Presentation - Novozymes

SUSTAINABILITY AS
A BUSINESS DRIVER
ODDO Environment Forum, Paris, June 20 2011

Safe Harbor Statement
This presentation and its related
comments contain forward-looking
statements, including financial
expectations.
Forward-looking statements are by their
very nature associated with risks and
uncertainties that may cause actual
results to differ materially from
expectations.
The uncertainties may include
unexpected developments in the
international currency exchange and
securities markets, market-driven price
decreases for Novozymes‟ products, and
the introduction of competing products
within Novozymes‟ core areas.
2

Agenda
Overview of Novozymes
Novozymes and sustainability
Targets and performance
Environmental management and business
drivers
Other sustainability issues
3

Novozymes –
The World Leader in Bioinnovation
• Business consists of two segments:
Enzyme Business and BioBusiness
• 2010 sales: USD 1,75 billion
Founded 1941
Listed 2000
• 2010 EBIT margin: ~ 22%
• More than 700 products used in 130
countries in over 30 different industries
• + 6,500 granted and pending patents
• + 5,500 employees
• Two share classes; A and B shares
• A share capital and 11% of B shares
(25.5% of O/S; 70.1% of votes) held by
Novo A/S, the management company of
the Novo Nordisk Foundation
Ticker
Exchange
Market Cap*
Enzyme Business
NZYM
Copenhagen
~ 10 billion USD
BioBusiness
Household
Care
Food &
Beverages
BioEnergy
Feed &
other Tech.
Microorganisms
Biopharmaceutical
ingredients
*A+B shares April, 2011
4

Delivering Tomorrow‟s Solutions Today
Delivering solutions from
nature:
food applications, detergents,
pharmaceutical products, the
energy sector and countless other
applications
Helping companies
become more efficient:
energy efficiency, saving raw
materials, reducing waste and
replacing chemicals
This unique approach
leads to:
“more with less”
higher quality, lower costs, better
yields and a better environment
5

Uniquely Diversified Group Creates Synergies and
New Opportunities
• Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow
• ~ 14% of annual sales invested in R&D
• Global provider of enzymes to all market segments creates global market leader position
• Leveraging competencies across segments accelerates pace of innovation, reduces competition and creates
high barriers to entry
32% 30% 19%
13% 4%
2%
Household
Care
Food &
Beverages
enzymes
Bioenergy
Feed & Other
Technical
Microorganisms
Biopharmaceutical
ingredients
• Laundry &
Dishwasher
detergents
• Baking
• Brewing
• Starch to
syrups
• Wine & juice
• Corn ethanol
• Cellulosic
biofuels
• Animal feed
• Textile
• Leather
• Pulp & Paper
• BioAgriculture
• Wastewater
• Institutional
& household
cleaning
• Drug delivery &
formulation
• Medical devices
• Bio-manufacturing
Enzyme Business
BioBusiness
6

Undisputed Market Leader
Expanding Enzyme Application
2000 – Global enzyme
market: DKK ~ 12bn
2010 – Global enzyme
market: DKK ~ 19bn
Global enzyme market
2010 value DKK ~ 19bn
Rest of
market
57%
Novozymes
43%
Market potential*
Rest of
market
53%
Novozymes
47%
Others
16%
DSM
6%
Captive
10%
Novozymes
47%
Current enzyme market
DKK ~ 19bn
Danisco
21%
Untapped market
Multi-billion (US$)
Rules of competition
dictated by innovation
*Global markets for chemicals, food ingredients, feed additives, etc.
7

Growth drivers
Sustained growth
and profitability
Multiple Drivers Create a Sustainable
Business with Significant Growth Potential
• Innovation
• Sustainability
• Scarce raw material
• Replacing chemicals
• Energy efficiency
• Cost/Performance
• Waste reduction
• Branding
• Patient care
1. Innovationdriven
top-line
growth
2. Productivity
improvements
3. Leverage
expertise
outside enzymes
Sustainable solutions
8

1. Innovation-driven Top-Line Growth
• Achieving growth through R&D investment remains a fundamental priority
• > 50 product introductions in the last 5 years, ~ 100 active projects in current portfolio
• R&D investment-reaping rewards with increasing diverse revenue streams
R&D Expenditure 2005−2010
(DKK million)
20 year sales CAGR
of around 8%
Sales DKKm EBIT margin R&D/Sales ROIC
880
995
1,096
1,207
1,360
24%
22%
20%
18%
16%
12.000
10.000
8.000
6.000
14%
4.000
12%
2.000
10%
0
2006 2007 2008 2009 2010
9

