lundbeck a/s · perform pharmacovigilance, continuously evaluate the benefits and risks of our...

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CDP Climate Change 2016 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 5,300 people worldwide, 1,700 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 China, Denmark, France and Italy and research centres in Denmark and China. Lundbeck generated revenue of approximately DKK 14.6 billion in 2015. Corporate Social Responsibility: Our Corporate Social 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 corporate 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 CO2 emission in 2020 compared to 2006.

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

Thu 01 Jan 2015 - Thu 31 Dec 2015

CC0.3

Country list configuration

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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, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the 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. If you wish to view the questions first, please see https://www.cdp.net/en-US/Programmes/Pages/More-questionnaires.aspx.

Further Information

Question 0.1: For more general information about the company read our Annual Report 2015 For more information about our Corporate Social Responsibility read our Un Global Compact Progress Report For more information about our strategy on Climate change read our Position on Climate change

Attachments

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https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC0.Introduction/climate change - Position 2016.pdf https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC0.Introduction/Annual_Report_2015.pdf https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC0.Introduction/UN Global Compact Progress Report_2015.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,also 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. 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.

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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 Corporate Energy Forum. All Lundbecks production and research sites are represented in this forum. The forum coordinates energy initiatives at all the sites and exchanges experiences and possibilities about 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 (4% energy and 4% CO2 reduction in 2016 compared to 2015) are created by breaking down the Corporate long term target about GHG emission.

Business unit managers Monetary reward

Emissions reduction target Energy reduction

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 about scope 1 and 2

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indicator

Comment

target

emissions down 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 about scope 1 and 2 emissions down 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 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 about GHG emission down 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 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.

All employees Recognition (non-monetary)

Emissions reduction project Energy reduction

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

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indicator

Comment

project Behaviour change related indicator

All employees Recognition (non-monetary)

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

At a yearly HSE seminar a HSE prize, 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 get the prize get a reward. The prize in 2015 was given in september.

All employees Other non-monetary reward

Energy reduction project 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 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

CC2.1

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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 current activities and resources, and a clear basis for decision-making on Lundbeck’s overall risk exposure. 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

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 monitoring, identifying, quantifying and responding to risks. Furthermore, we have defined reporting,

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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. 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 we should maintain our focus on actions to mitigate climate change. OPPORTUNITIES are continuously identified and managed by the same decentralized business units. As a part of the daily work opportunities are identified and discussed by employees and managers. 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. Other more strategic opportunities are reported up in the line organization following the defined procedures for communication and decision making. 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. Risks related to climate change issues, including reputational, regulatory, physical and other climate related risks, is categorized under 3. Infrastructure. 4. Reputation 5. Legal rights 6. Financial matters The risk categories are defined into three risk types: external, actionable or strategic. Climate change risks are typically defined as external or actionable risks. Using this information, the Risk Office assesses the overall risk exposure and reviews it with the Executive Management. After this, the Executive Management presents a two-dimensional risk ‘heat map’ which is shared with the Board of Directors annually.

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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 addressed and 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 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.

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Climate change related issues are also reported through the systematic work in our HSE organization. Our HSE Council meets quarterly and evaluates our progress towards reaching our CO2 target and decides on new corporate 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. Following Climate change aspects have influenced the business strategy and the way we work: - 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. Since 2012 we have invested around 12.2 MDKK in climate adaptation of our buildings. Mostly to protect against heavy rainfall. - International and national energy targets set up expectations to companies about being responsible: Being responsible is one of our business principles and taking voluntary action to reduce our GHG emissions is considered an act of responsibility. In 2014 we revised our long-term target: We want to reduce our CO2 emission by 55% in 2020 compared to 2006. Apart from the above, climate change is only marginally influencing our core business and no specific adaptation of e.g. product range or treatment areas is implemented due to climate change. iii. 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 thereby reducing GHG emissions. By setting annual targets short term reductions in GHG emissions are possible. We continue our integrated approach where dedicated teams of engineers and maintenance employees challenge habits and conventional thinking to identify new ways to reduce energy use. This approach has resulted in optimization of ventilation and reduction of air change in production areas and is the major contributor to our energy reductions. - Our strategy about maintenance of our facilities is impacted by the need to mitigate climate change risks. We continuously develop our sites so they can resist weather events. E.g. we have built water reservoirs at selected locations in order to avoid damages from heavy rain. iv. Our long-term business strategy i.e. +4 years has been influenced by climate change: - The most important long-term component is our continuous development of our Climate strategy including more ambitious CO2 targets and increased focus on renewable energy like bio fossils. - Another important component is our focus on production efficiency that secure our ability to continue to produce more with less. 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. v. The overall focus on production efficiency and energy savings reduces GHG emissions and operating costs. It secures our ability to produce more with less resources 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 increased prices. Our focus on energy savings has today reduced our annual electricity costs with around 30 MDKK compared to 2006. We also believe that our climate strategy enhances our reputation and improves our standing in external ratings and indices. vi. None of the substantial business decisions made during 2015 were affected by climate change driven aspects. Neither did climate change lead to new business decisions. 2015 has been a year of restructuring and focusing. In August a restructuring programme was initiated including a reduction of 1,000 employees in order to recover our profitability. It has also been decided to focus our research projects on 4 disease areas. The restructuring programme do have a positive effect on energy reductions because employees are being relocated to fewer and renovated facilities following our facility guidance with less space/employee. Parallel with these significant business changes we have decided to continue our focused work with reduction of energy consumptions and GHG emissions and a new corporate annual target on 4% CO2 reductions in 2016 compared to 2015 have been decided.

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CC2.2b

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

CC2.2c

Does your company use an internal price of carbon?

Yes

CC2.2d

Please provide details and examples of how your company uses an internal price of 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, energy savings and carbon reductions are caculated 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. the investment on around 800,000 DKK in optimizing our server facilities reducing our CO2 emissions with 130 tons CO2 was reduced with around 120,000 DKK because we could sell the energy reduction. In general low energy consuming equipment have a high priority in Lundbeck and we conduct risk assessment prior to sourcing new equipment to e.g. assess the energy consumption. 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. In general energy considerations are included in our building and maintenance projects.

