Lundbeck A/S...Lundbeck’s Executive Management consists of three members, headed by Kåre Schultz,...

CDP Climate Change 2015 Information Request

Lundbeck A/S

Module: Introduction

Page: Introduction

CC0.1

Introduction

Please give a general description and introduction to your organization. About H. Lundbeck A/S: Lundbeck is a global pharmaceutical company highly committed to improving the quality of life of people living with brain disease. 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 diseases such as depression and anxiety, psychotic disorders, epilepsy and Huntington’s, Alzheimer’s and Parkinson’s diseases. Research and development: Lundbeck is one of Denmark’s most research-intensive enterprises. We employ more than 1,300 highly-trained specialists in our research and development units. Each year, Lundbeck ploughs back around 20% of its revenue into research and development of new pharmaceuticals to improve treatment options for the millions of people around the world living with brain disease. Key figures: Lundbeck employs approximately 6,100 people worldwide, 2,000 of whom are based in Denmark. We have employees in 57 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, China and the US. Lundbeck generated core revenue of approximately DKK 13.5 billion in 2014. In 2014, 37% of our revenue derived from Europe, 28% from the US and 31% from the International Markets region. Management: Lundbeck’s Executive Management consists of three members, headed by Kåre Schultz, President and CEO. Corporate responsibility: Lundbeck recognise that as a business we have a responsibility to respect human and labour rights, to commit to environmental protection and to work against corrupt behaviour. Our Corporate Responsibility approach takes in our business responsibilities, environmental impact and social influence: • Our business responsibilities are about being fair, transparent and accountable. Lundbeck systematically monitors, evaluates and acts on opportunities and risks to our company in order to develop best practices and business standards.

• Lundbeck works systematically to minimise our environmental impact. The precautionary principle guides our efforts, and we ensure continuous improvements in research, development and production, applying certified environmental management systems. • We acknowledge our social influence on people, the community and society, and strive to be known as a company that advances responsible social relations. 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. Each year we report on our progress within corporate responsibility to the UN Global Compact. Through FTSE4Good Index Series Lundbeck is scored against globally recognized corporate responsibility standards. In 2014 Lundbeck scored 98 points of 100 possible. Our environmental approach: One of our important coporate responsibilities is that we address our environmental impact by our Health, Safety and Environmental (HSE) Policy. It states that our ambition is to be among the leading companies in the fields of HSE. In five position documents it is described shortly how we work with HSE and how we strive to reach this ambition. One of the Position document deals specifically with Climate change. Our HSE efforts are developed, conducted and controlled through our corporate HSE system that is certified according to ISO 14001. CO2 strategy: For many years we have worked with energy optimization and in 2007, Corporate Management established our CO2 strategy, making a firm commitment to minimizing corporate CO2 emissions, and confirming our ambition to be among the leaders within the pharmaceutical industry. By challenging routines and conventional thinking and without compromising product quality and employees safety we reached a 46% reduction of our CO2 emission in 2014 compared to 2006. In 2014 we revised our long term target 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

Wed 01 Jan 2014 - Wed 31 Dec 2014

CC0.3

Country list configuration

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

Select country

CC0.4

Currency selection

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

CC0.6

Modules

As part of the request for information on behalf of investors, 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 see our annual report. For more information about our CSR efferts we have attached our Un Global Compact Progress Report. For more information about our HSE policy and Climate change position we have attached our HSE policy and our Position on Climate change.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC0.Introduction/UN Global Compact Progress Report_2014.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC0.Introduction/Position on climate change 2015 final.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC0.Introduction/HSE policy.pptx https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC0.Introduction/Lundbeck_Annual_Report_2014.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 Group Senior Vice President of Supply Operations & Engineering,also member of the Corporate Management Group (CMG,) is appointed by the Cheif Executive Officer to be chairman for Lundbecks HSE Council. Apart from the Chairman the HSE Council consists of 3 managers: 1 Group Senior Vice President, that is also member of the Corporate Management Group, and 2 Vice Presidents) 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. The two members og CMG can bring relevant topics to CMG where also 3 members of the Board (our CEO and two executice vice presidents) are members. ii. The HSE Council acts on behalf of the Corporate Management Group in respect of 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 HSE policies, strategies, guidelines and corporate activities and targets. Evaluate Lundbecks HSE performance quarterly and annually at the meetings. Communicate corporate decisions to managers and employees at all sites. Respond to enquiries from managers and employees. The Council have 1 meeting every quarter of the year. Climate change issues are considered to be one of the significant environmental issues in Lundbeck and are therefore managed and controlled like all other significant HSE issues by the HSE Council. This means that Lundbecks Climate strategy (The CO2 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 experinces and possibilities about energy and CO2 emission reduction. At each 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

There is an annual bonus for meeting short term targets related to energy reduction and GHG emission reduction targets. The short term targets (4% CO2 reduction in 2015 compared to 2014) 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. 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.

Chief Operating Officer (COO) Monetary reward


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 targets is created by breaking down the Corporate long term target about scope 1 and 2 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, including climate related goals. Once a year the performance is evaluated and scored and the score is determining the size of the bonus.

Business unit managers Monetary reward


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 targets is created by breaking down the Corporate long term target about scope 1 and 2 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, including climate related goals.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

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 targets 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




indicator

Comment

reduction project Energy reduction target

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

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 targets is created by breaking down the corporate long term target about GHG emission down to business functions. Environmental/substainability managers are also 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. 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: All employees (around 1000 persons) 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 other 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 project Behaviour change related indicator

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

All employees Recognition (non-monetary)

Emissions reduction project Energy reduction project

At a yearly HSE seminar a HSE price, 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 price get a reward. The price will in 2015 be given in september.




indicator

Comment

Efficiency project Behaviour change related indicator

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 a scoring system. The score is used as input to promotion and salary adjustments.

Other: Hourly emplyees 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

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 Corporate Management Group 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 Model for long-term 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 Corporate Management Group. 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 through the same 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, 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 Corporate HSE department 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. An important input to risks at asset level is our insurance inspections, that are performed every second year at all our sites. 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 identified opportunities and decisions are taken in the units. Some opportunities are implemented immediately

in the units. For example-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 CO2 strategy reports to the HSE Council about climate related opportunities and risks. For instance 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?

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. Eg we do secure our facilities against extreme weather situations. These initiatives are based on decentralized risk analysis performed by the organization. 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 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 Corporate Management Group. After this, the Corporate Management Group presents a two-dimensional risk ‘heat map’ which is shared with the Board of Directors annually. Climate change OPPORTUNITIES are decided on the basis of the priorities in our business strategy. On the short timeline 1-2 years many decisions are taken in the decentralized units eg energy reduction plans. On the long timeline, more than 2 years, opportunities are evaluated and decided according to our Financial Long-term Model.

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. Lundbecks strategic path is built on six pillars. Climate change mitigation and adaptation is closely related to two of the pillars: Organizational efficiency and High-performance culture. In the pillar “Organizational efficiency” we work targeted with our Fit-for-the-Future program that aim to reduce complexity, increase organizational efficiency and free up resources. Our targeted work by optimizing energy efficiency and continuously improve our buildings and production facilities free up resources. In the pillar “High performance culture” our focus is to create a workplace that attracts, develop and retains the best employees. We believe it matters for Lundbeck employees that they work in a company that takes e.g. climate change seriously. And we expect everyone to live our corporate values eg. about being Responsible, which means that Lundbeck employees are expected to act responsibly towards colleagues, the environment, including climate, and the external community. This is underlined by our signing of UN Global Compact and by our CO2 strategy. HERE WE HAVE MADE A FIRM COMMITMENT TO REDUCE OUR CO2 EMISSION, AND BREAK THE CORRELATION BETWEEN BUSINESS GROWTH, ENERGY CONSUMPTION AND THE RESULTING CO2 EMISSION. Through our annual target setting process and our Global Performance Management Process all managers and employees work towards supporting the Business strategy e.g. all managers with specific influence on climate performance have individual climate performance targets. Climate change also influence Lundbecks strategy through the systematic work in our HSE organization. Eg the 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 chairmen of the HSE council is member of the Corporate Management Group (CMG) and report climate change issues with significant importance for the business strategy to CMG. ii.

