Novozymes’ level of ambition increased in 2009 compared to previous years. Some of the sustainability targets were replaced, new measures were introduced, and the targets for some key indicators were raised. The purpose was to bring Novozymes’ sustainability targets more in line with our strategic ambitions.
All sustainability targets but one were met.
Novozymes' sustainability targets are centered on four themes:
Water consumption is a key indicator of efficiency and environmental impact. The 2009 target was that the increase in water consumption should be at least 2% lower than sales growth. The target had been raised compared to the previous year, when the difference should be at least 1%. In 2009, sales (in local currency) grew by 2%, while water consumption fell by 4%, and the target was therefore achieved with a total relative performance improvement of 6%.
Similarly for energy consumption, the 2009 target was that the increase in energy consumption should be at least 2% lower than sales growth. In 2009 energy consumption fell by 5% so the target was achieved with a total relative performance improvement of 7%.
It is important for Novozymes to be able to position our enzyme technology as part of the solution to address climate change. Accordingly, Novozymes introduced a new target linking sales of enzymes to the corresponding reduction in our customers’ CO2 emissions. The target was adjusted according to sales growth to a reduction of 27 million tons of CO2 emissions. The actual reductions for 2009 are estimated to be 27 million tons, and the target was therefore met.
In 2009, Novozymes completed the implementation of a new comprehensive supplier performance management system. The system covers all aspects of management from approval of new suppliers to performance evaluation. The target was to cover 80% of our purchasing by the end of 2009. At the end of 2009, 88% of purchasing was covered, and the target was met.
In 2009, Novozymes also introduced a new target to identify the most important issues and engage with key stakeholders in a more systematic way. In order to address this target, a new set of tools was developed, and internal workshops were held in Europe, the Americas, and Asia. The purpose of the workshops was to train key functions to incorporate the new tools into the management of day-to-day stakeholder relations.
In contrast to previous years, Novozymes did not explicitly state a target in 2009 for compliance and complaints. However, it is obvious that the company continuously aims to comply with regulations and to minimize complaints. Even though there is no specific target, there is still a need to monitor and report on these parameters. In 2009, 17 breaches of regulatory limits were registered worldwide. These breaches were mainly related to concentrations of pollutants in wastewater (12 out of 17).
Novozymes received 33 complaints from neighbors in 2009. Neighbors living close to factories can be troubled in some locations, mainly by odors and noise. By way of comparison, in 2008 there were 38 complaints.
Novozymes always strives to avoid significant spills such as the release of chemicals into watercourses or soil. There were no significant spills in 2009.
In 2003, high nitrate levels were found in the groundwater around Novozymes’ site in Franklinton, North Carolina, USA. Subsequent measurements were submitted to the authorities in early 2008. The data are still under review by the authorities.
In 2008, competition for employees was intense, and companies generally experienced high employee turnover. The abrupt slowdown of the economy from the last quarter of 2008 and in 2009 changed the picture and very much affected employee turnover rates throughout the year. This is part of the reason for the employee turnover rate of 7% in 2009, which should be compared to the target of less than 9%.
Every year Novozymes’ employees have the opportunity to express their opinions in a survey. In 2009, the average score for “Satisfaction and motivation” was 77 compared to a target of 72. The corresponding result for “Opportunities for professional and personal development” was 74, compared to a target of 69. Thus both targets were reached.
The 2009 target for absence from work was a rate of below 3%. With absence of 2%, this target was achieved.
The frequency of occupational accidents in 2009 increased to 5.1 accidents per million working hours from 4.9 in 2008. As the target was a frequency below 4.5, the target was not met. Initiatives to address and mitigate hazards in the working environment have been successful, and the frequency of occupational accidents related to routine activities has declined accordingly. However, injuries occurring when employees are doing nonroutine activities increased, for example when traveling between meetings. New initiatives have been initiated to address this issue.
The target to completely avoid fatal occupational accidents was met in 2009.
Novozymes met the majority of the financial and sustainability targets defined for the employee stock option program in 2009. Management has therefore approved a pro rata allocation of 81% of the year’s stock options to employees and managers.
As far as Executive Management’s incentive program is concerned, most of the sustainability targets were met, and the targets for economic profit in 2009 were met in full, triggering a pro rata allocation of 99%.
In 2008 employees were granted 99% and Executive Management 97%. The two incentive programs differ in terms of targets and timing. The general guidelines for Executive Management’s incentive program can be found at www.novozymes.com/corporategovernance. The guidelines were approved at the Annual Shareholders’ Meeting in March 2008. Further details can be found in Note 24 to the financial statements.
No significant events have occurred after December 31, 2009.