systems (CEMS)

Regulation

% of emissions covered by the system

Compliance period

Evidence of submission

CC8.7

Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures

66


CC8.7a

Please provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant statements

Location-based or market-based figure?

Verification

or assurance

cycle in place

Status in

the current

reporting year

Type of verification

or assurance



Relevant standard

Proportion of reported

Scope 2 emissions verified (%)

Market-based

Annual process


https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC8.7a/Lundbeck signed auditor verification statement 2016.pdf

Verification statement from Deloitte. One page. Attachments: "Lundbeck signed auditor verification statement 2016.pdf"

ISAE3000 100

Market-based

Annual process


https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC8.7a/Verification CDP 2016_final.pdf

Supplementary information from Deloitte on the CDP Verification template to address all issues required.

ASAE3000 100

Market-based

Annual process



Attachment: "Final - Energy and CO2 data 2016 final.xls" - as documentation of calculations on Scope 2 emissions.

ASAE3000 100

67

CC8.8

Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2

Additional data points

verified

Comment

Year on year change in emissions (Scope 1)

Verified by Deloitte during our annual review of HSE data in January 2017. Emission Scope 1, 2015 = 7150 Tons CO2. Emission Scope 1, 2016 = 6626 Tons CO2. Reduction Scope 1, 2015-2016 = 524 Tons CO2 (-7.3%).


Verified by Deloitte during our annual review of HSE data in January 2017. Emission Scope 2, 2015 = 15774 Tons CO2. Emission Scope 2, 2016 = 13317 Tons CO2. Reduction Scope 2, 2015-2016 = 2457 Tons CO2 (-15.6%).

Year on year change in emissions (Scope 1 and 2)

Verified by Deloitte during our annual review of HSE data in January 2017. Emission Scope 1+2, 2015 = 22924 Tons CO2. Emission Scope 1+2, 2016 = 19943 Tons CO2. Reduction Scope 1+2, 2015-2016 = 2981 Tons CO2 (-13.0%).


Scope 3 from Business travel has been verified by Deloitte in April 2017. Emission Scope 3 (Business travel), 2015 = 4430 Tons CO2. Emission Scope 3 (Business travel), 2016 = 3913 Tons CO2. Reduction Scope 3 (Business travel), 2015-2016 = 517 Tons CO2 (-11.7%)

Progress against emissions reduction target

Verified by Deloitte during our annual review of HSE data in January 2017. Reduction target is 55% by 2016 compared to base year 2006. Emission factors for base year (2006) are location based only! Emission factors for (scope 2) 2016 are market based only! Total reduction from 2006-2016 = 57.7%. Target achieved!

Change in Scope 1 emissions against a base year (not target related)

Verified by Deloitte during our annual review of HSE data in January 2017. Base year 2006. Emission Scope 1, 2006 = 14282 Tons CO2. Emission Scope 1, 2016 = 6626 Tons CO2. Reduction Scope 1, 2006-2016 = 7655 Tons CO2 (-53.6%)


Verified by Deloitte during our annual review of HSE data in January 2017. Base year 2006. Emission factors for base year (2006) are location based only! LOCATION BASED: Emission Scope 2, 2006 = 32996 Tons CO2. Emission Scope 2, 2016 = 18967 Tons CO2. Reduction Scope 2, 2006-2016 = 14029 Tons CO2 (-57.5%). MARKET BASED: Emission Scope 2, 2006 = 32996 Tons CO2. Emission Scope 2, 2016 = 13317 Tons CO2. Reduction Scope 2, 2006-2016 = 19679 Tons CO2 (59.6%).


Scope 3 from Business travel has been verified by Deloitte in April 2017. Base year 2013. Emission Scope 3 (Business travel), 2013 = 6455 Tons CO2. Emission Scope 3 (Business travel), 2016 = 3913 Tons CO2. Reduction Scope 3 (Business travel), 2013-2015 = 2542 Tons CO2 (39.4%)

CC8.9

Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization?

Yes

68

CC8.9a

Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2

18

Further Information

CC8.6a, CC 8.7a and CC8.8: Energy and CO2 is verified annually by Deloitte January 2017. Attachments: 1) "Lundbeck signed auditor verification statement 2016.pdf". 2) Supplementary information from Deloitte to CDP 2016 (Verification CDP 2016_final.pdf): Supplementary information from Deloitte on the CDP Verification template to address all issues required for gaining full score. 3) "Final - Energy and CO2 data 2016 final.xls" - as documentation of calculations on Scope 1+2 emissions CC8.9 + CC8.9a: Use of bio oil at site Lumsås, Denmark is a by-product from sunflower and rapeseed oil production. Please see certificate in attached document "Biooil certificate.doc"

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC8.EmissionsData(1Jan2016-31Dec2016)/Verification CDP 2016_final.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC8.EmissionsData(1Jan2016-31Dec2016)/Final - Energy and CO2 data 2016 final.xls https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC8.EmissionsData(1Jan2016-31Dec2016)/Biooil certificate.doc https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC8.EmissionsData(1Jan2016-31Dec2016)/Lundbeck signed auditor verification statement 2016.pdf

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2016 - 31 Dec 2016)

CC9.1

Do you have Scope 1 emissions sources in more than one country?