Following aspects have influenced the business strategy and the way we work: - International and national energy targets set up expectations to companies about being responsible: Taking voluntary action to reduce our CO2 emissions is considered an act of responsibility. In 2014 we revised our long-term reduction target: We want to reduce our CO2 emission by 55% in 2020 compared to 2006. Furthermorewe have signed Global Compact and comply with FTSE4GOODs climate change criteria. We believe this contributes to our reputation about being responsible and build up trust among stakeholders. - Adaptation: Our continuous focus on efficiency in our production supports our work with energy on demand and reduced energy consumption and CO2 emission. 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 so that they can withstand these climate changes. iii. 0-5 years: 2015 – 2020. Our short term strategy has been influenced by climate change initiatives. - We have introduced integrated approach where a dedicated team of engineers and maintenance employees challenge habits and conventional thinking to identify new ways to reduce energy use. In particular optimization of ventilation and reduction of air change in production areas have been the major contributors to our energy reductions. OUR CO2 TARGET IS A DETERMINING FACTOR for the achieved results, as it clearly states our commitment to reduce CO2 emissions by 55% in 2020 compared to 2006. This helps us mitigate the risks related to rising energy prices. - 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. For instance we have built water reservoirs at selected locations in order to avoid damages from heavy rain. - We continue optimization of our facilities also in our affiliates. The target is to reduce our facilities from 36 m2/employee to 20 m2/employee. This minimizes the total square meters that must be heated or cooled. - In 2014 we decided to implement the EU directive on energy efficiency in our existing Health Safety and Environmental management system at our production and research sites worldwide. This will strengthen our systematism about energy review. - Regulatory reporting requirements and reputational considerations affect the way we communicate about our business. E.g. Lundbeck has made it a priority to be able to track and report our CO2 emissions. In our UN Global Compact Progress Report we communicate specifically about our climate performance. - We expect to develop our evaluation of suppliers and partners climate performance in order to maintain a strong supply chain and build up good partnerships. iv. More than 5 years: After 2020. - Changes in our CO2 strategy will continuously be integrated in our business strategy. We expect to develop our CO2 strategy with more ambitious CO2 targets and focus on renewable energy like introduction of solar panels. - The continuous focus on energy efficiency in Production of active pharmaceutical ingredients and R&D facilities will continue to be an important activity in becoming an even more efficient business. This also includes development of new technologies towards a more flexible production. 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, a strong supply chain and our systematic approach to identify and act on climate risks and opportunities is considered a competitive advantage. It supports our Business strategy and secures our ability to produce more with less and thereby support our future business. We also believe that our climate related activities and communication enhances our reputation. vi. The most substantial business decisions in the reporting year influenced by the climate change driven aspects of the strategy is that we have: - Decided a new long term CO2 target: In 2020 we will reduce our CO2 emission by 55% compared to 2006. We have also revised our annual target for 2015. We will reduce energy consumption and reduce CO2 emission by min. 4%/year. - Implemented or introduced integrated approach at all sites. At our headquarter it has resulted in a 12% reduction of the energy consumption in 2014 compared to

2013. - Decided to implement the requirements in the EU directive for energy efficiency at all Research and production sites worldwide.

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. This means that it is possible to sell energy reductions to these companies. 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. In general low energy consuming equipment have a high priority in Lundbeck and we conduct risk assessment priori 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)

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?

Yes

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?

UN Global Compact

Consistent

UN Global Compact have ten priniciples 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 ten principles in UN Global Compact and we are funding UN Global Compact beyond the ordinary membership. We are not attempting to influence further.

CC2.3d

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

CC2.3e

Do you fund any research organizations to produce or disseminate public work on climate change?

CC2.3f

Please describe the work and how it aligns with your own strategy on climate change

CC2.3g

Please provide details of the other engagement activities that you undertake

Lundbeck continuously engage with different kind of stakeholders: Trade associations: Lundbeck participate in networks in The European Federation of Pharmaceutical Industries and Associations, The Danish Association of the Pharmaceutical Industry and the Confederation of Danish Industries. Lundbecks position to climate change is very close to the trade association’s positions. E.g. The Confederation of Danish Industries where we have several memberships. 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. As a member of the networks we participate in meetings where upcoming and new legislation is discussed. We also 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. In 2014 issues related to climate change e.g. the implementation of the European Energy efficiency directive, which have been implemented in national legislation, have been discussed. This directive requires that large companies carry out energy review. This has been discussed in the Danish Association of the Pharmaceutical Industry and in the Confederation of Danish Industries. Lundbeck has advocated for a clarification of which companies that are covered by the directive in the individual EU countries, as well as a uniform authentication system in individual countries. In Lundbeck we have decided to implement the requirements in the directive at all production and research sites, that are covered by our Health, Safety and Environmental system, also outside Europe.

In the Confederation of Danish Industries also energy prices and taxes and carbon taxes have been discussed. Lundbeck support initiatives that ensure equal business competitiveness across countries and prices and taxes that reflect the impact on climate and the environment in general. Other: IN 2014 LUNDBECK INVITED THE COMMISIONER FOR CLIMATE Connie Hedegaard to our headquarter in Denmark. The purpose of this invitation was to give the commissioner an insight in the pharmaceutical industry both possibilities and challenges. Climate change was a big topic on the agenda and both the results Lundbeck have achieved and our wishes to the future regulation was presented and discussed with the commissioner. Lundbeck also sign and comply with international initiatives, which include climate issue. For instance we have committed us to the Global Compact and work continuously with improving the ten principles in UN Global Compact including the principle concerning climate changes. We also participate in climate network in the municipal. In this network we support the development of tools to manage climate issues in companies. These tools are available for all member companies on the internet. Direct engagement with policy makers: Lundbeck have entered a partnership with the Danish Agency for Environmental Protection. The purpose of the partnership is to influence on new BREF documents. In 2014 it has been the BREF about wastewater and emissions. The next BREF will be about fine organic chemicals and we expect also to be able to participate in a relevant partnership when the BREF about Energy Efficiency must be revised.

CC2.3h

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?

The internal Communication concerning climate issues is coordinated and controlled through Lundbecks HSE organisation and through Lundbecks HSE management system that is certified according to ISO 14001 and OHSAS 18001. 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 CO2 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 internal climate initiatives, which participate in the network activities and the commenting on new legislation. This ensures consistent communication about our climate change 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.

CC2.3i

Please explain why you do not engage with policy makers

CC2.4

Would your organization's board of directors support an international agreement between governments on climate change, which seeks to limit global temperature rise to under two degree Celsius from pre-industrial levels in line with IPCC scenarios such as RCP2.6?

No

CC2.4a

Please describe your board's position on what an effective agreement would mean for your organization and activities that you are undertaking to help deliver this agreement at the 2015 United Nations Climate Change Conference in Paris (COP 21)

Lundbeck believe that our most significant environmental aspects are our use of chemicals and our emission of chemicals and pharmaceuticals to the environment. This use and emission have potentially much more significant impact on the environment than our business' impact on the climate. Therefore our primary focus is on use and emission of chemicals and pharmaceuticals. Even though we do have many initiatives in regard to climate change and we do not believe that an effective agreement would lead to significant changes in our work with climate changes, because: - Lundbeck is already working actively with carbon reductions and keeps our ambitions high by setting long term and annual targets. - We have already introduced renewable energy sources at some locations and intend to do it even more in the future. - We have integrated the environmental aspects in our evaluation of our supply chain and intend to continue to develop our tools for supplier audits. - Lundbeck already engages in political activities through network activities in trade associations and partnerships with relevant authorities like the municipal and the Danish Agency for Environmental Protection. - Lundbeck does provide information about our climate management in corporate reports and at the internet like our homepage and in CDP. And we do believe that this information is sufficient for our investors and other stakeholders. - Lundbeck have an indirectly price on carbon and do not consider at the moment that more carbon prices would change significantly on the amount of our activities to reduce carbon emissions.

Further Information

Question 2.1. In our annual report p. 19, 20 the risk management system is described. Question 2.2. In our annual report page 10,11 our business strategy is described. Question 2.2. In our Position on Climate change our long term CO2 goal and our activities is described. Question 2.2. In UN Global Compact Progress Report pages 12, 13 our results in 2014 is described.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC2.Strategy/Position on climate change 2015 final.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC2.Strategy/Lundbeck_Annual_Report_2014.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC2.Strategy/UN Global Compact Progress Report_2014.pdf

Page: CC3. Targets and Initiatives

CC3.1

Did you have an emissions reduction 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

(metric tonnes CO2e)

Target year

Comment

Abs1 Scope 1+2

100% 55% 2006 47200 2020

Lundbeck intends to break the correlation between business growth, energy consumption and the resulting CO2 emission. We have both a long term CO2 reduction target and an annual target for CO2 reduction. By the end of 2013 we reached our previous long term target, so in 2014 we defined a new ambitious target which is a 55% CO2 reduction in 2020 compared to 2006.