2. Enzyme Technology Improves Profitability
• Focused on improving margins through sophisticated technological solutions
• Achieved sales CAGR of 8% over 20 years with improving margins
• Roughly 20% of the R&D spend goes into productivity improvements
Productivity improvements are gained in three ways:
1. Production strain improvement
2. Production process optimization
3. Improving the enzyme produced
FERMENTATION
FORMULATION
2. Optimizing the industrial production
Traditional production optimization
• Process optimization
• Equipment optimization
• Input optimization
RAW MATERIALS
PURIFICATION
1. Improving the production strain
MICRO-
ORGANISMS
Improving the microorganisms‟ ability to produce more
enzymes per m 3 fermentation tank through genetic engineering
ENZYMES
3. Improving the enzyme produced
Improving the efficacy of the
enzymes through protein
engineering. Customers buy efficacy,
not volume
10

3. Leveraging Expertise Generates
Opportunities and Efficiencies
Continued development in
the following areas…
…creates opportunities to apply technology in
other areas
Molecular
biology
Bio-informatics
& Systems biology
Strain development using
protein engineering, genetic
modification, DNA sequencing,
etc.
Application of computer
algorithms in the
computational discovery of
enzymes in DNA databases
Microorganisms
Renewables
Screening systems
Application of high-throughput
robotics to find the best
enzyme candidates
Pharma peptides
Industrial-scale
fermentation
Production of enzymes and
proteins whilst continuously
optimizing and improving
yields
Polymers
Underpinned by culture of knowledge-sharing across geographies and application fields
11

Household
Care
Food & Beverage
Bioenergy
Feed & other
Enzyme Business‟ Unique Industry Trends
Industry Unique Trends Recent Launches
Innovation
Laundry Performance claims Chemical replacement
Dishwasher
Cold water wash
Environmental regulation
Compaction
Chemicals replacement
Lipoclean XPect
Celluclean Mannaway
Stainzyme Plus
New
functionalities
Replacing
chemicals
Brewing
Consolidation
Alternative raw materials
Volatile malt prices
Efficiency
Ondea Pro
Attenuzyme
Baking
Starch
Juice
Fresh-keeping
Market expansion
High sugar prices
Consolidation
Consolidation
Market expansion (E.M.)
Efficiency
Novamyl Pro
Opticake Fresh
Sucrozyme
Saczyme
Pectinex Ultra AFP
Improved
yields
Enhanced
quality
Health & Nutrition
Healthy foods
Acrylaway
Conventional
biofuels
Advanced
biofuels
Mature industry
Emerging industry
Huge global potential
Marginal increases
Needs ”birth help”
Spirizyme Excel
Cellic CTec2
Improved
yields
Feed
High phosphor prices Regulatory requirements
Growing meat consumption High protein prices
Ronozyme NP
Ronozyme ProAct
Textile
Fragmented industry
Environmental concerns
Replacement of chemicals
Low-cost industry
FiberCare D
Improved
yields
Forest
High energy prices
Replacement of chemicals
Replacing chemicals
12

BioBusiness – Q1 2011
Exciting Projects with Potential of Delivering Growth
Compound
Indication
Partner/
Licenser
Discovery
Preclinical
Phase I Phase II Phase III
Market
approval
Type of future
revenue stream
End market
potential
NZ2114/
plectasin
(Gram Pos.)
NZ17000/
Arenicin
(Gram Neg.)
Hospitalacquired
infections,
e.g. skin,
pneumonia,
bloodstream
and urinary
tract
Under
starategic
review:
Looking at
divestment or
spin-off
Not applicable
Not applicable
Not applicable
Not applicable
Albumin
fusion
Type 2
diabetes
(GLP1)
GSK (HGS)
Syncria
License agreement:
Royalties
Blockbuster market
potential
Albumin
fusion
Neutropenia
Teva (HGS)
Neugranin
License agreement:
Royalties
Blockbuster market
potential
Area/ Tech.
Product
Partner/
Licenser
2010 2011 2012 2013 2014 2015
Type of future
revenue stream
End market
potential
Medical
devices/
Biopharma.
Hyaluronic
Acid
None
Product sales
Bulk market ~ 9 tons in
2008 ~ 1 BDKK, CAGR
10-15% (Kline & Co.)
Area/ Tech.
Product /
Field
Partner/
Licenser
2010 2011 2012 2013 2014 2015
Type of future
revenue stream
End market
potential
Agriculture
Biopesticides
& Biofertility
None Product sales ~ 1 BUSD
Renewable
chemicals
3HP for Bio
Acrylic Acid
Technology license
Existing Bioacrylic Acid
market ~ 11 BUSD,
CAGR 4% (Nexant)
Renewable
chemicals
Green
polypropylene
Technology license
Existing polypropylene
market ~ 66 BUSD,
CAGR 4%(Nexant)
Renewable
Chemicals
Intermediate
chemical from
ren. feedstock
Technology license
Not applicable
13