69

Yes

CC9.1a

Please break down your total gross global Scope 1 emissions by country/region

Country/Region

Scope 1 metric tonnes CO2e

Denmark 2102

Italy 2580

France 1365

United States of America 579

CC9.2

Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply)

By facility By GHG type By activity

CC9.2a

Please break down your total gross global Scope 1 emissions by business division

70

Business division

Scope 1 emissions (metric tonnes CO2e)

CC9.2b

Please break down your total gross global Scope 1 emissions by facility

Facility


Latitude

Longitude

Site Valby, Denmark 1774 55.658035 12.516765

Site Lumsås, Denmark 328 55.94317 11.512057

Site Padova, Italy 2580 45.410201 11.926138

Site Nice, France 1365 43.628082 7.051954

Site Paramus, USA 579 40.93364 -74.076374

CC9.2c

Please break down your total gross global Scope 1 emissions by GHG type

GHG type


CO2 6592

HFCs 34

CC9.2d

71

Please break down your total gross global Scope 1 emissions by activity

Activity


Biooil 18

Methane 4524

Gasoil 267

F-gas (LPG) 38

Towngas/Citygas 1746

HFCs (R134a,R407c) 34

Further Information

Factors in 9.2d differ +/- 1 ton CO2, due to the round off of decimals. CC9.1a: Attachment: "Final - Energy and CO2 data 2016 final.xls" - as documentation of calculations on Scope 1 emissions. CC9.2b: Itouchmap.com was used to retrieve the longitude and latitude of our 5 sites: 1: Headquater, Ottiliavej 9, 2500, Valby, Denmark 2: Site Lumsås, Oddenvej 182, 4500 Nykøbing Sjælland, Denmark 3: Site Elaiapharm, 2881 Route des Cretes 06904 Sophia Antipolis, France 4: Site Padova, S.p.A. Quarta Strada 2, 35129 Padova, Italy 5: Site Paramus, 215 Collage Rd #100 Paramus, NJ 07652, USA

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC9.Scope1EmissionsBreakdown(1Jan2016-31Dec2016)/Final - Energy and CO2 data 2016 final.xls

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2016 - 31 Dec 2016)

CC10.1

Do you have Scope 2 emissions sources in more than one country?

72

Yes

CC10.1a

Please break down your total gross global Scope 2 emissions and energy consumption by country/region

Country/Region

Scope 2, location-based (metric

tonnes CO2e)

Scope 2, market-based (metric tonnes CO2e)

Purchased and consumed

electricity, heat, steam or cooling

(MWh)

Purchased and consumed low carbon electricity, heat, steam or

cooling accounted in market-based approach (MWh)

Denmark 14874 8814 39215 0

Italy 2763 2073 6357 0

France 241 1582 6451 6451

United States of America

1088 846 2812 0

CC10.2

Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply)

By facility By activity

CC10.2a

Please break down your total gross global Scope 2 emissions by business division

73

Business division

Scope 2, location-based (metric tonnes CO2e)


CC10.2b

Please break down your total gross global Scope 2 emissions by facility

Facility



Site Valby, Denmark 11900 7143

Site Lumsås, Denmark 2974 1671

Site Padova, Italy 2763 2073

Site Nice, France 241 1582

Site Paramus, USA 1088 846

CC10.2c

Please break down your total gross global Scope 2 emissions by activity

Activity



Purchased electricity 17247 11894

Purchased district heating 1720 1422

74

Further Information

Data can differ +/- 1 ton CO2, due to the round off of decimals. CC10.1a: Find the data on scope 2 emissions 2016 in "Final - Energy and CO2 data 2016 final. xls" and "Locationbased approach - Final - Energi og CO2 data 2016 final. xls". EMISSION FACTORS 2016: Data using Market-based data only - was validated by Deloitte in January 2017 and these data are reported on www.Lundbeck.com. Lundbeck has re-calculated our scope 2 emission based on the Location-based approach. These re-calculated data have not been validated by a third party (Deloitte) - nor have it been reported in our annual report. This is only for showing this approach in our methodology when reporting to CDP. 10.1a: The low emission (Location based compared to Market based) from our site in Nice, France is due to the way we historically have calculated our Market based emissions. We use a mean of the last 3 years - hence it will take 3 years before all numbers are fully converted to the new low emission number - due to nuclear power in France. The Location based figure is the actual figure from 2015. This figure is only used for CDP reporting of Location based approach and not used in our public reporting.

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC10.Scope2EmissionsBreakdown(1Jan2016-31Dec2016)/Final - Energy and CO2 data 2016 final.xls https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC10.Scope2EmissionsBreakdown(1Jan2016-31Dec2016)/Location based approach - Final - Energi og CO2 data 2016 final.xls

Page: CC11. Energy

CC11.1

What percentage of your total operational spend in the reporting year was on energy?

More than 0% but less than or equal to 5%

CC11.2

Please state how much heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type

MWh

75

Energy type

MWh

Heat 14096

Steam 0

Cooling 0

CC11.3

Please state how much fuel in MWh your organization has consumed (for energy purposes) during the reporting year

43392

CC11.3a

Please complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels

MWh

Diesel/Gas oil 1000

Methane 22505

Town gas or city gas 10272

Vegetable oils 9454

Liquefied petroleum gas (LPG) 161

CC11.4

76

Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor in the market-based Scope 2 figure reported in CC8.3a

Basis for applying a low carbon emission factor

MWh consumed associated with

low carbon electricity, heat, steam or cooling

Emissions factor (in units of metric

tonnes CO2e per MWh)

Comment

Off-grid energy consumption from an on-site installation or through a direct line to an off-site generator owned by another company