Abs2 Scope 1+2

100% 5% 2013 28351 2014

Lundbeck intends to break the correlation between business growth, energy consumption and the resulting CO2 emission. We have both a long term CO2 reduction target and an annual target for CO2 reduction. The annual target for 2014 was to reduce CO2 emissions by 5% in 2014 compared to 2013.

CC3.1b

Please provide details of your intensity target

ID

Scope

% of emissions in

scope

% reduction from base year

Metric

Base year

Normalized base year emissions

Target year

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

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

ID

% complete (time)

% complete (emissions)

Comment

Abs1 57% 81% By the end of 2014 we had reduced our CO2 emission with 46% compared to 2006.

Abs2 100% 100% By the end of 2014 we had reduced our CO2 emission by 9% compared to 2013.

CC3.1e

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

Does the use of your goods and/or services directly enable GHG emissions to be avoided by a third party?

No

CC3.2a

Please provide details of how the use of your goods and/or services directly enable GHG emissions to be avoided by a third party

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 *)

Stage of development

Number of projects

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

Under investigation 20

To be implemented* 1 130

Implementation commenced* 17 513

Implemented* 15 3298

Not to be implemented 35

CC3.3b

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

Activity type

Description of activity

Estimated annual CO2e

savings (metric tonnes CO2e)

Scope

Voluntary/ Mandatory

Annual monetary savings

(unit currency -

as specified in CC0.4)

Investment required

(unit currency -

as specified in

CC0.4)

Payback period

Estimated lifetime of

the initiative

Comment

Energy efficiency: Processes

Upgrade boiler system installation of a total dissolved solid system and a purging heat recovery system.

10 Scope 1

Voluntary

119000 335000 1-3 years 6-10 years


Upgrade boiler system installation of a new tank for condensate receiving, pre heating and water degassing.

9 Scope 1

Voluntary

134000 671000 4-10 years

6-10 years

Activity type




Scope



(unit currency -


Investment required

(unit currency -

as specified in

CC0.4)

Payback period


the initiative

Comment


Optimization of vent from biological water treatment system.

4 Scope 2

Voluntary

51000 75000 1-3 years 6-10 years


Shutdown unused lab equipment and optimize energy consumption for servers, freezers etc.

31 Scope 2

Voluntary

61580 13750 <1 year Ongoing

Energy efficiency: Building services

Lighting occupancy sensors and increase t-stat cooling temperature in IT and mechanical areas.

26 Scope 2

Voluntary


Energy efficiency: Building fabric

Lowering ventilation during the night and on holidays (plant 1-4).

7

Scope 1 Scope 2

Voluntary



Lowering ventilation during the night and on holidays (Plant 5).

8

Scope 1 Scope 2

Voluntary



Lowering ventilation during the night and on holidays (Pilot Plant).

4

Scope 1 Scope 2

Voluntary



Lowering ventilation during the night and on holidays (Kilo lab).

7

Scope 1 Scope 2

Voluntary


Activity type




Scope



(unit currency -


Investment required

(unit currency -

as specified in

CC0.4)

Payback period


the initiative

Comment


Redesign of the way the plant is controlled.

1517 Scope 2

Voluntary

2258557 208800 <1 year Ongoing


Reduce time for operation. 755 Scope 2

Voluntary

1196951 358757 <1 year Ongoing Minor adjustments can be neccesary over time.


Relocation and shutdown of ventilation plants, cooling and heating coils.

305 Scope 2

Voluntary

303270 23500 <1 year Ongoing


Rebuilding and optimization of animal facilities.

320 Scope 2

Voluntary Mandatory

158882 2080118 11-15 years

Ongoing

The rebuilding activities was legally required and therefore mandatory.


Rebuilding activities. 95 Scope 2

Voluntary

130228 119210 <1 year Ongoing


Repair of malfunctions. 200 Scope 2

Voluntary


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 2014 Lundbeck invested around 3.9 MDKK. Apart from the energy efficiency projects this budget is used for energy screenings. In 2014 we established a dedicated team of internal engineers and maintenance employees who challenge habits and conventional thinking to identify new ways to reduce energy use. This team has successfully identified possibilities for closing down equipment and ventilation when it is not in use. Implementation of many of these activities only require employee hours and not financial investments. In 2015 the dedicated budget is 2 MDKK.

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.

Partnering with governments on technology development

At our chemical factory in Lumsås, Denmark we have a partnership with the 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.

Internal finance mechanisms

In 2014 energy savings was integrated in our ordinary maintenance activities. A dedicated team of engineers and maintenance employees challenge habits and conventional thinking to identify new ways to reduce energy use. In particular optimization of ventilation and reduction of air change in production areas have been the major contributors to our energy reductions. Some of these activities require financial investments and are managed through our internal finance system for investments. In 2014 energy efficiency projects with a total investment on 4 MDKK was identified and approved for implementation in 2015. Other investment is taken from the dedicated budget for energy efficiency.

CC3.3d

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

Further Information

Question 3.1a: In our Position on Climate Change you can see our long term CO2 target. Question 3.1a and 3.1d: In our UN Global Compact Porgerss Report p. 5 you can see our annual CO2 target and at p. 12 you can read more about our results.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC3.TargetsandInitiatives/Position on climate change 2015 final.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC3.TargetsandInitiatives/UN Global Compact Progress Report_2014.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

In voluntary communications

Complete p. 5, 12 and 13 https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC4.1/UN Global Compact Progress Report_2014.pdf


Complete All of the document https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC4.1/Position on climate change 2015 final.pdf


Complete Section about energy consumption and CO2 emission

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC4.1/HSE data overview 2012-2014.pdf


Complete Example from our interactive charts at www.lundbeck.com

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC4.1/Example on interactive chart at www.Lundbeck.com.docx


Complete News about CDP score at www.lundbeck.com

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC4.1/Communication about CDP score at www.lundbeck.com.docx

Further Information

Lundbeck also publish all our environmental data at an interactive homepage at http://www.lundbeck.com/global/CSR/health-safety-environment-strategy/reporting. On this page you can choose which data you would like to see e.g. CO2 emission. You choose which part of the business and what years you want this information. We have also published two stories about energy initiatives from the daily work in the company at http://www.lundbeck.com/global/CSR/health-safety-environment-strategy/significant-aspects.

Module: Risks and Opportunities

Page: CC5. Climate Change Risks

CC5.1

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

Risks driven by changes in regulation Risks driven by changes in physical climate parameters

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

Increased operational cost

1 to 3 years

Direct Very likely Low

Today our total energy costs only constitute about 0.6% of our revenue (around 90 MDKK compared to our revenue on

At all Lundbecks sites for research, development and production we have implemented systematic procedures at all our sites in order

The costs associated with energy saving activities differ from year to year. In 2014 we invested 3.9 MDKK in energy

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

is likely that the energy prices will raise and that regulatory incentive towards favoring renewable 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.

13468 MDKK). We expect that energy prices and taxes will rise in the future in most parts of the world, but the risks from these changes are considered low, because it constitutes a very small part of our total operational costs. Even though the prices were doubled to around 180 MDKK, which we believe is unlikely to happen, the energy cost will still be low compared to our revenue.

to identify existing and coming HSE legislation, including legislations related to climate issues. Already when coming regulation is identified, Lundbeck consider what consequences (positive or negative) the regulation may 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

activities and because we have established dedicated teams of internal engineering and maintenance employees that spent around 5-10% of their working hours on energy optimization, the cost for internal resources (man hours) equals to around 0.8 MDKK. In 2015 we expect to spend 4-6 MDKK on energy projects and again around 2 MDKK on internal resources (man hours). Costs related to tracking legislation are considered as ordinary costs that is necessary for having an efficient business.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

our continous implementation of "Energy on demend". We are selling our energy savings (In DK you can sell your energy savings to the energy companies). 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 22 MDKK. In order to reduce the financial impact of changing energy prices Lundbeck also seek to make contracts with energy suppliers including fixed

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

energy prices for a number of years. These activities ensure that the risk continously is kept at a very low level.

Emission reporting obligations

In Denmark we are obliged to report about our climate performance in a public report. In some countries the authorities require energy data from our production sites.


