Focus - Fibre2Fashion · SInCe 2009/10 Sustainability snapshots 2010 /11 #1 72% 10 14 7 0 .4% ......

Ingredients for a changing world

FocusSustainability Report 2010 /11

2 SUStaInabIlIty RepoRt 2010/11 ContentS

Contents

Sustainability snapshots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Value chain perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6From challenge to performance . . . . . . . . . . . . . . . . . . . . . . . . . . .8Synergies drive future opportunities . . . . . . . . . . . . . . . . . . . . . . .9

Stakeholder engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Key impacts, risks and opportunities . . . . . . . . . . . . . . . . . . . . . .15Focusing on what matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Sustainability strategies, targets . . . . . . . . . . . . . . . . . . . . . . . . . . 22embracing a life cycle approach to sustainability . . . . . . . . . . . .26

Key impacts of our raw materials . . . . . . . . . . . . . . . . . . . . . . . . .30Robust approaches enable impact and risk reduction . . . . . . . 32

our environmental approach . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Corporate carbon footprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Greenhouse gases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46Materials and packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51Material waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Solutions to meet global challenges . . . . . . . . . . . . . . . . . . . . . . .58Meeting customer needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62Using lCa to change the discussion . . . . . . . . . . . . . . . . . . . . . . .63Inventing the future through market-driven innovation . . . . . .66

a powerful global workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70employee development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72employee engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73Human rights and our Code of Conduct . . . . . . . . . . . . . . . . . . .75Health and safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76Community and society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

our business and products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84bringing sustainability to the top . . . . . . . . . . . . . . . . . . . . . . . . . .87external commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88Recognition and awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

SUStaInable SoURCInG

opeRatIonal eFFICIenCy

SUStaInable SolUtIonS

people

StaKeHolDeRS anD StRateGIeS

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oUR CoMpany

MeetInG FUtURe CHallenGeS

MeetInG FUtURe CHallenGeS SUStaInabIlIty RepoRt 2010/11 3

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eMployee enGaGeMent InDex

yeaRS In tHe DoW JoneS SUStaInabIlIty InDex

aWaRD WInnInGSUStaInabIlIty RepoRt2009/10

RoUnDtable on SUStaInable palM oIl CeRtIFIeD plantS

eneRGy ReDUCtIon SInCe 2009/10

CoMpleteD lIFe CyCle aSSeSSMentS (lCa)

WateR ReDUCtIon SInCe 2009/10

Co2 ReDUCtIon SInCe 2009/10

InCReaSe In ReneWable eneRGySInCe 2009/10

Sustainability snapshots 2010 /11

#1 1072%

14 0 .4%7

3 .6% 12%2 .1%

DuPont acquires Danisco A/S in May 2011on May 19, 2011, Dupont, through a wholly-owned subsidiary, completed the acquisition of approximately 92 .2% of the outstanding shares of Danisco a/S (“Danisco”) pursuant to a previously announced tender offer for all of Danisco’s outstanding shares, excluding treasury shares . the remaining outstanding shares are in the process of being acquired through a compulsory acquisition procedure

in accordance with Danish law . this procedure is expected to be completed during the third quarter of 2011, at which point Dupont will own 100% of Danisco’s shares .

this report describes the Danisco sustainability performance prior to the Dupont acquisition and will serve as the last sustainability report published by Danisco . We will endeavor to align our sustainability strategies going forward with the new Dupont organization and business .

Meeting future challengesover 9 billion people by 2050 — more than triple the world population in 1960 and 30% more than today .

In our lifetimes – and those of our children – the world will change in unprecedented ways . as the population soars to more than 9 billion over the next 40 years, we will confront food, health, energy, and ecosystem challenges unknown to our parents and grandparents . Demand on natural resources like water and arable land will increase exponentially to meet the nutrition needs of a burgeoning population, requiring more efficiency in farming, food production, and distribution . Urban crowding and degraded environments will drive us to pioneer new ways to protect human health .

the need for renewable energy to power communities and connect people will grow dramatically as rural areas and emerging economies connect to the grid in greater numbers than ever before . and finite fossil fuels will challenge us to innovate new technologies for transportation, chemicals, plastics and other petroleum-based products .

these issues are daunting, to be sure, but not insurmountable . Working together across business, government, academia, and civil society, we can devise new solutions for even the most significant challenges . at Danisco, we have already begun .

ninebillion people

in 2050


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embracing the global challengesWe recognise the significance of our role in creating truly sustainable products . We embrace our responsibility – as a company, as a leader, and as an innovator – to contribute to a brighter future for all . and we know we can draw on our legacy of stewardship to forge new paths to that future, where people are healthy and well-nourished, and where ecosystems are leveraged responsibly to support global needs for energy, chemicals and other resources . although there is much more to do, we believe we are already contributing to that future .

In particular, Danisco is positioned to help address four global challenges – food, health, energy and chemicals . together, these four challenges serve as a compass for our business strategy, turning difficulties into catalysts for change and challenges into opportunities for leadership toward a brighter future . We invite you to learn more in this report .

SUSTAINABILITYbalancing environmental,

social and economic factors throughout

the value chain

HEALTH

FOOD

ENERGY

CHEMICALS

Wasteful inefficient,environmentally degrading

Population that is ageing,overweight & undernourished

Fossil fuel dependence,climate & security issues

Largely petroleum-basedsubstances in products

Efficient, environmentally neutral, waste-free in production,

distribution & consumption

Resources, foods, medicinesthat promote lasting health

Renewable energy solutionsto replace oil & gas supplies

Efficient, bio-basedalternatives to petrochemicals

Population growth 2010: 7 billion 2050: 9 billion

6 SUStaInabIlIty RepoRt 2010/11 MeetInG FUtURe CHallenGeS

Meeting future challenges

Value chain perspectivesour suppliersthe approximately 2,000 suppliers who provide us with the raw materials to develop innovative, sustainable solutions, range from specialty farmers to large agricultural operations . Regardless of their size, every Danisco supplier is important to our business . We work to ensure that all our suppliers understand and live up to our expectations for strong ethical practices, good governance, sound environmental management and responsible human rights measures . Should a supplier need assistance meeting our Supplier Code of Conduct or aligning with our values, we believe it is in our collective best interest for us to support their capacity development to contribute to a sustainable future .

Danisco supplier “Here in Colima the quality of the limes are better than in the other states . Since we started working with Danisco, we do not treat the lime peel as waste, and we thank Danisco for the support they have given us .“Javier Moreno Contreras, Owner - AELTSA S.A.

our employeespeople are the key “ingredient” in Danisco’s formula for success . attracting and retaining dedicated,and talented people across all roles in all the countries where we operate is a business imperative . that’s why we work and invest to strengthen our human resource capabilities and employee programmes . the experience, expertise and creativity our customers value is alive and well in the 6,890 people we employ in 40 countries

Supplier to Danisco Here in Colima the quality of the limes is better than in the other states . Since we started working with Danisco, we do not treat the lime peel as waste, and we thank Danisco for the support they have given us .

Danisco employee “I chose Danisco to make a difference . For me, sustainability is a series of projects, processes, and initiatives one can do both in the company and personally to make the world a better place . It is demonstrated not just in initiatives like think Green, act Green, but also in engagement through dialogue and giving .”Gilda Sosa Witling, HR Consultant

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the consumersWe do not work directly with consumers, but they are ever-present in our thoughts . the fundamental goal of all Danisco products is to facilitate improvements in the lives of consumers the world over, whether that means supporting health through enhanced nutrition or reduced fats and salt, contributing to food affordability, bolstering food safety or providing responsible and renewable energy sources .

Understandingvalue chainperspectives

Danisco supplier “Here in Colima the quality of the limes are better than in the other states . Since we started working with Danisco, we do not treat the lime peel as waste, and we thank Danisco for the support they have given us .“Javier Moreno Contreras, Owner - AELTSA S.A.

our customersDanisco customers play an active role in shaping the products we develop and the solutions we devise to meet their ever-increasing needs for products that improve health, boost nutrition, lower environmental impacts, replace harmful chemicals with safer alternatives and address rapidly expanding global energy demands . they are our partners and our inspiration in creating products to meet some of society’s most difficult global issues .

Consumer “Shopping has become quite complicated and confusing . If I see words I can’t pronounce, I automatically put the item back . It would help the consumer if products were clear about their health benefits or environmental profiles so we could make better choices .”Kristina Reid-Hansen

Danisco customer “everybody in the food business needs to work together – our suppliers, our growers, the retailers, and also our consumers . We all have a stake in this and we all need to work together on the global challenges we face .”Steve Peterson, Director Sourcing Sustainability - General Mills

Danisco customer ”everybody in the food business needs to work together – our suppliers, our growers, the retailers, and also our consumers . We all have a stake in this and we all need to work together on the global challenges we face .”Steve Peterson, Director Sourcing Sustainability - General Mills

8 SUStaInabIlIty RepoRt 2010/11 MeetInG FUtURe CHallenGeS

Meeting future challenges

In 2011, we will align our targets

with Dupont targets

From challenge to performanceDanisco’s stakeholders are central to our sustainability strategies, our path, and our progress . their input helps us to better understand our impacts throughout the value chain . It informs our decision-making . and it shapes our strategies for lasting change . our suppliers, our employees, our customers, and their consumers enlighten us, advise us, and challenge us to optimise, innovate, and transform .

In 2009, we looked closely at our previous stakeholder engagement efforts and realized a change was in order . although we were responding to stakeholder questions, we did not create many opportunities for two-way discussion . Since then, the Danisco Stakeholder advisory board has opened the door to new dialogue with our stakeholders, allowed us to more fully understand their ideas and concerns, and provided new avenues for exploring opportunities and solutions in our value chain .

Sustainability achievements During the past year, the support of our external stakeholders and the ingenuity of our employees have produced impressive results . We increased our proportion of renewable energy by 3 .6%, cut Co2e emissions by almost 13%, and reduced overall energy consumption by 0 .4%, an incremental but important step toward our new 2020 target of reducing energy use by 10% compared to revenue . at the same time, water consumption decreased by 2% during the year compared to revenue, toward our 2020 reduction target of 20% – with an increased focus on water scarcity risk in our operations and main raw material sources .

We have further focused our life Cycle assessment capabilities to evaluate our corporate carbon footprint and to provide a basis for future evaluation of the impact reductions afforded by our products in consumer use . We have launched an effort to evaluate the application benefits of our products and have established a platform to drive sustainability partnerships with our customers to deliver improved sustainability profiles of their value chains and product offerings . this market driven approach has allowed us to differentiate our

product offerings and to further our sustainability leadership position in the food and biotechnology industries .

We also finished developing a sophisticated tool for assessing, tracking, and mitigating risk in our supply chain and partnering with suppliers who share our commitment to sustainable and ethical sourcing . We achieved Roundtable on Sustainable palm oil certification for our seven plants that produce emulsifiers and blends thereof . and we developed a comprehensive new Code of Conduct . In these initiatives and others, sustainability permeates our decision-making, energises our employees, and transforms our relationships with our customers .

Future opportunities I’m proud of these accomplishments, but recognise that our work is far from complete . as all of us at Danisco look ahead to our new place in the Dupont family, I’m most excited about the opportunity to integrate our stakeholder-oriented, value chain-driven approach to sustainability with Dupont’s own leadership in this area . We share strong core values around customer and consumer focus, personal responsibility and ethics, sustainability and environmental responsibility, safety, and respect for people . We also share clear visions and missions to provide market- and science-driven innovations that provide safer, healthier and more sustainable solutions in light of the global challenges and megatrends . by leveraging Dupont’s considerable expertise and resources – in green chemistry, biosciences, and sustainable innovation – and combining these with our own strengths in nutrition and health, food science and safety, pioneering research and development, and biotechnology, I am confident that together we can accomplish what neither of us can do alone .

Jeffrey Hogue Vice president Danisco Corporate Sustainability

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as we continue our sustainability progress, we look forward to working closely with our new Danisco colleagues to establish a set of shared commitments and strategies for advancing our mutual sustainability objectives . because of the timing of this report – which covers the Danisco 2010/2011 fiscal year – and the early phase of our integration into Dupont, we cannot yet report on these as-yet unknown future commitments . We can however, share our vision for leveraging our combined sustainability strengths and innovations, which we have tried to do here and elsewhere in this document .

Dupont’s new bioscience powerhouse has the potential to revolutionise processes in mature industries by substituting renewable materials for fossil fuel processes, generating higher performing and more cost-effective transformative products for our customers, and leveraging complementary scientific expertise . to support customer sustainability goals, we will be able to draw from an enhanced suite of enzymes for a host of industrial applications, take advantage of advanced fermentation design and operating experience to reduce time to market, improve product yields and efficiencies, enable biomass extraction and separation, and enhance renewable bio-based options for polymers and chemicals .

Customers will benefit from Genencor’s flagship platforms and technologies and Dupont’s award-winning solutions such as biopDo™, a bio-based chemical central to producing carpets that are more environmentally friendly than traditional options and bio-based airplane de-icers without ethylene glycol . Dupont Danisco Cellulosic ethanol llC will continue to get special focus because of its unique ability to support more sustainable transportation . In addition, we will reduce processing times and energy use for customers of Genencor enzyme technology in the household, fabric care, and food industries, and will leverage our joint technology competencies to produce new biomaterials and chemicals, enabling the reduction of fossil fuel-based feedstocks .

Similarly, the strong synergies between Danisco’s leadership in food ingredients and Dupont’s global position in soy protein, soy ingredients, and food safety diagnostics provide new opportunities to drive further improvements in food science and technology, food safety and protection, health and nutrition, and enzyme and microbial expression technologies . We now have opportunities to help customers further reduce pathogens in food, improving quality and minimizing food waste through Dupont’s Qualicon diagnostic testing technologies and Danisco’s food protection solutions . We will also support further improvements in health and nutrition through Danisco’s food ingredient offerings, which allow our

customers to reduce salt, fat and sugar in food products and through the Solae business, which provides innovative soy products with functional, nutritional, and economical benefits .

Combining Danisco and DuPont In both areas – bioscience and nutrition and health – there is opportunity for Danisco’s value chain solutions to be embedded across the expanded sectors in which we will operate . but the challenges of the future demand revolutionary breakthroughs, which is why the combination of Dupont and Danisco will result in more powerful solutions .

In fact, the combination of the Danisco and Dupont business could not have come at a better time . as separate companies, life cycle thinking has helped to identify the impacts and opportunities through the life cycle of our products, building sustainability into our business models . as we continue toward a future marked by a larger population, greater resource constraints, and higher raw material costs, Dupont, empowered by the Danisco acquisition, will continue seeking – and finding – the solutions to address the world’s most pressing challenges in food, health, and energy .

the Danisco organisation is proud to present this report that covers the progress made against commitments in 2010/2011 . We are now beginning the integration work to bring together the sustainability commitments and activities of Dupont and Danisco and will report as one combined organization in 2012 . the coming year will be a busy one, but we expect that the combined organization will bring the best of both companies as we strive to continue our sustainability leadership .

Craig Binetti president, nutrition & Health

Jim Collins president, Industrial biosciences

Synergies drive future opportunitieson May 19, 2011, Dupont announced the successful completion of its tender offer for Danisco’s outstanding common stock at DKK 700 cash per share . We have moved enthusiastically into the next phase, integrating Danisco’s Genencor enzyme division with Dupont’s applied bioSciences to create a leading $1 billion Industrial biosciences business that will stand alone as a Dupont financial reporting segment led by Dupont’s James Collins . Danisco’s Food Ingredients business is integrating with Dupont’s existing nutrition & Health businesses to form a premier $3 billion specialty food ingredients and food safety business . nutrition & Health, led by Dupont’s Craig binetti, also will stand alone as a financial reporting segment . this not only positions us as a world leader in nutrition and health and industrial biosciences, but offers tremendous new opportunities to drive sustainability throughout our combined organization, support breakthrough innovation in our products and deliver solutions toward the global megatrends .

10 SUStainability report 2010/11 StakeholderS and StrategieS

Stakeholders and strategies

2Stakeholders and strategies

Sustainability strategy development process

Stakeholder inputrisks, opportunities & material issues

Strategies& targets

life cyclemanagement

StakeholderS and StrategieS SUStainability report 2010/11 11

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Four integrated dimensions inform our strategiesFour integrated and parallel dimensions inform sustainability throughout the danisco value chain.

Stakeholder input First, our value chain includes many diverse stakeholders, from suppliers to consumers, whose views and concerns contribute to our understanding of sustainability risks and responsibilities. Risks, impacts, opportunities and material issues Second, we consider the risks and opportunities presented by a rapidly changing world and identified in concert with our stakeholders as material issues.

Strategies and targets third, we are driven by our commitment to address global challenges through strategic targets and sustainable solutions. Life cycle management and fourth, we apply life cycle management into our value processes and use the concept to drive performance toward our strategies.

together, these interconnected considerations help us recognize current and emerging risks and opportunities and set strong targets that align our business strategies with sustainability and guide specific initiatives.



Stakeholder engagementCentral to developing meaningful targets is ongoing and transparent dialogue with danisco stakeholders. it enriches understanding of our sustainability impacts and areas for growth, while helping to focus our decision-making. although we hear from stakeholders through many avenues during the year, in 2010 we also adopted a systematic approach to stakeholder engagement. We formed a Stakeholder advisory board (Sab) to help ensure that all relevant viewpoints are represented and to collect feedback and insights on our sustainability commitments, activities and performance.

in our new stakeholder approach, we analysed our stakeholders on the basis of their influence on our organization. this helped us to identify how to engage them more effectively, yet more importantly to ensure shared value on both sides of the table. We mapped stakeholders according to their interest and influence on today’s and tomorrow’s business, and defined engagement approaches.

With some stakeholder categories such as investors, employees and major customers, we will engage closely and frequently, providing forums for their input and incorporation of their needs into our sustainability strategies. With other stakeholders such as trade unions, academia, non-governmental organizations (ngos) and suppliers, we will engage on specific issues as needed.

Stakeholder identificationWe recognize the importance of dialogue with key stakeholder groups that are important to our business success. part of our stakeholder process is to review our stakeholder groups each year, and to identify the most important ones by asking ourselves these questions:

• Who does Danisco positively or negatively affect by our decisions or activities? • Who do we hear from on a regular basis? • Who can help us address specific impacts of our business? • Who would be disadvantaged if they were left out? • Who in the value chain is affected?

Local communities

Investors and analysts

Media and press

Communication and dialogue

Suppliers Purchasing Sales

Communications

Customers Retailers Consumers

R&D HR

Finance Production

Logistics

Com

mun

icat

ion

and

dial

ogue

Governmental bodies• governmental organizations• intergovernmental organizations• politicians and regulators

Other organizations• non-governmental

organizations (ngos)• industry associations• labour associations• Universities & institutes• Standardization bodies


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Stakeholder advisory board Members Investor

ole buhlSenior Socially Responsible Investment Advisor, ATP

Government

Victor kjærHead, CorporateCitizenship DepartmentDanish Commerce and Companies Agency

Retailer

kerstin lindvallSenior Vice PresidentCorporate Responsibility ICA Sverige AB

NGO

John norboConservation DirectorWWF Denmark

Customers

Sanne VintherStakeholder Relations Manager Arla

dr. peter WhiteDirector of Sustainability Procter & Gamble

Employees

kaustuv bhattacharyApplication Specialist Danisco Brabrand

ian FairsGroup Manager Confectionery Danisco Brabrand

Sustainability Leadership

tom knutzenFormer CEO – Danisco A/S

Jeffrey hogueVP of Corporate Sustainability Danisco A/S

annette hansenDirector of SustainabilityDanisco A/S

Facilitator

preben SørensenPartner Corporate Responsibility Deloitte

Stakeholder advisory boardWe held our first danisco Stakeholder advisory board (Sab) meeting in May 2010 while developing our 2009/10 sustainability report. the identification of material issues in the light of our stakeholder input was extremely valuable in developing our sustainability strategies across our value chain. the board was comprised of respected individuals that are representative of our broader stakeholder population. each member committed to at least one in person meeting and periodic consultations throughout the year. the Sab members were not compensated for their participation.

While our 2010 meeting was useful in setting direction and confirming the important focus areas within our business, we decided to develop a different approach in 2011. We again used our materiality analysis as the basis for the discussion and synthesized a series of questions related to particular areas of challenge. the meetings were held over a period of weeks in separate teleconferences with each member. our stakeholder interaction has helped us to confirm the position of issues important to our business on our materiality matrix, and have provided direction for approaches toward our risks, impacts and opportunities throughout the value chain.

This is our tenth annual sustainability report – a tribute to our long-standing commitment to sustainability. long-terM

key stakeholder questionsbuilding on the success of the first Sab meeting held in 2010, we revisited the main stakeholder comments in our 2011 meetings to determine whether we adequately progressed on the issues, and to determine if they were still relevant . the revisited areas included the following:

Roles of SAB members – how should danisco ensure that we are attaining the most value of SAB engagement?

Sustainability strategy – how does danisco maintain focus on the right things when it comes to strategy setting? Are the current focus areas still relevant?