9454 0.00186

Heat/steam: Biooil (by-product from the production of sunflower- and rapeseed oil). Used for heat/steam in Site Lumsås, Denmark. CO2 emission from the use of biooil in 2016 was only 18 tons CO2, as the emission factor (provided by the supplier) is: 0.00186 tons CO2 pr. MWh. Please see certificate for biooil "Biooil certificate. doc"

CC11.5

Please report how much electricity you produce in MWh, and how much electricity you consume in MWh

Total

electricity consumed

(MWh)

Consumed electricity

that is purchased

(MWh)

Total

electricity produced

(MWh)

Total

renewable electricity produced

(MWh)

Consumed renewable electricity

that is produced by

company (MWh)

Comment

40739 40739 0 0 0

Lundbeck do not produce any electricity ourselves, but more than 50% of the electricity in the national grid in Denmark in 2016 was originated from renewable energy sources (wind mills, solar, water). This corresponds to a renewable energy part of 31% of our Corporate consumption of electricity in 2016. The use of Nuclear power in France also contribute to very low CO2 emissions. Please see attachment "Renewable energy - Denmark 2016".

77

Further Information

Find the data on energy consumption in MWh in 2016 in "Final - Energy and CO2 data 2016 final. xls and the certificate for biooil "Biooil certificate. doc"

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC11.Energy/Biooil certificate.doc https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC11.Energy/Final - Energy and CO2 data 2016 final.xls https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC11.Energy/Renewable energy - Denmark 2016.docx

Page: CC12. Emissions Performance

CC12.1

How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year?

Decreased

CC12.1a

Please identify the reasons for any change in your gross global emissions (Scope 1 and 2 combined) and for each of them specify how your emissions compare to the previous year

Reason

Emissions value

(percentage)

Direction of change

Please explain and include calculation

Emissions reduction activities

2.3 Decrease The overall decrease in consumption of electricity in 2016 was 4,5% (1939 MWh) compared to 2015. Last year a total 518 tCO2 were reduced by our global emissions reduction projects. Our total scope 1 and scope 2 emissions in the previous year was 22924 tCO2, therefore we arrived at 2.3% through (518/22924)*100=

78

Reason

Emissions value

(percentage)

Direction of change

Please explain and include calculation

2.3% The overall reduction is due to focus on energy consumption from ventilation (lowering pressure and night closing in our production and labs.), Optimization of control of temperature and humidity, close down of autoclave and general optimizations in building facilities.

Divestment 4.5 Decrease

The Site in Paramus, USA have been in the process of site closure, due to mooving activities to Site Valby. Hence the activities has been much reduced in 2016. Energy consumption in 2015 was 10469 MWh. Energy consumption in 2016 was 6009 MWh. A reduction of 4459 MWh - equvivalent to 42.6%. The CO2 emission was reduced by 41.9%. The reduction in CO2 emission from 2015 to 2016 was (2455-1425) =1030 tons CO2.(1030/22924)*100=4,5%.

Acquisitions

Not relevant for Lundbeck in 2016.

Mergers


Change in output 0.8 Increase

Due to the difference in the production portfolio (mix of products produced, change in production mode, steam and moisturerequirements), the consumption of towngas/citygas has increased 10.4 % in 2016 (970 MWh) compared to 2015. Consumption 2016 = 10272 MWh. Consumption 2015 = 9302 MWh. This increase represents 189 tons CO2 (0.8% of the total reduction in CO2 emission in 2016). (189/22924)*100 = 0.8%

Change in methodology

3.5 Decrease

Lower CO2 emission factors in 2016 have been in our favor. This is relevant for primarily electricity in Nice, France due to nuclear energy. The emission factors for Nice, France was reduced by 33.5% in 2016 compared to 2015 (from 0,17 to 0,095 ton CO2/MWh). The emission in 2016 was 2948 tons CO2. If the factors had been the same as in 2015 the CO2 emission would have been 3746 Tons CO2. This is a difference of 798 tons CO2 - equivalent to 3.5% of the total CO2 reduction in 2016. (798/22924)*100 = 3.5%

Change in boundary


Change in physical operating conditions


Unidentified 3.5 Decrease

Total reduction in CO2 emission in 2016 = 13,0% compared to 2015. The above documented reductions add up to 9,5% (2.3+4.5+3.5-0.8=9.5). Resulting in 3,5% is not documented reductions (13.0-9.5=3.5). This is primarily based on various minor energy savings (not documented in the CDP reporting) and general lower emission factors in 2016 compared to 2015.

Other


CC12.1b

79

Is your emissions performance calculations in CC12.1 and CC12.1a based on a location-based Scope 2 emissions figure or a market-based Scope 2 emissions figure?

Market-based

CC12.2

Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue

Intensity figure =

Metric numerator (Gross global combined

Scope 1 and 2 emissions)

Metric denominator:

Unit total revenue

Scope 2 figure used

% change from

previous year

Direction of change

from previous

year

Reason for change

1.276 metric tonnes CO2e 15634 Market-based

23.8 Decrease

REDUCTION ACTIVITIES: Decrease of 23,8 % primarily due to higher revenue in 2016 compared to 2015. The change is also due to lower emission factors in 2016 and a long range of energy reducing activities. 2016: 19943 tons CO2/15634 million DKK => 1.276 tons/CO2 per million DKK.