Q1 2011 Summary
Solid first quarter sales growth
• Good demand across multiple industries
and geographies
• Positive currency impact in the quarter
• Acquisition of EMD/Merck Crop BioScience
impacted quarterly sales by ~ +5%
Solid first quarter earnings growth
• Productivity improvements
• Better capacity utilization
• Other operating costs grew less than sales
• Negative impact from acquisition
Expectations for full year 2011:
• DKK sales growth expectation adjusted
for USD depreciation
• EBIT growth expectation maintained
• Expectation for net profit and free cash flow before
acquisitions increased
World’s first commercial-scale cellulosic
biofuel plant expected to open in 2012 in Italy
Key financials Q1, 2011 Q1, 2010
Total sales, DKKm 2,692 2,325
Sales growth, DKK 16% -
Sales growth, LCY 14% -
Sales growth, organic 8% -
EBIT, DKKm 635 535
EBIT growth 19% -
EBIT margin 23.6% 23.0%
Net profit growth 21% -
Free cash flow bef.
acq., DKKm
Net investments,
excl. acq., DKKm
477 270
206 213
ROIC incl. goodwill 22.8% 24.6%
14

Performance Overview by Segment, Q1 2011
Enzyme Business: DKK: +11%, LCY: +8%
Household
Care
Enzymes
Q111, DKK: +13%
Q111, LCY: +11%
• Increased penetration of enzymes across tiers
• Emerging markets growth
• Chemicals replacement
Food &
Beverages
Enzymes
Q111, DKK: +13%
Q111, LCY: +11%
• Broad appreciation across industries
• Baking enzyme sales slightly lower
• Starch enzyme sales driven higher by growth in emerging markets and high sugar
prices
• Customers’ focus on healthy concepts and quality drove demand
Bioenergy
Enzymes
Q111, DKK: +8%
Q111, LCY: +6%
• Bioenergy enzyme sales growth in the US expected slightly lower compared to the
preliminary Q1’11 US first-quarter ethanol output
• Bioenergy enzyme sales outside the US slightly lower compared to Q1 2010
• Expectations for the 2011 US ethanol production remain at 13.8 billion gallons,
+5% compared to 2011
Feed &
Other
Technical
Enzymes
Q111, DKK: +4%
Q111, LCY: +1%
• Feed enzyme sales saw stabilizing phytase enzyme sales and the growth track for
Ronozyme ProAct continued
• Textile & Leather enzyme sales lower due to challenging market conditions in Asia
• Good development in other technical enzyme industries
BioBusiness: DKK: +78%, LCY: +77%
Microorganisms
Q111, DKK: +95%
Q111, LCY: +94%
• Acquisition impact: ~ +85%
• Acquisition of EMD/Merck Crop BioScience impacted sales growth in BioAg
• Microorganisms for cleaning and wastewater solutions both delivered good growth
Biopharma
ingredients
Q111, DKK: (7)%
Q111, LCY: (10)%
• Sales impacted negatively by timing effects
15

Q1 2011 Financial Performance
DKKm Q1, 2011 Q1, 2010
Absolute
Development
Index
Sales 2,692 2,325 367 116
Gross profit 1,493 1,308 185 114
Gross margin 55.5% 56.3%
EBIT (Operating profit) 635 535 100 119
EBIT margin 23.6% 23.0%
Net profit 492 405 87 121
EPS (diluted) 7.67 6.35 1.32 121
Operating cash flow 683 483 200 141
Net investments excl. acq. 206 213 (7) 97
Free cash flow before acq. 477 270 207 177
Acquisitions 1,550 - 1,550
Free cash flow (1,073) 270 (1,343)
Net interest-bearing debt 1,855 965 890
Net debt-to-equity 23.9% 15.7%
Equity ratio 59.1% 55.1%
ROIC, incl. goodwill 22.8% 24.6%
16

2011 Financial Outlook
Guidance including
the EMD acquisition
Key financials 29.04.11 07.02.11 21.01.11 2010
Sales, DKKm - - - 9,724
Sales growth, DKK 8−11% 10−13% 7−10% 15%
Sales growth, LCY 10−13% 10−13% 7−10% 10%
Sales growth, organic 7−10% 7−10% 7−10% 11%
EBIT, DKKm - - - 2,117
EBIT growth 8−11% 8−11% 8−11% 25%
EBIT margin ~ 22% 21−22% 21−22% 21.8%
Net profit - - - 1,614
Net profit growth 10−13% 8−11% 8−11% 35%
Net investments, excl.
acq., DKKm
~ 1,400 ~ 1,400 ~ 1,400 1,326
Free cash flow bef. acq.,
DKKm
1,000−
1,100
900−
1,000
900−
1,000
998
ROIC ~ 21% ~ 20% 21−22% 22.2%
17