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)

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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

CC2.3b

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

No

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

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Please provide details of the other engagement activities that you undertake

Lundbeck continuously engage with different kind of stakeholders: Direct engagement with policy makers: 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 2015 we have, in cooperation with other pharmaceutical companies, made a report with recommendations to the future BREF documents about wastewater and emissions and Organic Fine Chemicals. 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. We expect also to be able to participate in a relevant partnership when the BREF about Energy Efficiency must be revised. Trade associations: EFPIA, European Federation of Pharmaceutical Industries Ass.: In 2015 Lundbeck has shared the coordinator role in a survey about climate performance and targets in the pharmaceutical industry. Input from the survey will be the basis for the development of a Position on climate change for The European Federation of Pharmaceutical Industries. The Confederation of Danish Industries: The Confederation of Danish Industries works to ensure that the business competitiveness, a clean environment and energy security are utilized to create the foundation for long-term and sustainable growth - green growth. In The Confederation of Danish Industries we have several memberships. Our engagement concerning climate change in 2015 was focused on how the industry implements the EU directive on energy efficiency in DK and the differences in implementation across Europe. By participating in meetings we have given input that will be used when The Confederation of Danish Industries participate in an implementation council set up by the Government. The Danish Association of the Pharmaceutical Industry: Lundbeck participate in a network where we comment on new legislation before it is defined finally. Typically the trade association gathers comments from member companies and then makes a common comment to the authorities. Other: 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?

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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 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

Question 2.1: In our Annual Report p 23-25 you can read about our risk management system Question 2.2a: In our Annual Report p. 10-11 you can read about our business strategy Question 2.2a: In our Position on Climate change you can read about our long-term target Question 2.2a: In our UN Global Compact Progress report p. 4 you can see our annual target for 2015 and 2016.

Attachments

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC2.Strategy/Annual_Report_2015.pdf https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC2.Strategy/climate change - Position 2016.pdf https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC2.Strategy/UN Global Compact Progress Report_2015.pdf

Page: CC3. Targets and Initiatives

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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

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% 55% 2006 47200 2020 Yes

Lundbeck intends to break the correlation between business growth and the resulting GHG emissions. Our target is a combined scope 1 and scope 2 target. Our scope 2 baseline calculations is based on location based emission factors, because it hasn't been possible to get market based figures for 2006. In the target year all scope 2 emissions will be market based.

Abs2 Scope 1+2 (market-based)

100% 4% 2014 26077 2015 Yes To support our long-term target we set up annual targets as well. Like the long-term target the short-term target is a combined scope 1 and scope 2 target.

CC3.1b

Please provide details of your intensity target

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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

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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 64% 93% By the end of 2015 we had reduced our CO2 emissions with 48% compared to 2006.

Abs2 100% 100% By the end of 2015 we had reduced our CO2 emission by 6,3% compared to 2014.

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

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

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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 14 170

To be implemented* 6 148

Implementation commenced* 9 551

Implemented* 23 1137

Not to be implemented 0 0

CC3.3b

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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 -


Payback period

Estimated lifetime of

the initiative

Comment

Energy efficiency: Processes

Upgrading Iced water production

101

Scope 2 (market-based)

Voluntary

165000 2700000 16-20 years

6-10 years

This project was initiated because of quality and productivity gaps.

Energy efficiency: Building services

Stop of ventilation system in specific area

41


Voluntary

75000 300 <1 year Ongoing


Optimization of ventilation in production

122


Voluntary

225000 80000 <1 year Ongoing


Optimization of ventilation

21


Voluntary


Energy efficiency: Building fabric

Optimization of serverrooms

163


Voluntary

320000 680000 1-3 years 11-15 years


Optimization of water installations

30 Scope 1

Voluntary

65423 47000 <1 year 3-5 years

Energy Optimization of 30 Scope 2 Voluntary 101805 24000 <1 year Ongoing

21

Activity type




Scope



(unit currency -


Investment required

(unit currency -


Payback period


the initiative

Comment

efficiency: Building services

ventilation (market-based)



16


Voluntary




75


Voluntary

138500 27000 <1 year Ongoing


New compressed air compressor

104


Voluntary

186000 900000 4-10 years

21-30 years


Optimization of fume hoods

39


Voluntary

68000 475000 4-10 years

11-15 years



26


Voluntary



Isolation of steam installations

28 Scope 1

Voluntary



Down classification of GPMP area

55


Voluntary

122360 45000 <1 year Ongoing

22

Activity type




Scope



(unit currency -


Investment required

(unit currency -


Payback period


the initiative

Comment


Oxygen trim control of steam boilers

67 Scope 1

Voluntary

120000 70000 <1 year Ongoing


Energy on demand. Optimization heating with outside temperatures.

14


Voluntary




8


Voluntary



Exchange of steam traps

27 Scope 1

Voluntary


This project was initiated due to ordinary maintenance and attrition of equipment.


Exchange of cooling equipment

46


Voluntary

82000 800000 4-10 years

Ongoing This project was initiated due to attrition of equipment


Exchange of steam traps

34 Scope 1

Voluntary

75000 188200 1-3 years Ongoing

This project was initiated due to ordinary maintenance and attrition of equipment.



9


Voluntary


Low carbon energy installation

Exchange to energy efficient freezers

42 Scope 2 (market-based)

Voluntary

38000 91100 1-3 years 11-15 years

23

Activity type




Scope



(unit currency -


Investment required

(unit currency -


Payback period


the initiative

Comment


Optimization of heating utility and temperature and humidity control

39


Voluntary

138486 27000 <1 year Ongoing

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 2015 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 and optimizing ventilation when it is not in use. Implementation of many of these activities only require employee hours and not financial investments. In 2016 the dedicated budget is 1 MDKK.

Lower return on investment (ROI) specification

In 2015 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. Due to this energy activities can be favoured over other activities. In 2015 energy efficiency projects with a total investment on 1 MDKK was identified and approved for implementation in 2016. Other investment is taken from the dedicated budget for energy efficiency.

24

Method

Comment

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 down 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 considerations concerning 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 2015 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 possibilities for identifying even more potentials for energy savings in the future.

CC3.3d

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

Further Information

Question 3.1a: In the UN Global Compact progress report p. 4 you can see our annual targets in 2015 and in 2016. At p. 11-12 you can read more about our result. Question 3.1a: In our Position on Climate change you can read about our long-term target. Question 3.1a: In a screen dump, we can document that we are on SBT's list of companies taking action with a science based target.

Attachments

25

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC3.TargetsandInitiatives/Lundbeck on SBT Taking action list.docx https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC3.TargetsandInitiatives/UN Global Compact Progress Report_2015.pdf https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC3.TargetsandInitiatives/climate change - Position 2016.pdf

Page: CC4. Communication

CC4.1

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 other regulatory filings

Complete p. 3, 4, 11, 12 https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC4.1/UN Global Compact Progress Report_2015.pdf

It is legally required that we report our climate performance. Furthermore we are required to report on the 10 principles in UN Global Compact because we have signed the UN Global Compact.

In voluntary communications

Complete p. 1, 2, 3 https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC4.1/Internet page HSE strategy, case story and data.docx

The document consist of 3 screen dumps of our homepage, displaying targets and case stories. It is possible to create different HSE data set on our interactive data page.