CC12.3

Please provide any additional intensity (normalized) metrics that are appropriate to your business operations

80

Intensity figure =

Metric numerator (Gross global combined

Scope 1 and 2 emissions)

Metric denominator

Metric

denominator: Unit total

Scope

2 figure used

% change

from previous

year

Direction of

change from

previous year

Reason for change

0.000008946 metric tonnes CO2e

unit of production

2229221757 Market-based

13.5 Decrease

REDUCTION ACTIVITIES: Lundbeck has a 13.5% decrease in our intensity figure of "ton CO2 per unit produced", due to an increase in finished goods production of 0.6% in 2016 compared to 2015. In praxis it is difficult to use the production of medicine as a KPI, because of different types of medicine (size, type and production method of pills, tablets, ampules, pill boxes etc. is not the same) hence not possible to direct compare from year to year. Normally no other units than financial revenue is used at Lundbeck for measuring our emissions, as this is the most suitable figure for year to year comparison. 2015: 0.000009998 tons CO2/unit produced. 2016: 19943 tons CO2/2229.2 million units = 0.000011029 tons CO2/unit produced - equvivalet to 11 g CO2 per unit produced.

3.910 metric tonnes CO2e

full time equivalent (FTE) employee

5100 Market-based

9.6 Decrease

REDUCTION ACTIVITIES: Reduction of 200 employees in 2016 compared to 2015 (3.8%). Our emission intensity figure decreased by 9.6% in 2016 compared to 2015. 2015= 4.275 tons CO2/per FTE. 2016: 19943 tons CO2/5100 FTE => 3.910 tons CO2/per FTE.

Further Information

Reduction of 31.8% in total energy (MWh) and 13.0% in total scope1 and scope 2 emissions (Tons CO2) in 2016 compared to 2015 (Market based). This is due to specifik target setting, process optimization and general high focus and dedication from the top management to lowering our CO2 emissions as well as lower CO2 emission factors in 2016 (in our favor). Numerous energy saving projects have been completed and resulted in less use of energy and reduced CO2 emission. In 2014 Lundbeck made a new ambitious CO2 target. 55% CO2 reduction in 2020 compared to 2006 (base year). By 2016 our CO2 TARGET WAS ACHIEVED – 57.7% DECREASE!

81

Page: CC13. Emissions Trading

CC13.1

Do you participate in any emissions trading schemes?

No, and we do not currently anticipate doing so in the next 2 years

CC13.1a

Please complete the following table for each of the emission trading schemes in which you participate

Scheme name

Period for which data is supplied

Allowances allocated

Allowances purchased

Verified emissions in metric tonnes CO2e

Details of ownership

CC13.1b

What is your strategy for complying with the schemes in which you participate or anticipate participating?

CC13.2

Has your organization originated any project-based carbon credits or purchased any within the reporting period?

No

CC13.2a

82

Please provide details on the project-based carbon credits originated or purchased by your organization in the reporting period

Credit origination

or credit purchase

Project type

Project identification

Verified to which standard

Number of credits (metric

tonnes CO2e)

Number of credits (metric tonnes

CO2e): Risk adjusted volume

Credits canceled

Purpose, e.g. compliance

Further Information

Page: CC14. Scope 3 Emissions

CC14.1

Please account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e

Emissions calculation methodology

Percentage of

emissions calculated using data obtained

from suppliers or value

chain partners

Explanation

Purchased goods and services

Relevant, calculated

1419

In 2010 and again in 2016 Lundbeck made an effort to evaluate our supplier emissions from purchasing raw materials (API, chemicals, packaging materials). By doing so we hope to raise a focus and affecting our suppliers’ environmental approach.

47.00%

CO2 emission from purchased goods (13 largest suppliers). Primary data representing 47%. Extrapolated to 100%. Constant value of 1459 tones CO2/year until reevaluated in 5 years (2021).

83

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

METHODE: CO2 emission from suppliers was collected based on a questionnaire made by Lundbeck, data from the top 30 suppliers delivering chemicals and packing materials were gathered. The questionnaire asked for information on their CO2 emissions and energy reduction effort. 13 suppliers (43%) gave feedback on the questionaire. The number of suppliers anwsering was extrapolated to the total number of suppliers in the catagories investigated based on a calculation. The value is a constant of 1419 tones CO2/year. After the consolidation process in 2016, the selection revealed that this emission was quite small (it is 1.8% of our total combined scope 1+2+3 in 2016) and we as a company have a low influence due to our relative small part of the total sales at our supplier (0,04-10%). Supplier Evaluation Program: In 2011 the Lundbeck Supplier Standards was updated by implementing a Corporate Guideline and tools that will cover all first tier suppliers globally and include human rights, labor rights, environmental protection and anti-corruption. HSE audits (questionnaires and visits) are now conducted on our main chemical suppliers alongside quality audits. On these audits questions on energy consumption and CO2

84

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

emission are addressed.

Capital goods Relevant, calculated

7600

Calculation of Lundbeck’s scope 3 GHG emissions from Capital goods are based on economic spend data from Lundbeck and the multi‐ regional hybrid input‐ output database Exiobase. The spend of lab consumables was 46 million DKK in 2016. This results in a 7600 tons CO2-eq. The emission accounts for 9.9% of our total combined scope 1+2+3 emission in 2016.

0%

New in 2016. In the future more machines and equipment used at Lundbeck will be added to this calculation. At Lundbeck we focus on low energy consuming equipment as an important parameter when buying new equipment. We always conduct a risk assessment when sourcing new equipment to e.g. assess the energy consumption or use of raw materials.