M&G Breaks Ground for First Commercial Plant
• Novozymes‟ partner M&G begins
construction of the world‟s first
commercial-scale cellulosic ethanol plant
• The plant will produce 13 million gallons
of ethanol per year from biomass, and is
competitive with 60-70 USD/barrel
oil
• The biofuels plant will be ready in 2012,
and is located in Crescentino, Northern
Italy
Pictures courtesy of M&G
18

NOVOZYMES AND
SUSTAINABILITY

Sustainability – Novozymes‟ ”DNA”
Our statutes:
“The company strives to do business in a
sustainable and responsible way with regard to the
economic, environmental and social aspects of our
activities.”
Our vision:
”We imagine a future where our biological solutions
create the necessary balance between better
business, cleaner environment and better lives.”
Our ambition:
“To change the world together with our customers
– drive the world towards sustainability through
insights and solutions.”
CHANGE THE WORLD
20

Novozymes‟ Sustainability Journey
Sustainability has been our business
vision for a decade.
Integration of sustainability in both our
technology offering and business
processes is our unique asset – it is the
basis for all the benefits we offer our
customers.
Focused integration of our sustainability
offerings into sales and marketing efforts.
A clear sign of integration!
Business dev.
Cost reduction
Risk minimization
21

Fostering a Sustainability-driven Organization
Novozymes in the Dow Jones Sustainability
Indexes (DJSI):
• Included in DJSI Biotechnology sector since
2000, and sector leader 2000-2007, 2009 and
2010
• „Gold Class‟ rating in 2009 and 2010 by
Sustainable Asset Management (SAM)
Top 1% of Environmental Investment
Organization carbon reporting
Best in Class Storebrand SRI
Member of Global 100 most sustainable
corporations in the world
Member of FTSE4Good Global and
Europe
Founding member of the Sustainability
Consortium
Member of SB20 by
SustainableBusiness.com
PRIME status by oekom research
Member of OMX GES Sustainability
Index
22

Novozymes‟ Sustainability Organization
Board of Directors
Chair, Vice Chair, 8 members
• Approve company ambition, strategy and targets
• Overlook company performance, through, e.g.,
quarterly reporting
• Responsible for incentive programs
Executive Management
CEO, 5 EVPs
• Define company ambition and set
strategic direction
• Approve SD strategy and targets
• Overlook strategy execution
Sustainability Development Board
2 EVPs, 6 VPs
• Identify and evaluate trends and issues
• Draft SD strategy and targets
• Execute SD strategy, via cross org. anchoring and integration
with functional / business strategies
23

Our Strategy is Based on Stakeholder Insights
Retailers
End
consumers
Customers
Common
long-term
interest: Sustainable
development
NGOs
Employees
Public
decision
makers
24

Sales & Marketing:
Use of sustainability as co-business driver
CUSTOMER
DRIVERS
• Prepare the customer for increased ”pull” from retailers
• Prepare the customer for increased ”push” from regulators
• Support the customer in achieving internal sustainability
goals
WHAT WE DO
Help the customers differentiate themselves through the
reduced environmental impact made possible by
Novozymes‟ technology, LCA documented solutions as well
as sustainability experience and insights
VALUE FOR
NOVOZYMES
• We open doors at higher levels to showcase our technology
• We build new business platforms due to the demand for low
temperature detergents, replacement of chemicals
• We create strategic partnerships, e.g. Walmart
• A very careful guesstimate is that sustainability contributes
to up to 25% of the growth for certain products
25

Stakeholder Insights Lead to Concrete Initiatives
R&D Purchasing Production
Sales &
Marketing
People &
Organization
Positioning
Finance, IT
& Legal
Supplier
performance
management
program
Use of sustainability
as business driver
backed up by LCAs
Positioning of
Novozymes as
sustainabilitythought
leader
“LCA light”:
Environmental
profile of the
product pipeline
Ambitious
targets
for energy
and water
savings
Sustainability
bonus scheme
+ targets for
employee
satisfaction and
development
Integrated
sustainability
reporting
and investor
road shows
Cross-organizational initiatives
Managing
stakeholder
relations
Managing
corporate
governance
Managing
business
integrity
Managing
labor and
human rights
Managing
corporate
citizenship
Managing
health and
safety
26