In voluntary communications

Complete p. 1 https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC4.1/climate change - Position 2016.pdf

At our homepage (www.lundbeck.com) you can also find our Position on Climate Change.

Further Information

Module: Risks and Opportunities

26

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

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 and that regulatory incentive towards favoring renewable

Increased operational cost

1 to 3 years

Direct Very likely Low

Today our total energy costs only constitute about 0.5% of our revenue (around 76 MDKK compared to our revenue at 14,594 MDKK). We expect that energy prices and taxes will rise in the future in most parts of the world, but the risks from

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

The costs associated with energy saving activities differ from year to year. In 2015 we invested 1 MDKK in energy activities and because we have established dedicated teams of internal engineering and maintenance

27

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

energy use will come. We expect in the future to see price 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.

these changes are considered low, because it constitutes a very small part of our total operational costs. Even though the prices were doubled to around 152 MDKK, which we believe is unlikely to happen, the energy cost will still be low compared to our revenue.

when coming 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. 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

employees that spent around 5-10% of their working hours on energy optimization, the cost for internal resources (man hours) equals to around 1 MDKK. In 2016 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.

28

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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 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 30 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

29

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

activities ensure that the risk continously is kept at a very low level.

Product efficiency regulations and standards

Danish regulation have requirements 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 many of our

Reduction in capital availability

Up to 1 year

Direct Virtually certain

Low

Investments in new buildings can rise due to regulatory requirements. The size of the investment differs a lot, because it depends up 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 have been from 0 to less than 3 years. After that it has resulted in continuously lower energy costs. Costs related to energy screenings and energy saving

At Lundbecks sites for research, development and 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. The energy requirements for new buildings, energy review and energy efficiency

The costs associated with investments in energy savings differ from year to year. In 2015 we spent 1 MDKK on energy investments. In 2016 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

30

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

sites. These legislations influence on both the cost for investment in new buildings and our operational 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.

activities is considered negligible or very low. Costs in 2015 related to implementation of the energy review is estimated to 80,500 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 and hybrid ventilation (a ventilation method that combines natural and mechanical ventilation). On top of this a night cooling system is in place. We presume that the energy use in the building is

a good investment and in line with our strategies. Costs related to tracking legislation are considered as ordinary costs that is necessary for having an efficient business. Costs in 2015 related to implementation of the energy directive is estimated to 80,500 DKK, but in the future these costs will be reduced to around 22,000 DKK/year.

31

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

reduced by 5% a year due to these initiatives. An example on our work with energy review and optimization is our establishment of energy teams at our sites. The energy teams screen the energy consumption and implement “Energy on demand”. E.g. have these activities resulted in 5.7% reduction of the energy consumption at our headquarter in 2015 compared to 2014. 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


>6 years Direct More likely than not

Low Changes in international agreements are

At Lundbecks sites for research, development and

Costs related to tracking new and coming

32

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

affect the development of national legislation and national plans concerning energy prices, energy reduction and the use of renewable energy. Denmark is in the front 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

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 revenue (around 76 MDKK compared to our revenue on 14,594 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.

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. 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

legislation, National, European and International plans and our reporting activities are considered as ordinary costs that is necessary for having an efficient 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.

33

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

national plans and regulation in the other countries we operate in will be affected by international agreements.

optimized in order to meet the changes. Furthermore Lundbecks Corp. HSE department are tracking the development in National, European and 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

34

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

systems. In general the risk is low because our energy costs only constitute around 0.5% of our revenue.

Carbon taxes

Regulation concerning 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 more energy projects good business.


1 to 3 years


Today our total energy costs only constitute about 0.5% of our revenue (around 76 MDKK compared to our revenue on 14,594 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.

Lundbecks CO2 strategy including 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

The costs associated with investments in energy saving activities differ from year to year. In 2015 the investment was 1 MDKK and 1 MDKK for having our energy teams. In 2016 we expect to spend 1 MDKK on energy projects and 1 MDKK for our internal energy teams.

35

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

annual electricity costs with around 30 MDKK.

General environmental regulations, including planning

International regulations like REACH (Chemical regulation) and regulation about 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.


1 to 3 years


Environmental regulation can require investments in the production equipment and 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

In order to minimize the financial implications related to environmental 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

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

36

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

eventual increase in energy consumption will have very little impact on our revenue. The cost and resource demand for implementing new technologies in order to comply with the environmental legislation is expected to have a larger impact on the short run.

keep the investments and eventually interuptions in the production at a very low level.

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 only around 3,500

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

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.

37

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

DKK. research, development and production sites collect local HSE data and send them to the corporate HSE department. The data are then verified by 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

The cost for the CDP response is estimated to 100,000 DKK. The tracking of legislation and International plans is activities that are necessary for driving our business efficient and not considered extra costs.

38

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

identified, Lundbeck consider what consequences the regulation may have, and necessary actions are taken. Eg have we implemented the 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

Extreme weather


Up to 1 year

Direct Likely Low-medium

Lundbecks own sites are

At all our production sites

In 2012 and 2013 the total cost for

39

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

risks situations that can damage buildings can occur at Lundbecks own sites. This initiates activities that secure production facilities and buildings so they can resist situations with for example heavy rainfall or storms.

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

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

repairs was around 8 MDKK. In 2013 to 2015 we have spend 4.2 MDKK on preventive activities. In 2016 we expect to use 0.4 MDKK on preventive actions. The spend on preventive activities can be related to the cost of management and implementation of our action plan.

40

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

estimated to 1,969 MDKK.

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 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.

41

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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.

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 located in Europe and USA where extreme weather situations are unlikely to have a character that affect product reliability. A part of our suppliers and partners are

Reduction/disruption in production capacity

1 to 3 years

Indirect (Supply chain)

About as likely as not

Low

Untill now Lundbeck have not experienced problems with supplier and partner reliability because of 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

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 five independent sites. In this way we have enhanced

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 2015 we performed 211 audits estimated to around 6 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

42

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

located outside Europe and USA where it cannot be excluded, that extreme weather situations can affect supplier reliability.

scenario the financial impact due to missing deliveries is estimated to around 500 MDKK.

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 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

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

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 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

44

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 our ability to attract and retain talented employees and investors and decrease our stakeholders e.g. authorities confidence in our capabilities. Currently, we do not consider climate issues as the most significant factor in relation to bad press, but as climate change becomes more pronounced, we believe that it can have a greater impact on our future risk picture.