Product innovation – how will danisco align our innovation models to reap the benefits from the global challenges?

Supply chain – does danisco adequately manage risks in our supply chain?

We also acknowledged a number of subject areas with increasing stakeholder focus, including some that are entirely new:

Stakeholder and consumer needs – Which emerging issues will be relevant for danisco as a player in the food and industrial biotechnology value chains?

Local community investment and engagement – is danisco’s decentralized approach sufficient? Should we develop an approach that drives shared value creation?

Impact of DuPont acquisition – how will danisco secure momentum during the pre- and post-acquisition periods?

this interaction resulted in fruitful discussions with alignment amongst the Sab members. a summary of the major points including our responses are detailed on the following page.



danisco responses to stakeholder inputWe agreed with Sab members to address four key points over time and in this year’s report.

1. Sustainability strategy there was a wide acceptance of our current sustainability strategy with support for how we have aligned our strategies with our value chain. Several Sab members mentioned that having short-term targets would be beneficial to keep focus and direction toward the current long-term targets. Danisco response: We realize that we often do not communicate our short-term targets externally due to their granularity and sometimes complex nature. We will need to align our current targets with dupont, and plan discussions on whether our short-term targets should be included or not. in addition, we will continue to focus on our entire value chain, with an emphasis on raw material suppliers with the launch of our global Supplier assessment and approval System and by using life cycle thinking in our new product development and innovation platforms.

2. Diversity the board members discussed that gender diversity in our workplace has been addressed by previous position statements, and support our work with “operation Chain reaction”, an effort to increase the representation of women in boards and senior manager positions in denmark. however, several members discussed the need for an approach to support other types of diversity in our workplace. Danisco response: We have communicated a strong position that we strive to hire the best person for the job, regardless of race, color, creed, or gender. We have not specifically set hiring quotas for diversity and will continually re-address the issue based on stakeholder input. at this point, only our Sab has raised this question, requiring further monitoring.

3. Taxes at least two board members discussed the disclosure of tax payments and strategy in our external communication and sustainability reporting. the discussion centered on the growing trend of tax payment disclosure and emerging shareholder resolutions demanding disclosure of tax payments and strategies for major corporations. Danisco response: tax payment is one of the important parts of our businesses in the communities that we operate. however, corporate tax payment alone does not adequately summarise the positive impacts that we have as a business on society as it also includes important aspects such as direct and indirect employment and the associated money flows into society including employee taxes. therefore we seek to stimulate the positive economic impacts of our business on our communities in many different ways and in the context of the communities that we operate in. given this, we have policies and commitments in place to ensure that we follow the legal tax frameworks and that we keep the interests of our business and shareholders by paying the taxes we are required to pay. We include all relevant and statutory tax disclosures in our annual report.

4. Local community investment and engagement the discussion centered on our local community engagement and investment efforts and the difficulty we have experienced in consolidating our community activities at a corporate level. the Sab members agree that danisco is clearly focused on community engagement and shared value in the communities that we operate, but question whether the approach is strategic enough to focus our efforts globally. Danisco response: While we do see value in having a corporate strategy for community engagement, moving forward we will need to align our approach with the dupont model. We plan to contribute our community engagement data consolidation into the dupont reporting process.


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key impacts, risks and opportunitiesWhile life cycle management supports operational and product improvements, it is also integral to understanding our risks, impacts, and opportunities throughout the value chain. Combining life cycle assessment and stakeholder dialogue with the analysis of our corporate environmental footprint, we are able to focus on appropriate strategies and priorities. in this way, our sustainability efforts are closely aligned with our key stakeholder needs in the global context, using sound data to safeguard against risks and to transform challenges into market opportunities.

Focusing on the impacts of our value chaindanisco has confronted the daunting task of modeling our environmental impacts across our entire value chain using our 2009/10 value chain data. the impacts evaluated relate to all environmental aspects of our value chain including: raw material sourcing and inbound logistics; production, outbound logistics and business travel. the study was evaluated by deloitte in connection with the third-party assurance of this year’s sustainability report. in addition, impacts associated with application and use of our products have been estimated.

the results demonstrate the greenhouse gas (ghg) emissions related to our raw material sourcing are more than 2 times larger than the emissions from our own operations. While the study focused on the impacts of the cradle-to-customer life cycle, we have further estimated that the avoided impacts from using our products in our customer’s and consumer’s product use, application and disposal phase are approximately 2.5 times greater than our total life cycle impacts from cradle-to-customer.

in terms of Co2 equivalents (Co2e), we estimate avoided emissions from our products in the consumer use phase at more than 6.5 million tonnes of Co2e per year, delivering significant impact reduction benefits.

apart from the contribution to climate change (global warming potential), 16 additional impact categories have been analyzed in the model. this analysis emphasizes the importance of raw material sourcing as it contributes more than 60% of the total environmental burden from cradle-to-customer. the analysis illustrates the following important impact categories driven mainly by the use of fossil-based fuels for energy production and use of land resources:

• Climate change • Depletion of non-renewable resources • Land use

the following graphic depicts the carbon footprint portion of the environmental footprint.

Corporate carbon footprint59% 5% 26% 10% ~2.5x avoided

Upstream activities Downstream activitiesDanisco



key impacts, risks and opportunities from the corporate footprint study Climate change a changing climate presents multiple challenges. First, we produce greenhouse gases indirectly from sourcing raw materials and directly from the energy used for processing and transporting products. Second, we anticipate that future regulations and financial controls will sharply constrain carbon emissions and we are pursuing ambitious goals to reduce our climate impact and develop sustainable products that reduce customer impacts as well. and third, we continue to monitor the effects of sea-level rise and changing precipitation patterns on agriculture and the sources of our raw materials. our climate and energy strategies are described in the operational efficiency section. More importantly, the opportunities in delivering sustainable solutions for customer applications are discussed in the Sustainable solutions section.

Depletion of non-renewable resources our impacts on non-renewable resources result from energy use and the potential associated depletion of gas, coal and oil reserves. potential declining fuel stocks and changes in energy prices are key risks that may affect our production cost models. While we have strategies to increase renewable energy sourcing and to reduce energy use at our sites, we anticipate a greater impact reduction in the use of our products in consumer applications. danisco’s innovative approach to develop bio-based products to reduce food waste, processing times and temperatures play a significant role in energy reduction in the food value chain. and our advanced biofuel technology allows an alternative to oil in enabling the use of bio-based, renewable feedstocks in the transport sector.

Land use and agriculture as the population grows, the need for productive, arable land for crops increases. because we produce bio-based products, danisco depends on the continued security and sustainability of agricultural feedstocks to maintain and grow our business. We are pursuing efficiencies in our use of agricultural raw materials and we increasingly use waste and by-products as our raw material sources.

as food and energy demands increase globally, the competition for land used to produce local food, cash crops, wood and biofuel feedstocks will escalate. to reduce potential impacts associated with our own demand for raw materials and to honour our commitment to responsible sourcing, we participate in initiatives such as the roundtable on Sustainable palm oil (rSpo) and round table on responsible Soy association (rtrS), which bring together global organizations in response to the land conflicts, deforestation and habitat loss associated with irresponsible palm and soy oil sourcing. We also help to foster sustainable agriculture through our membership in groups such as the european Food Sustainable production and Consumption round table and the roundtable on Sustainable biofuels. in fact, we have developed enzymes to support a sustainable biofuel industry based on switchgrass and waste products from agriculture, which would minimize or eliminate the current land use tensions between food and energy crops. See the Sustainable sourcing section for more information.


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“I believe sustainability is when business decisions are based on sound science and well-understood principles to deliver market facing benef its” Jeffrey Hogue, Vice President of Corporate Sustainability

ViSion

other key impacts, risks and opportunitiesan important input to our identification of impacts, risks and opportunities is our stakeholder analysis and Stakeholder advisory board consultation.

Water scarcity Fresh water is a vital resource already in scarce supply in many parts of the world, with many areas confronting increasingly severe water shortages. as water is essential to healthy communities, productive agriculture and to the bio-based materials from which we make our products, it is critical for us to understand the effects of water scarcity on our business. as a first step, we have mapped our operations against current and future water-scarce regions. our water reduction efforts will prioritize actions and investments in the most water-scarce areas. See the operational efficiency section for more information.

Global disruptions as recent years have illustrated, global businesses can be affected by a host of disruptions – volcanic eruptions, earthquakes, flooding, political unrest and prolonged strikes. these and other regional disruptions can affect raw material sourcing, production, storage and distribution, as well as customer ability to receive our products. danisco’s food ingredients, and particularly our cultures, which must be kept cold, can be adversely affected by delays in reaching our customers. our new logistics food ingredients organisation (logFi) is finding creative solutions to overcome these disruptions. See the operational efficiency section.

Food safety our customers increasingly require that our manufacturing sites have a food safety management system approved and controlled by a third party. We have decided to follow the standards set by the global Food Safety initiative, which recognises globally respected food safety management systems such as the british retail Consortium (brC) standard and the Food Safety Standard Certification (FSSC 22000). We are one of the first ingredients businesses to introduce the brC standard. initially, the standard applied only to food producers, but we believe this type of requirement is also relevant further along the supply chain – in 2008, we decided to obtain certification for our food and feed ingredients manufacturing plants. today, 80% of our manufacturing plants have achieved food safety certification, well above our target of 60% certification by 2011/12.

Product health claims danisco supports the goal of accurate product claims based on strict criteria. With the expertise of our health and nutrition research & development group, we deliver scientifically sound human health and efficacy studies that document the specific health benefits of our patented probiotics and other ingredients. health claims became more complicated with the 2007 european Union (eU) regulation on nutrition and health claims and the food ingredients industry has struggled to understand the european Food Safety authority (eFSa) expectations regarding these requirements. our work with industry peers during the past few years has resulted in greater clarity from eFSa on the required scope and design of the studies. to meet the new health claim requirements, we have undertaken dozens of additional studies. While some of our studies supporting health claims concerning pectin, Vitamin k, phytosterols, Xivia, litesse and guar gum have been approved, we are further documenting our probiotic claims.



E numbers e numbers are internationally recognised code numbers commonly used in europe for food additives to avoid listing long chemical names on food labels. an e number indicates that a particular food additive meets stringent european Commission safety assessment requirements. despite this, consumers have increasingly come to see products with e numbers as being unnatural. in response, some food manufacturers have begun including “natural” before the ingredient name, preferring to say natural pectin, for example, rather than e 440.

Some of danisco’s food ingredients have e numbers and many of our customers would like to use the word natural instead. however, because no legislation defines the word in this context, the industry has agreed to follow the eU definition of natural for food colours. this process-based definition allows simple physical processes such as boiling and drying but excludes more complicated processes such as chemical synthesis.

We are sensitive to the needs of our customers and consumers and respect that concerns exist about e number labelling. We are reviewing all our e number ingredients to determine whether we can modify the recipe or the manufacturing process to support a natural label. the sustainability profile of each food ingredient is complex, of course, and changes in one area may have unintended consequences, such as increased energy use. We are working to balance these competing needs as we evaluate possible modifications over the next few years.

Genetically modified organisms danisco believes in the potential of modern biotechnology to provide innovative and cost-effective solutions that address the food needs of the world’s burgeoning population. genetic engineering can create genetically modified organisms (gMos) with desirable traits such as pest-resistance or enhanced nutritional value. however, we are sensitive to the controversy regarding gMos and genetically modified microorganisms (gMMs), and adhere to differing customer needs and legal requirements in this area. We meet all legal requirements for labelling and traceability for food and feed produced from or containing ingredients using gMo/gMMs.

Biofuels danisco believes that biofuels play an important role in reducing our dependence on non-renewable fossil fuels. biofuels can play a significant role in both providing alternatives to fossil fuels in transportation and in reducing greenhouse gas emissions. as a world leader in biotechnology with expertise in biofuels, we are investing significant financial and human capital in developing a healthy, efficient ethanol industry to ensure sustainable energy sources for the future.

despite the many benefits of biofuels, this is a controversial topic. Some stakeholders have expressed concerns that: • Land used to grow food will be converted to grow biofuel crops, leading to competition for limited arable land • Natural habitats will be destroyed as forests are converted to farmland • Food prices will rise • The energy used to produce biofuels could offset their environmental benefits

First-generation biofuels use starch-based food crops such as corn and sugar cane, while second-generation biofuels use cellulose from agricultural waste and non-food crops like switchgrass. We contribute products, solutions and expertise to both of these industries and provide our best-in-class enzymes to develop first-generation biofuels because of the important role they play in creating a market for ethanol, promoting energy independence and advancing biofuel technology. We believe, however, the most sustainable future for ethanol includes non-food cellulosic feedstocks. these second-generation fuels are not yet ready for commercialization, but the emerging industry is already benefiting from the market, infrastructure and knowledge associated with current first-generation biofuels.


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Case study

grindstedværket mercury exposure casesin the 1960s, 1970s and early 1980s, grindstedværket – which later became part of danisco – produced vitamins in grindsted, denmark until vitamin production was taken over by baSF in 1982. production of these vitamins involved the use of mercury as a catalyst, and some employees from that time have filed claims for work-related injuries or diseases in connection with mercury exposure. Work by the national board of industrial injuries continues in the processing of these claims.

danisco has encouraged all former and current employees who believe they have suffered such work-related injuries or diseases to contact the national board of industrial injuries and submit a claim for compensation.

While we are not legally obligated to offer compensation, we want to ensure that we live up to our social and ethical responsibilities, as announced at the danisco annual general meeting in 2008. When all claims have been processed, we will announce plans for offering additional compensation for claims validated by medical experts and the national board of industrial injuries as having been work-related injuries resulting in a loss.

only claims related to mercury made by those employed at grindstedværket during the vitamin production years will be recognized.

pollution around the grindsted plantin 1989, the former grindstedværket became part of the newly named danisco. For more than 50 years before that, the grindstedværket site in grindsted, denmark produced many different kinds of products, including pharmaceuticals and later vitamins. only as part of danisco did food ingredients become the plant’s main focus.

because regulatory requirements around wastewater treatment and the disposal of hazardous chemicals were less sophisticated in the early days at grindstedværket, the ground and water around the plant became contaminated with various pollutants. these pollutants have since been contained and mapped, and danisco continues to work with the region of Southern denmark and other local authorities to monitor the area for any additional problems.


Focusing on what matters to further understand and prioritize our sustainability work year after year, we have undertaken a process to evaluate the large number of stakeholder inputs and the impacts, risks and opportunities identified in our corporate footprint and impact analysis. the output of this process allows us to evaluate our current strategies, and to create new ones if needed.

For the past two years, we have conducted a systematic process to evaluate the issues that are material for our organization in the context of our business. the effort, which includes various steps, begins with a collection and cataloging of the inputs to identify major trends. When possible we strive to categorize trending items in subject categories. the inputs to this process include: our corporate footprint/lCa model; customer interactions; a risk analysis completed in our ethical supplier system, or Sedex; the various analyst questionnaires, like SaM, eiriS and Cdp; analysis of competitor and customer focus points; direct short-term financial risks; and our own performance over the previous year.

the resulting issues and topics are evaluated by examining several factors in the context of our sphere of influence, for instance, the level of interest the issue has to our stakeholders and the relative impact on our organization.

Stakeholder interestin our matrix we rank the issues not only based on the number of stakeholders that raise the issue, but also the level

of interest or concern that any one stakeholder group may have. items that are of high concern to our most important stakeholders, customers, and employees may rank high on the interest continuum.

We further our assessment by evaluating the issues that affect our licence to operate and could have significant impact on our business, employees, and communities. We also supplement the analysis by discussing and determining whether the issue falls under our control or not.

as we develop our materiality matrix we consult with leaders in our organization to determine whether the ranking is correct. We enhance the process by discussing the material issues with our Stakeholder advisory board (Sab), made up of individuals who are thought leaders in our identified stakeholder categories. this process does result in modifications and reassessment, from time to time, but the process, in itself is robust, leading to stronger strategic direction.

impact on our organisation

20 SUStainability report 2010/11 StakeholderS and StrategieS20 SUStainability report 2010/11 StakeholderS and StrategieS


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Materiality assessment matrixour materiality assessment guides our development of sustainability strategies and targets.

loW

loW

Med

iUM

hig

h

MediUM high

leV

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F C

on

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take

ho

lder

S

CUrrent or potential iMpaCt on daniSCo

employment issues •

• Climate change

energy consumption •

Customer • relations

innovation •

• Stakeholder engagement

• Food safety

• Management commitment

Sustainable indices •

• Clear communication

Water scarcity •

Supply chain •

packaging •• human health

networking & public policy •

Waste including wastewater •

• noise & odour

biodiversity • & land use

diversity •

•ethical issues

• health & nutrition

knowledge •management

grindsted •mercury case

occupational •health & safety

loW

loW

• resourcedepletion



Sustainability strategies and targetsour ongoing refinement of material issues supports danisco’s continued shift to a new paradigm – away from a focus on isolated reduction targets, toward an approach where we consider the impacts and opportunities throughout product life cycles. as we do so, we build a firm foundation for our sustainability strategies and targets using the same scientific and data-driven approach that guides our product development.

our current strategies were developed in 2009 to align our sustainability strategic review with our value chain and the business. through involving a wide variety of colleagues across danisco including our senior leaders, the three simple value chain based strategies were developed to address sustainable sourcing, operational efficiency and sustainable innovation and product offerings.

Ownership at the top a critical part of the strategy development process has been to assign responsibility and accountability for the strategies across the organization. to ensure effective execution, our executive Committee assumed ownership of the value chain strategies including a commitment to allocate the necessary resources. Several focus groups emerged and are evolving to develop structured plans for delivery. the progress is reported quarterly to the executive Committee and board as part of the management review process.

Converting strategies into targets our targets toward the value chain strategies have developed from the focus group work and have been endorsed by technical experts across our divisions.

however, not all of our targets have been developed in this process. For instance, our employee engagement and development targets have been developed out of corporate human resource strategies. likewise, our community engagement and investment targets are set by the sites in the local communities where we operate.

Moving forward as we progress on our structured plans to deliver the strategies, we plan to further engage the organization by identifying champions in our business to lead the charge through our line organization.

Sustainability strategies to address value chain impacts

Sustainable sourcingprotect our resources andecosystems and enable ourbusiness to contribute to a

more sustainable future

operational eff iciencyimprove resource efficiency

to create value forour stakeholders

Sustainable offeringsprovide innovative, bio-based

product offerings that improvethe overall sustainability profiles

of our customers


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OPERATIONAL EFFICIENCY TARGETS AND PROGRESS 2010/11

Category Target Target year Baseline year Progress

energy • reduce energy consumption by 10% per revenue 2020 2009/10 energy consumption was reduced by 0.4%

renewable energy • increase renewable energy by 20% 2020 2009/10 renewable energy was increased by 3.6%

Water • reduce water consumption by 20% per revenue 2020 2009/10 Water consumption was reduced by 2.1%

Co2 emissions • reduce Co2 emissions by 20% per revenue 2020 2009/10 Co2 emissions were reduced by 12%

health and safety • achieve fewer than two lost-time

injuries per million working hours 2012 n/a lti frequency increased to 3.8

Social responsibility / Code of Conduct

•to re-address training needs based on risk and ensure 100% of high risk employees are trained

2011 2009/10

We suspended our efforts due to the dupont tender offer. training will commence with the dupont code in 2011.

employee engagement survey •

to conduct an annual employee engagement survey and become best in class for external benchmarking

ongoing n/a

danisco Spirit was conducted in august 2010. the response rate was 86%. the overall employee engagement rate was 3.88, compared to external benchmarking at 3.97.

danisco dialogue • 70% of employees with an on-line

access completes danisco dialogue ongoing n/a

the deadline for completing danisco dialogue is on 30 June 2011. 60% of employees with on-line access completed the process per 30 april 2011.

Sustainability assessment •

to develop a sustainability assessment programme based on a risk assessment approach

2010 n/a

target redefined. a decision was made to increase third party assessments and to leverage the findings of customer and divisional assessments.

life cycle assessment •

to develop tools to make quick life-cycle decisions in innovation, chemical and process selection without the need for comprehensive lCas

2011/12 2009/10target in progress. embedding life cycle thinking into product stage gate process was initiated.

life cycle assessment •

to conduct at least six peer reviewed lCas for pectin, locust bean gum, freeze-dried and frozen cultures, textile bleaching and xylitol

2011/12 2009/10target in progress. Fourteen lCas were completed of which four were peer reviewed.

Food safety •to achieve food safety certifications at 60% of our food ingredient production sites that supply an external customer

2011/12 2008 76% of the sites have achieved a food safety certification.

targets and progressWe evaluate our progress at least annually to determine the need for adjustments or new targets. all future targets will be aligned with the dupont business and sustainability strategies. the following table summarizes our current targets and progress.

operational eFFiCienCy targetS

• on track or completed • partially on track • off track or not completed


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SUSTAINABLE SOURCING TARGETS AND PROGRESS 2010 /11


Sustainable sourcing • to develop focus groups and set up

targets for sustainable sourcing 2011/12 2009/10

raw material life Cycle inventories in development.

global Supplier assessment and approval System (gSaa) in pre-launch stage.

detailed analysis of major raw material streams completed.

palm oil •to complete conversion of our palm oil consumption to sustainable sources

2015 2009/10 7 of our manufacturing plants have been certified to rSpo standards.