TARGETS AND
PERFORMANCE

Novozymes‟ Ambition, Internal & External
Reduce our
CO 2 emissions
to at least
2007 levels
Enable indirect
CO 2 emission
reductions of
75 million tons
by 2015
Be a
globally
preferred
employer
ROIC of more
than 22%
Be recognized
as a leader
within
sustainability
Organic sales
growth of more
than 10% p.a.
EBIT margin of
more than 20%
Enzymes for cellulosic bioethanol are not included in sales growth target
28

Sustainability Targets and Achievements
2010 achievements:
Targets
(index 2005)
2009
realized
2010
realized
2011
target
2015
target
• Biotechnology sector leader in
Dow Jones Sustainability Indexes
and Gold class rating by SAM
• Oekom PRIME status
Water efficiency 28% 29% 31% 40%
Energy
efficiency
27% 30% 32% 50%
CO 2 efficiency 25% 38% 41% 50%
• Founding member of the
Sustainability Consortium
Climate change
Million tons CO 2
emission
reductions
Occupational
accidents
Accidents per
million working
hours
27 40 45 75
5.1 4.1 4.5
Rate of absence 2.3% 2.1% < 3%
Employee
turnover
6.7% 7.5%
> 4% –
< 9%
29

Novozymes‟ Historical Sustainability Performance
Indicators 2010 2009 2008 2007 2006
Water efficiency (index 2005) % 29 27 23 13 10
Energy efficiency (index 2005) % 30 27 21 13 12
CO 2 efficiency (index 2005) % 38 24 14 3 9
Waste recycling % 43 45 45 43 42
HCFC emission t 1.5 0.5 1.7 1.1 1.3
Significant spills No 0 0 0 0 0
Breaches of regulatory limits,
groundwater
No 28 27 22 21 22
Breaches of regulatory limits, other No 36 17 19 17 8
Fatalities No 0 0 0 0 0
Frequency of occ. accidents per
million working hours
No 4.1 5.1 4.9 4.8 3.9
Employees No 5,432 5,275 5,146 4,933 4,533
Gender distribution (m/f) % 64/36 63.8/26.2 64.4/35.6 64.7/35.3 64.2/35.8
Employee turnover % 7.5 7 11 9 8
Absence % 2.1 2.3 2.2 2.2 2.3
Animals for testing No 3,710 2,760 2,943 5,575 4,339
30

Employee Data – Geographical Overview 2010
Headcount
Headcount
Turnover
Absence rate
(Absolute)
(% of total)
(%)
(%)
Denmark 2,409 44.3% 4.7% 3.5%
China 1,070 19.7% 5.7% 0.7%
Americas 1,097 20.2% 9.9% 1.5%
India 312 5.7% 21% 1.8%
Rest of the world 544 10% 12.9% 1.3%
Total/Average 5,432 100% 7.5% 2.1%
31

Short and Long-term Sustainability Targets
Sustainability targets for 2011:
1. Enable a 45 million ton reduction in CO 2 emissions through our customers' application of our products
2. Improve energy efficiency by 32% compared to 2005
3. Improve CO 2 efficiency by 41% compared to 2005
4. Improve water efficiency by 31% compared to 2005
5. Score at least 75 for ”satisfaction and motivation” in our employee survey
6. Score at least 70 for ”opportunities for professional and personal development” in our employee survey
7. Keep the frequency of occupational accidents below 4.5 per million working hours
8. Keep employee absence below 3%
9. Keep employee turnover between 4% and 9%
10.Retain our Gold Class rating by SAM in the Sustainability Yearbook
Long-term sustainability targets:
1. Enable a 75 million ton reduction in CO 2 emissions in 2015 through our customers' application of our
products
2. Improve energy efficiency by 50% in 2015 compared to 2005
3. Improve CO 2 efficiency by 50% in 2015 compared to 2005
4. Increase energy supply from renewable and CO 2 -neutral sources to 50% in 2020
5. Improve water efficiency by 40% in 2015 compared to 2005
6. Be recognized as a global leader in sustainability
7. Be a preferred employer globally
32

ENVIRONMENT

Environmental Management System and
Performance
The environment is important. That’s why:
• All production sites are ISO 14001 certified
• Our environmental reporting dates back to 1993
• We use third party verification of our system and data
Ambitious targets for our internal environmental savings result in…
Water and
energy
efficiency
An increase of water or energy efficiency by 1%
corresponds to an annual reduction of purchased
water and energy quantities by approximately
1.5%, which corresponds to:
80,000 m 3 water
55,000 GJ energy
Improved Water and
Energy efficiency leads to
lower resource
consumption and a lower
utility bill.
Biomass
Farmers' use of NovoGro and NovoGro30 as
fertilizers eliminates the need for disposal at a
waste treatment station (typically by incineration).
In Denmark: 101,000 ton NovoGro30 (2010)
In USA, China and Brazil: 377,000 ton
(2010*)
Farmers‟ use of biomass
by-product eliminates the
need, and related cost, for
disposal
(typically
incineration).
* A mix of NovoGro, NovoGro30, and compost. Cost savings not known.
34