>6 years Direct Unlikely Low

If our reputation deteriorates it can lead to loss of talented employees and 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). If we in a future scenario are not able to continue to develop our pipeline in the same pace as today. Together with potential less confidence at authorities it can reduce our revenue for a limited number of years. At the moment Lundbeck has 11 promoted products on the market. The product with the lowest revenue at 117 MDKK can be

Lundbeck seek to motivate and retain our employees through individual 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

Costs related to recognition, development and improving the working 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 2015 we did spent 1 MDKK and in 2016 we expect to spend 1 MDKK on energy savings. Apart from that we spend around 1 MDKK/year on internal

45

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

used as indicator on an estimated financial implication.

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 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 48% since 2006.

ressources, because we have dedicated energy teams at all sites 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

46

CC5.1e

Please explain why you do not consider your company to be exposed to inherent risks driven by 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

47

CC6.1a

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

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

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 30 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

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.

The annual costs on energy saving activities differ. In 2015 we did spent 1 MDKK and in 2016 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

48

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

believe this will be an advantage compared to other companies.

have reduced our energy consumption by 48%. Implementation of renewable energy sources have untill now only had positive financial impact and also contributed to reduced operational costs because of reduced maintenance costs to the boilers.

One specific example is that we once a month search the internet for new and coming legislation and twice a year we open the search to include all European, Chinese and American plans. 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

efficient business. We track legislation because it is necessary for driving our business and required by our internal systems.

49

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

and that it can become an advantage for Lundbeck compared to companies, who has not prepared for more ambitious climate 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

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

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.

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.

50

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

improve our possibilities to attract and retain talented employees and our stakeholders confidence in our capabilities.

around 5 MDKK/year (1% of our employee turnover).

The HSE departments at all our research, development and production sites collect the local HSE data and send them to the corporate HSE department. The data is used for internal and external voluntary and compulsary reporting and other kinds of stakeholder reporting.

CC6.1b

Please describe the 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

Lundbecks suppliers, partners and our

Reduced operational costs

3 to 6 years

Direct About as likely as not

Low Reduced operational costs affect our revenue

In order to overcome situations with

The activities that relate to securing our supply chain

51

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

and droughts 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 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.

positively. By having managment methods that secure our sites and our supply chain eg that we have second sources for our 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

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

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 preventive solutions we implement in order to secure our own sites against extreme weather situations were from 2013 to 2015 4.2 MDKK and in 2016 we expect to spend 0.4 MDKK.

52

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

on around 1,969 MDKK).

precautionary approach to environmental challenges like climate change. We annually conduct multiple audits in accordance with the current risk 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

53

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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 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 the 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

Increased stock price (market

3 to 6 years

Direct More likely than not

Low

If our reputation deteriorates it can lead to loss of talented

Lundbeck believe that a clear attitude to public reporting and a

Except from our response to CDP our public reporting activities

54

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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 retain talented employees and investors and increase our stakeholders e.g. the authorities confidence in our capabilities.By having a clear attitude to public reporting and a responsible business strategy we believe we have a good reputation, which can help to avoid loss of employees.

valuation) employees and loss of confidence in our capabilities at our stakeholders. Loss of employees is around 5 MDKK (estimated on the basis that 1% of our vacancies cannot be filled again).

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 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

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 energy saving activities differ from year to year. In 2015 we spent 1 MDKK and in 2016 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.

55

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

climate changes. We do take climate changes seriously and we have been working targeted with energy reduction since 2006 and have an ambitious CO2 target and strategy. So far we have reduced our CO2 emission with 48% 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 physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

56

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

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


57

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

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 emissionfactors is based on Location based emission factors only. Please see our attached annual emission factors 2015

HFCs Other: R134a and R404a. EPA, class I and II ozone-depleting substances.www.engineeringtoolbox.com

CC7.4

58

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

Fuel/Material/Energy

Emission Factor

Unit

Reference

Electricity 0.304 metric tonnes CO2 per MWh

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


Location-based: Italy: http://www.eumayors.eu/IMG/pdf/technical_annex_en.pdf


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

Other: District heating 0.122 metric tonnes CO2 per MWh

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

Methane 0.202 metric tonnes CO2 per MWh

Italy and France: http://www.eumayors.eu/IMG/pdf/technical_annex_en.pdf

Methane 0.230 metric tonnes CO2 per MWh

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

Town gas or city gas 0.170 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)

0.240 metric tonnes CO2 per MWh

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

59

Fuel/Material/Energy

Emission Factor

Unit

Reference


Market-based: Denmark: http://www.energidanmark.dk/media/635570/generel%20deklaration%


Location-based: France: Emission factor for new market based approach: https://www.edf.fr/en/the-edf-group/responsible-and-committed/environment/preventing-climate-change


Market-based: France: https://www.edf.fr/en/the-edf-group/responsible-and-committed/environment/preventing-climate-change

Other: District heating 0.098 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 2015 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. CC7.4: 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. Natural gas: France and Italy use the same factor. Sources for emission factors is attached "Lundbeck emission factors 2015".

Page: CC8. Emissions Data - (1 Jan 2015 - 31 Dec 2015)

CC8.1

60

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

7025

CC8.3

Does your company have any operations in markets providing product or supplier specific data in the form of contractual instruments?

Yes

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

15042 17420 Lundbeck have used the new Scope 2 accounting methods in 2015, due to the publication of the GHG Protocol Scope 2 Guidance in January 2015.

61

CC8.4

Are there are 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

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 not 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

62

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. Uncertainty in manual reading of consumption and possible transcription errors.

Scope 2 (location-based)

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

Data Gaps Assumptions Extrapolation Metering/ Measurement Constraints

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



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 the first time Lundbeck have disclosed both location based and market based emission factors separately we are still not very mature in this method. Hence the higher level of uncertainty.

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

63

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

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/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC8.6a/Lundbeck signed auditor statement 2015.pdf

Verification statement from Deloitte. One page.

ASAE3000 100

Annual process


https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC8.6a/Verification CDP 2015_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/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC8.6a/Market based - HSE data 2015 final.xls

Attachment: "Market based - HSE data 2015 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 Emissions Monitoring Systems (CEMS)

Regulation

% of emissions covered by the system

Compliance period

Evidence of submission

CC8.7

64

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


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


or assurance



Relevant standard


Scope 2 emissions

verified (%)

Location-based

Annual process



Verification statement from Deloitte. One page. Emission factors for electricity used in Denmark and France are "Location-based".

ASAE3000 100

Market-based

Annual process



Verification statement from Deloitte. One page. Emission factors for electricity (Italy and USA) and district heating (Denmark) are "Market-based".

ASAE3000 100

Location-based

Annual process


https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared

Location based: Supplementary

ASAE3000 100

65

Location-based or market-based figure?