Fuel-and-energy-related activities (not included in Scope 1 or 2)

Not relevant, explanation provided

Lundbeck do not have any production of fuels or energy purchased/consumed that are not included in our scope 1 or scope 2. Emissions from the combustion of fuels or electricity consumed is already accounted for in our scope 1 and 2 (Market based Scope 2 method was used). Extraction, production, and transportation of fuels is not part of our business - nor is generation of energy (electricity, steam, heating, and cooling).

Upstream transportation and distribution


10900

Calculation of Lundbeck’s scope 3 GHG emissions from Upstream transportation and distribution are based on economic spend data from Lundbeck and the multi‐ regional hybrid input‐ output database Exiobase. The spend on distribution was 104 million DKK in 2016. This results in a 10900 tons CO2-eq. The emission accounts for 14.2% of our total combined scope 1+2+3 emission in 2016.

0% New in 2016.

85

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

Waste generated in operations


3829

Only waste from Denmark is in this scope (Chemical waste and waste for reuse). 10 fractions are accounted for: glass, paper, cardboard, plastic PET, plastic LPDE, rubble, chemical waste, wood, concrete and rock wool). The emission accounts for 5.0% of our total combined scope 1+2+3 emission in 2016. The web-based calculator "Klimakompasset" is used to sum up the specific emissions form the different types of waste. Chemical waste is calculated in co-operation with our national waste disposal facility "Ekochem". Primary data originates from Denmark only and is 85% of the total - data is extrapolated to 100% by using the number of FTE outside Denmark.

85.00%

Waste generated in operations: The web-based calculator "Klimakompasset" is used to sum up specific CO2 emissions from different types of waste. Klimakompasset: www.klimakompasset.dk Liquid Chemical waste: The web-based calculator at KommuneKemi/Nord: http://www.nordgroup.eu/ is used to sum up specific CO2 emissions from liquid chemical waste.

Business travel Relevant, calculated

5282

Transportation of employees in business related activities (air travel and employees driving in own car for business meetings). AIR TRAVEL: Our travel company ”BCD Travel” reports data to Lundbeck about emissions from fuel by plane in many countries, primary in Europe (Denmark, Belgium, France, Netherlands, Ireland, Sweden, Switzerland, Greece, Austria, Finland, Iceland, Norway). The emission factor used is 0.28 kg CO2/flight mile. PRIVATE CAR: Emissions from private car in Denmark, driving to and from business

100.00% GHGP is the Green House Gas Protocol. Factors and calculations for conversion are for global data (http://ghgprotocol.org/about-ghgp).

86

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

related meetings. Our employees report their mileage (km) in a central system and the total mileage (km) is converted to liters of fuel (1 liter of fuel = 15 km). The fuel is then converted to kg CO2 emission (1 liter of fuel = 2.5 kg/CO2). The data covers about 65% of the total Lundbeck travel activity from air and car. Extrapolated to 100% the number is 5282. The emission accounts for 6.9% of our total combined scope 1+2+3 emission in 2016.

Employee commuting


Scope 3 emissions from transportation of employees between their home and work is not considered relevant. Currently we have not investigated this area. In order to assess emissions, we will have to conduct specific surveys on some major sites and use this data to estimate emission for all sites taking into account average commuting modes depending on the site location. We have not yet planned this survey and do not intend to do this within the next few years, as this will be very time costly and the result not very accurate, as it is based on a lot of assumptions.

Upstream leased assets


5067

The emissions are based on reports from the leasing companies on company cars leased by Lundbeck. There are available information on 197 company cars in Lundbeck (registered in Denmark (190) and Italy (7)). This corresponds to about 15% of the total number of cars on a corporate level

100.00%

87

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

(1.300 cars, primarily used by our managers and sales force locally in 55 countries). The total emission from upstream leased assets is calculated for all 1300 cars at Lundbeck. The emission accounts for 6.6% of our total combined scope 1+2+3 emission in 2016. Lundbeck receive the amount of fuel used and make a calculation to CO2 emission. The emission factors used is 2.65 kg CO2/liter diesel and 2.35 kg CO2/l gasoline.

Downstream transportation and distribution


4816

Transportation of products to end user. Emissions from fuel by transportation in Denmark, Europe and overseas. Each transportation mode is taken into account (truck, railway, ship, airplane). Only trucks with EURO Norm 4 or above are accepted. Companies have to send in a report on CO2 emissions every 3 months to Lundbeck (this is part of our written contract with the transportation company). The emission accounts for 6.3% of our total combined scope 1+2+3 emission in 2016. All calculations have been done by the companies by adopting the internationally recognized ‘GHG Protocol Product Lifecycle Accounting and Reporting Standard’.

100.00%

Processing of sold products


3961 Processing of sold products is relevant to Lundbeck, as we do have such activities at

100.00%

88

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

at our site in France and Italy. In time we may have more of this at our 2 sites in Denmark as well. The CO2 emission for the products is already calculated as a part of our total energy consumption (and scope 1 and 2 emission) from Lundbeck production. In order to assess emissions, we have conducted a surveys on the sites in question to estimate the emission for CMO produced products by Lundbeck. The part origination as CMO is 30% in France and 87% in Italy adding up to 4653*0.3=1396 ton CO2 and 2948*0.87=2565 ton CO2 respectivily. Total= 1396+2565=3961 ton CO2 in 2016 as CMO production. The emission accounts for 5.2% of our total combined scope 1+2+3 emission in 2016.

Use of sold products


Lundbeck do not see any major emission producing activities regarding use of sold products. Therefore this is not relevant to us. We produce pharmaceuticals! Not equipment designed to consume or save energy.