Decoupling Use of Resources from Economic Growth
By 2050 we will be 9
billion people!
• Enzymes are efficient biological
catalysts with microbial origin
• Utilized in production processes
they can increase efficiency,
reduce energy consumption,
lower raw material input or limit
waste streams
Economic Growth
Resource Consumption
Bioinnovation
• With Bioinnovation we can
produce ”more with less” and
help decouple economic growth
from the consumption of
natural resources
Time
35

Sustainable Development is About Making the Right
Choices – We Help our Customers to do so
Life cycle assessment* enables
us to compare environmental
impacts of conventional and
enzyme assisted processes
Conventional
Process 1
method
Enzyme assisted
Process 2
process
In many cases small amounts
of enzymes can replace large
amounts of raw materials,
chemicals energy, and water in
industry
User benefit
... same benefit for the
user - but different
environmental impact
*Life cycle assessment (LCA).
36

LCAs Address Four Environmental Categories
Global
warming
Acidification of the
environment
Nutrient
enrichment
Smog
formation
37

Reducing CO 2 Emissions
together with our Customers
• In 2010, Novozymes helped customers save 40 million tons of CO 2
• Novozymes vision: Working towards a future where biological solutions create the necessary balance
between a better business, a cleaner environment and better lives
Net CO 2 saving using 1kg enzyme in different production processes
3400 kg
3800 kg
30 kg
40 kg
100 kg
150 kg
150 kg
200 kg
Up to
600 kg
1300 kg
BIOCATALYSIS
CEREAL FOOD
OILS & FATS
PAPER
ANIMAL FEED
LEATHER
TEXTILES
BIOETHANOL
DETERGENT
FOOD
38

Our Products Help Reduce CO 2 across Industries
Detergent:
100 kg CO 2
per ton of laundry
Animal feed:
80 kg CO 2
per ton of feed
Textile:
1100 kg CO 2
per ton of fabric
Cereals:
110 kg CO 2
per ton of bread
Agriculture:
15 kg CO 2
per ton of corn
Beverage:
25 kg CO 2
per 1000 litre of beer
Paper making:
150 kg CO 2
per ton of pulp
Leather:
100 kg CO 2
per ton of hide
Vegetable oil:
44 kg CO 2
per ton of oil
Dairy:
230 kg CO 2
per ton of mozzarella
Corn ethanol:
888 kg CO 2
per 1000 litre of
ethanol
Cosmetics:
190 kg CO 2
per ton of fatty
acid ester
ILUC (Indirect land Use Change) is not considered.
39

Potential CO 2 Savings Per Year in 2030
• When using enzymatic solutions and current
technology
Million ton CO 2 saved in 2030
• Industrial biotech can save the world up to
2.5 billion tons of CO 2 per year
• Novozymes is uniquely positioned to
contribute to these savings
633
204
1024
668
Provide substitutes for fossil fuels
Substitute other chemicals
Recycling waste into energy and materials
Improve efficiency in industrial processes
As estimated by WWF in September 2009
40

Regular Bread vs. Enzymatically Processed Bread
• If all bread sold in the United States contained
extended shelf-life enzymes, bread would remain
fresh for longer, meaning that less bread would be
wasted and less wheat would need to be produced,
with the result that there would be less use of
fertilizers and less soil acidification.
• In addition, the reduction in the transportation
needed to distribute the bread would mean
10% less CO 2 emissions due to fuller
distribution trucks, fewer distribution points,
and an overall increase in distribution
efficiency.
Savings potential in CO 2 per year:
10%
41

Novamyl has Transformed the Baking Supply Chain
1.4g of Novamyl saves 10
bread loaves…
If Novamyl was used in all 6bn
loaves consumed in the US:
Global warming:
300,000 ton CO 2
…extends shelf-life by 10 days…
Energy consumption:
800,000 MWh
Nutrient enrichment:
2,000 ton PO 4
… and saves transportation of 1 ton for 30km!
Smog:
540 ton ethylene eq.
42

OTHER
SUSTAINABILITY
ISSUES

Managing Sustainability across the Value Chain
R&D Purchasing Production
Sales &
Marketing
People &
Organization
Positioning
Finance, IT
& Legal
Supplier
performance
management
program
Use of sustainability
as business driver
backed up by LCAs
Positioning of
Novozymes as
sustainabilitythought
leader
“LCA light”:
Environmental
profile of the
product pipeline
Ambitious
targets
for energy
and water
savings
Sustainability
bonus scheme
+ targets for
employee
satisfaction and
development
Integrated
sustainability
reporting
and investor
road shows
Cross-organizational initiatives
Managing
stakeholder
relations
Managing
corporate
governance
Managing
business
integrity
Managing
labor and
human rights
Managing
corporate
citizenship
Managing
health and
safety
44