Verification

or assurance

cycle in place

Status in

the current

reporting year


or assurance



Relevant standard


Scope 2 emissions

verified (%)

Documents/Attachments/CC8.7a/Verification CDP 2015_final.pdf

information from Deloitte on the CDP Verification template to address all issues required. (For gaining full score by CDP). Covers Location-based data.

Market-based

Annual process



Market based: Supplementary information from Deloitte on the CDP Verification template to address all issues required. (For gaining full score by CDP). Covers Market-based data.

ASAE3000 100

Location-based

Annual process


https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/CC8.7a/Location based - HSE data 2015 final.xls

Attachment: "Location based - HSE data 2015 final.xls" - as documentation of calculations on Scope 2 emissions. Covers Location-based data.

ASAE3000 100

Market-based

Annual process



Attachment: "Market based - HSE data 2015 final.xls" - as documentation of calculations on Scope 2 emissions. Covers Market-based data.

ASAE3000 100

66

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 2016. Emission Scope 1, 2014 = 7250 Tons CO2. Emission Scope 1, 2015 = 7025 Tons CO2. Reduction Scope 1, 2014-2015 = 225 Tons CO2 (3.1%). MARKET BASED (scope 2):


Verified by Deloitte during our annual review of HSE data in January 2016. LOCATION BASED: Emission Scope 2, 2014 = 17925 Tons CO2. Emission Scope 2, 2015 = 15042 Tons CO2. Reduction Scope 2, 2014-2015 = 2883 Tons CO2 (16.1%). MARKET BASED: Emission Scope 2, 2014 = 18827 Tons CO2. Emission Scope 2, 2015 = 17420 Tons CO2. Reduction Scope 2, 2014-2015 = 1407 Tons CO2 (7.5%).

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

Verified by Deloitte during our annual review of HSE data in January 2016. LOCATION BASED (Scope 2): Emission Scope 1+2, 2014 = 25175 Tons CO2. Emission Scope 1+2, 2015 = 22067 Tons CO2. Reduction Scope 1+2, 2014-2015 = 3108 Tons CO2 (12.3%). MARKET BASED: Emission Scope 1+2, 2014 = 26077 Tons CO2. Emission Scope 1+2, 2015 = 24445 Tons CO2. Reduction Scope 1+2, 2014-2015 = 1632 Tons CO2 (6.3%).


Scope 3 from Business travel has been verified by Deloitte in April 2016. Emission Scope 3 (Business travel), 2014 = 7132 Tons CO2. Emission Scope 3 (Business travel), 2015 = 4430 Tons CO2. Reduction Scope 3 (Business travel), 2014-2015 = 2702 Tons CO2 (37,9%)

Progress against emission reduction target

Verified by Deloitte during our annual review of HSE data in January 2016. Reduction target is 55% by 2016 compared to base year 2006. Emission factors for base year (2006) are location based only! LOCATION BASED: Total reduction from 2006-2015 = 53%. MARKET BASED: Total reduction from 2006-2015 = 48%

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

Verified by Deloitte during our annual review of HSE data in January 2016. Base year 2006. Emission Scope 1, 2006 = 14282 Tons CO2. Emission Scope 1, 2015 = 7025 Tons CO2. Reduction Scope 1, 2006-2015 = 7257 Tons CO2 (50.8%)


Verified by Deloitte during our annual review of HSE data in January 2016. 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, 2015 = 15042 Tons CO2. Reduction Scope 2, 2006-2015 = 17954 Tons CO2 (54.4%). MARKET BASED: Emission Scope 2, 2006 = 32996 Tons CO2. Emission Scope 2, 2015 = 17420 Tons CO2. Reduction Scope 2, 2006-2015 = 15576 Tons CO2 (47.2%).


Scope 3 from Business travel has been verified by Deloitte in April 2016. Base year 2013. Emission Scope 3 (Business travel), 2013 = 6455 Tons CO2. Emission Scope 3 (Business travel), 2015 = 4430 Tons CO2. Reduction Scope 3 (Business travel), 2013-2015 = 2025 Tons CO2 (31.4%)

CC8.9

67

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

Yes

CC8.9a

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

16

Further Information

CC8.6a, CC 8.7a and CC8.8: Energy and CO2 is verified annually by Deloitte January 2016. Attachments: 1) "Lundbeck signed auditor statement 2015.pdf". 2) Supplementary information from Deloitte to CDP 2015 (Verification CDP 2015_final.pdf): Supplementary information from Deloitte on the CDP Verification template to address all issues required for gaining full score. 3) "Location based - HSE data 2015 final.xls" - as documentation of calculations on Scope 1+2 emissions. 4) 3) "Market based - HSE data 2015 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. See certificate as attachment.

Attachments

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC8.EmissionsData(1Jan2015-31Dec2015)/Certificate biooil 2015.pdf

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)

CC9.1

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

Yes

68

CC9.1a

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

Country/Region

Scope 1 metric tonnes CO2e

Denmark 1838

Italy 2579

France 1323

United States of America 1285

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

Business division

Scope 1 emissions (metric tonnes CO2e)

69

CC9.2b

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

Facility


Latitude

Longitude

Site Valby, Denmark 1638 55.658035 12.516765

Site Lumsås, Denmark 200 55.94317 11.512057

Site Padova, Italy 2579 45.410201 11.926138

Site Nice, France 1323 43.628082 7.051954

Site Paramus, USA 1285 40.93364 -74.076374

CC9.2c

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

GHG type


CO2 6963

HFCs 62

CC9.2d

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

70

Activity


Biooil 16

Methane 5196

Gasoil 144

F-gas (LPG) 26

Towngas/Citygas 1581

HFCs (R134a, R404a, R407c) 62

Further Information

Factors from Site Valby can differ +/- 1 ton CO2, due to the round off of decimals. CC9.1a: Attachment: "Market based - HSE data 2015 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/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC9.Scope1EmissionsBreakdown(1Jan2015-31Dec2015)/Market based - HSE data 2015 final.xls

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)

CC10.1

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

Yes

CC10.1a

71

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 9224 12698 38544 0

Italy 3020 2109 6252 0

France 375 1139 6698 0

United States of America

2423 1474 4881 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

Business division

Scope 2 emissions, location based (metric tonnes CO2e)

Scope 2 emissions, market-based

(metric tonnes CO2e)

72

CC10.2b

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

Facility




Site Valby, Denmark 7630 10302

Site Lumsås, Denmark 1594 2396

Site Padova, Italy 3020 2109

Site Nice, France 375 1139

Site Paramus, USA 2423 1474

CC10.2c

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

Activity




Purchased electricity 13371 16078

Purchased district heating 1671 1342

Further Information

CC10.1a: Find the data on scope 2 emissions 2015 in "Location based - HSE data 2015 final. xls" and "Market based - HSE data 2015 final. xls". NEW EMISSION FACTORS 2015: Data using our old approach (a mix of Location-based and Market-based data was validated by Deloitte in January 2016 and these data are reported on www.Lundbeck.com). Lundbeck has re-calculated our scope 2 emission based on the Location-based and Marked-based approach. These re-calculated

73

data have not been validated a third party (Deloitte) - nor have it been reported in our annual report. This is only for showing we are about to integrate this approach in our methodology. When reporting to CDP in 2017 we will fully integrate this approach and all data will be validated by Deloitte.