Up to 1 year

Direct Virtually certain

Low

In Denmark we are legally obliged to report about our climate performance to the environmental authorities and in our public reporting. The time use for the regulatory required reporting is low, because we would make our data collection and public 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 3500

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

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, because they accept our CDP response as climate reporting. The cost for the CDP response is estimated to 90000 DKK. The tracking of legislation and International plans is activities that are

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

DKK. 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 is identified, Lundbeck consider what consequences the regulation may have, and necessary actions are taken. Eg are we implementing the new Energy efficiency directive in our HSE system. These activities ensure that the risk continously is kept at a very low level.

necessary for driving our business efficient and not considered extra costs.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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

Reduction in capital availability

1 to 3 years

Direct Virtually certain

Low

Investments in new buildings can rise because of regulatory requirements. The size of the investment differs a lot, because it depends up on the type of the building. It will always have a financial impact on the short run, but energy investments will usually be paid back during some years. So far pay back periods have been from 0 to less than 3 years and after that it has resulted in continuously lower energy costs. On the long run the investment will result in savings because of the reduced energy need. Costs related to energy screenings and

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 have motivated the company to implement a procedure for Energy review and for Energy considerations in

The costs associated with investments in energy savings differ from year to year. In 2014 we spent 3.9 MDKK on energy investments. In 2015 the spend is expected to be 4-6 MDKK. The cost for having established energy teams is around 2 MDKK a year, but in 2014 this cost was payed back during the year because of reduced energy costs. The investment in energy saving systems in the new office building is not related to regulatory requirements, but a good investment and in line with our strategies. Costs related to tracking

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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

energy saving activities is considered negligible or very low.

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. Hybrid ventilation is a ventilation method that combines natural and mechanical ventilation. On top of this a night cooling system is attached. We presume that the energy use in the building is reduced by 5% a year because of these initiatives. An example on our work with energy review and optimization is our establishment of

legislation are considered as ordinary costs that is necessary for having an efficient business.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

energy teams at our sites. The energy teams screen the energy consumption and implement “Energy on demand”. At our headquarter these activities resulted in 12% reduction of the energy consumption in 2014 compared to 2013. Our energy saving activities continuously reduces our energy costs and through this keeps the impact of this risk at a low level.

Uncertainty surrounding new regulation

Uncertainty about regulation in countries where Lundbecks suppliers and partners are situated around the world has to be considered even though we consider the risks low.


3 to 6 years

Indirect (Supply chain)

Likely Low

Uncertainty about new regulation in countries around the world can give rise to additional costs at our suppliers and partners. Many countries have already some kind of regulation concerning

Lundbeck have a supplier evaluation guideline. As a part of the guideline audits have been carried out at new and existing suppliers and partners for several years. In 2014, we developed our tools with the

The climate change part of the supplier and partner evaluation is just one element of several that Lundbeck wants to control at our suppliers and partners and can not be considered extra costs.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Changes in these countries can affect the suppliers and partners products and activities to become more expensive or affect there production in other ways.

climate change but it is likely, that these regulations will be tigthened in the future. The regulation can both go in direction of carbon taxes and in direction of requirements to energy conscious production and use of renewable energy. Untill now it has not given rise to any financial implications.

intention that all our suppliers in India and China have been evaluated by the end of 2016. Our evaluation criteria are based on the ten UN Global Compact principles and due diligence of key business partners is an integrated part of the process. The aim of the review is to reduce risks to our business and also, in the long term, to raise the standard of corporate responsibility among our suppliers and partners and make them more robust towards regulatory changes. Lundbeck also carefully monitor the development at our suppliers and partners and are being notified if regulatory

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

requirements at our suppliers and partners have negative influence on the products and services we buy. This makes it possible to act on and reduce the consequences of regulatory changes. These activities continuously keep uncertainty about regulatory risks at our suppliers at a low level.

International agreements

New International agreements can affect the development of national legislation and national plans concerning energy prices, energy reduction and the use of renewable energy. Denmark is in the front when it comes to


>6 years Direct More likely than not

Low

Changes in international agreements are closely related to the financial risks associated with rising energy prices, taxes and the like. Today our total energy costs only constitute about 0.6% of our revenue (around 90 MDKK compared to our revenue on

At Lundbecks sites for research, development and production we have implemented systematic procedures at all our sites in order to identify existing and coming HSE legislation, including legislations related to climate issues. Once a month we search the internet for new and

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

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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

13468 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.

coming legislation. Already when upcoming regulation is identified, Lundbeck consider what consequences (positive or negative) the regulation may have, and necessary actions are taken. Relevant managers and employees are informed about the changes and if necessary, procedures are optimized in order to meet the changes. Furthermore Lundbecks Corp. HSE department are tracking the development of National, European and International plans concerning climate change, in order to be able to consider an

is activities we have as a part of our general attitude and strategies and neccesary for driving our business efficient.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

eventual 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, but in general the risk is very low because our energy costs only constitute around 0.6% 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


1 to 3 years


Today our total energy costs only constitute about 0.6% of our revenue (around 90 MDKK compared to our revenue on 13468 MDKK). We expect that taxes will rise in the future in most parts of the world, but the risks from these changes

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

The costs associated with investments in energy saving activities differ from year to year. In 2014 the investment was 3.9 MDKK and 2 MDKK for having our energyteams. In 2015 we expect to use 4 - 6 MDKK on energy projects

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

operational costs, but at the same time it reduces the pay back time on energy projects and through this makes more energy projects good business.

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.

keep our energy use at a low level and continously help the company to avoid serious consequences from rising carbon taxes. Since 2006 our energy reduction activities have reduced our annual electricity costs with around 22 MDKK.

and again 2 MDKK for our internal energy teams.

General environmental regulations, including planning

International regulations like REACH (Chemical regulation) and regulation about Best Available Technology like the IE Directive can affect the energy efficiency of a production for instance through requirements about confined production.

Reduction in capital availability

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. But when the solution is implemented it usually results in reduced operational costs because it often include energy optimizations or better use of raw materials. So far

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

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

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

we have not experienced any major financial implications related to environmental legislation.

immidiately a proces where we identify the most neccesary changes and plan how the changes can be implemented in the most efficient way. In this way it is possible to keep the investments and eventually interuptions in the production at a very low level.

related to tracking legislation are considered as ordinary costs that is necessary for having an efficient business.

CC5.1b

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

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Uncertainty of physical risks

Extreme weather situations that can damage buildings can occur at


Up to 1 year

Direct Likely Low-medium

Lundbecks own sites are not considered high risk areas. Nevertheless we have

At all our production sites inspections from our insurance company are performed. The

In 2012 and 2013 the total cost for repairs was around 8 MDKK. In 2013 preventive

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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

experienced weather situations during the last three years at two sites that affected our business in minor degree. In USA we had to close our site for a few days due to a heavy storm and in Denmark heavy rain and storm caused damage at our buildings. The cost for repairs has been around 8 MDKK and the costs of preventive activities have been around 3.8 MDKK until now. We expect the the 8 MDKK for repairs will decrease in the future, but it can be used as an indication of the financial

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, showing where we have the biggest risks at the site and what buildings that are most exposed to damages from extreme weather situations. The criticality analysis has resulted in the implementation of an action plan including activities that secure our buildings towards heavy rainfall and

activities was around 3 MDKK. In 2014 we spend 0.8 MDKK on preventive activities. In 2015 we expect to use 0.5 MDKK on preventive actions. The spend on preventive activities can be related to the cost of management and implementation of our action plan.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

impact. 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 consumes twice the amount of water from a normal rain situation. We have also implemented pump installations and secured fragile installations like power stations. The action plan contains more activities which is planned to be implemented during the coming years. These activities keep the financial risks at a low level,

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

because we can avoid to for instance 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.

Reduction/disruption in production capacity

1 to 3 years

Indirect (Supply chain)

About as likely as not

Low

Lundbecks business model is based more and more on partnerships. Partnerships offer a number of benefits, but also mean that we do not retain full control of the individual projects. Our biggest partners are located in Europe, China, Japan and USA. Lundbeck can not exclude that extreme weather situations in rare cases can affect the deliveries from Lundbecks partners and

Risks related to Lundbecks partnerships are minimized through a close and open dialogue with our partners. We share ideas and best practices and through this we ensure to reach our targets. In order to ensure adherence to the company’s ethical standards, we annually conduct audits of Lundbeck business units, suppliers and partners. Audit activities are planned and executed in accordance with the current risk picture. In 2014

Lundbeck do not consider the costs related to our dialogue with our partners and our audit activities as an extra cost because of climate change issues. A close and open dialogue and evaluation of our partners is neccesary for our business and cooperation with our partners.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

through this arise financial implications. Untill now we have not experienced such situations.

we conducted 202 audits at our suppliers and partners. Some of these audits are directly driven by our responsible procurement and partnership initiative that establishes a supplier evaluation process. These audits represent an in depth control process that includes an evaluation of their exposure to physical risks, which adds information that is used to select new or monitor performance of existing strategic suppliers and partners. A larger proportion of our suppliers and partners go through an integrated evaluation and due diligence process based on

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

the UN Global Compact Principles. All suppliers and partners are asked to sign a mutual commitment to compliance 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. The aim of the review is to reduce risks to our business and also, in the long term, to raise the standard of corporate responsibility so that our partners share our commitment to high ethical standards.