End of life treatment of sold products


Lundbeck do not see any major emission producing activities regarding end of life treatment of sold products. The disposal of unused pharmaceuticals from the end user/hospitals/pharmacy, is not consider this a big issue, as most pharmaceuticals are used for treatment and do not end up as waste. Therefore this is not relevant to us. We produce pharmaceuticals;

89

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

these are not using a lot of energy when handled as waste (incinerated).

Downstream leased assets


Lundbeck do not see any major activities regarding downstream leased assets, therefore this is not relevant to us.

Franchises Not relevant, explanation provided

Lundbeck have no franchise activities, therefore this is not relevant to us.

Investments Relevant, calculated

3528

Operation of investments (partnerships and co-production with other companies) are a big part of our buisness at Lundbeck. In 2016 395 milion Lundbeck tablets was produced by our partners. The average CO2 emission from 1 tablet is 8,9 grams (please see the intensity figure in CC.12.3). Total CO2 emission is 3528 tons CO2 in 2016. The CO2 emission accounts for 4.6% of our total combined scope 1+2+3 emission in 2016.

100.00%

Other (upstream) Relevant, calculated

396

Purchased raw materials (solvents): Lundbeck use solvents in our production. The use of solvents is an essential part of making a chemical synthesis. The suppliers of our 2 mostly used solvents (Ethanol and Acetonitrile) have been asked to supply the CO2 emission factor for the production of 1 tons of solvent. Factor Ethanol: 0,75 tCO2/tEtOH Factor Acetonitrile: 0,106 tCO2/t Acetonitrile The CO2 emission

100.00%

90

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

accounts for 0.5% of our total combined scope 1+2+3 emission in 2016.

Other (downstream)


10000

Calculation of Lundbeck’s scope 3 GHG emissions from other downstream business activities are based on economic spend data from Lundbeck and the multi‐ regional hybrid input‐ output database Exiobase. The spend of congress meetings, events and marketing was 311 million DKK in 2016. This results in a 10000 tons CO2-eq. The emission accounts for 13.0% of our total combined scope 1+2+3 emission in 2016.

0% New in 2016.

CC14.2

Please indicate the verification/assurance status that applies to your reported Scope 3 emissions


CC14.2a

Please provide further details of the verification/assurance undertaken, and attach the relevant statements

91

Verification

or assurance

cycle in place

Status in

the current

reporting year

Type of

verification or

assurance



Relevant standard

Proportion of

reported Scope 3 emissions verified (%)

Annual process


https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/CC14.2a/Verification CDP 2016 final.pdf

Deloitte have made third party verification for Business Travel.

ASAE3000 22

Annual process



Attachment: "Final - Energy and CO2 data 2016 final.xls" - used by Deloitte as documentation on scope 3 emissions on Business Travel.

ASAE3000 22

CC14.3

Are you able to compare your Scope 3 emissions for the reporting year with those for the previous year for any sources?

Yes

CC14.3a

Please identify the reasons for any change in your Scope 3 emissions and for each of them specify how your emissions compare to the previous year

92

Sources of Scope

3 emissions

Reason for

change

Emissions

value (percentage)

Direction

of change

Comment

Downstream transportation and distribution

Emissions reduction activities

32.8 Decrease

In 2015: 7162 tons. In 2016: 4816 tons. Decrease of 32.8% compared to 2015. REASON: Downstream transportation of goods has not been transported by air as was partially done in 2015 (a necessity due to high demands on timely delivery to China in 2015). METHODE: We normally prefer sea as this results in lower CO2 emission.

Business travel Change in methodology

19.8 Increase

In 2015: 4430 tons. In 2016: 5282 tons. Increase of 19.8% compared to 2015. REASON: Lundbeck had less global meeting activity in 2016, but the scope 3 emission has been extrapolated to cover 100% in 2016. It covered only 65% in 2015 - hence the higher volume in 2016, despite the reduced traveling. METHODE: Due to a list of emission reduction initiatives, such as more web meetings/video conference to reduce traveling, a firm travel policy, travel approval by management (only compliance travel is approved). Combined this made a vast decrease in our CO2 emission from business travel of 11.5% in 2016. But the extrapolation to 100% in 2016 eat up the savings of 11.5% resulting in an total increase of 19.8%.

Upstream leased assets

Change in physical operating conditions

11.6 Decrease

In 2015: 5730 tons. In 2016: 5067 tons. Decrease of 11.6% compared to 2015. REASON: Due to lower number of employees with the benefit of a company car in 2016. Almost 200 FTE less in 2016 compared to 2015. METHODE: This results in a minor decrease in fuel used for transportation.

Other (upstream) Change in output 25.4 Increase

In 2015: 315 tons CO2/year. In 2016: 396 tons CO2/year. Increase of 25.4% compared to 2015. REASON: Due to sourcing of more Ethanol and Acetonitril for production at our chemical site in Lumsås, Denmark. The production mix can differ from year to year. Chemical production increased by 18.2% at site Lumsås in 2016 compared to 2015. METHODE: Despite emission reduction initiatives (our effort to regenerate solvents to consume less "virgin" solvents) we still need to buy virgin solvents for our production. Lundbeck recovered 37% of our 9 most used solvents in 2016, but had to buy the rest from our suppliers.