Attachments

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC10.Scope2EmissionsBreakdown(1Jan2015-31Dec2015)/Market based - HSE data 2015 final.xls https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC10.Scope2EmissionsBreakdown(1Jan2015-31Dec2015)/Location based - HSE data 2015 final.xls

Page: CC11. Energy

CC11.1

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


CC11.2

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

Energy type

Energy purchased and consumed (MWh)

Heat 13696

Steam 0

Cooling 0

CC11.3

74

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

43633

CC11.3a

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

Fuels

MWh

Diesel/Gas oil 569

Methane 24907

Town gas or city gas 9302

Vegetable oils 8748

Liquefied petroleum gas (LPG) 107

CC11.4

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

Comment

Off-grid energy consumption from an onsite installation or through a direct line to an off-site generator

8748

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 2015 was only 16 tons CO2, as the emission factor (provided by the supplier) is: 0.00186 tons CO2 pr. MWh.

75

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

42678 42678 0 0 0

Lundbeck do not produce any electricity ourselves, but more than 60% of the electricity in the national grid in Denmark in 2015 was originated from renewable energy sources (wind mills, solar, water, nuclear). This corresponds to a renewable energy part of 35% of our Corporate consumption of electricity in 2015. The use of Nuclear power in France also contribute to very low CO2 emissions. https://www.energinet.dk/DA/KLIMA-OG-MILJOE/Miljoedeklarationer/Sider/Hvor-kommer-stroemmen-fra.aspx https://www.edf.fr/en/the-edf-group/responsible-and-committed/environment/preventing-climate-change

Further Information

Find the data on energy consumption in MWh in 2015 in "Market based - HSE data 2015 final. xls".

Attachments

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC11.Energy/Market based - HSE data 2015 final.xls

Page: CC12. Emissions Performance

CC12.1

76

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

0.5 Decrease

The overall decrease in consumption of electricity in 2015 was 5.2% (2362 MWh) compared to 2014. (This is equivalent to 1079 tons CO2 - 4.14% of total CO2 decrease in 2015). (1079/26077)*100 = 4.14%. Some of this is due to energy reduction activities, but most of it is due to change in emission factors (see more in “Change in Methodology”). Last year a total 130 tCO2 were reduced by our global emissions reduction projects. Our total scope 1 and scope 2 emissions in the previous year was 26077 tCO2, therefore we arrived at 0.5% through (130/26077)*100= 0.5% The overall reduction is due to focus on energy consumption from ventilation (lowering pressure and night closing in our production and labs.), screen fume cupboards, investigating pumps and adjusting CTS control. In 2015 especially adjusting ventilation/cooling in server rooms at site Valby, Denmark gave tangible results. Unfortunately not all sites managed to show same good progres, hence the grand total was not as high as anticipated. Note: The actual CO2 emissions saved due to energy projects must be subtracted from the "Change in methodology" as emission factors on electricity has been in our favor as well in 2015. The actual number originating from emission factors is 4.14% - 0.5% = 3.64% (find this number in "Change in methodology".

Divestment

Not relevant for Lundbeck in 2015.

Acquisitions


Mergers


Change in output 0.61 Decrease

Due to the difference in the production portfolio (change in production mode and the range and mix of products produced), the consumption of towngas/citygas has decreased 9,2 % in 2015 (941 MWh) compared to 2014. This decrease represents 160 tons CO2 (0.61% of the total reduction in CO2 emission in 2015). (160/26077)*100 = 0.61%

Change in methodology

3.64 Decrease

1: Lower CO2 emission factors in 2015 have been in our favor. This is relevant for primarily electricity. The emission factors for Denmark was reduced by 5.2% in 2015 compared to 2014. If the factors had been the same as in 2014 the saving had only been 400 tons CO2 in 2015 compared to the actual 1349 tons CO2 (compared to 2014). This is a difference of 949 tons CO2 - equivalent to 3.64% of the total CO2 reduction in 2015. (949/26077)*100 = 3.64%

77

Reason

Emissions value

(percentage)

Direction of

change

Please explain and include calculation

Change in boundary


Change in physical operating conditions


Unidentified 1.55 Decrease

Total reduction in CO2 emission in 2015 = 6.3% compared to 2014. The above documented reductions add up to 4,75%. Resulting in 1.55% is not documented/identified reductions. This is primarily based on minor energy savings on gasoil at site Lumsås (Denmark) in 2015 compared to 2014 and slightly lower emission factors for district heating in 2015 compared to 2014.

Other


CC12.1b

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

78

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

1.675 metric tonnes CO2e 14594 Market-based

13.5 Decrease

REDUCTION ACTIVITIES: Decrease of 13.5 % primarily due to higher revenue in 2015 compared to 2014. The change is also due to lower emission factors in 2015 and a long range of energy reducing activities, with specific focus on energy consumption from ventilation, lowering pressure and night closing in our production and labs., screen fume cupboards, investigating pumps and adjusting CTS control. 2014: 26077 ton CO2/13468 million DKK => 1.936 tons/CO2 per million DKK. 2015: 24445 tons CO2/14594 million DKK => 1.675 tons/CO2 per million DKK.

CC12.3

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

Intensity figure =



Metric denominator

Metric

denominator: Unit total

Scope

2 figure used

% change

from previous

year

Direction of

change from

previous year

Reason for change

4.325 metric tonnes CO2e

full time equivalent (FTE) employee

5300 Market-based

7.9 Increase

REDUCTION ACTIVITIES: Reduction of 800 employees in 2015 compared to 2014 (13.1%). Due to the vast reduction in FTE our emission intensity figure increased by 7.9% in 2015 compared to 2014. 2014: 26077 tons CO2/6100 FTE = 4.275 tons CO2/per FTE. 2015: 24445 tons CO2/5300 FTE => 4.612 tons CO2/per FTE. Lundbeck is in the process of closing

79

Intensity figure =



Metric denominator

Metric

denominator: Unit total

Scope

2 figure used

% change

from previous

year

Direction of

change from

previous year

Reason for change

several building, due to this reduction in FTE - to better fit the FTE to the m2 available. Less buildings (m2) will help us save more energy on heating and electricity, giving an improved intensity figure next year.