Uncertainty Extreme Reduction/disruption 1 to 3 Indirect About as Low Most of In order to keep Lundbeck do

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

of physical risks

weather situations at Lundbecks suppliers can in rare situations affect the supplier reliablility.

in production capacity

years (Supply chain)

likely as not

Lundbecks suppliers are situated at locations in Europe and USA where extreme weather situations are unlikely to have a character that affect the supplier reliability. A part of our suppliers are located outside Europe and USA where it cannot be excluded, that extreme weather situations can affect supplier reliability. Untill now Lundbeck have not experienced problems with supplier reliability because of extreme weather situations.

the risks related to break down at our suppliers 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 production flexibility. We have also 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 suppliers.

have operational costs related to keep our inventory of products and for driving the system where we systematically monitor our supply. But these costs cannot be referred to have direct relation to risks related to extreme weather situations. Suppliers can have production delays or break down because of many other reasons. Neither do we consider the costs related to our audit activities as an extra cost because of climate change issues. Lundbeck would have these risk reducing activities even though there were no risks related to extreme weather

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

Furthermore we ensure suppliers adherence to our company’s ethical standards and we annually conduct multiple audits of Lundbecks suppliers which include an evaluation of their exposure to physical risks. Audit activities are planned and executed in accordance with the current risk picture. Our audit process is based on the UN Global Compact Principles. All suppliers are asked to sign a mutual commitment to compliance with human rights, employee rights, environmental protection and anti-corruption in our contracts e.g. to have a precautionary approach to

situations.

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

environmental challenges like climate change. These activities reduce risks to our business and continuously keep them at a low level.

CC5.1c

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

Risk driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

CC5.1d

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

CC5.1e

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

We do not see that there are any other risks related to climate changes that will be able to generate a substantive change in our business. Following risks have been reviewed: Risks related to consumer needs: Lundbeck do not consider our company to be affected by changes in consumer needs, because of climate changes. Lundbeck produce products for diseases in the brain and the central nervous system and the need for medicine to these diseases are not expected to be influenced significantly because of climate changes. Risks related to financial crises caused by climate changes: Financial crisis can press the prices on medicine and through this reduce Lundbecks income on the products. We have not yet experienced a connection between climate related changes and financial crisis in countries. Risks related to this scenario are therefore considered negligible. Risks related to reputation: Lundbeck believe that there is a potential reputational risk in Denmark if we do not consider climate change issues, however we do not consider this to be able to generate a substantive change in our business. Instead we see a potential for a positive effect on our reputation as we have many different types of CO2 reduction initiatives on the agenda. Briefly bad press cannot be excluded, for example if we do not reach our CO2 reduction target, but the risk from this will be negligible, because we expect to have good explanations, if we do not reach our target. Until now we have been in compliance with our strategy and ahead of our target. By the end of 2013 we reached our 40% reduction target, two years ahead of planned, and in 2014 we defined a new target commiting us to a 55% reduction in CO2 emission in 2020 compared to 2006. It would give bad press if we did not include our handling of the climate change issue in our UN Global Compact Progress Report. But we have been reporting on this issue for several years and intend to continue that. It will therefore not become a risk. Geographic areas considered and timeframe: The risk evaluation includes our global operations in all countries we are acting in and is viewed on a time horizon of 1 – 2 years. The risks are evaluated by Boards, committees and management groups at regular intervals throughout the year. Four times a year Lundbeck communicate publicly about changes in our risk

exposure.

Further Information

In our Position on Climate change our long term CO2 goal and our activities is described. In UN Global Compact Progress Report is described the 10 principles that our suppliers and partners must sign and on pages 12, 13 our results related to climate change in 2014 is described.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC5.ClimateChangeRisks/Position on climate change 2015 final.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC5.ClimateChangeRisks/UN Global Compact Progress Report_2014.pdf

Page: CC6. Climate Change Opportunities

CC6.1

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

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

CC6.1a

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

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

International agreements

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

Reduced operational costs

>6 years Direct More likely than not

Low

We believe that reduced operational costs affect our revenue positively. Our energy savings has reduced our operational costs. Since 2006 our yearly energy costs has been reduced by around 22 MDKK. We will continue to reduce our energy consumption in the coming years and following reduce our energy costs even more. Implementation of renewable energy sources have untill now only had positive finacial impact and also contributed to reduced operational costs.

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

The annual costs on energy saving activities differ. In 2014 we spent 3.9 MDKK and in 2015 we expect to spend 4-6 MDKK on energy savings. Apart from that we spend around 2 MDKK/year on internal ressources, because we have dedicated energy temas at all sites that carry out energy screenings and -savings. Costs related to tracking legislation are considered as ordinary costs that is necessary for having an efficient business. We track legislation because it is necessary for

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

companies. 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 and that it can become an advantage for Lundbeck compared to

driving our business and required by our internal systems.

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

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 improve our possibilities to attract and retain talented employees and

Increased stock price (market valuation)

>6 years Indirect (Client)

Likely Low

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

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

Except from our respons to CDP our voluntary reporting are not considered extra costs because of climate change issues. The cost for the CDP response is estimated to 0.2 MDKK.

Opportunity driver

Description

Potential impact

Timeframe

Direct/Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

our stakeholders confidence in our capabilities.

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 and droughts

Lundbecks suppliers, partners and our own sites can be affected by extreme weather situations. Like for all companies

Reduced operational costs

3 to 6 years

Direct About as likely as not

Low

Reduced operational costs affect our revenue positively. By having managment methods that secure our sites

In order to overcome situations with breakdown we carefully monitor supply and maintain an inventory that will

The activities that relate to securing our supply chain and the deliveries from our suppliers and partners are not considered cost

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

this can in worst case lead to stock outs in the production. Lundbeck has set up several systems to avoid stock outs, for instance are our own chemical plants 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.

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 for around 3 month and affecting 10 production lines. This can have a financial impact on around 10% of our revenue (Equals: 1346

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 suppliers. Lundbeck also seek to enhance our production flexibility by having five independent productions and packaging sites. Risks related to break down at our suppliers and partners are minimized by ensuring adherence to our company’s ethical standards including having a precautionary approach to environmental challenges like climate change.

related to climate changes. It is activities we do because of other business related reasons. The preventive solutions we implement in order to secure our own sites against extreme weather situations was in 2014 0.8 MDKK and in 2015 we expect to spent 0.5 MDKK.

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

MDKK). 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. These gives valuable input for identification of critical facilities or buildings and are used as input in our facility management plans. At our headquarter we have also made a criticality analysis, showing the biggest risks at the site. This has resulted in implementation of activities that secure our

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

buildings towards heavy rainfall and storms eg. 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

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

Increased stock price (market valuation)

3 to 6 years

Direct More likely than not

Low

A good reputation is important for our competitiveness and the continuous development of the company. If our reputation deteriorates it can lead to loss of talented employees

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

Except from our respons to CDP our public reporting activities are not considered extra costs because of climate change issues. The cost for the CDP response is

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

employees and investors and increase our stakeholders confidence in our capabilities.

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

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

estimated to 0.2 MDKK. The costs associated with energy saving activities differ from year to year. In 2014 we spent 3.9 MDKK and in 2015 we expect to spend 4-6 MDKK on energy savings. Apart from that we spend around 2 MDKK/year on internal ressources, because we have dedicated energy temas at all sites that carry out energy screenings and -savings.

Opportunity driver

Description

Potential impact

Timeframe

Direct/ Indirect

Likelihood

Magnitude of impact

Estimated financial

implications

Management

method

Cost of

management

reduction since 2006 and have an ambitious CO2 target and strategy. So far we have reduced our CO2 emission with 46% 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

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

In our Position on Climate change our long term CO2 goal and our activities is described. In UN Global Compact Progress Report is described the 10 principles that our suppliers and partners must sign and on pages 12, 13 our results related to climate change in 2014 is described.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC6.ClimateChangeOpportunities/Position on climate change 2015 final.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC6.ClimateChangeOpportunities/UN Global Compact Progress Report_2014.pdf

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 Sun 01 Jan 2006 - Sun 31 Dec 2006

32918

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 local factors in the extent possible. If no local factors (from suppliers) are available, we use factors from GHG tools. Please see our attached annual calculation of emission factors.