Contacts
Martin Riise
Investor Relations, Europe
Rikke W. Nørgaard
Sustainability Advisor
Tobias C. Bjorklund
Investor Relations, Europe
Thomas Steenbech Bomhoff
Investor Relations, US
Tel.: +45 4446 0738
Mobile: +45 3077 0738
E-mail: mrsn@novozymes.com
Tel: +45 4446 1853
Mobile: +45 3077 1853
E-mail: rwnq@novozymes.com
Tel: +45 4446 8682
Mobile: +45 3077 8682
E-mail: tobb@novozymes.com
Mobile (USA): +1 919 649 2565
Mobile (DK):+45 3077 1226
E-mail: tsbm@novozymes.com
Further sustainability and investor relations information
is available from the company homepage at
www.novozymes.com
45

OTHER
SUSTAINABILITY
ISSUES
APPENDICES

Responsible Purchasing:
Novozymes‟ Supplier Performance Management (1/2)
• Instead of relying solely on supplier selfevaluations,
the supplier evaluation process
is supplemented with media research,
dialogue, and the critical insight of
Novozymes‟ purchasers.
• A systematized but flexible approach to
evaluating suppliers in Novozymes ( the
riskier the supplier, the more thorough
evaluation)
• Advanced supplier evaluation and reporting
system based on integrated performance
criteria
• In 2010, 90% of total purchase spend was
covered by the program and significant
suppliers have been screened.
48

Supplier Criteria, Evaluation and Engagement (2/2)
Supplier criteria:
Evaluation process:
Approved
Conditionally
approved
Rejected
No or only minor issues.
Supplier is re-evaluated
every 1-2 year
Major issues but no
alternatives. Keep eye on
supplier and help supplier
solve issue(s)
Major issues. Supplier
not approved
Engagement:
Action plans have been developed for
noncompliant suppliers in order to
improve performance. This has led to 168
action plans (2010) with the majority
resulting in dialogue with suppliers to
resolve commercial, quality, and
sustainability issues.
49

Human Capital and Incentive Structures
A lower employee turnover reduces recruiting and training related
costs
A lower absence rate corresponds to additional employees (for free)
as well as reduces additional stress on colleagues who would
otherwise have to work harder
Incentive program:
Incentive structures for employees and management (stock
options, bonuses) depends on the fulfillment of short and long
term targets according to the following key:
• Short term sustainability targets: 25%
• Short term financial targets: 25%
• Long term targets: 50%
50

Managing Corporate Governance
Two-tier management system
In accordance with Danish legislation, Novozymes has a two-tier management system
comprising the Board of Directors and Executive Management, with no individual
member of both
Annual evaluation of competencies and collaboration
Each year, the board of directors and the executive management conduct an evaluation
of the working relationship to identify improvements
The board of directors annually does an evaluation of whether or not it possesses the
competencies needed to support, challenge and develop Novozymes‟ business and
executive management
Corporate governance code
Novozymes follows the Danish Committee on Corporate Governance's recommendations
through the "comply or explain"-principle. Reviewed annually, Novozymes currently
follows 71 out of 78 recommendations and explains 7. All answers are available online
at Novozymes.com
51

Novozymes‟ Business Integrity Management System
Business ethics and anticorruption
• Novozymes business integrity principles
• Management standard on business
integrity
• Committee on Business Integrity
• External whistleblower mechanism
• Training of employees
• Principles covering suppliers
• Systems/processes for seeking guidance,
raising concern, reporting and review
52

Managing Human Rights
The entire organization annually develops self-assessments to document
compliance and share best practices vis-à-vis our UN Global Compact based social
minimum standards:
• Respect Human Rights
• Not complicit in Human Rights abuses
• Freedom of Association
• Non-discrimination
• Disciplinary measures
• Child labor
• Forced labor
Internal social audits follow up on self-assessments.
53

Novozymes as a Corporate Citizen
Corporate citizenship strategy
As a responsible corporate citizen, Novozymes is committed
to dedicating resources to forward looking community
engagement activities. We offer communities to benefit from
our skills and experience within science understanding and
environmental responsibility (Novozymes does not give
donations).
Novozymes benefit from developing employee skills, risen
employee satisfaction, new business opportunities and
reaching out to future scientists (ensuring the talent pool).
2010 spend:
54