Soy meal and oil •to complete a strategy plan for conversion of soy bean oil to sustainable sources

2011/12 n/a

Continue actively in rtrS and work with supplying partners to promote sustainability and implement solutions to be offered to our customers.

Supplier management •

to develop and implement a system to manage supplier and raw materials including approval processes and risk assessment

2010/11 2010/11gSaa in developed and in pre-launch stage. Full implementation will take at least 1 year.

packaging •to complete a strategy and identify focus areas for conversion to more sustainable packaging

2011/12 2010/11

Continue to work with supplying partners to promote sustainability and implement solutions to be offered to our customers.

SUStainable SoUrCing targetS

SUSTAINABLE OFFERINGS TARGETS AND PROGRESS 2010 /11


Sustainable offerings • to develop focus groups and set up

targets for sustainable offerings 2010/11 2009/10

developed product sustainability criteria which are integrated into our innovation stage-gate system.

Conducted 7 screening level lCas related to the application benefits of our products. allocated 2000 hours of work by our application scientists for 70 of our sustainable solutions.

SUStainable innoVationS/

oFFeringS targetS

• on track or completed • partially on track • off track or not completed


embracing a life cycle approach to sustainabilitylike many companies with a globally diverse network of stakeholders including our suppliers, distributors, transporters, and customers, we recognize that most of our environmental and social impacts take place outside of our fence-line.

the diversity and complexity of our value chain requires a life cycle approach to holistically identify and mitigate the impacts associated with our products. our approach influences our decisions and actions on three levels: Strategy We promote life cycle thinking to maintain focus on environmental, social and economic impacts throughout our value chain. our strategy also inspires our thinking and provides a compass for our actions. Management practices to enhance our strategic direction we employ life Cycle Management (lCM) to provide structure and processes to aid in business decision-making and continuous improvement.

Tools and techniques an important tool to help us attain valuable knowledge about the consequences of business decisions is life Cycle assessment (lCa). We actively use lCa to assess the environmental burden and key impacts of our products, and to create simple tools that enable our employees across our organization to develop more sustainable products and processes.

the combination of the three, in practice, helps us to catalyze collaboration across the organization to improve our sustainability performance and business.


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Applying Life Cycle Management to the business because life cycle thinking is a large part of how we set our strategies, managing the approach in our organization requires discipline. in our lCM model, we recognize the relationships between our vision and how we operate our business. the model drives collaboration and ultimately results in market growth and value.

in practice, lCM has led us to develop simple tools that can support innovation and product development in creating more sustainable solutions. this effort – or what we call ‘innovation 4 Sustainability’ – will be a key element of how we focus and prioritize innovation to meet future challenges.

likewise, we are developing several tools and practices that support sustainable procurement, sustainable engineering,

cleaner production, green distribution, and integration of sustainability in marketing and support to customers. this approach combined with our already strong stakeholder engagement, advocacy efforts, and collaboration with other players in the value chain is intended to improve synergies and create a market pull towards sustainability.

the most impactful strategic decision of our life cycle approach is how we have leveraged lCa toward our customers using a market facing approach. this supports our assertion that our products are not only simple ingredients used in our customers’ products, but key enablers for reducing impacts across the entire value chain. in this context, we can differentiate our offerings and communicate, with sound and science-based data – enabling our customers, retailers and ultimately the consumers to make informed choices.

Life cyclethinking

Leadership

Product & market orientedsustainability strategy

Sustainablemarketing& support

Sustainableprocurement

Sustainableengineering &cleaner production

“Innovation 4 Sustainability”

Green distribution

Procurement

Production

Sales &application

Productdevelopment

Distribution(LOGFI)

Life

Cycle

Management

Life cycle management is the way in which sustainability is made operational throughout our organization and our value chain. notable

our approach to life Cycle Management

28 SUStainability report 2010/11 SUStainable SoUrcing

3Sustainable sourcing

top six agriculturalraw materials

Corn-based carbohydrates 50%

Citrus peels 19%

Palm oil 12%

Seaweed 10%

Soy meal & oil 6%

Canola/rapeseed oil

3%

SUStainable SoUrcing SUStainability report 2010/11 29

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Focusing on the right thingsthe bio-based materials obtained from suppliers who share our commitment to high social and environmental standards are the building blocks of all of our products. in this light, we have focused on assessing the risks in our global supply chain across many critical business areas. We developed and implemented a new supplier assessment and approval system this year to support these commitments and to

allow us to focus and prioritize. We have also assessed the environmental impacts of our raw materials using life cycle assessment which has furthered our understanding of our upstream supply chain. these efforts will also help us to supplement our participation in multistakeholder initiatives like the roundtable on Sustainable palm oil.

the challenge of a diverse, global, agricultural supply chainDanisco’s upstream supply chain is complex and global – we work with approximately 2,000 strategic raw material and packaging suppliers spread across the globe ranging from large multinational corporations to small, independent farmers. We source materials from large commodity markets as well as small local markets – all of which require an assurance that our materials are gathered in ways that protect both natural and human resources and minimize any risks to our business. in fact we have recently identified that over 60% of the total environmental burden from cradle-to-customer is related to our raw materials.

60%of the total

environmental burden


Sustainable sourcing

Key impacts of our raw materialsin 2011, we undertook efforts to further understand the sustainability impacts of our raw material streams in two dimensions. First we launched our global Supplier assessment and approval (gSaa) system which will allow us to more systematically understand environmental, social and financial impacts and risks in our supply chain. Second, we completed our analysis of our global value chain with a specific focus on the environmental impacts of our raw material sourcing using life cycle assessment (lca).

citrus peels

Major growing regionsMexico, South america

Major impacts/riskspotential changes in climate and precipitation levels affecting the orange and lime harvests. Social issues related to market fluctuations resulting in crop switching (for example to sugar cane).

Our approachWorking with farmers to improve citrus farming agricultural practices and productivity. Supporting the University of colima in Mexico to address sustainable agricultural practices related to water, fertilizer and reuse of crop residues.

canOla/rapeseed Oil

Major growing regionseurope, canada, china, india

Major impacts/riskspotential losses in biodiversity through increased plantings and land conversion. potential changes in climate and precipitation levels affecting the canola/rapeseed harvests.

Our approachas canola/rapeseed oil is a commodity and currently no multistakeholder initiatives exist to address the sustainability aspects, we have focused on items within our sphere of influence, such as improvement of processing efficiency.

in our corporate environmental footprint, we identified that the major impacts related to our raw material sourcing are related to land use, global warming and depletion of non-renewable resources. other impacts related to water use and toxicity are also potentially important - but the effects of water use are highly dependent on the source location of the raw material.

in addition to the analysis completed in our corporate environmental footprint, we also strive to evaluate the social aspects related to human rights, labour issues, impacts from conflicts related to land rights, rural migration and indigenous peoples rights. We have incorporated our assessment into our new supplier system. the system, or gSaa, will support our efforts including the launch of a new Supplier code of conduct. We hope to advance

our supplier management in the next years and to reduce the potential risks identified in our assessments.

to minimize transportation impacts and costs, we have strategically located our manufacturing sites near our raw material suppliers. this strategy supports the local economies and provides employment and associated financial benefits to our local communities. as we are a global business, purchasing from local sources is not always possible. in all cases, we employ our supplier risk management processes and leverage our strong relationships with our suppliers to minimize impacts to our business. Sourcing locations, major impact/risk areas and our approaches to reducing risks in our upstream supply chain are detailed below.


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palM Oil

Major growing regionsSoutheast asia, africa, South america

Major impacts/risksSignificant amounts of palm oil are grown in areas with high biodiversity, for example, tropical forests. this involves the conversion of peat land, which also causes significant greenhouse gas (gHg) emissions. adverse weather conditions experienced in key regions could affect crop production over time.

Our approachengaging in multistakeholder initiatives like the roundtable on Sustainable palm oil (rSpo) and committing to the use and production of rSpo certified products by 2015. We have attained rSpo certifications for 7 of our manufacturing plants by third-party auditors.

seaweed

Major growing regionsasia, europe, South america

Major impacts/risksSeaweed production does not involve land occupation or transformation. However, there are potential risks of over-harvesting requiring sustainable cultivation practices. changes in water temperature, salinity, storms, and tidal patterns may affect yields.

Our approachWorking with farmers to improve farming practices and productivity. restoration of seaweed habitats and replanting of stocks. collaboration with local governments through the chilean Fishery Development institute.

sOy Meal and Oil

Major growing regionsnorth and South america, china, india

Major impacts/risksover the past year, drought conditions in china and latin america effected crop yields. in addition, the increased use of soybean oil in biodiesel production could affect land use.

Our approachengaging in multistakeholder initiatives like the round table on responsible Soy association (rtrS). ensuring raw material efficiency in our production processes to minimize the use of soy meal and oil.

cOrn-based carbOhydrates

Major growing regionsnorth and South america, europe, china, india

Major impacts/riskspotential losses in biodiversity through increased plantings and land conversion. potential changes in climate and precipitation levels affecting corn harvests. competition for biofuel production and other higher value crops.

Our approachas corn is a commodity and currently no multistakeholder initiatives exist to address the sustainability aspects, we have focused on items within our sphere of influence, such as improvement of processing efficiency.



Supplier and material assessment and approvalWe work hard to ensure the high quality of the raw materials and packaging we purchase as well as the ethical standards of our suppliers. as a food ingredients supplier, we have a long-standing commitment to meeting the food industry’s high standards. We bring this same focus on quality to our non-food sourcing work as well. as we work with thousands of suppliers spread across the globe, we need a reliable, thorough system for communicating our expectations to our suppliers and assessing and managing the risks in this area.

From fragmented to systematic our previous supplier management system was fragmented. Suppliers were often selected for audits based on the volumes we purchased from them rather than on their risk of being substandard. a milestone achievement in 2010/11 was our development of a global Supplier assessment and approval system (gSaa) for our strategic suppliers. all of our businesses will use this standardized, web-based system and will be able to track the assessment and approval workflow. the system covers raw materials, packaging and toll manufacturers, and enables the examination of risks related to business continuity, environmental impacts, social/ethical aspects, product safety, quality and other risks.

the foundation of the system is a process whereby suppliers are requested to complete a series of questionnaires relevant to the scope and nature of their operations.

the sustainability questionnaire is mandatory for all suppliers and covers the following subjects:

• Sustainability strategy and established targets • Energy use and renewable energy sourcing • Compliance with UN conventions and other international norms on human rights • Environment, health and safety training • Environmental management systems

additional guidelines and procedures accompanying this process include mandates to agree with our general requirements for raw Materials and Supplier code of conduct. We have also integrated the country-level human rights risk information developed by amnesty international.

creating shared value responses to all questionnaires are evaluated by the system and the approvers to identify areas of concern to determine whether the supplier should be audited. When we identify issues as a result of an audit, we will work with our suppliers to resolve the issue.

over time we plan to use the system as a tool to identify supplier collaboration and engagement opportunities, and to develop even stronger relationships with our key suppliers.

robust approaches enable impact and risk reductionpalm oil is one of the key raw materials that we purchase by volume. Despite this, our share of the global market for raw materials such as palm and soy oils is marginal. the most effective way for us to influence farming practices for these commodity crops is by working through reputable, third-party organizations. Danisco is a member of two multistakeholder organizations seeking to promote responsible production – the roundtable on Sustainable palm oil (rSpo) and the round table on responsible Soy association (rtrS).

Supplier assessment and approval process

Suppliersand rawmaterials

Questionnairesand

documentation

riskassessment

approvalaudit of critical

suppliers


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Working on the gSaa system with people from different departments, we all brought different perspectives but our goals were the same. i have learned so much about Danisco by working together as a team. it was a great experience for us as individuals and as a company.”

John Murphy, business process Manager, genencor global Supply chain

case study

participating in multistakeholder organizations – sourcing sustainable palm oilpalm oil is a key component of our emulsifiers, which bind oil and water together and allow our customers to eliminate trans fat and to reduce the fat and salt content in their offerings. the dramatic rise in worldwide demand for this widely used oil has led to pressing concerns about deforestation, habitat loss and greenhouse gas emissions associated with the conversion of forests and peat lands to palm plantations in Southeast asia.

in 2004, Danisco joined a diverse group of stakeholders working through the roundtable on Sustainable palm oil to develop global standards and a credible certification programme for sustainable palm oil. the rSpo is a non-profit association that unites stakeholders from seven sectors of the palm oil industry - oil palm producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation ngos and social or developmental ngos – to develop and implement global standards for sustainable palm oil.

to ensure the traceability of sustainable palm oil, the rSpo certifies the entire supply chain from plantations to end users. Seven Danisco manufacturing plants have recently achieved rSpo certifications through third-party audits, building on the self-assessments the plants conducted the previous year.

listening to our customers “at Danisco, we work to integrate sustainability into our business model. customers are asking a lot of questions at the moment, and we can contribute to improving the level of sustainability of their products. the certification of Danisco’s sites is an important step in the process and shows our customers that we have listened to them. Danisco is a first-mover in this area, so now we will focus on turning it into concrete business opportunities,” lionel Flutto, Vice president - enablers

Danisco’s goal is to source 100% certified sustainable palm oil by 2015. We continue to work closely with our suppliers to ensure high product standards and to address the larger issues associated with palm oil production. a similar initiative, the round table on responsible Soy association (rtrS) is progressing slower than the rSpo. However, we engage our main soy-based product suppliers regarding the sustainability of their operations.

Danisco is the world’s number one producer of emulsifiers. The vegetable oils that we purchase are a key part of these ingredients. Fact



case study

collaboration yields sustainable supplya look at how we obtain our seaweed illustrates both the global nature of our supply chain and the breadth of our efforts to minimize natural resource impacts and as well as on commitment to work with suppliers to improve their methods.

We purchase red and brown seaweed to extract carrageenan and alginate, respectively. these thickening and stabilizing agents are used by our customers to reduce sugar, fats and carbohydrates to produce healthier foods. our brown seaweed sources span the globe with supplies coming from sources in the northern and southern hemisphere. there is a range of harvesting methods as well. in some places, seaweed that is cast ashore is simply gathered from the beach while in other locations it is harvested wild or farmed. red seaweed comes to us from indonesia, Malaysia, and china and we are investigating new sources in eastern canada.

With such variety in the sources and gathering methods for this raw material, our seaweed strategy requires us to take action on diverse fronts to ensure a sustainable supply. to relieve stress on existing stocks, we are investigating new sources of brown seaweed in the outer Hebrides, the Faeroe islands and western ireland. We initiated a successful re-population project in chile in 2005 and are collaborating with competitors and local governments through the chilean Fishery Development institute.

our main concern with the local processing of our brown seaweed supplies is the quality of the effluent from on-site wastewater treatment plants. Danisco has been coaching suppliers and conducting mini-audits to assess and improve their methods. We also conduct audits and mentor suppliers on a range of environmental, health and safety practices.


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FrOM raw Materials tO Finished prOducts

Milk powder

Whey powderyeast sugars

locust bean gum

citrus peel

guar gum

Woodbased

materials

corn

barley

Sugar

Vegetable oil

Fermentation

Extraction

Extraction

Fermentation

Modification

raw materials

cultures

Hydrocolloids

Xylitol(Xivia)

enzymes

emulsifiers

danisco products consumer products

Locust bean gum, used as a thickening agent, comes from Carob trees in the Mediterranean. These trees grow long pods that take a year to ripen, and contain the seeds that give us our locust bean gum.

notable

our raw materials in action Danisco offers a range of bio-based ingredients that contribute to the high quality products that manufacturers require. We use natural raw materials, such as vegetable oil and seeds in our products. and we support our wide range of products with technical services including sustainability support to create innovative, less impactful solutions

found in popular consumer goods around the globe. our ingredients enhance the taste, texture and nutritional profile of processed foods, and often help extend the shelf life of the final consumer product preventing food waste and reducing other environmental impacts.

36 SUStainability report 2010/11 operational efficiency

operational efficiency

4operational efficiency

0.4%

energy

2.1%

Water

12%

co2

3.6%

renewable energy

Key environmental performance indicators 2010/11

operational efficiency SUStainability report 2010/11 37

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focusing on the right thingsthroughout Danisco’s manufacturing facilities, we are increasingly applying life cycle thinking and management to optimize production processes, redesign work-flows, replace equipment, enhance efficiency in the use of raw materials and resources such as water and energy and minimize emissions and waste. We also apply a management system approach to assess, improve, and track the

environmental performance of our own operations, from material selection and processing to packaging, distribution, and waste management. the combination of these two approaches with strong management support, will allow us to prioritize our investments, make more informed decisions, and reward the behaviours of colleagues engaged in achieving our performance targets toward 2020.

challenges in optimizing efficiencies after strong 3-year performancealthough the manufacturing phase of our value chain represents less than 10% of our total environmental burden, it is where we exert the greatest degree of control and can produce the most immediate sustainability benefits. Since 2007, we have experienced the benefits of an impressive decrease in all of our Key performance indicators (Kpis) leading to water reduction of 26%, carbon dioxide emissions reduction of 18%, and energy consumption reduction of 20%. at the same time, we experienced a decrease in our safety and health Kpi by 26%. in this period, many low-hanging fruits were harvested, significant investments were made and additional focus on behaviours was emphasized. the upcoming challenge in achieving our 2020 targets will rely on more intensive investments, deeper analysis of our processes, and alternative approaches to drive the next step change in our performance.

10%of our total value

chain co2 emissions come from our

plants



our environmental approachas a supplier of bio-based ingredients, we recognize that the health of the environment is inextricably linked to the health of our business, our investors, and our shared society. Danisco’s sustainability approach extends beyond traditional environmental compliance and protection to encompass innovative practices and strategies that demonstrate our leadership in this area. in this light, our 2020 targets are supported by a three dimensional foundation of life cycle assessment (lca), production toolboxes, and management systems to help us identify and plan improvements. this year, we set new global targets, focusing on improving performance in three key areas: energy consumption and renewables, greenhouse gas (GHG) emissions, and water management.

The Danisco Executive Committee reviews the company’s progress toward established sustainability targets each quarter.overSiGHt

Life Cycle Assessment lca is a critical tool used to help us identify and focus on the critical impacts of our production processes to the granular level. through our modelling efforts, we are able to identify the most impactful processes. inside our fence line we increasingly use lca as a tool to support our decisions when it comes to investments, raw material selection, packaging and process optimization. it also allows us to avoid unintended trade-offs with other types of impacts across the life cycle.

IdentIfyIng

Management systemsto ensure continuous improvement of our identification, planning, and tracking processes described above, we utilize a holistic management system approach. our sites maintain and improve environmental performance by conducting regular internal audits, sharing best practices and facilitating external audit processes. the management system approach allows a feedback mechanism to our lcas and the production toolboxes to influence future decision-making around improvement actions and investments. to promote global consistency and drive higher performance, we support rigorous third-party certification programmes, such as iSo 14001. of our 48 production sites, 23 have achieved certification to the iSo 14001 environmental management standard. With seven sites pending approval, we expect to achieve a 63% certification rate by 2012.

IMprovIng

production toolboxesto clearly understand the impact of our decisions, we use production toolboxes to observe and track actual performance over time, and under real production conditions. in the past year, we have optimized our energy toolbox to predict expected energy reductions on a project-by-project basis. the toolbox is used to track and manage process improvements and investments over time and to intervene when expected results do not meet predicted values. the production toolbox model will be expanded to include water in the future.

pLAnnIng And trACkIng


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CO2

SCOPE 3 (Indirect) SCOPE 2(Indirect)

SCOPE 1(Direct)

SCOPE 3 (Indirect)

1.57 Mt CO2e

Mt-Megatonnes = 1,000,000 tonnes

0.41Mt CO2e

0.25 Mt CO2e

0.25 Mt CO2e

6.50 Mt CO2e avoided

Upstream activities (Scope 3) Downstream activities (Scope 3)Danisco

CH4 N2O HFCs PFCs SF6

Waste & wastewater treatment

Business traveling

Upstream transport

Packaging, water & energy

Raw materials & associatedprocess materials

Applications in biochemicals

Use in textile industry

Company vehiclesPurchased energy

Company facilities

Use in energy sector

e in food & feed iUseUse ii ndustry

Use by consumer

Consumer transport

Retail

Transport tocustomer

Waste & wastewater treatment

corporate carbon footprintas part of the input to our climate strategy, we have modeled the corporate carbon footprint, which includes the greenhouse gas emissions from all upstream activities including inbound logistics of raw materials and chemicals (upstream scope 3), direct and indirect emissions related to our production sites (Scope 1 and 2), as well as greenhouse gas emissions for outbound logistics (downstream scope 3). in addition, impacts associated with application and use of our products have been estimated.

corporate carbon footprint – input for our climate strategythe study which represents the financial year 2009/10 follows the principles of the Wri/WbcSD Greenhouse Gas (GHG) protocol and has been independently reviewed by Deloitte. the modeling of scope 3 impacts is based on a combination of supplier specific data, generic data from the ecoinvent database (v2.2), as well as data from scientific publications. in addition to the carbon footprint, the study includes 16 additional impact categories. visit www.danisco.com/sustainability for our methodology.

the results clearly show that our corporate-wide carbon footprint is dominated by upstream impacts related to our material inputs. the most important contribution is from the

sourcing of vegetable oils, followed by carbohydrates, acids and other chemicals. the results are illustrated in the figure below.

the upstream Scope 3 activities constitute 63% of the total carbon footprint from cradle-to-customer. in comparison, the emissions from our production facilities contribute 27% (Scope 1 and 2), while Scope 3 emissions from outbound logistics represent the remaining 10%.

on a product basis the product footprint corresponds roughly 4 kg co2e per kilogram of product from cradle-to-gate.



environmental benefits in application and beyond based on 2009/10 sales data, we have estimated that our customers and consumers save more than 6.5 million tonnes of co2e per year by using our products. the significant estimated reductions are due to our products effect on improvements in yield and efficiency of our customers’ processes, raw material choices in consumer and food products, and reduction of food waste and energy use in retail and households. examples include: the use of enzymes and emulsifiers in bread to extend shelf life; application of enzymes to increase the efficiency of animal feed; use of protective cultures to prevent food spoilage of dairy; and the use of enzymes to enable low temperature (short cycle) laundering and automatic dish washing.