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

CC7.4

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

Fuel/Material/Energy

Emission Factor

Unit

Reference

Electricity 0.35266

metric tonnes CO2 per MWh

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

Electricity 0.42670


Italy and France: http://rapport-dd-2013.edf.com/resources/ParagPdf/94/fr-FR/PdfFile.pdf

Electricity 0.30197


USA: https://www.pseg.com/info/environment/sustainability/2014/sustainability_report/HTML/index.html

Methane 0.20432


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

Methane 0.18106


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

Other: District heating 0.106


Denmark: http://www.veks.dk/~/media/VEKS/Files/Publications/Miljdeklaration.ashx

Town gas or city gas 0.208


Denmark: http://www.hofor.dk/baeredygtige-byer/miljodeklaration-2012/

Fuel/Material/Energy

Emission Factor

Unit

Reference

Other: Bio oil 0.0400


Denmark: http://www.combineering.dk/om-combineering.html

Diesel/Gas oil 0.2664


Denmark: http://key2green.dk/n%C3%B8gletal-fyringsolie-tr%C3%A6-og-halm

Liquefied petroleum gas (LPG)

0.235


Denmark: http://www.primagaz.dk/

Further Information

CC7.4: CO2 emission values from: electricity, district heating, city gas and methane are found annually. Values for Gas oil, LPG, bio oil are all constant. The factors are in general based on official standard values or data from suppliers. Because of local CO2 emission values depends on both geography (the grid) and practice (other firms you compare with), local values are to be used as these will provide the most accurate picture of the sites actual CO2 contributions. Available emission factors originate from the external suppliers of energy and national databases. If it is not possible to find a local value, the Danish or other available values are used. This is the case for: • Natural gas: France and Italy use the same factor as Denmark. • Electricity: France uses the same factor as Italy. Our emission factors are calculated as an average of emission factors of the last 3 years, this is to prevent/minimize yearly fluctuations. Report and sources for emission factors attached "Calculating Emission factors from energy to CO2 2014" and "Emission factors 2014".

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC7.EmissionsMethodology/Emission factors 2014.xlsx https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC7.EmissionsMethodology/CDP - Calculating Emission factors from energy to CO2 2014.pdf

Page: CC8. Emissions Data - (1 Jan 2014 - 31 Dec 2014)

CC8.1

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

Operational control

CC8.2

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

7671

CC8.3

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

18003

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

Scope 2 emissions

excluded from this source

Explain why the source is excluded

Global Sales offices except in Valby, Denmark

Emissions are relevant but not yet calculated

Emissions are relevant but not yet calculated

CO2 emissions are only accounted for sites with research, development and/or production + Valby Headquarter. 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), but 80-90% of the total energy consumption. Data is not included due to difficulties in retrieving the information and unreliable data. We have not yet investigated and evaluated this thoroughly, nor have we adopted an approach to account for the emissions.

CC8.5

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

Scope

Uncertainty range

Main sources of

uncertainty

Please expand on the uncertainty in your data

Scope 1

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

Assumptions Metering/ Measurement Constraints Data Management

The associated CO2 is calculated on the basis of the amount of fuel consumed using local official conversion factors where possible. Natural gas: Emission factors from Denmark are used in Italy and France. Uncertainty in manual reading of consumption and possible transcription errors. Lundbeck use the mean of the last 3 years to stabilize the variation in data.

Scope 2


Assumptions 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 on electricity and district heating. Furthermore Lundbeck also use the mean of the last 3 years to stabilize the variation in data. To calculate CO2 emissions, Lundbeck use country-specific emission factors (emission factor of the supplier´s plant) to

Scope

Uncertainty range

Main sources of

uncertainty

Please expand on the uncertainty in your data

Data Management

account to national differences in the energy supply mix. Uncertainty in manual reading of consumptions. If local emission factors are not possible to achieve we extrapolate from similar countries e.g. electricity emission factors from Italy is used in France. These factors are considered similar as the energy mix for electricity, temperature and climate in these countries are alike.

CC8.6

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

Third party verification or assurance complete

CC8.6a

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

Type of verification

or assurance

Attach the statement

Page/section reference

Relevant standard

Proportion of reported Scope 1

emissions verified (%)

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC8.6a/Verification-Assurance statement 21 January 2015_signed.pdf

Verification/assurance statement from Deloitte. One page.

ISAE3000 80

Limited https://www.cdp.net/sites/2015/48/11048/Climate Change Supplementary information from Deloitte ISAE3000 80


or assurance


Page/section reference

Relevant standard

Proportion of reported Scope 1


assurance 2015/Shared Documents/Attachments/CC8.6a/Supplementary information from Deloitte to CDP 2015.pdf

on the CDP Verification template to address all issues required. (For gaining full score by CDP).

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC8.6a/HSE data 2014 final.xls

Attachment: "HSE data 2014 final.xls" - as documentation of calculations on Scope 1 emissions.

ISAE3000 80

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC8.6a/HSE data overview 2012-2014.pdf

The complete HSE data set verified by Deloitte January 2015.

ISAE3000 80

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



CC8.7a

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


or assurance



Relevant standard

Proportion of

reported Scope 2


Limited assurance


Verification statement from Deloitte. One page.

ISAE3000 80

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC8.7a/Supplementary information from Deloitte to CDP 2015.pdf

Supplementary information from Deloitte on the CDP Verification template to address all issues required. (For gaining full score by CDP).

ISAE3000 80

Limited assurance


Attachment: "HSE data 2014 final.xls" - as documentation of calculations on Scope 2 emissions.

ISAE3000 80

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC8.7a/HSE data overview 2012-2014.pdf

The complete HSE data set verified by Deloitte January 2015.

ISAE3000 80

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

Other: HSE KPI data Other KPIs related to our Environmental Footprint are verified, (but not directly relevant regarding energy and CO2 emission) like production trend, use of chemicals, water, wastewater, waste etc. The data are verified by Deloitte during our annual review of HSE data.

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 2015. Emission Scope 1, 2013 = 8189 Tons CO2 Emission Scope 1, 2014 = 7671 Tons CO2 Reduction Scope 1, 2013-2014 = 518 Tons CO2 (6.3%)


Verified by Deloitte during our annual review of HSE data in January 2015. Emission Scope 2, 2013 = 20163 Tons CO2 Emission Scope 2, 2014 = 18003 Tons CO2 Reduction Scope 2, 2013-2014 = 2160 Tons CO2 (10.7%)

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

Verified by Deloitte during our annual review of HSE data in January 2015. Emission Scope 1+2, 2013 = 28352 Tons CO2 Emission Scope 1+2, 2014 = 25674 Tons CO2 Reduction Scope 1+2, 2013-2014 = 2678 Tons CO2 (9.4%)

Progress against emission reduction target

Verified by Deloitte during our annual review of HSE data in January 2015. Reduction target is 55% by 2016 compared to base year 2006. Total reduction from 2006-2014 = 46%

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

Verified by Deloitte during our annual review of HSE data in January 2015. Base year 2006. Emission Scope 1, 2006 = 14282 Tons CO2 Emission Scope 1, 2014 = 7671 Tons CO2 Reduction Scope 1, 2006-2014 = 6611 Tons CO2 (46.3%)


Verified by Deloitte during our annual review of HSE data in January 2015. Base year 2006. Emission Scope 2, 2006 = 32918 Tons CO2 Emission Scope 2, 2014 = 18003 Tons CO2 Reduction Scope 2, 2006-2014 = 14915 Tons CO2 (45.3%)


Scope 3 from Business travel has been verified by Deloitte in April 2015. Base year 2013.

Emissions reduction activities A number of energy reducing activities in 2014, have been verified by Deloitte in April 2015.


Scope 3 from Business travel has been verified by Deloitte in April 2015. Base year 2013.