0.00001034 metric tonnes CO2e

unit of production

2216.5 Market-based

10.3 Increase

REDUCTION ACTIVITIES: Lundbeck has a 10.3% increase in our intensity figure of "ton CO2 per unit produced", due to a big decrease in finished goods production of 15% in 2015 compared to 2014. 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. 2014: 26077 tons CO2/2608.3 million units = 0.000009998 tons CO2/unit produced. 2015: 24445 tons CO2/2216.5 million units = 0.000011029 tons CO2/unit produced.

Further Information

Reduction of 3.1% in total energy (MWh) and 7.5% in total scope1 and scope 2 emissions (Tons CO2) in 2015 compared to 2014 (market based approach is used). 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 2015 (in our favor). Numerous energy saving projects, especially optimization of ventilation in laboratories 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 2015 our CO2 TARGET IS WELL ON THE WAY – 48% DECREASE IN 10 YEARS!

Attachments

80

https://www.cdp.net/sites/2016/48/11048/Climate Change 2016/Shared Documents/Attachments/ClimateChange2016/CC12.EmissionsPerformance/Market based - HSE data 2015 final.xls

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

81

CC13.2a

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 of CO2e)

Number of credits (metric tonnes

CO2e): Risk adjusted volume

Credits cancelled

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

3380

In 2010 Lundbeck made a large effort to evaluate our supplier emissions from purchasing raw materials (API, chemicals, paper, cardboard). By doing so we hope to

100.00% CO2 emissions from purchased goods only. The value is a constant of 3380 tones/year.

82

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

raise a focus and affecting our suppliers’ environmental approach. METHODE: CO2 emission from suppliers was collected based on a questionnaire made by Lundbeck, data from the top 19 suppliers delivering chemicals and packing materials were gathered. The questionnaire asked for information on their CO2 emissions and energy reduction effort. The value is a constant of 3380 tones/year. After the consolidation process in 2010, the selection revealed that this emission was quite small (it is 7.2% of our total combined scope 1+2+3 in 2015) and we as a company have a low influence due to our relative small part of the total sales at our supplier. 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 emission is addressed.

Capital goods Not relevant,

CO2 emission by the supplier from the production of

83

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

explanation provided

machines and equipment used at Lundbeck, is not considered relevant. 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. Emissions from the use of capital goods by Lundbeck is accounted for in scope 1 or scope 2.

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. 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


Scope 3 emissions from transportation of products purchased by Lundbeck is not considered relevant. Currently we have not investigated this area further.

Waste generated in operations


3039

Only waste from Denmark are 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 6.5% of our total combined scope 1+2+3 emission in 2015. The web-based calculator "Klimakompasset" is used to sum up the

80.00%

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.

84

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

specific emissions form the different types of waste. Chemical waste is calculated in co-operation with our national waste disposal facility "Ekochem".

Business travel Relevant, calculated

4430

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 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 65-70 % of the total Lundbeck travel activity from air and car. The emission accounts for 9.4% of our total combined scope 1+2+3 emission.

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

Employee commuting

Not relevant, explanation

Scope 3 emissions from transportation of employees between their home and work is not considered

85

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

provided 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


5730

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 with about 15% of the total number of cars on a corporate level (1.300 cars, primarily used by our managers and sales force locally in 55 countries). The total emission from upstream leased assets is calculated at all 1300 cars at Lundbeck. The emission accounts for 12,2% of our total combined scope 1+2+3 emission. 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.

100.00%

Downstream transportation


7162 Transportation of products to end user. Emissions from fuel by transportation in

100.00%

86

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

and distribution 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 15.2% of our total combined scope 1+2+3 emission. All calculations have been done by the companies by adopting the internationally recognized ‘GHG Protocol Product Lifecycle Accounting and Reporting Standard’.

Processing of sold products


Processing of sold products is not considered relevant to Lundbeck, as we do only have such activities at a minor scale 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. At the moment sold products (not produced for Lundbeck, but as a CMO) has not been assessed yet. We do not consider this a high priority as we produce pharmaceuticals - not products designed to consume or save energy. In order to assess emissions, we may in time conduct specific surveys on the sites in question to estimate the emission for CMO produced products by Lundbeck.

87

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

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. We have the disposal of pharmaceuticals from the end user/hospitals/pharmacy, but do not consider this a big issue. Therefore this is not relevant to us. We produce pharmaceuticals; 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 Not evaluated

Operation of investments (partnerships and co-production with other companies) is not evaluated.

Other (upstream) Relevant, calculated

315

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

100.00%

88

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

tCO2/tEtOH Factor Acetonitrile: 0,106 tCO2/t Acetonitrile The CO2 emission accounts for 0.7% of our total combined scope 1+2+3 emission.

Other (downstream)

Not evaluated

Other Scope 3 CO2 emissions from downstream activities is not evaluated.

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

89

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



Deloitte have made third party verification for Business Travel.

ASAE3000 18

Annual process



Attachment: "market based - HSE data 2015 final.xls" - used by Deloitte as documentation on scope 3 emissions on Business Travel.

ASAE3000 18

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

90

Sources of Scope

3 emissions

Reason for

change

Emissions

value (percentage)

Direction

of change

Comment

Waste generated in operations

Change in output

9.8 Decrease

In 2015: 3039 tons. In 2014: 3368 tons. Decrease of 9.8 % due to less "Chemical waste" from our Danish site in Valby, due to reduced production activities. METHODE: The waste is incinerated at a special facility in Denmark. 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.

Business travel Emissions reduction activities

37.9 Decrease

In 2015: 4430 tons. In 2014: 7132 tons. Decrease of 37.9% due to less global meeting activity in 2015 and 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 in 2015.

Upstream leased assets


1.3 Decrease In 2015: 5730 tons. In 2014: 5806 tons. Decrease of 1.3% due to lower number of employees with the benefit of a company car in 2015. Almost 800 FTE less in 2015 compared to 2014. This results in a minor decrease in fuel used for transportation.

Downstream transportation and distribution


21.9 Decrease

In 2015: 7162 tons. In 2014: 9166 tons. Decrease of 21.9% due to downstream transportation of many goods from France to China in 2015, has not been transported by air as was done in 2014 (This was a necessity due to high demands on timely delivery to China). We normally prefer sea as this gives lower CO2 emission. This procedure has now been implemented when transporting goods from France to China.

Other (upstream) Change in output

3.5 Increase

In 2015: 315 tons CO2/year. In 2014: 305 tons CO2/year. Increase of 3.5% due to sourcing more Acetonitril (90 tones more than 2014) for production at our chemical site in Lumsås, Denmark. The production mix can differ from year to year. 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 53% of our 9 most used solvents in 2015, but had to buy the rest from our suppliers.