Strategic decisions this corporate carbon footprint study is a milestone in the continuous improvement of our climate strategy. over the past 10 years, we have been successful in quantifying and reducing our GHG emissions at our manufacturing sites, thereby focusing on areas that we directly manage and control. We will use this study to support fur ther reductions of indirect emissions in our upstream and downstream value chain. Most importantly, we will use this study to inspire innovation in collaboration with other value chain players to produce even more sustainable solutions.

case study

beyond carbon disclosurethe carbon Disclosure project (cDp), which represents 534 institutional investors with USD 64 trillion in assets under management, provides an evaluation tool for institutional investors based on responses to cDp’s questionnaire, which focuses on greenhouse gas emissions, emission reduction targets and risks and opportunities associated with climate change. We use the cDp report to benchmark against other companies and as a tool for directing part of our sustainability strategy and developing energy and emission targets. it also sharpens our focus on providing innovative solutions to address the climate change impacts of our customers’ products.

a high ranking in the index indicates good internal data management and understanding of climate change-related issues affecting the company. in 2010, Danisco has been ranked second in Denmark and seventh in the nordic region in the carbon Disclosure leadership index (cDli) . Danisco was also featured as one of six nordic companies in the new carbon performance leadership index (cpli), which compliments the disclosure score and recognizes companies that are taking positive measures on climate change mitigation.


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energy the use of fossil fuels for electricity, steam, and heat results in co2 emissions believed to contribute to global climate change, along with other heat-trapping greenhouse gases (GHGs) such as methane and refrigerants. reducing energy use – and associated GHG emissions – from our operations and contributing to climate change solutions are critical business priorities.

Meeting our energy reduction goals requires continued creativity, commitment, investment, and behavioural change. through previous energy reduction efforts, we have addressed most of the readily implemented changes, so fur ther improvements present greater challenges. in addition to engaging employees in efforts to conserve and to generate new energy-saving ideas, we continue to invest in state-of the-ar t, energy-efficient equipment and to promote enhanced maintenance activities.

energy reduction status Danisco’s total energy consumption decreased by 0.4% during 2010/11, thanks to continued efforts by our employees, improved employee behaviours and the installation of new equipment. the reduction of energy is small but is an important step toward our 2020 target. During the year, we invested over DKK 20 million in more than 60 energy-related projects, and anticipate continued investments for the next year.

this year we have included additional r&D and administration sites in our energy data as estimates due to the lack of actual data. the inclusion of these sites based on a worst-case estimate adds 7% to our total direct energy performance, and roughly 3% to our total indirect energy performance. a large part of the indirect energy is renewable, adding 10% to our total renewable energy sourcing.

Generally, electricity and heat/steam suppliers have improved their information regarding their sources of energy. also a growing part of their indirect energy is sourced from renewable sources, increasing our ability to source renewable energy. for example, our enzyme production site in brugge, belgium has certifications for all sourced indirect energy as renewable. in some regions, energy consumption has reduced slightly due to a milder winter in the northern hemisphere.

Several examples of energy reduction efforts come from our key plants. in Smirice, czech republic, the plant’s new centralized control system, installed in 2010, reduced standby periods and associated losses. the change lowered energy consumption by 11.8% per kg product over the past year.

thanks to boiler, steam, and condensate system upgrades in Sassenage, france, it now takes 13.9% less energy than it did a year ago to produce the same amount of product. likewise, improvements to the steam/condensate system in Kansas, USa, decreased energy consumption by 4.7% per kg product.

a 4.4% reduction was achieved in tecoman, Mexico, by addressing the energy efficiency of motors and drives, and focusing on their local energy management approach. likewise, our Kotka, finland plant reduced their energy use by 10% as a result of improving equipment utilization and reducing downtime.

energy Water

Mat

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ls finishedproducts

airemissions Waste

tArgetto reduce

energy consumption by 10% before

2020



energy consumption (GWh)

1500

3000

2500

2000

1000

500

0

2,459

233

1,984

260

2,143

384

total renewable energy

total fossil energy

total energy consumption per revenue (MWh / DKKm)

2008 2009/10 2010/11 2020

163.7 163.0

energy ConSUMptIon

direct energy consumption 1) Unit 2010/11 2009/10 2008

non-renewable GWh 1,075 900 1,186

renewable GWh 7 8 47

total gWh 1,082 908 1,233

renewable proportion of direct energy % 0.7 0.8 3.8

Indirect energy consumption 2) Unit 2010/11 2009/10 2008

non-renewable GWh 1,068 1,084 1,273

renewable GWh 377 252 186

total gWh 1,445 1,336 1,459

renewable proportion of indirect energy % 26.1 18.9 12.8

direct and indirect energy consumption Unit 2010/11 2009/10 2008

total gWh 2,527 2,244 2,692

renewable proportion % 15.2 11.6 8.7

total energy consumption / revenue MWh / dkkm 163.0 163.7 -

1) internal combustion of fuels for energy production. 2) purchased electricity, steam and heat.

energy reduction outlook achieving our corporate energy targets will require greater focus on sites where the most dramatic reductions are needed, as well as incremental improvements in facilities already operating at more efficient levels. our employee “energy champions,” located throughout the organization, help by evaluating site performance and discovering opportunities for improvement.

as of 2010/11, we can track the precise energy usage at every manufacturing site, set individualized targets and rapidly pinpoint problem areas. We developed a powerful tool for achieving our corporate targets, allowing data-driven decision-making by

enabling target setting in context of our sites’ production levels, investment plans and ambient temperatures. this increased level of sophistication in managing our energy consumption at the organizational level, coupled with continued investment, will be invaluable in our efforts to meet or exceed our 2020 targets.

the tool has helped us focus on several key projects including a 50/50 joint venture to form Gas natural caxitlán with the purpose of constructing, owning, and operating a natural gas transportation system to supply natural gas for two Mexican production sites owned by the partners respectively. the project will eliminate the need for the use of heavy fuel oil at our tecoman plant, resulting in a projected co2 reduction of 30%.


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Greenhouse gasesthe potential effects of global climate change – rising sea levels, changing temperature and precipitation patterns and an increase in extreme weather events – could harm the ecosystems on which our plant-based raw materials depend. as an ingredients supplier and biotechnology innovator, Danisco can contribute to climate change solutions by helping to reduce greenhouse gas (GHG) emissions both within and beyond our own operations in the value chain. life cycle considerations guide us in optimizing our operations, which includes reducing transport distances through our efficient global supply chain organization for logistics food ingredients (loGfi), as described later in this section.

tArgetto reduce

co2 emissions by 20% before

2020

energy Water

Mat

eria

ls finishedproducts

airemissions Waste

In October 2010, the Carbon Disclosure Project commended Danisco for our strong climate disclosure practices and included the company in its prestigious Carbon Disclosure Leadership Index for the third year in a row.

notable

emissions reduction status We have tracked our GHG emissions since 2001 using the the Greenhouse Gas protocol established by the World resources institute and the World business council for Sustainable Development. in the context of our manufacturing sites, we

track Scope 1 – direct emissions from company-controlled

buildings and vehicles, and Scope 2 – emissions from purchased electricity on a continual basis. our total greenhouse gas emissions in 2010/11 declined 12% on a revenue basis.

this year we have separated our co2 emissions related to renewable energy sources (co2 from biomass) and biogenic emissions (co2 from fermentation) from our total Scope 1 and 2 emissions. they are now reported separately as total co2 from biogenic and renewable sources in this report.

our significant co2 emission reductions in 2010/11 are caused by the combination of increased sourcing of renewable energy and increases in production and revenue.

total greenhouse gas emissions per revenue (tonnes / DKKm)

Direct greenhouse gas emissions (scope 1)

indirect greenhouse gas emissions (scope 2)

600,000

400,000

200,000

0

100,000

800,000

244,873343,354

481,037 407,609 391,580

259,910

2008 2009/10 2010/11 2020

47.642.0

Air emissions (tonnes)

Scope 1: Direct emissions from company-controlled buildings and vehicles.

Scope 2: indirect emissions from electricity, steam, or heat produced by another organisation.



emissions reduction outlookDanisco’s many efforts to reduce GHG emissions are ongoing at all sites. Here are a few examples.

epernon, france our new ultra-cold storage facility, which opened in november 2010, allows the consolidation of frozen shipments of cultures and cuts co2 emissions by reducing the amount of dry ice (solid carbon dioxide) and transport used.

Landerneau, france efforts to refine the seaweed treatment process used at our landerneau site have reduced the amount of raw material needed per amount of product. by decreasing the amount of seaweed harvested and improving heat recovery in processing, the plant decreased emissions by 15.2% compared to 2009/10.

Hanko, finland our employees in Hanko take pride in their plant’s use of renewable energy. in December 2009, the plant switched from heavy fuel to a combination of wood chips, tree stump waste, and recycled wood chips. this 18-megawatt (MW) plant also provides heating for the town. the change has reduced co2 emissions by about 90% from combustion alone. the emission of co2 from non-renewables related to their energy supply has decreased by 9,000 tonnes, which results in a reduction of 36.7%

Melle, france a change to natural gas and a more efficient steam system have reduced co2 emissions by 38%.

greenHoUSe gAS eMISSIonS

Category Unit 2010/11 2009/10 2008

Direct co2e - Scope 1 1) tonnes 259,910 244,873 343,354

indirect co2e - Scope 2 2) tonnes 391,580 407,609 481,037

total Co2e - Scope 1 & 2 tonnes 651.489 652,482 824,390

total Co2e / revenue - Scope 1 & 2 tonnes / dkkm 42.0 47.6 -

Direct co2e - biogenic and renewable sources 3) tonnes 62,449 65,278 53,400

indirect co2e - biogenic and renewable sources 4) tonnes 80,499 62,296 0

total Co2e - Biogenic and renewable sources tonnes 142,948 127,574 53,400

co2e - non-Kyoto refrigerants tonnes 13,936 7,895 2,329

emissions of ozone-depleting substances (cfc-11 eqv.) kg 1,679 668 103

1) Scope 1: Direct co2 equivalent emissions from company-controlled buildings and vehicles 2) Scope 2: indirect co2 equivalent emissions from electricity, steam, or heat produced by another organization 3) includes biogenic co2 from production and dry ice 4) includes co2 from energy produced by biomass 4) co2e - carbon Dioxide equivalents

refrigerantsbecause equipment malfunctions or leaks can lead to emissions from refrigerants, we track ozone-depleting potential (oDp). in 2010/11, we observed a significant increase in refrigerant emissions.

We have investigated this trend and have attributed the increase to the increased awareness of refrigerant monitoring.

at many of our sites, and as a result of our reporting, many of our sites have developed processes to improve the tracking of refrigerant releases. While the absolute impact of refrigerant release is minimal, we recognize that our focus will continue on refrigerant replacement.


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Photo caption goes here, photo caption goes here

case study

this site achieved a 7,500-tonne co2 reduction over the previous reporting year, prompting Miljønetværk Syd, a local environmental network, to grant the facility a 2010 environmental award.

two-thirds of the improvement was due to investments in technical equipment, while employee conservation efforts accounted for the remaining third. plant Manager Martin Madsen explains, “the former Minister for climate and energy once said that every Dane had to save one tonne of co2 at home. So we said, why not see if we can save 10 tonnes at work? and we did. in fact, our reduction corresponds to 13.5 tonnes per employee.” the plant’s focus on environmental improvement is long-standing. over the past 18 years, the energy used to produce 1 tonne of finished product has been cut nearly in half, while water consumption has dropped by 70%.

Danisco Grindsted wins regional environmental award

our main challenge is sourcing raw materials because our suppliers face droughts, storms, earthquakes, and other environmental issues that are pushing some producers out of business. this has driven us to look for improvements in the crops we source and to put operational measures in place to protect our business. Agustin Orozco, Engineering Manager, Tecoman, Mexico




Waterthe scarcity of fresh water resources is an important issue in the context of our business. tremendous population growth will decrease the amount of fresh water available per person. as agriculture and industry try to keep pace with our growing population, even greater demands will be placed on global water supplies. climate change will undoubtedly play a role as well due to more frequent and severe droughts and floods.

because Danisco’s raw materials come directly from nature, we expect that water scarcity, declining water quality, higher costs, and more stringent water regulation will affect our business in the future. an integrated, global strategy is critical to ensuring that we use water wisely and sustainably in the years to come. this year marks a turning point for us as we begin moving from a focus on maximizing water use efficiency at the plant level to a more global, longer-term exploration of the locations and timing of potential water resource impacts due to vulnerabilities in water-scarce regions.

Water reduction status Danisco’s overall water consumption declined 2.1% during the 2010/11 reporting year, advancing toward our goal of reducing water consumption by 20% per revenue compared with the 2009/10 baseline. our previous water reduction target – 5% from 2007 to 2009/10 – was far exceeded when we achieved a 26% reduction.

Water consumption is the volume of all water used in our manufacturing processes, added to a product as an ingredient or used for cooling. cooling water that is not contaminated

and is discharged from a site to its original source without loss in volume is not included in our water consumption data.

cDp Water Disclosurelaunched in 2010, cDp Water Disclosure builds on the methodology and process used by the cDp for carbon and climate change since 2003. this year, cDp sent its first annual water questionnaire to 302 of the world’s 500 largest companies in the ftSe Global equity index Series, focusing on sectors that are water intensive or particularly exposed to water-related risks. of the 302 companies targeted, 150 responded. although Danisco was not requested to disclose, we were one of only five companies in the food, beverage & tobacco sector (and among 25 companies overall) that proactively responded to the questionnaire, reflecting our commitment to transparency and our deep interest in supporting water strategies to meet global needs. cDp Water Disclosure did not rank participants’ performance, but our response can be viewed at www.cdproject.net.

energy Water

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airemissions Waste

tArgetto reduce

water use by 20% before 2020

12,000

10,000

8,000

4,000

2,000

0

14,000

6,000

Water consumption (1,000 m3)

1,4583,358

2008 2009/10 2010/11 2020

730.5715.3

9,012

3,251

5,537

3,743

5,960

Surface water and sea water

total water consumption per revenue (m3 / DKKm)

Municipal waterGround water

1,2231,384

OperatiOnal efficiency SUStainability repOrt 2010/11 47

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WATER CONSUMPTION AND USE

Water consumption by source Unit 2010/11 2009/10 2008

Ground 1,000 m3 5,960 5,537 9,012

Municipal 1,000 m3 3,743 3,251 3,358

Surface 1,000 m3 989 828 1,221

Sea 1,000 m3 395 395 237

Total water consumption 1,000 m3 11,087 10,012 13,828

Total water consumption / revenue 1,000 m3 / DKKm 715.3 730.5 -

Cooling water use by source 1) Unit 2010/11 2009/10 2008

Ground 1,000 m3 4,418 3,720 7,359

Municipal 1,000 m3 91 69 389

Surface 1,000 m3 8,160 6,728 76

Sea 1,000 m3 21,615 21,045 10,000

1) cooling water in this category is abstracted but not consumed. this category refers to non-contact cooling water returned to the same source.

although only 17% of our manufacturing sites are located in projected areas of water scarcity in 2025, many of our sites have active water reduction programmes focusing on water efficiency and re-use. the approach to water reduction is specific to the site’s operations and includes a combination of engineering analysis, project planning and behavioural changes. in 2011, our pectin plant in Smirice, czech republic realized a reduction of water consumption per kilogram of product produced by 72%. the site’s performance was led by a team of employees who systematically identified staged projects over a 4-year period. Water balances and harvesting of low-hanging fruit allowed the site to identify and prioritize projects and water reduction activities for capital improvements.

the plan began with projects to optimize filtration performance, resulting in longer filtration cycles and consistently lower water consumption for filter cleaning operations. Other projects like replacement of old filtration equipment, improvement of evaporation losses in cooling towers, and process optimization compounded their water savings and energized water reduction activities at the site.

collaboration and teamwork drives water reduction at Smirice

case study

OperatiOnal efficiency SUStainability repOrt 2010/11 47



potential water scarcity at eight manufacturing sitesour eight sites that operate in water scarce regions vary in their processes and their total annual water consumption. in the table below, we have evaluated the index of water scarcity for each site. We have calculated the index based on the number of person equivalents by comparing the volumes with the projection of regional water availability in 2025.

of the eight sites identified by the WbcSD Global Water tool, four have been prioritized based on water consumption volumes, scarcity index and the nature of processes requiring significant sources of fresh water to operate. the water scarcity index for the top four water consuming sites in water scarce regions range from 889 person equivalents in our enzyme plant in arroyito, argentina, to 56 person equivalents at our cultures site in epernon, france. the four sites identified consume water key processes including cleaning of vessels and process equipment, cooling of

processes and utility equipment and production of steam for sterilization and process temperature control. With potential water scarcity in mind, the four sites have strived to reduce water consumption and have begun to develop plans for reductions over time. collectively the four sites have reduced over 2.5 million cubic meters of water in the past three years.

the four remaining sites identified in water scarce regions are minor sites with limited need for fresh water in their processes. these four sites represent cultures production, blending of systems, and guar gum manufacture. While the water scarcity indices for these four minor sites are relatively

low – ranging from 11 person equivalents in Sonha, india, to

2 person equivalents in Daxing, china – we will continue to evaluate water reduction projects that make business sense.

dAnISCo SIteS In potentIAL WAter SCArCe regIonS In 2025

Site name total water consumption (m3)

Annual renewable water supply per person

2025 (m3/person/year)person equivalents

Actions in taken in 2010/11

brugge, belgium

466,350 500-1,000 466optimization of clean in place (cip) system to reuse water in the process - total water reduction/year = 6,400m³

arroyito, argentina

444,413 <500 889

optmization of clean in place (cip) system to reuse water in the process - total water reduction/year = 36,700 m³

conducted a thorough water audit which defined reduction areas - total water reduction /year = 100,000 m³

anyang, china

368,352 <500 737High water consuming process unit was suspended in 2008 - total water reduction/year = 2 million m³

epernon, france

56,343 500-1,000 56

reduction of the number and the duration of cip operations, reduction of the time and flow for equipment sterilization, improvement of the water quality used for the boiler in order to re-use a higher percentage.

Sohna, india

5,688 <500 11

as these sites are low water consumers, we expect a very low risk of impacting the local water source. further water reduction measures will be discussed in 2012 and beyond.

Zaandam, the netherlands

4,557 <500 9

botany, australia

1,546 <500 3

Daxing, china 1,065 <500 2


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2025 potential Water Scarcity – Danisco locations

expanding water scarcity analysis to our top raw materialsour top 6 agricultural raw materials are derived from corn, palm oil, seaweed, soy, rapeseed, and citrus. While several of these raw materials are sourced in relatively few regions, others represent commodities and are sourced from many regions globally. While it is difficult to pinpoint the exact source of each kilogram of sourced commodity material - like corn, soy and rapeseed - we will focus on further evaluating the sustainability profiles of each major

raw material including an evaluation of water scarcity for the major regions where these materials are sourced. We plan to provide additional strategies to address water scarcity related to these six important raw materials in our future business plans. our strategy will also support our active participation in multistakeholder initiatives like the round table on responsible Soy association (rtrS) and the roundtable on Sustainable palm oil (rSpo).