Managing Health and Safety
OH&S focus areas:
ZEAL – Zero Enzyme Allergy
Stress and work-life balance
The OH&S organization is based on two specialized units:
Medical Centre
•Headed up by a
doctor
•Medical focus
•Advises individual
employees on
health problems
Working
Environment
•Managing and
coordinating
OH&S and
preventive work
55

GMO and Microorganisms
Enzymes – a part of all of us
• Enzymes are substances found naturally in all
living organisms, and produced for industrial
use by microorganisms
More than 25 years of safe production
using GMO
• Enzymes produced by genetically modified
microorganisms in containment have a more
than 25 years of safe use history in industrial
production including food and feed production
Key to solve some of global society’s
challenges
• The use of GM microorganisms is the
prerequisite for development of smart and
effective enzymes and other proteins which can
contribute to solving some of the global
society‟s challenges (ensuring enough food for
the growing population, reducing emissions of
greenhouse gases and adapting agricultural
production to climate changes)
What is gene technology
“Gene technology” or “recombinant DNA
techniques” are techniques with which
Man can change the genetic composition
of an organism through DNA manipulation
outside the cell (in vitro).
The use of gene technology enables the
genetic transfer of desired characteristics
(improved traits) among organisms
resulting in genetically modified organisms
(GMOs).
56

NOVOZYMES AND
TECHNOLOGY
APPENDICES

What are Enzymes
• Enzymes can be found in all living organisms:
human beings, animals, plants, microorganisms
• Enzymes are proteins catalyzing
biological processes
• Proteins are substances, not organisms
• All proteins are composed by a string of amino
acids, each placed in 20 possible positions
arranged in different orders
• The sequences of the amino acids determine
the structure and thus the function and
properties of the enzymes (e.g., the catalytic
activity, the specificity and stability)
58

What are Microorganisms
• Microorganisms are living organisms
(bacteria, fungi ..)
• All organisms have genes which are based on
DNA, and which determine the characteristics
of the organism
• All living organisms can reproduce themselves
• Microorganisms are very suitable for enzyme
production
59

Novozymes‟ use of Gene Technology
• Development of new GM microorganisms that can produce enzymes and other proteins,
including biopharmaceutical ingredients
• As host organisms, mainly Aspergillus oryzae and Bacillus licheniformis are used
• All Novozymes‟ GM microorganisms are used in containment. Novozymes does not produce
GM microorganisms for deliberate release into the environment
60

Genetically Modified Microorganisms
• Genetically modified microorganisms (GMMs)
is a subgroup of GMOs (genetically modified
organisms)
• A classical GMM is constructed by taking a
gene from one microroganism and inserting it
into another (also called heteorologous
cloning)
• A self-cloned GMM is constructed by taking
multiple copies of a gene and reinserting it
into the organism from which it was originally
taken (also called homologous cloning)
61

GM Microorganisms
Examples:
• Tailor-made genetically modified
bacteria and fungi (Aspergillus oryzae
and Bacillus licheniformis ) used as cell
factories in containment
Modified to optimize production of:
• Additives (citric acid, aspartame)
• Enzymes
• Vitamins (Vitamin B2, C)
• Amino acids (animal feed)
• Chemicals, pharmaceuticals
62

Safety and Quality Come First
• Novozymes‟ policies state the commitment to quality and safety
• Products are subject to extensive toxicological characterization during development
• Final products are subject to a thorough risk assessment covering application and handling
• Production plants are authorized and inspected by national authorities
• Novozymes has an integrated quality management system that controls development,
production, distribution and supporting processes
• Food and Feed safety is ensured by procedures that control raw materials, production hygiene
and traceability (food and feed GMP)
Novozymes‟ commitment to quality and safety is documented by a long track-record and a
number of certifications, e.g.
• ISO 9001: 2008 (quality)
• ISO 14001: 2004 (environment)
• FAMI-QS (feed producing plants)
• ISO 22000, FSSC 22000 (Danish plants, food safety)
• AIB (American Institute of Baking) (Danish and US plant, food safety)
• Numerous audits by customers
63

Novozymes‟ Use of Industrial Biotechnology
Carefully using the technology.
Novozymes uses industrial white biotechnology and contained use of gene technology. Contact
with the outside environment is restricted and controlled when using genetically modified
microorganisms (GMMs). Gene technology makes the production process efficient and helps
reducing environmental impact without being part of Novozymes‟ final product!
Joining efforts with NGOs
Novozymes has made efforts to demystify gene technology together with Danish society for
Nature Conservation (DN). Together with WWF, we have documented the potential of
biotechnology to save CO 2 .
All GMMs used at
Novozymes are
categorized to
Safety Level 1 (EU
Directive
98/81/EC)
64