Sound environmental management remains to be good business. However, to achieve more sustainable gains for the environment as well as in financial terms, we have set a course to move beyond compliance-based solutions. Innovations must integrate environmental considerations.

In 2001, analyses showed that the efficiency gains in consumption of water and energy did not result in similar actual savings of costs due to significant price increases. With increasing prices, efficient utilisation of resources remains to be good business, as our efficiency gains in the consumption of water and energy entail lower costs.

Environmental costs as a share of total production costs as well as of operating income have remained stable. In absolute figures, costs have increased in two areas. In connection with the start-up of a new Insulin Bulk Plant in Kalundborg, Denmark, increased volumes of wastewater had to be discharged, at subsequently higher net costs of wastewater treatment. This also implied increases of the costs of biomass management at 58%.

Efforts to reduce environmental impacts focus on those areas where environmental costs are particularly high: energy supplies, waste management and wastewater. Targets and action plans to reduce environmental impacts in these areas are integrated in the Environmental Management System according to the ISO 14001 standard.

Environmental costs and investments
(click to see table)

Novo Nordisk has made massive investments in new production facilities to meet the market demands for insulin and to fully exploit the prospects of NovoSeven® becoming the world’s first general haemostatic agent.

The new insulin plant in Kalundborg, an investment at DKK 2.5 billion, will be ready for production in early 2004 and will be our primary supplier of insulin and insulin analogues. A DKK 800 million NovoSeven® facility in Hillerød, Denmark, was completed as a fast-track project in just 18 months and inaugurated in November 2002.

From design to delivery, environmental considerations have been part and parcel of the processes. The NovoSeven® facility consists of modules, delivered ready to use at the factory site. All materials are chosen in accordance with latest environmental standards, including energy-saving technology and minimising waste wherever possible.

In line with this, a new procedure for environmental assessment of investment applications has been implemented. If the pay-back time for additional costs of environmental improvement is less than four years, then these additional costs related to the investment will be covered. This procedure applies for all new investments in production facilities.

These two factors – heavily increased overall investments and the move towards integration of environmental investments – are reflected in the table below as a significant decrease in the environmental investment as a share of total investments. By having environmental concerns integrated into standard solutions, the level of investment accounted for as ‘environmental investments’ is likely to decrease in future.

However, we wish to be able to assess such costs and investments and to calculate the extent to which environmental gains also have a positive impact in monetary terms. To do so, we have set up a pilot project in 2003 at our production facilities in Bagsværd and Hillerød, Denmark, to implement Environmental Management Accounting. The aim is to  introduce this as a corporate activity.