Sufficientextreme scarcity

Stress

Scarcity

> 500,000 50,000-200,000

200,000-300,000

300,000-500,000 <50,000 abundant

We are proud of our team’s accomplishments to increase water efficiency at the Smirice plant. our past efforts inspired a new project in 2011 to reuse wash water in our ion exchange process which will result in an even greater reduction in water consumption in 2012.” blanka valusova, plant Manager pectin - czech republic

total water consumption by site location projected water scarcity in 2025



WASteWAter

Wastewater volume Unit 2010/11 2009/10 2008

Danisco WWtp 1) 1,000 m3 3,753 4,120 6,133

external WWtp 1,000 m3 4,657 4,484 4,206

non-contact cooling water 2) 1,000 m3 5,188 4,464 13,709

total volume (danisco and external WWtps) 1,000 m3 8,410 8,604 10,339

Wastewater quality Unit 2010/11 2009/10 2008

biological oxygen Demand (boD5) tonnes 8,685 9,071 9,545

chemical oxygen Demand (coD) tonnes 18,643 18,875 18,675

nitrogen tonnes 1,923 1,945 2,315

phosphorous tonnes 156 108 199

total suspended solids (tSS) tonnes 1,842 2,854 2,471

essential to our water management efforts is our responsibility for ensuring the quantity and quality of wastewater discharged by our facilities do not negatively affect the environment. because our operations are wastewater-intensive, we have enhanced our ability to monitor wastewater discharges and correct problems promptly.

approximately 25% of Danisco’s sites have their own wastewater treatment plants, and 75% pre-treat or direct discharge to a municipal or community wastewater treatment plant. Wastewater treatment conducted on-site is accomplished through conventional physical and biological treatment.

Wastewater volume the total volume of wastewater treated in Danisco’s wastewater treatment plants and in external plants decreased by roughly 2% in 2010/11. the reductions are directly related to the increase of water re-use over the reporting period.

this year we have included data on the release of untreated cooling water. While the water is not consumed it is used to cool our processes and equipment. the cooling water discharged is not affected by contaminants and is normally returned to the environment with an increased temperature.

Wastewater quality the main focus areas for our wastewater composition include biological oxygen Demand (boD, 5-day), chemical oxygen Demand (coD), nitrogen (n), phosphorus (p) and total Suspended Solids (tSS).

in 2010/11 the normalized boD5, coD and n values

have decreased by more than 10%. the absolute values have slightly decreased indicating that the increase in global production has caused the improved performance.

total p emissions have increased by 14 tonnes or 10%. When normalized against production the performance remains flat.

total tSS emissions have been in focus in several plants with a total increase of 35%. in tecoman, a tSS reduction project resulted in more than 40% decrease allowing improved wastewater treatment efficiency..

Wastewater management

1) WWtp - Waste Water treatment plant 2) cooling water is not consumed, it is used as it is released back to the environment uncontaminated


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energy Water

Mat

eria

ls finishedproducts

airemissions WasteMaterials and

packagingDanisco’s value chain begins with sourcing many natural materials used in creating our diverse products. We search locally and across the globe for the most renewable and sustainable sources, and our product designers strive to minimize the amount of material needed and maximize its efficient use. We also contribute to resource conservation by increasing the proportion of recycled materials in our products. in 2010/11, our use of recycled materials increased by 5.2% due to significant increase in the use of renewable materials for the production of xylose (waste black liquor) and pectin (waste citrus peels).

MAterIAL InpUt

Material input by source Unit 2010/11 2009/10 2008

Direct material 1) 1,000 tonnes 639 581 609

recycled materials 2) 1,000 tonnes 493 353 542

associated process materials 3) 1,000 tonnes 95 74 111

total material input 1,000 tonnes 1,227 1,008 1,262

recycled materials % 40.2 35.0 42.9

1) Direct materials - Materials present in the final product 2) recycled materials - Materials replacing virgin materials for example, citrus peels for pectin production and wood pulp for xylitol production 3) associated process materials - Materials used for the manufacturing process but not part of the final product



packagingour commitment to resource preservation includes the responsible selection, use and disposition of packaging materials. We seek to minimize the environmental burden on customers and society by increasing the use of reusable materials in our product packaging and have been reviewing our packaging practices, consolidating suppliers and standardizing specifications. Generally the amount of packaging per tonne of product is decreasing. as an example, our site in Wuxi, in china has replaced totes with flexi-bags, which means a decrease in

packaging quantity more than 90%.

although packaging volume has decreased by 4.3% when normalized by production volume in 2010/11, we have room for further improvement. for example, we recently discovered that, due to legacy industry practices, some of our products are still over-packaged, such as non-hazardous items that are being shipped in sturdier, Un-rated packaging designed for hazardous materials.

pACkAgIng

packaging type Unit 2010/11 2009/2010 2008

reusable 1,000 tonnes 4,398 5,246 3,991

non-reusable 1,000 tonnes 20,366 18,157 23,075

total packaging 1,000 tonnes 24,765 23,403 27,066

proportion of reusable packaging % 17.8 22.4 14.7

total / kilogram of product kg / kg 0.044 0.046 0.050

Working with vendors We urge our suppliers to minimize the amount of material in

their packaging. previously, shipments of various plastics such as

stretch films arrived packed in shrink-wrapped boxes on pallets.

those boxes have been replaced by recyclable cradle packs

at all of our north american sites, reducing the fibre content

significantly. When necessary, we also identify new suppliers

to help us reduce packaging. Danisco is pursuing a number of

initiatives, from pallet pooling to down-sizing the coolers for

our cultures, to evaluating the biodegradable “green coolers”

used in the meat industry. already, we have made significant

improvements in two key areas: bags and plastic containers.

Brown bags in 2009, we switched from white bags to brown bags at 11 locations, with 400,000 bags converted to date. the new bags not only avoid the need for harmful bleaching chemicals, but

also reduce paper content by 30% while providing a stronger bag for our products. However, because the polyethylene liner prevents these bags from being easily recycled, we are assessing the life cycle greenhouse gas impact of other options such as fully recyclable plastic bags.

plastic containers the 19-litre plastic pails used by Danisco’s north american sites

– about 35,000 pails annually – were previously recyclable only

if the polypropylene gaskets were manually removed. a new

supplier now provides us with 100% high-density polyethylene

(HDpe), fully recyclable pails. Similarly, we are now working with

a supplier of 1,000-litre plastic intermediate bulk container totes

that offers a collection and recycling or reuse programme for

these large plastic items.

Danisco’s policy is to minimize environmental impact by reducing, reusing and recycling packaging materials. i’m passionate about making this happen because we have a tremendous opportunity to move to more sustainable options” Darren Weaver, Global category Manager for packaging


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Wastea focus on the entire life cycle of our products drives our efforts to improve waste management systems and practices. because the most effective approach is to avoid creating waste in the first place, a commitment to waste prevention and cleaner technology guides our product design and material selection processes. We also emphasize material reuse and recycling, energy recovery options, and when no other alternative exists, landfilling. improvements and reductions in packaging are central to our waste management strategy, as discussed in the previous section.

over the past few years there is an increasing focus on waste

as a topic of concern. Manufacturers, like ourselves, see large

economic opportunities for internal reuse and recycling options

to avoid external disposal. for this reason, the figures have been

regrouped showing quantities separated by final disposal and

recovered waste.

Danisco’s total waste has increased by 6% normalized on

production volume; however we are recovering a higher

proportion. We are moving significant volumes from landfill to

incineration and recover value by utilizing the energy content for

energy production. We are also increasing the amount of waste

used for land application and composting, creating high quality

nutrients for soil.

WASte generAtIon

disposal methodology Unit 2010/11 2009/10 2008

non

-rec

over

ed w

aste

non-hazardous waste

landfill tonnes 12,811 15,464 ----

incineration tonnes 493 1,097 ----

on-site storage tonnes 517 212 ----

other disposal tonnes 678 10,736 102,171

Hazardous waste tonnes 2,183 3,556 4,005

total non-recovered waste tonnes 16,668 30,122 105,727

Unit 2010/11 2009/10 2008

rec

over

ed w

aste

1

recycling tonnes 10,908 20,056 ----

energy recovery tonnes 29,444 2,417 ----

composting tonnes 13,213 10,521 ----

land application tonnes 20,926 16,101 ----

recovery tonnes 235 197 ----

reuse tonnes 1,154 223 ----

total recovered waste tonnes 75,880 49,515 ----

total waste generation tonnes 92,563 79,646 105,727

total waste generation per tonne product tonne/tonne 0.16 0.16 0.20

1) oecD-eurostat definition for waste recovery: recovery is defined as any waste management operation that diverts a waste material from the waste stream and which results in a certain product with a potential economic or ecological benefit. recovery mainly refers to the following operations:• Material recovery, i.e. recycling (see below);• energy recovery, i.e. re-use a fuel;• biological recovery, e.g. composting;• re-use.

Direct recycling or reuse within industrial plants at the place of generation is excluded.



logisticsthe 2010/2011 period was a challenging time for product transportation. the volcanic eruption in iceland disrupted air transport of our cultures and floods in australia and pakistan and continuing unrest in northern africa and the Middle east complicated transportation in those areas. Damage to our products and concern about radioactivity after the Japanese earthquakes led us to consider relocating our finished products, even though our warehouse locations are more than 200 kilometres away from the fukushima plant.

in May 2010, Danisco established a new supply chain structure to simplify and enhance the way we manage our global supply chain. the logistics food ingredients (loGfi) organization covers supply chain planning, customer service, transportation and warehousing, as well as logistics sourcing and supply chain development. this new structure has improved alignment across the business and enabled us to provide better service to our customers.

in the past, our logistics network was fragmented, with each sector transporting primarily its own products and sharing warehouse facilities on a limited basis. the greater transparency and coordination loGfi brings allows co-transport in full truckloads, as well as additional opportunities for creative solutions. With 500 employees from the divisions and our Sales and application food ingredients business having transferred to loGfi, the new network has already begun sharing and adapting best practices.

Disruptions that make transportation difficult are here to stay. our new structure will improve our ability to find rapid, flexible and creative solutions to challenges that confront us in the future” Karen-Marie Katholm, vp for loGfi

We are also achieving greater collaboration between the loGfi organization and our industrial biotechnology division, Genencor. Joint supply chain initiatives include:

optimization of regional distribution centeres this strategy offers tremendous opportunities to reduce our environmental footprint in product transport by using full truckloads where possible. by maximizing the use of our own facilities, we have already closed some external warehouses. in addition, common warehouse standards for energy emissions, noise, food safety and health and safety are being established.

Consolidation of carriers for all modes of transport We have reduced the number of freight forwarders (the middlemen of oceanic shipping) we use by more than half,

and have dramatically reduced our reliance on external trucking contractors in europe. by consolidating our business with a smaller number of service providers, we are able to negotiate more favourable contracts, better focus on achieving environmental goals, reap the benefits of electronic data interchange and build stronger relationships.

prioritization of energy-efficient modes of transport While our cultures require temperature-controlled transport by air freight, we opt for the lower cost and lower carbon footprint of rail for other products where feasible. in determining the optimal mode of transport, we consider the location of the customer, our warehouses and our manufacturing facilities to minimize transport distance and reduce customer delivery times.


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compliance environmental violations and spillsour use of environmental management systems and risk-based analyses facilitate early identification and resolution of potential impacts at our manufacturing sites. We track areas where we are not meeting our own or local regulatory standards and focus on improvements in those areas. Many of our sites use wastewater-intensive processes and depend on high-pH detergents for cleaning, which must be neutralized before discharge. When violations do occur, they most often involve wastewater permit exceedances

– primarily pH, nutrients or chemical oxygen demand – and are almost always related to process control variances, which are addressed in maintenance and operational control programmes. in 2010/11, we experienced seven violations, one of which resulted in a fine of around USD 4,700.

We also monitor odour and noise concerns filed with Danisco facilities. an odour of bread and grain can result from

fermentation processes, while noise complaints are most often related to vehicles transporting goods to and from our sites. in response to complaints, plant personnel evaluate potential remedies, frequently involving community members in the effort. We registered 23 complaints in 2010/11.

community members with concerns regarding our operations are encouraged to contact our sites directly or write to us at [email protected] other fines and sanctions there have been no other significant fines or non-monetary sanctions levied against Danisco for non-compliance with laws and regulations during the 2010/11 reporting period.

envIronMentAL InCIdentS

violations and spills 2010/11 2009/10 2008

Wastewater 3 13 13

other violations (spills, etc.) 4 6 2

Complaints 2010/11 2009/10 2008

noise 12 15 10

odour and dust 11 22 9

product responsibility to ensure that our products are safe for human health and the environment, we assess our raw materials and finished goods against a variety of health and safety standards. as a global company, a number of different regulations govern the way we analyse our ingredients’ physical and chemical properties and conduct environmental and human health hazard assessments. the european Union’s registration, evaluation, authorisation and restriction of chemicals (reacH) program required us to provide risk data in 2010 on six substances that we produce in volumes greater than 1,000 tonnes per year. by 2013, this requirement will extend to the approximately 30 substances we produce in quantities between 100 and 1,000 tonnes per year. We follow applicable regulations where our products are made and sold.

product safety communication We provide accurate, clear information regarding content, safe use, storage and disposal of our ingredients to ensure that employees, transporters, customers and end users have

access to the appropriate information to handle our products safely. While safety data sheets are only required for hazardous substances, Danisco provides these for all products. the sheets detail first aid measures and handling and storage requirements. We are currently upgrading our global safety data sheet system to comply with different national laws and to facilitate knowledge sharing within our organization.

Danisco also meets the assessment and communication requirements of the 2007 United nations Globally Harmonised System of classification and labelling of chemicals, which went into effect in europe for pure substances in 2010 and will cover mixtures beginning in 2015.

Sustainable solutions

56 SUStainability report 2010/11 SUStainability SolUtionS

5Sustainable solutions

We provide solutions to global challengesas a world leader in food ingredients, enzymes and bio-based solutions, we use nature’s own materials to design products that meet market demand for healthier and safer products. Contributing to solutions for a sustainable future is a natural fit for us in the areas of food, health, chemicals and energy.

• Ingredientsenhancingtaste, texture, safety and nutrition

• extend shelf life and preserve freshness

• Cost reduction and value-improving solutions

• Dietarysupplementssupporting physiological benefits and nutrition claims

• ingredients contributing to digestive, immune, bone, cardiovascular and oral health and weight management

• Enzymesforreductionof water and energy

• products for 1G and 2G biofuels

• DDCE:cellulosic ethanol technology

• BioIsoprene™ collaboration with Goodyear

• GRINDSTED® SoFt-n-SaFe

HEALTHFOOD ENERGY CHEMICALS

Population 2010: 7 billion 2050: 9 billion

56 SUStainability report 2010/11 SUStainable SolUtionS

SUStainability SolUtionS SUStainability report 2010/11 57

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Global challenges require holistic approachesas consumers, we are increasingly confronted with the future global challenges related to the products that we consume. as an ingredients supplier, we also face the challenge of our customers growing demand to deliver more sustainable products and to communicate their sustainability benefits clearly to retailers and consumers. We recognize our role and responsibility to promote ingredients as value chain solutions, quantify the benefits and impacts, and to help communicate the message.

Focusing on the right things

6.5million tonnes

of Co2e avoided

the global challenges are the catalyst that has brought us to where we are today. the culmination of our sustainable innovation efforts are revealed in our products – products that reduce refrigeration needs to save energy, concentrated cultures that reduce transport impacts, proprietary ingredients to support improved health and unique enzymes that revolutionize industrial cleaning and reduce water use or that pioneer a new generation of biofuels.

through these products and many others, we demonstrate our lasting commitment to addressing future challenges through innovative, sustainable solutions.

We have faced the challenge of quantifying the impacts from our products in a life cycle perspective, focusing on our most important products. We have engaged in a dialogue with our stakeholders to understand their challenges and needs. and, we have developed a means to communicate the benefits and impact reductions of our products in a clear, concise, and personalized approach.

SUStainable SolUtionS SUStainability report 2010/11 57



Reducing food waste as much as 30% of the food grown for human consumption – food that required resources to grow, process and transport – is discarded as waste. the british Waste and resources action programme estimates that each tonne of food wasted is responsible for more than 4 tonnes of Co2 emissions. our long-standing expertise in food protection technology prevents waste through products such as Danisco’sPOWERFresh® and G+ technology, which provide anti-staling enzymes to keep bread fresh longer, as well as products that prevent spoilage in meat, seafood, and dairy.

Making good bread from low-quality flour While the recent economic downturn and rise in food prices have sparked customer interest in lowering their production costs, food affordability is an even broader issue. already, many people cannot afford to feed themselves adequately, a situation that will be exacerbated in a resource-constrained future.

We collaborate with our customers to make affordable foods available where they are most needed, such as by devising affordable solutions to compensate for poor quality raw materials. For example, bakers may need to use second quality grain to make bread. Working at the molecular level, Danisco’semulsifierscancounteractthepoorbakingqualityof marginal grain.

Solutions to meet global challengesWe bring sustainable solutions to market by using nature’s own materials to design products that meet the demand for healthier and safer products, investing in game-changing innovation, and using life cycle assessment (lCa) tools in product development. Contributing to a sustainable future is an innate fit for us in the areas of food, health, chemicalsandenergy.And,althoughDaniscoisengagedinsolutionsonmanylevels,itisthroughoursustainableofferings that we contribute most significantly to mitigating these challenges.

Food – preventing waste, making food affordablea rapidly growing population, higher – and more consumptive and wasteful – standards of living in the emerging economies, conflicts over scarce land, water and oil and extreme weather events all contribute to the difficulties we will face in feeding 9 billion people.

SolUtionConCern

30% of all food goes to waste extend shelf life & preserve freshness

Facing foodshortages and climate change


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Health — promoting lasting well-beingNotonlyisourpopulationskyrocketing,weareincreasinglyageing,overweightandundernourished.Dansicopossessesworld-class expertise in creating ingredients that allow the formulation of healthier foods without compromising taste or texture. our products address oral health, weight management, immune system wellness and overall health. our litesse sweetener, for instance, provides a low-calorie sugar substitute with soluble fibre to aid in nutrition and weight management (www.litesse.com).

increasingfocus onhealth

lesspollution

SolUtionConCern

Healthy food for all Convenient and healthy solutions

Promoting oral health with xylitol XiVia, our sustainable xylitol derived from renewable forestry wood pulp, can replace sugar in many products, benefiting oral health and weight management (www.xylitolinfo.com). Daniscoalsoprovidesarangeofprobioticswithstrain-dependent benefits to the immune system and protection against pathogens (www.howaru.com).

Improving bone health SomeDaniscoproductsassistinbuildingstrongerbonesandpreventing osteoporosis. recent studies have shown that vitamin K, especially K2, plays a pivotal role in supporting healthybonemass,alongwithcalciumandvitaminD.Daniscooffers a line of products to support bone health, including natural vitamin K2 (MK-7). Known as activK™MK-7, it is a pure extract of natto, traditional Japanese fermented soya beans, the richest and most bio-available known sources of the vitamin.

GRINDSTED® Fiberline won the Health Ingredients Excellence Award in 2010 for making rye bread more appealing so this healthier option can be the consumer’s first choice.

innoVation

Feed is expensive and arable land is decreasing breeding chickens and pigs is a challenge to the environment and the food industry. the animals are fed so they can end up as food on the consumer’s table. but feed is expensive, arable land is decreasing, and animals are not able to absorb all the nutrients of the feed without a little help.

Getting more with less our enzymes improve animal digestion by breaking down the cell walls of the feed so the animal’s intestines can better absorb the nutrients. this innovation allows farmers to reduce feed costs while improving animal growth, with less feed required. another significant environmental benefit of improved feed efficiency is less animal manure. less manure results in less nutrient waste, including phosphorus discharge into the environment.

Feed – increasing efficiency, reducing wasteyou need to feed an animal around five kilos of grain feed to produce one kilo of meat. that is a problem in a world facing food shortages. Grain-based feed for food animals is not just a problem because the grain could have been used as food for humans, the animals are not able to absorb all the nutrients.

SolUtionConCern

Feed efficiency and nutrient waste improving animal digestion



Breaking down cellulose to make second-generation bioethanol Fuel ethanol can be created from the starch in grains and sugar cane, resulting in what is known as first-generation biofuel, or from the cellulose plant material in agricultural residue and non-food crops such as switchgrass, referred to as second-generation biofuel. because second-generation biofuel development is more complex, our expertise in enzymes and in extracting sugars from complex structures is proving extremely valuable. enzymes are critical in converting biomass material more effectively into fermentable sugars, a necessary step in producing ethanol. We provide a variety of enzymes for both the first- and second-generation sectors to improve production processes by reducing energy and water use and increasing process yields.

Twoofourlatestproductsshowcasethesesolutions:

SpeZyMe® rSl for first-generation applications, efficiently liquifies dry ground corn and milo, reducing feed costs while increasing yields.

accellerase®DUET,forsecond-generationapplications,provides more effective biomass hydrolysis while reducing energy, waste and chemical inputs. it is also feedstock flexible and costs less, removing enzyme cost as a barrier to commercial cellulosic ethanol.

Collaboration to decrease fossil fuel dependency We seek partnerships that develop our potential for catalyzing fuelsustainability.In2010,ourjointventure,DuPontDaniscoCellulosic ethanol llC, celebrated the opening of its demonstration refinery in tennessee, USa. the University of tennessee biofuels initiative and Genera energy are also partnering in this effort to produce ethanol from the cellulose in corncobs and switchgrass. We have also been cooperating with farmers on a pilot feedstock project and have begun site selection for the first commercial production plant in the american Midwest (www.ddce.com).