Purchased goods & services


58.0 Decrease

In 2015: 3380 tons CO2/year. In 2016: 1419 tons CO2/year. Decrease of 58.0% compared to 2015. REASON: Due to change in calculation of supplier emissions in 2016 compared to 2015. METHODE: CO2 emission from suppliers was collected based on a questionnaire made by Lundbeck, data from the top 30 suppliers delivering chemicals and packing materials were gathered. The questionnaire asked for information on their CO2 emissions and energy reduction effort. 13 suppliers (43%) gave feedback on the questionaire. Data has been extrapolated to cover 100% in 2016. In 2015 it only covere about 50%. The value is a constant of 1419 tones/year for the next 5 years (until 2021). After the consolidation process in 2016, the selection revealed that this emission was

93

Sources of Scope

3 emissions

Reason for

change

Emissions

value (percentage)

Direction

of change

Comment

quite small (it is 3.2% of our total combined scope 1+2+3 in 2016) and we as a company have a low influence due to our relative small part of the total sales at our supplier.

Waste generated in operations


26.0 Increase

In 2015: 3039 tons. In 2016: 3829 tons. Increase of 26.0 % compared to 2015, due to more "Chemical waste" from our Danish site in Lumsås. REASON: Due to more production activities the cemical production at the site rose 18.2 % compared to 2015 - hence the volume of chemical waste send for incineration rose 8.4% accordingly and due to extrapolating data to cover 100% in 2016. Data covered only 85% in 2015. METHODE: The waste is incinerated at a special facility in Denmark (Ekochem). The facility provides an "on line" calculator on how much CO2 is emitted compared to the amount of liquid chemical waste incinerated. The emission factor provided is 0,696 kg CO2/kg waste. Primary data originates from Denmark only and is 85% of the total - data is extrapolated to 100% by using the number of FTE outside Denmark.

Capital goods Change in methodology

0 No change

New in 2016. No data for 2015. Calculation of Lundbeck’s scope 3 GHG emissions are based on economic spend data from Lundbeck and the multi‐ regional hybrid input‐output database Exiobase.

Upstream transportation & distribution


0 No change


Other (downstream)


0 No change


CC14.4

Do you engage with any of the elements of your value chain on GHG emissions and climate change strategies? (Tick all that apply)

Yes, our suppliers Yes, other partners in the value chain

94

CC14.4a

Please give details of methods of engagement, your strategy for prioritizing engagements and measures of success

Purchased goods and services SUPPLIERS METHODE: In 2017 CO2 emission data from our top 30 biggest global suppliers of chemicals and packing materials were requested based on a questionnaire. The prioritization method is based on annual purchasing spent. The questionnaire asked for information on their CO2 emissions and energy reduction effort. 13 suppliers (43%) gave feedback on the questionnaire. By asking these questions we hope to lower our own scope 3 emissions by heighten the awareness of our suppliers on climate issues and CO2 emission. Additionally Lundbeck have a firm Due Diligence Process and conduct on-site HSE audits (questionnaires and visits) on our main chemical suppliers. Energy consumption is always a part of the audit. If any unconformities’ are reported, we visit (re-visit) all existing and new suppliers. STRATEGY: Scope 3 emission is less than expected and our part of the company’s turnover is very small, indicating that it is difficult for us to make a large pressure on the companies. At on-site audit at the suppliers we try to approach these issues. In most of the companies Lundbeck only account for < 1% of their total turnover. In an overall measure of CO2 emission from Lundbeck "supplier" emissions accounts for 1.8% of our total scope 1+2+3 emissions in 2016. MEASURE OF SUCCESS: We do not have a specific target in this category – but we wish to put focus on climate change at our suppliers by conducting audits and sending questionnaire. All suppliers receive a self-assessment questionnaire regarding HSE, CSR issues. So far 90% of our suppliers on chemicals from China and India have been evaluated. We aim to get more suppliers to engage and answer the questionnaires. Purchased goods and services RAWMATERIALS METHODE: Two suppliers of Ethanol and Acetonitrile were asked to disclose the CO2 emission factor for the production of one tonne of solvent. The suppliers are prioritized based on the volumes we source. By asking this we aim to become more aware about our own scope 3 emissions and raise the awareness on CO2 emission and climate change at the supplier. STRATEGY: CO2 emission from our raw material suppliers (solvents) is important to Lundbeck. As a responsible company the use of solvents is one of our significant environmental aspects. This we monitor and manage. Lundbeck use these data to track, if we can reduce or substitute solvents. We have a specific target of recovering 40% of our 9 most used solvents at Site Lumsås (Denmark). Ethanol and Acetonitrile are among these solvents. MEASURE OF SUCCESS: The emission factors provided have been used to calculate the CO2 emission in 2016. The CO2 emission accounts for 0.5% of our total combined scope 1+2+3 emission. In 2016 we had a recovery of 37% at site Lumsås. In this way we avoided purchasing approx. 635 tons of virgin solvents, which are resource demanding and costly to produce, transport and dispose of. The recovery of materials save CO2 and also costs for production. The amount of Ethanol recovered in 2016 was 14.9 tons equivalent to a CO2 saving of 11.2 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 191.8 tons equivalent to 20.3 tons CO2. The energy used for the recovery process will contribute to some CO2 emission. However this is negligible compared to the CO2 savings of the recovered material. OTHER PARTNERS IN THE VALUE CHAIN Downstream transportation of goods:

95

METHODE: Data originates from our 10 biggest suppliers for the transportation of our goods worldwide These suppliers are strategic to our operations and the prioritization method is based on the annual purchasing spent. Data covers available information from our Corp. Logistic Department who have the direct contact. We incentivize performance improvement by using the prioritization method that only trucks with EURO Norm 4 (using less fuel and emitting less CO2) or above are accepted. The engagement method is built on a regular communication with these strategic suppliers. In our written contract with all the transportation compaies they have to document CO2 emissions every 3 months. Due to this information we annually evaluate their performance on CO2 emission. We also focus on optimal and effective packing of the trucks, so all space in the truck is being used the best way possible. This lower our own scope 3 emissions and raise the awareness on CO2 emission and climate change at the supplier. STRATEGY: Lundbeck use these data to track, if we can do better next year (Local target of 5% CO2 reduction in 2016 compared to 2015). MEASURE OF SUCCESS: The emission was reduced 32.8% in 2016 compared to 2015. Target was achieved in 2016, due to more transportation by sea instead of by air (sea => lower CO2 emission and a lower cost). The total transportation of goods (downstream) accounted for 6.3% of Lundbeck total scope 1+2+3 emissions in 2016.

CC14.4b

To give a sense of scale of this engagement, please give the number of suppliers with whom you are engaging and the proportion of your total spend that they represent

Type of

engagement

Number of

suppliers

% of total

spend (direct

and indirect)

Impact of engagement

Active engagement

75 15%

Lundbeck directly engaged (by a questionnaire) with the 30 biggest global suppliers of raw materials and packaging materials. The prioritization method is based on annual purchasing spent. We make a survey every 5 years asking suppliers to provide feedback in a written form. For this engagement method we send around a questionnaire covering the following topics - "Energy consumption", "CO2 emission" and "Reduction target/Climate strategy". 13 suppliers provided feedback on energy consumption and CO2 emission (4 suppliers of raw materials and 9 suppliers of packaging materials). The total spend by these 13 suppliers is 40-50% of our total spend on raw materials and packaging materials. Lundbeck directly engage with our 10 biggest global suppliers of transportation of finished goods. These suppliers provide written feedback on CO2 emission to Lundbeck on a monthly basis. The total spend by these 10 suppliers is about 50% of our total spend on transportation of finished goods. Lundbeck directly engage with our 2 biggest suppliers of organic solvents (Ethanol and Acetonitrile). In 2016 the suppliers were asked (in writing) to provide data on the CO2 emission factor for the production of the 2 solvents in question. The emission factors are used a constantfigure for the years to follow. The total spend by these 2 suppliers is about 10% of our total spend of organic solvents. Lundbeck directly engage with all our chemical suppliers in India and China. By now 50 suppliers (equivalent

96

Type of

engagement

Number of

suppliers

% of total

spend (direct

and indirect)

Impact of engagement

to 90%) in India and China have had HSE audit (on-site) by Lundbeck. We audit our chemical suppliers every 3-4 yerar - if the standard is basic. For high performing suppliers in HSE we only visit once. Lundbeck plan these audit by requesting to visit on a 1-2 day on-site audit. A written audit report and requested CAPA by Lundbeck is always the outcome of these audits - including energy consumption.

CC14.4c

Please explain why you do not engage with any elements of your value chain on GHG emissions and climate change strategies, and any plans you have to develop an engagement strategy in the future

Further Information

CC.14.1: Attachment: "Final - Energy and CO2 data 2016 final.xls" - as documentation on scope 3 emissions.The methodology used is based on the GHG protocol, Corporate Value Chain (Scope 3) Accounting and reporting Standard. Waste generated in operations: The web-based calculator "Klimakompasset" is used to sum up specific CO2 emissions from different types of waste. Klimakompasset: www.klimakompasset.dk Liquid Chemical waste: The web-based calculator at KommuneKemi/Nord: http://www.nordgroup.eu/ is used to sum up specific CO2 emissions from liquid chemical waste. CC14.2a: Verification statement from Deloitte on scope 3 from Business Travel. Our travel company ”BCD Travel” reports data to Lundbeck about emissions from fuel by plane in 15 countries and we have internal reporting on the use of cars. Attachments: 1: Supplementary information from Deloitte to CDP (Verification CDP 2016.pdf): Deloitte have made third party verification for Business Travel. 2: "Final - HSE data 2015 final": Lundbeck document used by Deloitte as documentation on scope 3 emissions on Business Travel. CC14.4c: The amount of Ethanol recovered in 2016 was 14.9 tons equivalent to a CO2 saving of 11.2 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 191.8 tons equivalent to 20.3 tons CO2. CC14.4a: Lundbeck face a dilemma as regenerating of our solvents use more energy (compared to just buying new) - hence emitting more CO2 - by recovery we save more than 37% of virgin solvents in our chemical production, by recover the solvents already bought. This saves a lot of CO2 in producing the chemical by the supplier, transportation of raw materials and the disposal as waste.

Attachments

https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC14.Scope3Emissions/Verification CDP 2016 final.pdf https://www.cdp.net/sites/2017/48/11048/Climate Change 2017/Shared Documents/Attachments/ClimateChange2017/CC14.Scope3Emissions/Final - Energy and

97

CO2 data 2016 final.xls

Module: Sign Off

Page: CC15. Sign Off

CC15.1

Please provide the following information for the person that has signed off (approved) your CDP climate change response

Name

Job title

Corresponding job

category

Lars Bang.

Executive Vice President Lars Bang is member of the Executive Management and appointed by the Cheif Executive Officer to be chairman for Lundbecks HSE Council.

Chief Operating Officer (COO)

Further Information

CDP 2017 Climate Change 2017 Information Request