CC8.9

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

333

Further Information

CC8.6a, CC 8.7a and CC8.8: Scope 1 and 2 emission from Energy and CO2 is verified annually by Deloitte January 2015. Attachments: 1) "Verification-Assurance statement 21 January 2015_signed.pdf"). 2) "Supplementary information from Deloitte to CDP 2014": Supplementary information from Deloitte on the CDP Verification template to address all issues required for gaining full score. 3) "HSE data 2014 final.xls" - as documentation of calculations on Scope 1 +2 emissions. 4) "HSE data overview 2012-2014.pdf" - The complete HSE data set verified by Deloitte January 2015. CC8.9 + CC8.9a: Use of bio oil at site Lumsås, Denmark is a by-product from sunflower and rapeseed oil production.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC8.EmissionsData(1Jan2014-31Dec2014)/HSE data overview 2012-2014.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC8.EmissionsData(1Jan2014-31Dec2014)/Verification-Assurance statement 21 January 2015_signed.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC8.EmissionsData(1Jan2014-31Dec2014)/HSE data 2014 final.xls https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC8.EmissionsData(1Jan2014-31Dec2014)/Supplementary information from Deloitte to CDP 2015.pdf

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2014 - 31 Dec 2014)

CC9.1

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

Yes

CC9.1a

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

Country/Region

Scope 1 metric tonnes CO2e

Denmark 2760

Italy 2335

France 1366

United States of America 1210

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)

CC9.2b

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

Facility


Latitude

Longitude

Site Valby, Denmark 2179 55.658035 12.516765

Site Lumsås, Denmark 581 55.94317 11.512057

Site Padova, Italy 2335 45.410201 11.926138

Site Nice, France 1366 43.628082 7.051954

Site, Paramus, USA 1210 40.93364 -74.076374

CC9.2c

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

GHG type


CO2 7624

HFCs 47

CC9.2d

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

Activity


Methane 4912

Gasoil 216

Biooil 333

HFC´s (R134a, R404a) 47

Citygas 2130

F-gas (LPG) 33

CC9.2e

Please break down your total gross global Scope 1 emissions by legal structure

Legal structure


Further Information

CC9.1a: Attachment: "HSE data 2014 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/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC9.Scope1EmissionsBreakdown(1Jan2014-31Dec2014)/HSE data 2014 final.xls

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2014 - 31 Dec 2014)

CC10.1

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

Yes

CC10.1a

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

Country/Region

Scope 2 metric tonnes CO2e

Purchased and consumed electricity, heat, steam or cooling

(MWh)

Purchased and consumed low carbon electricity, heat, steam or cooling accounted for in CC8.3

(MWh)

Denmark 10751 39997 0

Italy 2579 6045 0

France 2972 6965 0

United States of America 1702 5636 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


CC10.2b

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

Facility


Site Valby, Denmark 8921

Site Lumsås, Denmark 1830

Site Padova, Italy 2579

Site Nice, France 2972

Site Paramus, USA 1702

CC10.2c

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

Activity


Purchased electricity 16562

Purchased district heating 1442

CC10.2d

Please break down your total gross global Scope 2 emissions by legal structure

Legal structure


Further Information

CC10.1a: Find scope 2 emissions 2013 + 2014 in "HSE data 2014 final. xls".

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC10.Scope2EmissionsBreakdown(1Jan2014-31Dec2014)/HSE data 2014 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 fuel, electricity, heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type

MWh

Energy type

MWh

Fuel 44301

Electricity 45040

Heat 13603

Steam 0

Cooling 0

CC11.3

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

Fuels

MWh

Diesel/Gas oil 800

Methane 24797

Town gas or city gas 10243

Vegetable oils 8319

Liquefied petroleum gas (LPG) 143

CC11.4

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

Basis for applying a low carbon emission factor

MWh associated with low carbon electricity, heat, steam or cooling

Comment

Non-grid connected low carbon heat, steam or cooling, generation owned by company

8319 Heat: Biooil (by-product from the production of sunflower- and rapeseed oil).

Further Information

11.1: The actual ratio is 7.7% (1160 mio DKK opprational spend - 90 mio DKK of this was used on energy). 11.2: At Lundbeck produce our own steam and cooling from electricity and fuel. 11.4: Lundbeck have plans of changing the fuel in our boilers at Site Valby (Denmark) from citygas to biofuel /biooil or wood pellets).

Page: CC12. Emissions Performance

CC12.1

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

Decreased

CC12.1a

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

Reason

Emissions value

(percentage)

Direction of change

Comment

Emissions reduction activities

0.6 Decrease

The overall decrease in consumption of electricity in 2014 was 1.0% (472 MWh) compared to 2013. (This is 166 tons CO2 - 0.6 % of total CO2 decrease in 2014). 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. (166/28351)*100 = 0.6%

Divestment

Not relevant for Lundbeck in 2014!

Acquisitions


Mergers


Change in output 1.4 Decrease

The consumption of Methane has decreased 5.2 % in 2014 (35,182 MWh) compared to 2013 (37,123 MWh). This decrease represents 397 tons CO2 (1.4 % of the total reduction in CO2 emission in 2014) and is mainly due to the difference in the production portfolio (change in production mode and the range and mix of products produced). (397/28351)*100 = 1.4%

Reason

Emissions value

(percentage)

Direction of change

Comment

Change in methodology

4.2 Decrease

Lower CO2 emission factors in 2014 have been in our favor. This is relevant for primarily electricity and district heating. The emission factor for electricity is reduced from 3.3-12.4% (depending on country) and district heating is reduced 5.4% in 2014 compared to 2013. If the factors had been the same as in 2013 the saving had only been 1496 tons CO2 in 2014 compared to the actual 2677 tons CO2 (compared to 2013). This is a difference of 1181 tons CO2 - equivalent to 4.2% of the total CO2 reduction in 2014. (1181/28351)*100 = 4.2%

Change in boundary


Change in physical operating conditions

1.9 Decrease

A mild winter in 2014 and energy saving initiatives resulted in lower consumption of district heating at Site Valby (Denmark) by 25.8% (500 tons CO2) compared to 2013. A similar reduction of 11.1% (45 tons CO2) in use of bio oil was seen at Site Lumsås (Denmark) compared to 2013, also due to the mild weather conditions and the reduced need for heating up buildings. The total reduction amounts to 545 tons CO2 - 1.9% of the total CO2 reduction in 2014. (545/28351)*100 = 1.9%

Unidentified 1.3 Decrease

Total reduction in CO2 emission in 2014 = 9.4% compared to 2013. The above documented reductions add up to 8.1%. Meaning that 1.3 % is not documented/identified reductions, but these are primarily based on minor energy savings on gasoil and city gas (used for producing steam and heat) at site Valby (Denmark) and site Lumsås (Denmark) in 2014 compared to 2013.

Other


CC12.2

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

Intensity figure

Metric numerator

Metric denominator

% change from

previous year

Direction of change

from previous

year

Reason for change

Intensity figure

Metric numerator

Metric denominator

% change from

previous year

Direction of change

from previous

year

Reason for change

0.000001906 metric tonnes CO2e

unit total revenue

2.6 Increase

REDUCTION ACTIVITIES: Increase of 2.6 %. Even though we ran a long range of energy reducing activities in 2014, 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, we still saw an increase in our intensity figure. This is due to less revenue from sales and less production in 2014 compared to 2013. 2014: 13,468 billion DKK => 0.000001906 tons/CO2 per DKK. 2013: 15,258 billion DKK => 0.000001858 tons/CO2 per DKK.

CC12.3

Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per full time equivalent (FTE) employee

Intensity figure

Metric numerator

Metric denominator

% change from

previous year

Direction of change

from previous

year

Reason for change


FTE employee

17.9 Decrease

REDUCTION ACTIVITIES: Reduction of 17.9%. Even though Lundbeck had an increase in number of FTE from 2013-2014 (301 people = 5.2%), we still managed to see a decrease in our intensity figure, due to our extensive emission reduction activities like specific target setting, process optimization and general high focus and dedication from the top management to lowering our CO2 emissions. 2014: 25674 tons CO2/6101 FTE = 4.208 tons CO2/per FTE. 2013: 28351 tons CO2/5530 FTE => 5.126 tons CO2/per FTE.

CC12.4

Please provide an additional intensity (normalized) metric that is appropriate to your business operations

Intensity figure

Metric numerator

Metric denominator

% change from

previous year

Direction of change

from previous

year

Reason for change


unit of production

5.3 Decrease

REDUCTION ACTIVITIES: Despite a decrease in finished goods production of 1.5% in 2014 compared to 2013, Lundbeck has a 5.3% decrees in our intensity figure of "ton CO2 per unit produced". This is due to specific 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 2014 (in our favor). Compared to our baseline year (2006) we have lowered our emissions by 46%. 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 comparison. Normally no other units than financial revenue is used at Lundbeck for measuring our emissions. 2014: 2608.3 million units = 0.00001015 tons CO2/unit produced. 2013: 2647.3 million units = 0.00001072 tons CO2/unit produced.

Further Information

Reduction of 7.3 in total energy (MWh) and 9.4% in total scope1 and scope 2 emissions (Tons CO2) in 2014 compared to 2013. This is due to specific 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 2014 (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). So far our CO2 TARGET IS WELL ON THE WAY – 46% DECREASE IN 9 YEARS!

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC12.EmissionsPerformance/HSE data 2014 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

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.

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. After the consolidation process in 2010, the selection revealed that this emission is quite small (6.2% of our total combined scope 1+2+3) and we as a company have a low influence due to our relative small part of the total sales at our supplier. The value is a constant of 3380 tones/year. This process planned to be done every 5 years to follow the development. 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.