SolUtionConCern

reduction of Co2 emissions Sustainable energy

energy — creating the biofuels of the futureto tackle reliance on fossil fuels, address volatile energy costs and help mitigate the changing climate, we must develop solutions that can transform society. We believe that a world powered by clean, renewable fuel is within reach. through our GenencorDivision’sexpertiseinbiofueltechnology,weareworkingtomakecommercial-scaleethanolproductionareality.

Case study

Genencor wins award for sustainable biofuel technologyon 22 March in rotterdam, Genencor received the Sustainable biofuels technology award at the World biofuels Markets conference – one of the largest and most well attended conferences on biofuels and biochemicals in europe. Sponsored by Green power Conferences, the prestigious award highlighted Genencor’s achievement as “a technology supplier improving the efficiency and sustainability of biofuels production.” Genencor was one of three finalists.

“We are honored to receive this award and accept it as a testament to the hard work and commitment of our biomass team in pushing boundarieswithintheindustry,”saidBjarneAdamsen,Genencor’sVicePresidentofBusinessDevelopment.“Today,biofuelsarethemostimportant alternative fuel to oil. We look forward to continuing to forge new frontiers in both the biofuels and biochemicals markets and answer the market’s call for technologies that are both cost-effective and sustainable.”


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SolUtionConCern

Finding a replacement for oil bio-based and sustainable products

Chemicals — creating bio-based alternativesour society has come to rely on petroleum-derived materials for ingredients in a variety of products from synthetic rubber to laundry detergent. our stores of fossil fuels are non-renewable, have a large associated greenhouse gas impact, and require significant resources to extract. Consistent with our belief that industrial biotechnology can contribute to a flourishing bio-based economy, we provide bio-based alternatives to a range of substances derived from crude oil.

Genencor recently launched new consumer research that demonstrates the market potential in North America for biobased and “green” household products with environmental benefits. Visit www.genencor.com/hsi/

LEADERShIP

based onrenewable

raw materials

Safer plastics transferring our expertise in food ingredients to the world of polymersisnotnewforDanisco.Wehavebeendevelopingbio-based alternatives that are not only renewable, but also safer than the petroleum-based materials they replace. one of our most excitingproductsisGRINDSTED® SoFt-n-SaFe, an alternative to the phthalates commonly added to plastics for elasticity. our product is vegetable-derived with no known health concerns so it is well-suited to applications in food packaging, children’s toys and medical equipment (www.danisco-softnsafe.com).

Green tires in the future We are collaborating with Goodyear tire and rubber Company to leverage the expertise of both companies to develop a bio-based molecule with revolutionary applications for the rubber industry. through a significant investment, we are creating a renewable alternative to petroleum-based isoprene, a key component of rubber. this is another application of our expertise in pathway engineering. our first product delivery to Goodyear in 2010 was ahead of schedule and we are on track to meet our target to begin commercial sales in 2013.



Meeting customer needsJust a few years ago, our sustainability focus was internal, focused on reducing environmental impacts at our own facilities. Since then, our approach has evolved quickly to encompass an important external focus. today, we work hard to reduce impacts in our customers’ and their consumers’ use of a product made with our ingredients and to imbue the product with a sustainable purpose as well.

today, our customers are also our partners and collaborators. We work to understand their aspirations so we can create and deliver products that not only meet their specific ingredient needs, but also address their sustainability commitments. Most customers appreciate the lower costs associated with impact reductions in energy, water or materials. those operating in regions affected by food security concerns seek practical solutions for keeping food fresh longer or improving their ability to accommodate the poor quality ingredients available in some areas. both cost and practical solutions are good starting points for robust dialogue on sustainability.

as our own sustainability strategies have matured, so have those of many of our larger customers, who increasingly expect us to provide data demonstrating sustainability improvements for multiple environmental parameters. We share their interest in precision and welcome the opportunity to help them make appropriate product claims and to prepare them – and ourselves

– for a future regulatory environment that may well expect explicit externalization of environmental costs. We believe all our customers appreciate the kind of leadership, innovation, and sophistication we have shown. together with our customers, we are creating the sustainable products of the future.

Reducingcarbonimpacts-DanoneCarbonPactin 2009, we engaged with one of our important dairy customers to reduce greenhouse gasses in our facilities and in the products that we provide.

OurengagementwithDanoneresultedinacontractualcommitmentcalledTheDanoneCarbonPact,forwhichweagreed to communicate our Co2e reductions over time and to conduct a series of lCas on key products over a 3-year period. We conduct annual reviews of our progress and share the results of our lCa activities.

Customers are starting to judge companies by their sustainability platforms and want a better understanding of what we can offer them. We are acquiring sustainable raw materials, reducing energy consumption and working on products that create more sustainable value for our customers. i feel very proud to work at a company at the forefront of sustainability, not only in thought, but also in action”Jan lenferink, regional president, Sales & application Food ingredients

SuStainable SolutionS SuStainability report 2010/11 63

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using lCa to change the discussionFocusing our life cycle approach toward our customers and the market is a key foundation of our sustainability strategy. in the past year, we have significantly advanced our approach to consider the retail trends toward evaluating and quantifying the sustainability performance of food and consumer products. life Cycle assessments (lCa) of our products and their application has allowed us to broaden and change the discussion with our customers, retailers, and consumers. it has also inspired our innovation and application groups to meet the challenges of the future.

over the past year, we have developed a product sustainability strategy to evaluate the environmental impacts of our major products using life Cycle assessment. the purpose of this exercise is to understand how we can make them more sustainable and to deliver and communicate our contribution to the reduction of impacts in our customers’ processes and products.

in prioritizing our efforts, we have concentrated on performing lCas for all of our major products from cradle-to-gate. During the last year, we have completed 14 lCas varying from screening to detailed iSo 14044 compliant, peer-reviewed studies. examples of these studies are found on the next page.

by 2013, we will complete studies for all remaining Danisco food ingredients product categories. Danisco’s significant investment in lCa testifies to our commitment to develop products with the least environmental footprint, and to provide our product developers with inspiration and tangible tools to make a difference.

Industry leadership initiatives Danisco participates in the Sustainability Consortium, a broad-based initiative to develop scientific methods for assessing and improving the sustainability of products and services. We also promote integration of sustainability and life cycle assessment through several industry associations to establish common lCa methodologies and promote life cycle thinking throughout industry.

in discussing the sustainability aspects of our products with our customers, we realized that often the discussion centers on the impact of our product itself – through either our direct emissions or cradle-to-gate life cycle. it was time to change the discussion.

We realize that the greatest potential for impact reductions is our products’ effect on our customers’ value chain. For instance, the use of an enzyme solution in bread could increase the freshness and consumer appeal, thus reducing the potential that the consumer will throw it out. When the consumer chooses to waste a partial loaf of bread, the upstream impacts are cascaded to the retail chain, transportation chain, processors, flour millers, all the way back to the field where the wheat was grown – and this is one of many examples where Danisco products make a difference.

Sustainable solutions project last year we launched an ambitious project aimed at documenting and quantifying the avoided impacts associated with the use of our products. the project team has screened six applications and identified the potential benefits. For example, one of our products which allows the replacement of animal derived protein with vegetable protein in our customers’ dairy products, significantly reduces greenhouse gas emissions back through the value chain to the cow. the same product allows for higher cooling chain temperatures, thus reducing energy consumption and Co2 emissions; reduced the need for energy consuming hardening tunnels in the dairy, also reducing energy and Co2 emissions; and is a healthy replacement for animal proteins.

the discussion will not change quickly – but it is starting. our holistic approach to life cycle thinking allows the discussion to progress, building foundations for new areas of collaboration and open innovation.

iMpaCt

Changing the discussion

assessing product impacts and providing leadership

LCA has become a way of business. We have successfully positioned it with our major customers to support their efforts to develop less impactful products and to strengthen our customer relationships. paul turner, Group Manager Sales, SaFi uK



LifecycleimpactsofDanisco’sproductsandservices

Customer•Enablingbiofuels•Lessretail&consumer waste = less transport

•Extendedshelflife•Lessenergyinput - Cold water washing•Betterorganoleptic qualities. Fresher food.

production

transport Consumer

end-of-life

Danisco

Use(Customer)

transportproduction

end-of-life

transpor t

rawmaterials

rawmaterialstransport

•Energy,water & chemical savings•Lessinputs&more sustainable raw materials

•Enablingbiofuels•Lessdownstreamwaste= less transport

•Moreefficientconversionof animal feed•Useofagricultural waste as feedstock•Lessdownstreamwaste = less raw materials

•Bio-based materials and chemicals

people tell me that seeing lCa results makes sustainability tangible. it is very motivating for product developers and people at the plant level to get lCa findings because they can see how their actions affect the big picture. in this way, a life cycle perspective and quantitative results promote sustainability throughout the whole organization and help decision-makers choose the most sustainable path forward.”

Mikkel thrane, life Cycle assessment Manager

our solutions can significantly affect our customers’ own processes by improving efficiency and enabling increased use of by-products. in addition, they can also influence the customers’ upstream and downstream processes and impacts. our products provide the opportunity to choose more sustainable raw materials or reduce food waste in retail and households.


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PRoduCt LIFe CyCLe ASSeSSMentS

Product Product/LCA description Results

Xivia™, Danisco’sxylitolsweetener

iSo 14044 compliant, comparative lCa of Xivia produced using a side stream from pulp and paper mills versus traditional xylitol produced from corn cobs – panel reviewed

• 86–99% lower impact in all environmental impact categories

• 10x lower Co2e emissions from cradle-to-gate than corn cob feedstocks

Huntsman Gentle power bleach™

iSo 14044 compliant comparative lCa of Danisco’senzyme-basedbleachingsolution,characterized by low energy and water use and low cotton loss, compared to a standard chemical based bleaching solution – panel reviewed

• Saves 10 trillion litres of freshwater annually• Saves 10–30 million Mt Co2e annually - if applied

globally

pectiniSo 14044 compliant cradle-to-gate lCa to quantify impacts and identify most relevant areas for improvements – reviewed

• Use of heat energy at plant is main impact driver• Switching from heavy fuel oil to gas and pursuing

energy efficiencies at Mexican plant will reduce Co2e impacts 15–20% over two years

Frozen Cultures Freeze-dried Cultures

Cradle-to-gate lCa aimed at quantifying impact reduction potentials and identifying most relevant areas for improvements – review expected, fall 2011

• transport is the main driver of impacts • Several options were identified for improvements in

transportation depending on location of customer• Danisco’shighlyconcentratedculturessignificantly

reduce impacts from transport and cooling

SoFt-n-SaFe

iSo 14044 compliant, cradle-to-gate lCa to quantify impact reduction potential of SoFt-n-SaFe which replaces phthalates – reviewed

• Demonstratesalowcarbonfootprintfromcradle-to-gate,partly due to biogenic carbon uptake by castor trees

• a more sustainable, nontoxic replacement for pthalates

bioisoprene™DetailedLCAstudyofthebio-basedisoprenereplacement from the petrochemically derived compound – reviewed

• illustrates that raw material choice is critical for sustainability profile of final product

• Study will be used to improve sustainability aspects of the product and is ongoing

The raw material for our XIVIA™ sweetener is side stream from paper production derived from renewable forestry. In a recent independent study, XIVIA™ emerged as the most sustainable xylitol with the lowest carbon footprint.

notable



inventing the future through market-driven innovationinnovation lies at the heart of our bold strategy to invent the future – to discover breakthrough innovations, create the sustainable products of the future and address our world’s greatest challenges. today, innovation-driven products make up an estimated two-thirds of our sales. our patents attest to the unmatched talent of our global research &development(R&D)andapplicationteams.WithasignificantinvestmentinR&Dandtwonewprogramsthatfoster cross-cutting ideas from the consumer in all of us, we have committed to innovation and the creation of transformative solutions company-wide.

reaching unexplored potentialto discover and develop the breakthrough innovations that will fundamentally shape the future of our business and our world, we must leverage our strongest business asset – our employees. the challenge is finding the best ways to unleash their creativity and channel these gifts toward game-changing ideas.

danisco Innovate as we are all consumers with our own ideas for products we would like to see on the market, we also encourage innovation among all of our employees, not just those withR&Dexpertise.Asanidea-generatingscheme,the

DaniscoInnovateprogramallowsustogatherideasfromanyone in the organization and generate perspectives that might not arise from other innovation approaches. the fun and interactive program allows employees to post ideas for new products that would serve an unmet need and to comment on, and vote for their favourites. More than 20% of our organization participated, generating more than 1,000 suggestions. We expect four of these to become innovation projects and eventually marketable solutions.

innovation isn’t limited to people in white lab coats; it

can come from anywhere. it is very powerful to see that

happen and to participate in this kind of cultural change.” ariella Gastel, idealab Coordinator


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During the 2010 China Economy Summit, Danisco China was named one of the top 10 innovation companies in China - the only food ingredient company to be so honoured.

DISTINCTION

IdeaLab With idealab, we have found an extremely effective process for doing just this. idealab involved a concerted effort in 2010 tobringtogetherpeoplefromtheR&D,science,businessand production functions in several intensive workshops held acrosstheglobefromBrabrand,DenmarktoSãoPaolo,Brazil.More than 250 direct participants (and another 100 who participated through interviews) explored the innovation possibilities arising from consumers’ unmet needs, generated 950 ideas. We then compared these insights with our core competencies to create 41 unique innovation platforms. the four best ideas were presented to the executive Committee for business case development and at least two of these have been approved to progress to the next stage.

Sustainability performance is a key criterion for these projects andDaniscoisworkingtointegratesustainabilityintoallkey innovation projects by using lCa screenings as well as questionnaires and improvement tools integrated into the product development process.

idealab succeeded in embedding innovation more strongly in our organization, creating visibility for additional ideas, inspiring our employees and giving them tools for driving innovation in the future. Going forward, idealab will establish Daniscoasapowerhouseinconvertingradicalideasintosustainable solutions that extend well beyond our traditional offerings.

Knowledge management it can be challenging to share best practices or creative ideas across a global organization that spans every time zone. a way that we are addressing this challenge is by developing experience profiles on our intranet portal. our intranet’s new competency finder is helping our thousands of employees access specialized knowledge and facilitate cross-divisional team development. in addition to providing greater visibility for individual expertise, our new Knowledge Management programme is building a culture of collaboration and creating channels to facilitate exchange of ideas. From yammer microblogging to establishing online communities, our employees are finding each other and sharing their knowledge

– benefiting the participants and our business.

Ithasbeenaprivilegetoworkwithmorethan1,500creativeandengagedcolleaguesonfillingDanisco’s

innovation pipeline. it is highly motivating to work together to build each other’s ideas into innovation

projectsand,hopefully,revenue.ThevastmajorityofDaniscoInnovateprojectsaresustainable,aimed

at meeting the global challenges. the outcome of this project confirms that sustainability is embedded in

thewayweworkandthink,andourinnovationculturegoeswaybeyondR&Dandapplication.”

DortheMalmqvist,DaniscoInnovateCoordinator

68 SUStainability report 2010/11 people

people

people

*as of 2010/11 Western europe and rest of the World have been aggregated

6employees by region

europe and rest of the World*)

51%31% Male / 20% Female

asia pacific


north america


latin america


people SUStainability report 2010/11 69

SiteS eMployeeSCoUntrieS

40 112 6,890

our people“First you add knowledge …”. those four words capture the distinctive and powerful advantage Danisco offers its customers. the knowledge that sets us apart from our competitors rests in our employees, the key ingredient in Danisco’s formula for success.

attracting and retaining dedicated and talented people across all roles and in all locations is a business imperative. that is why we work and invest to strengthen our human resource capabilities and employee development programmes. the experience, expertise, and creativity our customers value, is alive and well in the 6,890 people we employ in 40 countries worldwide.

talented, motivated employees with world-class expertise are Danisco’s greatest competitive asset, and by supporting their continued development we can attract and retain the best people. our human resources team has implemented consistent, forward-thinking policies and processes across the globe, supporting employee performance, encouraging engagement, building potential, and providing equitable rewards.

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a powerful global workforceDanisco is stronger for the diverse backgrounds, experiences, and perspectives of the people who make up our multicultural workforce. We foster a company culture in which all employees are treated as individuals and valued for their contributions to the team, regardless of gender, race, age, religion, political opinion, social or ethnic origin, sexual orientation, disability or other status unrelated to job performance.

Despite the widespread diversity of Danisco employees, we recognise that the representation of women at the senior management level of our organization could be improved. Currently one member of Danisco’s executive Committee is female, and roughly 17% of our senior-level managers are women. our executive board and the board of Directors has

committed to addressing this issue. While gender-based quotas are being explored in many companies, Danisco’s approach focuses on creating opportunities, building women’s employee networks, and other strategies to encourage strong female applicants for executive positions.

employeecategoriesour 6,890 employees are categorized as follows:

Administration 15%• Male 45% / Female 55%

Direct production 31%• Male 83% / Female 17%

Indirect production 28%• Male 68% / Female 32%

Distribution/procurement 5%

• Male 70% / Female 30%

Innovation 10%• Male 47% / Female 53%

Sales/marketing 11%• Male 50% / Female 50%


the size of the Danisco workforce has fluctuated widely with the acquisitions and divestments that have shaped our company. as of 30 april 2011, we employed 6,890 people worldwide. While most of our employees work full-time, 504 work part-time and 318 have temporary contracts. Work hours for full-time employees are restricted to the maximum hours per week allowed by local regulations.

through employee turnover, companies can gain new and invigorating ideas, talents and perspectives. at the same time, it is crucial to retain the knowledge and expertise of their employees. Consequently, we try to maintain a balance in our staffing efforts between acquiring new talent, preserving our knowledge and human assets, and providing career growth opportunities for current employees. We aim to fill openings with internal candidates about 80% of the time.

in 2010/11 employee turnover including both voluntary and involuntary was 14.3%, up 5.8% from the previous year. as we do not distinguish between voluntary and involuntary turnover in our systems, we have estimated the voluntary rate to be around 5%, which is similar to 2009/10.

EmployEE TurnovEr

By gender new hires leavers

Male 62% 60%

Female 38% 40%

By age new hires leavers

<25 32% 23%

26– 40 50% 41%

41–60 17% 26%

>60 1% 10%

By region new hires leavers

europe / rest of world*) 43% 48%

latin america 12% 7%

north america 26% 22%

asia-pacific 18% 23%

FeMale ManageMentFeMale eMployeeS

employee diversity / management diversity

ManageMent by age

41-60

>60

eMployeeS by age

<25

26-40

41-60

>60

35% 17%

We support the 21% of our employees who are covered by collective bargaining agreements. rightS

*as of 2010/11 Western europe and rest of the World have been aggregated

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employee developmentWe invest in the ongoing development of our people by helping employees realize their full potential and by finding

ways to make Danisco an even better place to work.

Danisco Dialogue – linking employees’ performance to company goalsit is critical that all employees understand the company’s vision and how their efforts support its realization. Danisco Dialogue provides a global framework for ongoing dialogue between employees and their managers and helps to clarify the linkage between company objectives and individual goals, ensuring alignment with the overall business strategy. Managers and employees meet to discuss work and personal development goals and set milestones, with individual performance then evaluated against agreed-upon deliverables tied to divisional

and corporate goals. Many of the environmental, health and safety targets discussed in this report are reflected in individual employee goals, especially at the plant level.

this year, for the first time, we launched a company-wide, short-term incentive programme, giving employees the chance to experience the tangible benefits of our company´s financial performance.

Danisco potential – nurturing employee talentidentifying leadership skills or special talents in our people and nurturing those abilities is essential to realizing our full capabilities as a company. the Danisco potential process provides a structured means of discovering individual talents and aspirations and matching employee development with the needs of the business. through this process, managers perform succession planning to identify the right people to fill key positions, while specialized training programs then help employees prepare to move into different roles. More than 300 managers have benefitted from our 10-month leadership academy. an online tracking program is also underway to further improve our leadership development offerings.

all employees can take advantage of the many training programs and resources available to them, and individual sites offer programs tailored to the needs of their people. Whether the goal is to improve job performance or in some other way increase the employee’s contributions to the business, Danisco offers online and in-person employee learning opportunities such as product training, it and systems training, safety and training in good manufacturing practices. in 2010/2011 we developed and launched standard processes, procedures and tools to administer and track training information for Danisco employees globally. a learning management system (lMS) that provides a catalogue of all training at Danisco, enables online registration, manages e-learning content publication and delivery and can generate analytical reports is scheduled for kick-off in october.

Spirit is very important for our group because we take it seriously. When we receive our Spirit results, we sit down as a team and analyse them. then we work together to develop an action plan based on the results. it works best when everyone is part of the solution” andy Muller, regional president Sales & application Food ingredients, north america

Danisco Spirit information used to come from the top down to the employees, but now we communicate more frequently, more openly, and more transparently. Ramich Kandasamy, Process Controller, Mohd Shabirin Mansor, Inventory Supervisor

employee engagementthe true value of any business strategy can be realized only to the extent it is implemented by employees engaged in achieving its goals. perhaps nowhere is this more relevant than in our continued sustainability efforts, where employees are among our most important stakeholders.