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

91

CC14.4a

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

Purchased goods and services SUPPLIERS METHODE: In 2010 a questionnaire was sent to our 19 largest suppliers of raw materials (API, chemicals, packaging materials). Information regarding energy consumption, CO2 emission, strategy and our part of their total turnover was addressed. This was to see a) What part of their emission was of Lundbeck total emission and b) to see if Lundbeck have any chance of influencing them to change their approach towards a more energy efficient strategy. By asking this we hope to lower our own scope 3 emissions and raise the awareness on CO2 emission and climate change at the supplier. STRATEGY: Lundbeck had the feeling that "suppliers" was an area of high scope 3 emission, but realized it was less than expected. On top of that our part of the company’s turnover was 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. The company with the largest part of their turnover due to Lundbeck was 20%. More than half of the companies Lundbeck only accounted for less than 5% of their total turnover. In an overall measure of CO2 emission from Lundbeck "supplier" emissions accounts for 7.2% of our total scope 1+2+3 emissions in 2015. MEASURE OF SUCCESS: We do not have a specific target in this category (because our effect is quite small, and we wish to put our effort where we see a higher potential). Also Lundbeck has a Supplier Evaluation Program. All relevant suppliers recieve a self-assessment questionnaire. All relevant suppliers are evaluated every 3-4 years (regarding HSE, CSR issues). So far 80-90% of our suppliers on chemicals from China and India has been evaluated. Energy consumption, CO2 and climat change is always a part of the audit, to try to raise the level at the supplier. If any unconformities’ are reported, we visit the suppliers. This helps us keep close contact to all existing and new suppliers. We also have a firm Due Diligence Process of our partners to assess them before signing a contract. Downstream transportation of goods: OTHER PARTNERS IN THE VALUE CHAIN METHODE: Transportation of goods. Only trucks with EURO Norm 4 (using less fuel and emitting less CO2) or above are accepted. In our written agreement/contract with the transportation company they sign to send in their calculated CO2 emissions every 3 months. We also focus on optimal and effective packing of the trucks, so all space in the truck is being used the best way possible. By doing this we hope to 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% reduction in 2015 compared to 2014). MEASURE OF SUCCESS: The emission was reduced 22% in 2015 compared to 2014. Our target was achieved in 2015, as total CO2 emissions from downstream transportation of goods from France to China in 2015, has been transported by sea and not air (we prefer sea, as this gives lower CO2 emission). This change in procedure resulting in a 22% reduction in 2015. The total transportation of goods (downstream) accounted for 15.2% of Lundbeck total scope 1+2+3 emissions in 2015. Purchased goods and services

92

RAWMATERIALS - Solvents: Ethanol and Acetonitrile) METHODE: The suppliers of our 2 most used solvents (Ethanol and Acetonitrile) have been asked to supply the CO2 emission factor for the production of one tons of solvent. - Factor Ethanol: 0.75 tCO2/tEtOH - Factor Acetonitrile: 0.106 tCO2/tAcetonitrile By asking this we aim to 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 reduce or substitute solvents. We have a specific target of recovering 50% of our 9 most used solvents at Site Lumsås (Denmark). Ethanol and Acetonitrile are among these solvents. MEASURE OF SUCCESS: The factors have been used to calculate the CO2 emission from our total use of these 2 solvents in 2015. The CO2 emission accounts for 0.7% of our total combined scope 1+2+3 emission. In 2015 we had a recovery of 53% at site Lumsås. In this way we avoided purchasing approx. 1,000 tons of solvents, which are ressource demanding and costly to produce, transport and dispose of 1,000 tons that would have been bought as new raw materials, if recovery did not work. The amount of Ethanol recovered in 2015 was 112.4 tons equivalent to a CO2 saving of 84.3 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 246.3 tons equivalent to 26.3 tons CO2.

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

Number of suppliers

% of total spend (direct and indirect)

Comment

29 10%

A total of 29 suppliers (19+8+2): 19 suppliers (raw materials and packaging materials). The total spend by these 19 suppliers is less than 5% of our total spend on raw materials and packaging materials. 8 suppliers of transportation of finished goods. The total spend by these 8 suppliers is about 50% of our total spend on transportation of finished goods. 2 suppliers of organic solvents (Ethanol and Acetonitrile). The total spend by these 2 suppliers is about 10% of our total spend of organic solvents.

CC14.4c

If you have data on your suppliers’ GHG emissions and climate change strategies, please explain how you make use of that data

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How you make use of the data

Please give details

Identifying GHG sources to prioritize for reduction actions

19 suppliers of raw materials and packaging materials: METHODE: CO2 emission from suppliers was collected based on a questionnaire made by Lundbeck. The questionnaire asked for information on their CO2 emissions, climate strategy and energy/CO2 reduction target. It was clear to Lundbeck in 2010 that this emission is quite small. In 2015 it was 7.2% of our total combined scope 1+2+3. As a company we have a low influence due to our relative small part of the total sales at our suppliers, but by onsite audit we do try to influence the suppliers anyway to have focus on CO2 emission and climate change. When also conduct HSE supplier evaluations on suppliers of chemicals, where climate issues are addressed as well. We focus primarily on China, Russia and India, where production methods of chemicals may be critical. So far we have evaluated 80-90% of our critical suppliers on site visits in India and China. Together with the supplier we identify areas for reducing energy consumption and hence the CO2 emission. 8 suppliers of transportation of finished goods: METHODE: Transportation of goods in Denmark, Europe and overseas. In our written agreement/contract with the transportation company they sign to send in their calculated CO2 emissions every 3 months. They fill in a premade form by Lundbeck, to document the level of CO2 emitted. They have their own method and specific emission factors used for these calculations. 2 suppliers of organic solvents (Ethanol and Acetonitrile): METHODE: Lundbeck use a high amount of solvents in our production. The use of solvents is an essential part of making a chemical synthesis. The suppliers of our 2 (of 9) 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 t CO2/tEtOH Factor Acetonitrile: 0.106 t CO2/tAcetonitrile These factors have been used to calculate the CO2 emission from our total use of these 2 solvents in 2015. The CO2 emission accounts for 0.7% of our total combined scope 1+2+3 emission.

CC14.4d

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: "Market based - HSE data 2015 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 2016 (Verification CDP 2015_final.pdf): Deloitte have made third party verification for Business Travel. 2: "Market based - 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 2015 was 112.4 tons equivalent to a CO2 saving of 84.3 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 246.3 tons equivalent to 26.3 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 53% of virgin solvents in our chemical

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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.

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 Chief Operating Officer (COO)

Further Information

CDP