Capital goods Not relevant, explanation provided

CO2 emission from the production of machines and equipment used at Lundbeck, is not considered relevant. If so we will use industry average emission

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

factors per material consumed and apply it to our capital expense annual program. At Lundbeck we focus on low energy consuming equipment as an important parameter when buying the equipment. We always conduct a risk assessment when sourcing new equipment to e.g. assess the energy consumption or use of raw materials.

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

Relevant, not yet calculated

Lundbeck are not considered a high consuming energy company. In Denmark a big part (>20%) of the electricity mix is "green energy". District heating is a by process of waste incineration and a very low environmental effect of achieving heat. In that light it is considered a minor focus area at the time, but upstream emission from energy suppliers may be relevant to Lundbeck, as we buy energy (electricity, district heating) for our production and processes.

Upstream transportation and distribution


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

Waste generated in operations


3368

Only waste from Denmark (Chemical waste and 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 6.1% of our total combined scope 1+2+3 emission. The web-based calculator "Klimakompasset" is used to sum up the specific emissions form the different types of waste. Chemical waste is calculated

80.00%

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

in co-operation with our national waste disposal facility "Nord".

Business travel Relevant, calculated

7132

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 15 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/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 13.0% of our total combined scope 1+2+3 emission.

100.00%

Employee commuting


Scope 3 emissions from transportation of employees between their home and work may be relevant to Lundbeck. In order to assess emissions, we will have to conduct specific surveys on some major sites and use this data to estimate emission

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

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.

Upstream leased assets


5806

The emissions are based on reports from the leasing companies on company cars leased by Lundbeck. There are about 1500 company cars in Lundbeck, of which we have data on 25% (registered in Denmark and Italy). The emission accounts for 10.6% 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 and distribution


9166

Transportation of products to end user. Emissions from fuel by transportation in Denmark, Europe and overseas. Each transportation mode is taken into account (truck, railway, ship, airplane). Only trucks with EURO Norm 4 or above are accepted. Companies have to send in a report on CO2 emissions every 3 months to Lundbeck (this is part of our written contract with the transportation company). The emission accounts for 16.7% of our total combined scope 1+2+3 emission. All calculations have been done by the companies by adopting the internationally recognized ‘GHG Protocol

100.00%

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

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 products is already calculated as a part of our total energy consumption from Lundbeck production. At the moment sold products (not produced for Lundbeck, but as a CMO) is not a big part of our business, why this area has not been assessed yet. We do not consider this a high priority as we produce pharmaceuticals! Not sold products like equipment 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.

Use of sold products

Not relevant, explanation provided

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

Sources of Scope 3

emissions

Evaluation status

metric tonnes CO2e


Percentage of



chain partners

Explanation

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

305

Purchased raw materials (solvents): NEW IN 2014! 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 one tons of solvent. Factor Ethanol: 0,75 tCO2/tEtOH Factor Acetonitrile: 0,106 tCO2/t Acetonitrile The CO2 emission accounts for 0.6% of our total combined scope 1+2+3 emission.

100.00%

Other (downstream)

CC14.2



CC14.2a

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

Type of

verification or assurance



Relevant standard

Proportion of

Scope 3 emissions verified (%)

Limited assurance

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/CC14.2a/Supplementary information from Deloitte to CDP 2015.pdf

Deloitte have made third party verification for Business Travel!

ISAE3000 25

Limited assurance


Attachment: "HSE data 2014 final.xls" - used by Deloitte as documentation on scope 3 emissions on Business Travel.

ISAE3000 25

Limited assurance


Verification/assurance statement from Deloitte. One page.

ISAE3000 25

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

Sources of Scope

3 emissions

Reason for

change

Emissions

value (percentage)

Direction of change

Comment

Waste generated in operations

Change in output

18.3 Increase

In 2013: 2847 tons. In 2014: 3109 tons. Increase of 18.3 % due to more "Liquid chemical waste" from our Danish chemical site in Lumsås. 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 Change in output

10.5 Increase

In 2013: 6455 tons. In 2014: 7132 tons. Increase of 10.5% due to more global meeting activity in 2014, as we have launched a range of new products all over the world and have several in our pipeline. Despite 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), we unfortunately did see an increase in our emission.

Upstream leased assets

Acquisitions 1.7 Increase

In 2013: 5711 tons. In 2014: 5806 tons. Increase of 1.7% due to higher number of employees with the benefit of a company car in 2014. This results in a minor increase in fuel used for transportation. Despite emission reduction initiatives, such as a company car policy with only diesel fueled cars available in Denmark, we unfortunately did see an increase in our emission.

Downstream transportation and distribution

Change in methodology

153.9 Increase

In 2013: 3610 tons. In 2014: 9166 tons. Increase of 154% due to downstream transportation of goods from France to China in 2014, has been transported by air and not sea (we normally prefer sea as this gives lower CO2 emission). This was a necessity due to high demands on timely delivery to China.

Purchased goods & services

Change in boundary

100 Increase

NEW IN 2014! In 2014: 305 tons CO2/year. Not possible to compare to 2013, as data are not available. Despite emission reduction initiatives (our effort to regenerate solvents to consume less "virgin" solvents) we still need to buy virgin solvents for our production as we recover only 40% of our 9 most used solvents.

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

CC14.4a

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

Purchased goods and services SUPPLIERS METHODE: In 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. BuAt 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 6.2% of our total scope 1+2+3 emissions in 2014. We will reevaluate our top suppliers every 5 years, to track any changes. 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, where all suppliers are evaluated every 4 years (regarding CSR issues). So far 70-80% of our suppliers on chemicals from China and India has been evaluated. CO2 and climat change is always a part of the audit, to try raise the level at the supplier. If any unconformities’ are reported, we visit the suppliers or make them deliver a self-assessment. 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 in Denmark, Europe and overseas. In Denmark only trucks with EURO Norm 4 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 2014 compared to 2013). MEASURE OF SUCCESS: Our target was unfortunately not achieved in 2014, as total CO2 emissions from downstream transportation of goods from France to

China in 2014, has been transported by air and not sea (we normally prefer sea, as this gives lower CO2 emission). This was a necessity due to high demands on timely delivery to China. CO2 emissions from transportation of goods (downstream) accounted for 16.7% of Lundbeck total scope 1+2+3 emissions in 2014. Purchased goods and services RAWMATERIALS - Solvents: Ethanol and Acetonitrile) - NEW IN 2014! 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 40% 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 2014. The CO2 emission accounts for 0.6% of our total combined scope 1+2+3 emission. In 2014 we had a recovery of 40% at site Lumsås. In this way we avoided purchasing approx. 1,300 tons of solvents, which are ressource demanding and costly to produce, transport and dispose of. 1,300 tons that would have been bought as new raw materials, if recovery did not work. The amount of Ethanol recovered in 2014 was 193.4 tons equivalent to a CO2 saving of 145 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 197.5 tons equivalent to 21 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

Comment

29 12%

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 finshed 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

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 2014 it was 6.2% of our total combined scope 1+2+3. As a company 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 and India, where production methods of chemicals may be critical. So far we have evaluated 70-80% of our 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) - NEW IN 2014! 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 2014. The CO2 emission accounts for 0.6% of our total combined scope 1+2+3 emission. In the future we will try to collect data from more suppliers of other types of organic solvents, to hopefully influence the way they produce these chemicals in a pro-active way.

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: "HSE data 2014 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 2015": Deloitte have made third party verification for Business Travel! 2: "HSE data 2014 final": Lundbeck document used by Deloitte as documentation on scope 3 emissions on Business Travel. 3: "Verification-Assurance statement 21 January

2015_signed": Verification/assurance statement from Deloitte. One page. CC14.4c: The amount of Ethanol recovered in 2014 was 193.4 tons equivalent to a CO2 saving of 145 tons, if this was bought as a new raw material. The number for Acetonitrile recovered was 197.5 tons equivalent to 21 tons CO2.

Attachments

https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC14.Scope3Emissions/Verification-Assurance statement 21 January 2015_signed.pdf https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC14.Scope3Emissions/HSE data 2014 final.xls https://www.cdp.net/sites/2015/48/11048/Climate Change 2015/Shared Documents/Attachments/ClimateChange2015/CC14.Scope3Emissions/Supplementary information from Deloitte to CDP 2015.pdf

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 Senior Vice President. Entitled to act on behalf of our CEO and chairs the HSE council.

Chief Operating Officer (COO)

Further Information

CDP

Date post:	25-May-2020
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