We work to nurture a culture in which our people have a voice in identifying opportunities for improvement – whether generating ideas for sustainable product solutions or innovative operational improvements – and a role in making it happen. an important tool toward that end is our annual Danisco Spirit survey. the survey has become an indispensable

tool for gauging employee attitudes, revealing valuable opportunities for improvement, and engaging our people in Danisco’s continued role as a great employer and sustainable business competitor.

Danisco Spirit – engaging our peopleWe all share the responsibility for – and the rewards of – making Danisco a great place to work. our annual Danisco Spirit survey provides a powerful tool for engaging employees. the survey gives us a picture of employee attitudes and concerns across the company, leading to positive changes in policies and practices, as warranted. While it has been gratifying to see Spirit scores rise over the past three years, the greatest benefits have been the constructive dialogue and planning, more energized working relationships and greater internal efficiencies arising from both collective and localized actions on the survey results.

an engaged employee, by our definition, is consistently motivated to go beyond expectations and is committed to the company and our customers. We determine the level of employee engagement at Danisco based on answers to four key questions in the Spirit survey. While our engagement score of 74% is slightly below the external benchmark, scores for 40 out of 41 Spirit questions went up in 2010, with significant improvement in all of our 2010/11 focus areas. in addition, we have identified a number of Danisco managers as “best-in-class” based on high marks from their direct reports, and are developing programmes that will leverage their leadership qualities – which include good communication, visibility, trust and personal interest and support – through sharing of best practices.

it took some time for everyone to become familiar with our Dialogue and Spirit processes, but now that everyone has gotten the hang of them, they are very strong programs supporting our business by driving performance through highly engaged teams. they have become an important part of who we are”

hanne ernst, Senior hr Consultant

Danisco Spirit survey results show that 73% of our employees feel Danisco provides them with the opportunity for learning and development. opportUnity


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benefits – consistency in rewardsthe global pay framework we unveiled in early 2010 has brought greater equity and clarity to our employee compensation practices. We have adopted a stronger “pay for performance” approach and become much more explicit about how we determine pay in the company.

this year, for the first time, all Danisco employees have been included in a short-term incentive programme, linking employee short-term incentives with company financial performance. bonuses are usually tied to team financial goals, but may include additional targets as well. at the plant level, these goals are clearly linked to the objectives of the operating unit and may include plant efficiency and sustainability targets. annual salary reviews are tied to individual performance goals clearly defined through the Danisco Dialogue process.

to ensure consistency in our global pay processes, we have:

• Defined global principles for managing the annual base salary review

• established a global compensation benchmark policy

• harmonised base salary review dates to 1 May (from as many as 15 dates previously)

• established a global job structure of eight job bands and associated every job with the appropriate band

• launched a pilot sales incentive programme

in providing employee wages and benefits, we adhere to applicable local laws, including those related to maximum working hours, overtime compensation and leave time. We offer our permanent, full-time employees health and accident insurance, medical care for employees and their families, disability insurance, paid parental leave, and flexible work schemes to help our employees maintain a positive balance between time at home and work. Danisco also offers employee retirement and termination plans that vary by country. Where we offer defined contribution plans, we make contributions to independent pension funds without further obligation. Where we offer defined benefit plans, we provide agreed-upon benefits to current and former employees. these defined benefit obligations comprise various salary pension plans, and to an immaterial extent, medical plans.

Genencor is among the top 10 best places to work in The Netherlands according to the Great Place to Work® Institute’s annual survey. StatUS


human rights and our Code of Conductrespecting human rights is the foundation for our interactions with our employees, suppliers, customers and the communities in which we operate.

Social policy our social responsibility policy is based on the principles of the United nations (Un) Declaration of human rights and the international labour organization Declaration on Fundamental principles and rights at Work. We also follow the organisation for economic Co-operation and Development guidelines for Multinational enterprises and have been closely watching the development of the Un guiding principles on business and human rights recently endorsed by the Un human rights Council on 16 June 2011. our social policy requires that:

• employees receive fair and equal treatment, regardless of gender, race, age, religion, political opinion, social or ethnic origin, sexual orientation, disability or other status unrelated to their ability to do their job

• employees have the right to freely form and join trade unions and to negotiate collectively

• We do not employ forced or compulsory labour• We do not use child labour • employees receive fair and lawful compensation• We support employees’ training and development• We safeguard employees’ health and safety in the

workplace • We provide a secure work environment

in 2010/11, Danisco had no confirmed instances of discrimination, child labour, forced or compulsory labour or violations of the right to exercise freedom of association or collective bargaining.

Code of ConductMaintaining a sustainable, principles-based corporate culture involves communicating clear expectations and values to cultivate the ethical behaviours we expect of our employees. We established our Code of conduct in 2008 with a focus on issues of bribery, facilitation payments, gift giving, political donations and charitable contributions.

online availability brought this new code to 90% of Danisco employees in its first year, but as discussed in our last year’s report, the implementation was not effective, resulting in a training rate of only 35%. We went back to the drawing board.

We began 2010 with a new code of conduct, application with the Danish data privacy agency, and final plans for an ethical hotline to provide improved case management capabilities. We put these plans on hold however, in the face of the uncertainty about Danisco’s future.

Upon the completion of the Dupont acquisition, we collaborated actively with our new Dupont ethics and compliance colleagues. We have structured a plan to launch the Dupont Code of Conduct and core values, with it’s accompanying ethics training programme and the Dupont ethics hot-line by the end of 2011.

Sedex Danisco is a member of Sedex, the Supplier ethical Data exchange. We chose Sedex as a management tool for ethical data as it satisfies our needs to monitor our own sites, perform risk assessments as well as meeting our customers’ requirements for transparency by maintaining data on our own production sites.

During 2010/11, each of our production sites were asked to complete a self assessment questionnaire that focuses on four pillars: labour Standards, health & Safety, environment and business integrity.

% oF total proDUCtion SiteS

proDUCtion SiteS regiStereD

42 94%

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5.0

4.0

2.0

1.0

0.0

3.0

Severity rate (lost scheduled working days per employee accident)

lti frequency (number of employee lost-time injuries with one or more lost scheduled working days per million working hours)

4.8 3.3 3.8 2.0

2008/09 2009/10 2010/11 2012

25.8

12.6

7.4

health and safetyproviding a safe work environment for our employees is of the utmost importance. in fact, employee health and safety was an area of intense focus for the Danisco management in 2010 /11.

our concern for employee well-being demands that we consider the many potential hazards in our workplace, whether physical, chemical, structural, procedural, behavioural or cultural in nature. We strive to ensure that the Danisco work processes do not expose employees to occupational related high incidence or high risk diseases. We take a multi-pronged approach to minimizing risk and improving safety performance at our sites by:

• leveraging local best practices at the company level as appropriate

• introducing an it-based risk assessment tool for evaluation and annual review at all plants in 2011/12

• linking Danisco Dialogue targets to safety improvements for factory personnel

• investing in new equipment or other plant improvements

intense management scrutiny in this area has already initiated cultural change in plants where the emphasis on safety was not strong enough. to walk the talk, management response to any potential health or safety issue was also strongly emphazised. over 2010/11, we experienced a general increase in risk assessment and avoidance with a number of concrete programs and actions implemented. these actions, combined with active, joint labour/management safety committee participation has increased our focus. in 2011, 73% of our sites have an active health and safety committee.

in principle our lost-time injury (ltis) target is zero, but in order to keep focus in the short term we developed a target to limit ltis to no more than 2.0 per million work hours. globally, Danisco divisions experienced 3.8 ltis in 2010/11, up 15% from the previous year. While our ltis are clearly of concern, it is worth noting that the seriousness of the injuries, based on the number of working days lost per injury, has declined and with no fatalities.Lost-Time Injury (LTI) frequency

and severity rate

in 2011, we will align our health and safety approach and

strategies with Dupont

lTI frEquEncy and sEvErITy raTE

By gender By gender

region lTI frequency male female severity rate male female

europe / rest of world 0.5 0.2 0.4 16.0 5.0 21.5

latin america 2.2 2.2 0.0 9.0 9.0 0.0

north america 2.4 2.4 0.0 7.5 7.5 0.0

asia-pacific 17.1 14.3 2.8 6.4 6.9 3.8

PeoPle SUStainability rePort 2010/11 77

Understanding the problem and setting priorities all sites were surveyed in 2010/11 to determine local management’s views on the relative risk and importance of key environmental and safety issues – to ultimately help us establish corporate standards that better align risk management practices company-wide. Feedback from plant managers included the following:

• Mechanical equipment – eliminating pinch points and machine guarding

• Chemical and biological issues – improving chemical handling and storage

• Manual handling – improving ergonomic aspects• investigation of incidents – Developing a consistent

approach to accident investigation and root cause analysis

in addition, all sites in the enablers Division completed a safety questionnaire, focusing on the main causes of injuries and to support the formulation of action plans to address them. action plans included new procedures, employee education and/or structural changes.

to better address these issues, the enablers Division has established occupational health and safety principles supported by standards including: alignment of risk management approaches; safe driving behaviour; support of team discussions, return to work initiatives; and investigation of incidents.

We have achieved OHSAS 18001 occupational health and safety standard certification at 40% of our sites, with a 56% certification rate expected by 2013. CertiFiCation

Case study

Six years without a lost-time injuryWith a team of 75 employees, the thomson, illinois Sweeteners plant took six years to reach the milestone of 1 million working hours without a lost-time injury. Furthermore, 52 of the 75 employees have been with the company for the entire six-year period. it has been an important accomplishment for both veteran employees and new employees to maintain performance with the significant changes in the business over the same period. over the past six years the site has focused on a combination of management commitment, behavioural safety programs, and various standards to help identify and control risks.

employees of the thomson plant maintain that one cannot rely solely on the engineering safety of the systems. yes, engineering has its part and responsibilities, but safety is a behaviour that all employees have to live every day. the team has already set their sights on the next goal of working two million man-hours without an lti.

investing in solutions We are making the most significant investments in safety improvements at those enablers sites where challenges have been greatest: Zhangjiagang in China, landerneau in France and St. Joseph in the United States.

When we acquired our gums production site at Zhangjiagang in 2006, it did not meet Danisco standards and the safety performance record was poor. our initial changes were so successful that the local work safety bureau now uses the plant’s annual safety education efforts as an example to other companies. to improve the site further, a new central distillation unit is being installed to recover the alcohol used in processing, and we are upgrading and expanding one of the three production lines. in addition to improving worker safety and air quality, these upgrades will reduce energy use.

the focus is quite different at the St. Joseph site, which depends, to a great extent, on manual labour. Solutions include measures to intensify safety communication and investments in key structural areas. in landerneau, we focused on process upgrades to reduce risk. in both St. Joseph and landerneau, plans have been developed for significantly reducing manual handling and improving overall safety.

Globally, employees are encouraged to provide input to develop creative solutions through a variety of channels. in many of our locations employees are rewarded for their participation in the solutions including trips and monetary awards.

OccupatiOnal illness frequency and severity

By gender By gender

region Occ. illness frequency Male female Occ. illness severity rate Male female

europe/rest of the world 0.4 0.2 0.2 7.5 10.0 5.0

latin america 0.0 0.0 0.0 0.0 0.0 0.0

north america 0.3 0.3 0.0 1.0 1.0 0.0

asia-Pacific 0.0 0.0 0.0 0.0 0.0 0.0 Pe

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Spotlight on

Dangé-Saint-romainthe 175 employees who work in our Dangé-Saint romain facilities in France serve a growing global need for solutions that create healthier foods using biologically active ingredients.

state-of-the-art research facility Designed to encourage creative and innovative work, the site’s new bioScience Development Centre includes advanced research facilities and a pilot plant to facilitate creation of new starter cultures. Completed in 2009, the center meets the certification requirements of the French high environmental Quality programme and features solar energy for hot water, electrical and light savings and skylights that maximize natural light and create a pleasing atmosphere for the scientists who work there.

Employee-driven safety and environmental programmes employee observation teams and regular equipment inspections shape the safety-focused culture at Dangé-Saint romain. as part of a behaviour-based safety programme, ten teams of three employees regularly conduct audits in all departments. these employees are specially trained to explain to colleagues when and why safety practices require a behaviour change. Safety messages are also reinforced through campaigns that remind employees to “think before acting.”

a similar approach is used in identifying opportunities for environmental improvements. an employee environmental committee meets every two months to discuss measures for saving energy and water. to date, savings have been realized by shutting down the site’s cooling machines when the freeze dryers are not in use, reducing the water used for cleaning and focusing on the use of heating and lighting.

Employee engagement Dangé-Saint-romain hosted two employee meetings in november 2010 to generate ideas for the Danisco innovate program. the program is designed to tap the creativity of Danisco employees in identifying unmet consumer needs and generating ideas for future Danisco products. given that the site’s staff consists of roughly equal numbers of r&D, production and marketing/sales employees, the Dangé-Saint romain team represents a diversity of talent and perspective. together, a group of 32 people generated and submitted 78 ideas, the fourth-largest number submitted by any Danisco site.

everyone appreciated the free discussion and the mood of the brainstorming. We all felt like we created something real. it was a good way to break the silo feeling we sometimes have at a site like Dangé” Jean-Claude Denis, Site Manager

w

Community & society the local community is providing us with raw materials, and we try to support them in terms of technology and the economy. We have even hired a university to help find better ways to use their product. We are here for them and because of them. Augustin Orozco, Engineering Manager - Tecoman, Mexico


Community and societythe social dimension of our commitment to sustainability centres on a set of shared principles that guide our decision-making and actions, while keeping us nimble and strategic, and engaging and inspiring our diverse employees. Worldwide, this culture of initiative provides our 6,890 employees with the flexibility to demonstrate both civic commitment and creativity in contributing to the communities where they work and live. the localized, but extremely widespread, nature of our community support demonstrates how deeply ingrained sustainability has become in our corporate culture.

because decisions about engagement in community projects and support of charitable organizations rest with Danisco’s local offices, our community spirit has many faces. Whether our employees are donating bicycles in beloit, contributing to a local cultural and sports centre in grindsted or partnering in gurgaon with Compact india on an affordable food initiative to develop rUtF – ready to Use therapeutic Food, they clearly take satisfaction in meeting local needs with locally meaningful solutions that make a sustainable difference. although we have debated the value of creating global criteria for community volunteering and philanthropy, we believe

additional guidelines would be regarded as restrictions, with the unintended effect of dampening employee enthusiasm for local programmes that have proven extremely valuable to communities in their need. For now, we continue encouraging our facilities and offices to lend their charitable support to those communities and organizations identified locally, as in the examples profiled here.

We welcome feedback from community members about how our work has been helpful and how we could be more effective. Contact us at [email protected]

community due diligence We have taken a systematic approach to how we locate our facilities. While we did not enter any new communities in the reporting period we will maintain our established due-diligence process in the future.

We assess the impacts of our operations on the local community prior to entering the community by using a filter of sustainability core issues like environmental impacts, job creation and access to talent, potential displacement of residents and impacts on transport, noise and infrastructure.

the most recent example of this was in 2005 when we sited our facility in Wuxi, China. in addition to economic due diligence, environmental and social aspects were considered. the plot of land in the Wuxi new District was selected because it was one of the only locations in the area that would prevent the displacement of local farmers and their families.

According to our Danisco Spirit annual survey, 82% of our employees see a clear link between their work and Danisco’s objectives. aligneD

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overcoming economic barriers via technologyDanisco and its employees invest time, money and personal effort in helping to strengthen the communities in which we work. but our technology can make important contributions, too, as in the case of smallholder dairy farmers fighting the limitations of poverty in developing countries. in countries where the creation of an organised dairy industry is still in the early stages, refrigeration is often simply not be feasible for economic and/or practical reasons. through a two-year CSr project jointly funded with the Danish international Development agency (DaniDa) – an organization inside the Ministry of Foreign affairs of Denmark – Danisco has set out to deliver protection of raw milk as an acceptable alternative to refrigeration. Danisco’s solution is based on hexose oxidase (hoX), an enzyme that catalyses the oxidation of various mono- and oligosaccharides, resulting in lactones and hydrogen peroxide. hoX is used to generate hydrogen peroxide, which in turn provides natural antimicrobial protection for the milk. in in-house feasibility studies, hoX has successfully extended the shelf life and quality of milk for up to 12-15 hours without cooling. Using our technology, smallholder farmers will be able to deliver morning milk and evening milk to the market at the same time and reduce milk wastage significantly. it will make it possible to increase production and create increased value for individual farmers. and by eradicating milk deterioration during transport, the solution will also improve raw milk quality at the time of processing.

project activities the project entails work to prepare hoX for commercialization, including application trials in Kenya to evaluate safety and efficacy under local conditions, as well as petitioning for regulatory approval of hoX in raw milk from relevant authorities. it will also encompass distribution channel studies, marketing studies, income studies and profitability studies for smallholder farmers and the dairy processing industry. We anticipate launching the application commercially in 2013.

local partner in Kenya Just as our technology can help build stronger local economies, sharing our knowledge can play an important role in nurturing the growth of innovation and sustainable business. toward that end, as part of the initiative, Danisco will partner with egerton University, Food Science & technology, in nakuru, Kenya. as an active participant in the project, we expect egerton University to gain a deeper understanding of dairy applications that will, in turn, support the development of Kenya’s emerging dairy processing industry.

Case study

planting trees and helping schools in tecoman, Mexicoon World environment Day, tecoman employees and their families planted Casuarina pine trees as part of a harvesting the Future event. the children named their trees and will provide care for these “adopted” family members as they grow. employees in tecoman also donated computers to local schools, including one school that had never before had computers.

it brings me much happiness to see how our company helps the community, and it was nice to see the smiles of the children and the gratitude from the teachers when they received the equipment” geraldo alvarez, it support - tecoman, Mexico


Making the world greener through community actionthrough last year’s highly successful amazing ‘round the World Challenge, our genencor employees helped change the world for two families in need and provided financial support to a local orphanage in Cape town, South africa, genencor’s newest site.

this year, the genencor team defined a new ambition: to have a significant impact on the sustainability of every household around the globe. the key to realizing that goal, the team agreed, is community action. genencor’s amazing Challenge 2011: Community action ran through april and May 2011, with teams and individuals volunteering their time and talents for community and charitable causes with a focus on sustainability and the environment.

the range of community activities genencor employees participated in was broad: from andrew riley, in the UK, helping to pick up litter along a local road, to Wuxi hosting a series of earth Day activities where employees pledged to do at least one thing that is environmentally friendly in their daily lives, to brugge where the team collected both clothes and food items for those in need.

Employees in action each participant was asked to record his or her volunteer hours in an online system and share stories, photos and twitter updates with each other. With each new posting, the world map featured on the site displayed another tree (for 10 or more volunteer hours) or leaf (for less than 10 hours), so employees could witness the world becoming “greener” through their efforts.

For additional inspiration, employees were issued a challenge: log at least 2,500 total volunteer hours, and the division will donate USD 10,000 to the World Wildlife Fund (WWF). by the end of the two-month campaign, the team had exceeded its goal by 2,367 hours, making the world a little greener and helping WWF conserve nature and protect natural resources.

Enzymes in action the Challenge also raised employee’ awareness of the ways in which genencor enzymes make the world greener. as employees worked to make their communities more sustainable, they wore t-shirts produced with unique genencor enzymes that support sustainability in textiles. replacing traditional enzymes with our oxy-gone® Catalase in the pre-treatment phase and primafast® Cellulase for biofinishing reduces energy and water consumption, chemical use and processing time in fabric processing.

our employees can feel proud of what they contribute to their communities through the time and effort they give to local causes, and they can feel just as good about what they contribute to making a better world through their work at genencor” lisa Zanetto, hr Director, genencor

Genencor’s Amazing Challenge logged 4,867 community action hours. UniteD

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82 SUStainability report 2010/11 oUr Company

77our company

a value-driven companyour core values define who we are, what we do, and how we do it. they guide our relationships with customers, stakeholders and each other.

We buildcompetencies

Webelieve indialogue

Wecreatevalue

We areinnovative

We takeresponsibility

Daniscovalues


oUr Company SUStainability report 2010/11 83

our companyDanisco a/S was formed in 1989 through a merger of the two old C.F. tietgen companies, Danish Sugar and Danish Distillers, with Dansk Handels- og industri Company (Danisco a/S). on may 19, 2011, Dupont, through a wholly-owned subsidiary, completed the acquisition of approximately 92.2% of the outstanding shares of Danisco pursuant to a previously announced tender offer for all of Danisco’s outstanding shares, excluding treasury shares. the Danisco businesses will remain, as a part of Dupont, one of the world’s leading producers of food ingredients and industrial ingredients to industry.

We have 112 locations in 40 countries. this gives us proximity to our customers, strong local market knowledge and limited transport from raw material to finished product. We have production facilities in countries such as China,

india, France, Denmark, USa and brazil and have innovation centers in australia, Singapore, California, Finland, China and Denmark. our largest market places are europe and the USa, but we also see solid growth in asia and latin america.



our business and productsWith a diverse and ground-breaking portfolio, Danisco is a world business-to-business leader in food ingredients, enzymes and bio-based solutions. Using nature’s own materials, science and the knowledge of our 6,890 people, we design, produce and deliver bio-based ingredients that meet demand for healthier, safer and more sustainable products. Since our company’s inception, we have been working to identify and manage our environmental and social responsibilities. in 2008, we began setting sustainability targets that are ambitious and science-based, encompassing operational performance, employee initiative, and a fully integrated approach to devising sustainable solutions.

Danisco’s ingredients are used globally in a wide range of industries – from bakery, dairy and beverages to animal feed, laundry detergents and bioethanol – to enable functional, economic and sustainable solutions. Danisco’s key focus is to become our customers’ first choice and a truly market-driven global business.

Food ingredients Danisco delivers bio-based food ingredients to more than 5,000 customers globally, including the world’s leading food manufacturers. We strive to be their first-choice provider for a global food industry that seeks healthy and safe natural ingredients founded on sustainability. our key focus areas include bioactives (cultures and natural sweeteners) with a clear health and nutrition profile and enablers (emulsifiers, pectin, gum and systems) that offer increased functionality to processed foods.

Enzymes and bio-based solutions today, major application areas for enzymes include industries as diverse as animal nutrition, detergents, bioethanol, textile treatment, carbohydrate processing and food and beverages. as the world’s second-largest developer and manufacturer of industrial enzymes, Danisco holds prominent market positions in all major segments. Danisco’s Genencor Division is a top 10 leader in global biotechnology. as a leading force in innovation in the white biotech space, Genencor addresses previously unmet needs as it creates the sustainable products of the future.

Raw materials Danisco uses thousands of raw materials with most coming from agriculture. our key raw materials include vegetable oils (such as palm oil, soy bean oil, rapeseed oil and castor oil), citrus peel, seaweed, locust beans, guar seeds, corn, wood pulp, soy meal and sugar. Using nature’s raw materials, the knowledge of our people around the world and the latest scientific methods, we create sustainable solutions that help people lead healthier, safer and more convenient lives.

Our sustainability approach We embed a sustainability mind-set throughout our value chain and within our organization through a strong reliance on life Cycle assessments of the impacts of our materials and products from cradle-to-grave and a commitment to develop the potential within our own employees. our sustainability targets are science-based and driven by our sustainable sourcing, operational efficiency and sustainable solutions strategies. looking ahead to the resource constraints a population of nine billion people in the year 2050 will bring, we believe in turning future challenges in food, health, chemicals and energy into business opportunities. our world-class innovation teams are driving our efforts to develop sustainable products that will meet future needs in these areas.

to learn more about Danisco, please visit www.danisco.com

in 2010/11 Danisco recorded

revenue of

15.5DKK billion

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organisationthe Danisco Group comprises two business segments: Food ingredients and industrial enzymes. Danisco is organized into four divisions – enablers, Sweeteners, Cultures and Genencor

– and bioactives. bioactives is comprised of the Cultures and Sweeteners divisions as well as our Health & nutrition platform.

ownershipon may 19, 2011, Dupont, through a wholly-owned subsidiary, completed the acquisition of approximately 92.2% of the outstanding shares of Danisco a/S (“Danisco”) pursuant to a previously announced tender offer for all of Danisco’s outstanding shares, excluding treasury shares.

the remaining outstanding shares are in the process of being acquired through a compulsory acquisition procedure in accordance with Danish law. this procedure is expected to be completed during the third quarter of 2011, at which point Dupont will own 100% of Danisco’s shares.

ViSionto be the First choice provider of bio-based ingredients to industry globally

miSSionto help our customers increase their competitiveness through innovative, sustainable and bio-based ingredient solutions that meet market demand for healthier and safer products

StrateGyto create value through: • organic and acquisitive growth by leveraging and strengthening our market access, applications and technology platforms • talented and engaged people


economic key figuresin 2010/11 we continued to take important steps towards meeting our strategic ambitions, and our business performance showed sustained improvement over the year. Focus has been on performance, growth and leadership.

Group financials in 2010/11, Danisco recorded revenue of DKK 15.5 billion against DKK 13.7 billion last year. all four divisions and all regions contributed positively. ebit (before bCp) came in above DKK 2.4 billion for the year, up from DKK 1.8 billion last year, reflecting a margin enhancement of 2.7 percentage points y/y to 15.8% that came from all four divisions. bio Chemicals projects – covering our collaborations with Dupont and Goodyear – recorded total costs of DKK 174 million for the year.

Special items came in at DKK 326 million, where DKK 292 million relate to Dupont’s offer to the shareholders. We booked income tax of DKK 586 million, reflecting a tax rate of 34%, leading to a profit of DKK 1.2 billion for the year, against DKK 0.5 billion last year. Cash flow from operating activities came in at DKK 2.2 billion against DKK 2.6 billion last year. CapeX came in at DKK 1,026 million, against DKK 733 million last year.

Danisco closed the year with a net interest-bearing debt of DKK 2.9 billion against 3.0 billion last year. this resulted in a gearing of 0.9 times ebitDa (last 12 months’ continuing operations). ronoa for the Group came in at 25.7% against 19.0% last year.

in 2011/12, we expect to see moderate, positive growth as part of Dupont.

Government grants During the financial year Danisco received government grants for research and development of DKK 9 million (2009/10 DKK 2 million), DKK 5 million (2009/10 DKK 1 million) for investments and DKK 3 million (2009/10 DKK 6 million) for other purposes. Further, Danisco was granted quotas of 49,555 tonnes of Co2 allowances (2009/10 49,551 tonnes). the value at grant date was DKK 5 million (2009/10 DKK 5 million), and the quotas match the expected emission tax.

Events after the reporting period in January 2011, following a structured bidding process that had lasted several months, our shareholders received an offer from Dupont to acquire Danisco. the bid was recommended by Danisco’s board of Directors as attractive, clearly representing full and fair value, and in may 2011, more than 90% of our shareholders had chosen to accept the offer from Dupont. Danisco subsequently de-listed from the stock exchange in June 2011.

Environmental and human rights investments environmental, health and safety investments and expenditures are categorized into those related to cleaner technology, pollution control, energy savings and health and safety. We invested DKK 180 million in 2010/11, which represents roughly 17% of our total investment expenditure. We did not have any investments in 2010/11 that were significant enough to perform a human rights investment analysis.

DaniscO kEy FiGuREs

2010/11 2009/10 2008/09 2007/08

number of employees 6,890 6,876 6,999 9,219

revenue (DKKm) 15,500 13,706 12,991 18,778

equity (DKKm) 12,165 12,505 12,140 12,542

net interest-bearing debt (DKKm) 2,854 3,007 4,739 9,545

total assets (DKKm) 19,726 20,508 21,278 27,943

operating costs (DKKm) 10,194 9,690 9,191 7,588

employee expenses (DKKm) (3,278) (3,117) (3,355) (3,437)

Change in equity (DKKm) (340) 365 (402) (407)

payments to government 1) (DKKm) (460) (390) (359) (590

Community investments 2) (DKKm) (945) (650) (773) (626)

1) including taxes and related penalties2) including donations and infrastructure investments

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bringing sustainability to the topSustainability issues are very visible at the top level of Danisco’s management as the executive Committee (eC) is responsible for the ownership of Danisco’s sustainability strategies and targets. this group, made up of the Ceo, CFo and senior leaders from human resources, sales and the divisions, allocates resources and manages economic, environmental and human resource decisions. this provides a direct vehicle for holding the divisions accountable for implementing sustainability targets.

the corporate sustainability team, headed by Jeffrey Hogue, reports directly to Ceo tom Knutzen and has presented new initiatives to the board of Directors, as well as reaching the board through the eC and the Ceo. Sustainability is solidly embedded in our business process as directives flow in a clear path from the eC to the divisional leaders and eventually to the plant managers. Sustainability targets are also championed across the organization by a corporate-wide group of approximately 90 sustainability team members.

Governance structure Danisco is governed by a two-tiered system with a separate executive board and a board of Directors, as required by Danish law. the board of Directors is responsible for the overall management of Danisco and the appointment and dismissal of the executive board. the six shareholder-elected members of the board of Directors are independent while additional members are elected by Danisco’s employees in Denmark. the board’s nomination Committee seeks members who bring professional expertise in areas that complement the company’s needs, as well as a balanced age and gender distribution on the board. the executive board is responsible for the company’s day-to-day management while the executive Committee, Danisco’s management forum, meets monthly to coordinate and review progress against the company’s strategic plan. Ceo tom Knutzen and CFo Søren bjerre-nielsen preside over the eC and report on strategic performance to the board of Directors and investors quarterly and annually.

board members receive a fixed annual remuneration and are not included in any share option programmes or bonus schemes. the remuneration is fixed on the basis of market terms and reflects the workload, competence, requirements and number of board meetings attended. the board of Directors reviews the remuneration of the executive board to ensure a balance that encourages value creation and excellent individual performance.

Policies and guidelines an important part of our management approach is to provide the necessary guidance to ensure that our employees are informed and aware of our key focus areas, including: control of major risks, compliance with regulations, conformance with customer and societal requirements, over-arching commitments, and positions on key issues.

our approach to setting policies and developing guidelines is a pragmatic one. in alignment with our core values, we seek to provide guidance for those key focus areas which are essential to meeting responsible business practices. For the most part, many of our important polices and guidelines can be found publicly on Danisco.com, our internal document management system and intranet portal. these policies are reviewed on an annual basis to ensure relevance with our current business associated material issues. as an example we recently updated and reissued our policy on use of animals in product development and testing from investor stakeholder input.

new policies are developed in collaborative settings with appropriate governance and approval processes to ensure accountability and ownership. in this light, Danisco has developed a number of policies, position papers and guidelines that can be found on our corporate website:

• Safety, health and environment policy• Quality and food safety policy• Sustainable water use policy• packaging policy• employee Code of Conduct (bribery and corruption

policy)• Social policy (human rights policy)• Supplier Code of Conduct• policy on use of animals in product development and

testing• position paper on modern biotechnology• position paper on genetically modified microorganisms

(Gmm) in enzyme production• position paper on strain development

and biodiversity utilization

Congratulations to the first place winners of the Danisco Knowledge Award competition. Students from the University of Arkansas (USA) created “i-Chips”, a tasty, gluten-free alternative to regular chips using five Danisco ingredients.

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external commitmentsConsistent with our emphasis on strong corporate citizenship, Danisco has adopted several voluntary charters and principles that apply to our global operations.

iniTiaTiVEs anD cOMMiTMEnTs

Organization and initiative Date of adoption

international Chamber of Commerce business Charter for Sustainable Development

1992

Global reporting initiative 2001

Un Global Compact 2003

oeCD Guidelines for multinational enterprises 2003

Un Caring for Climate 2007

Cop16 Cancun Communiqué 2010

United nations initiatives Danisco supports the United nations Global Compact’s universally accepted principles regarding human rights and corporate citizenship and became a signatory in 2003. “the Un Global Compact is an extension of our own values. it is important that we are part of this broad group of signatories who give legitimacy and support to this worldwide standard,” says Ceo tom Knutzen. these principles are echoed in our Code of Conduct, sustainability work and corporate policies. We have also signed the Un Caring for Climate initiative to demonstrate our leadership and communicate our engagement in addressing climate change.

public policyWe also participate in several trade/industry associations dedicated to pursuing sustainable solutions in our industry.

• american Cleaning institute (aCi)• biotechnology industry association (bio US) • business for Social responsibility (bSr)• Confederation of Danish industry• the european association for bioindustries (europabio)• european biofuels technology platform• european Convention on Global Sustainable bioenergy• european Food and Drink association (Ciaa)• european Food Sustainable Consumption and production

round table• roundtable on Sustainable biofuels• european technology platform for Sustainable Chemistry• Federation of european Specialty Food ingredients

industries (elC)

• Global bioenergy partnership• international Food additive Council (iFaC)• international organization for Standardization 26000

(Guidance on Social responsibility)• international life Sciences institute• oeCD´s Working party on industrial biotechnology• round table on responsible Soy association (rtrS)• roundtable on Sustainable palm oil (rSpo)• the Sustainability Consortium• World business Council for Sustainable Development• the Wri/WbCSD Scope 3 and product life Cycle

Climate Standards

according to Danicso’s anti-corruption policy, we do not engage in political activities, nor provide contributions or other support to political parties, local candidates or committees.

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recognition and awardsWe were honoured that our 2009/10 Sustainability report won the top award from the institute of State authorized public accountants in Denmark. this recognition of our hard work to embed sustainability throughout our organization and to communicate with our stakeholders was very gratifying.

in 2010/11, Danisco was also included in a variety of prestigious sustainability indices that track company performance according to social, environmental and financial criteria. these indices provide investors with objective benchmarks in identifying the companies that lead the field in corporate sustainability. in the future, Danisco will participate as a part of the Dupont disclosures and questionnaires.

• The Dow Jones sustainability World index – the only business-to-business company included in the food and beverage sector since 2002. www.sustainability-index.com

• FTsE4Good – our 9th year included as a member www.ftse.com/indices/FTsE4Good_index_series/index.jsp

• OEkOM Research – ranked as a prime sustainability investment www.oekom-research.de/index_en.php

• nasDaQ OMX nordic sustainability index www.omxnordicexchange.com/produkter/index/OMX_

index/Responsible_investment

• carbon Disclosure Project – ranked no. 3 in Denmark and no. 7 in the nordic countries. listed as one of five nordic companies in the Carbon Disclosure performance index. www.cdproject.net/en-us/Pages/HomePage.aspx

• Forest Footprint Disclosure index – ranked as the sector leader for 2 years running. www.forestdisclosure.com

From left: Tom Knutzen, former CEO, Danisco A/S, Jeffrey Hogue, VP of Corporate Sustainability, Danisco A/S and Preben Sørensen, Chaiman of the Independent Award Judging Panel..


reportingour sustainability model is a collaborative one – relying on the creativity, engagement and dedication of our employees, suppliers, customers and other stakeholders. it is critical that we convey our sustainability philosophy and commitments to these partners in our sustainability journey. We follow accepted international protocols in our reporting which allows comparability among companies. external benchmarking confirms our sustainability leadership role as shown through our inclusion in numerous sustainability indices. the current report follows our 2009/10 report entitled “ingredients for sustainability” issued on June 21, 2010.

reporting practicesWe follow the Global reporting initiative’s (Gri) G3 Guidelines (www.globalreporting.org), the most widely used, credible and trusted global framework for reporting on social, environmental and corporate citizenship issues. For the first time, we are also referencing the iSo 26000 social responsibility standards. these standards provide guidance to businesses and the public sector on integrating social responsibility into decision-making and were released in november 2010.

in determining the scope of this report, we considered issues across our value chain and reviewed all indicators in the new Gri G3.1 Guidelines, as guidance. We performed a thorough materiality analysis, sought input from our stakeholders, and considered the larger global sustainability context as discussed in the Stakeholders and strategies section of this report. We have tried to report on all core and additional Gri indicators, unless specifically noted in the Gri/iSo 26000 content index as not material to our business. We believe we are presenting a reasonable and balanced picture of Danisco’s sustainability performance. Summary practices and principles are stated here. Follow the link for more information on our Reporting Principles and the GRI/ISO 26000 content index.

ScopeHealth and safety data related to LTI frequency and severity the scope of this data for 2010/11 covers all sites with production and/or r&D activities, including all joint ventures.

this year we have added the following r&D and administration sites: Cotia, brasil; brabrand, Denmark; paris, France and Copenhagen, Denmark. the health and safety data covers 92% Danisco employees. the 8% not included in the data-set are working in smaller sales offices, where the risk of work related injuries usually is minimal.

Environmental data the environmental data covers 100% of our major sites. this represents 75% of our global employee base. all production

sites and several of our major r&D sites are covered. there are several sites that have not yet reported into our central data collection system. We have estimated the performance for these sites and have included the estimates in our Kpi performance figures.

performance data for Dupont Danisco Cellulosic ethanol llC (DDCe) and toll manufacturing sites are not included in the report. our reporting year runs from 1 may to 30 april matching our financial year.

Social and economic data the social and economic data covers 100% of our employees and sites.

Data accuracythis year systematic improvements have been established both related to processes for data collection, internal approval and validation. Furthermore, new reports have been developed to support the data retrieval process and data governance.

the report utilizes a three step validation process including third- party independent assurance of reported data, and included claims and statements.

this year we evaluated certain systematic errors in the data collected, which have been corrected in the 2010/11 report. in most cases, the data changes observed are not significant (<1%). in the case of renewable energy the values reported in 2009/10 were reduced by 38% when a more accurate reporting procedure was applied in 2010/11.

For greenhouse gas emissions we further clarified our compliance with the Wri/WbSCD Greenhouse Gas protocol, by removing biogenic Co2 and dry ice from our Scope 1 and 2 emissions. Carbon dioxide from biogenic sources and dry ice sublimation is now included in the

“biogenic and renewables” category.

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Our website ranks first in our sector in H&H Webrankings’ benchmarking of the website performance of top companies. We also scored the maximum ranking for our CSR and sustainability pages at www.danisco.com/sustainability.

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Gri applicationthis year we have used the new Gri G3.1 as guidance, but have applied the G3 principles to our reporting. in assessing this report’s content against the criteria in the Gri G3 application levels, we have internally determined that it has reached the a (highest) level. in evaluating our Gri compliance, we applied the following principles:

• Where the aspect does not meet our materiality threshold as defined in the Gri Sustainability reporting Guidelines, we explain our rationale in the Gri/iSo 26000 content index.

• When the aspect is material, but the indicator is less suitable to Danisco’s organizational context, we provide a contextual response in the section referenced in the Gri/iSo 26000 content index.

• if the aspect and the indicator are material and specific reasons prevent us from reporting on a particular indicator, we explain our rationale in the section referenced in the Gri/iSo 26000 content index, according to Gri’s four reasons for omission.

• We did not however, apply the Gri Food industry Sector Supplement Guidance as it is not mandatory in the reporting year.

our external assurance provider, Deloitte, has also completed an application level check of the report against the criteria for the Gri G3 application levels and has confirmed that the report meets application level a+.

please follow this link to our Reporting Principles and the GRI/ISO 26000 content index.


assurance independent auditor’s report on Danisco’s Sustainability report 2010/11.

To the Management of Danisco a/s We have reviewed the Danisco Sustainability report 2010/11 (”the report”). the report is the responsibility of and has been approved by the management of the Company. our responsibility is to draw a conclusion based on our review.

We have based our approach on emerging best practice and standards for independent assurance on sustainability reporting, including iSae 3000, ”assurance engagements other than audits or reviews of Historical Financial information”, issued by the international auditing and assurance Standards board. the objective and scope of the engagement were agreed with the management of the Company and included those subject matters on which we have concluded below. Data for the reporting years 2008 and before were not included in our review.

based on an assessment of materiality and risks, our work included analytical procedures and interviews as well as a review on a sample basis of evidence supporting the subject matter. We have interviewed members of the management responsible for environment, health & safety and social responsibility at corporate and divisional levels as well as at the reporting units: brabrand, Denmark, Dangé, France, penang, malaysia and tecoman, mexico.

We believe that our work provides an appropriate basis for us to conclude with a limited level of assurance on the subject matters. in such an engagement, less assurance is obtained than would be the case had an audit-level engagement been performed.

conclusions in conclusion, in all material respects, nothing has come to our attention that causes us not to believe that:

1. Danisco has established systems at corporate level to identify and manage material sustainability aspects as described in the report.

2. Danisco has applied detailed procedures to identify, collect, compile and validate the data and information about environment, health & safety, social and economic performance to be included in the report as described on pages 90-91. the data for 2010/11 as presented in the report are consistent with the data accumulated as a result of these procedures and are appropriately reflected in the report.

3. Danisco has implemented and locally adopted as necessary the management systems referred to in item 1 above at the reporting units tested by us. the data for 2010/11 from these units have been reported in accordance with the procedures referred to in item 2 and are consistent with the source documentation presented to us.

4. Danisco applies reporting practices in accordance with its objectives and principles for reporting, and these practices are aligned with the Global reporting initiative (Gri) reporting principles as described on page 91. the Gri index referred to appropriately reflects the extent to which the report aligns with the indicators in the Gri Sustainability reporting Guidelines.

copenhagen, 29 June 2011 Deloitte statsautoriseret Revisionsaktieselskab

anders Dons State authorised public accountant

Preben J. sørensen State authorised public accountant (Corporate responsibility)

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about DaniscoWith a rich and innovative portfolio, Danisco is a world leader in food ingredients, enzymes and bio-based solutions. Using nature’s own materials, science and the knowledge of our 6,890 people, we design and deliver sustainable ingredient solutions that meet market demand for healthier and safer products to a growing global population. Headquartered in Denmark and operating from more than 80 locations, our key focus is to become our customers’ First choice and a truly market-driven global business particularly in the areas of food, health, energy and chemicals. in may 2011, Dupont acquired Danisco forming a global leadership position in nutrition & Health and industrial biosciences. Find out more at www.danisco.com

Danisco a/slangebrogade 1p.o. 17 1001 Copenhagen KDenmark tel: +45 3266 2000 Fax: +45 3266 2175 www.danisco.com [email protected]

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