Climate Change Data

Environmental Metrics

ESG Focus Areas

• Energy & Climate
• Product Compliance & Transparency
• Environment, Health & Safety
• Ethical Conduct & Human Rights

Environmental Achievements

• Reduced energy intensity by 6% (14.5 MWh/mDKK in 2016 vs 15.4 in 2015)
• Reduced CO2 emissions to 233,716 tons in 2016 from 234,400 tons in 2015
• Achieved half of the expected 30% energy savings in buildings (27 largest factories), with remaining savings expected in 2018
• Reduced gas consumption by 20% at the Nordborg factory
• Installed a 2MW solar park at headquarters

Social Achievements

• Reduced Lost Time Injury Frequency (LTIF) by 3% to 3.3 in 2016 from 3.4 in 2015
• Launched global Environment, Health, and Safety (EHS) governance and a new global EHS policy
• Conducted a pilot project on human rights due diligence and integration in Eastern Europe
• Trained approximately 9,300 employees and managers in anti-corruption
• Improved screening and due diligence processes regarding anti-corruption and export controls

Governance Achievements

• Established a Product Compliance Team with representatives from all segments and key group functions
• Established a Group Product Compliance governance structure
• Implemented a solution with an external service provider to strengthen compliance within conflict minerals
• Developed and implemented improved processes for product and sanctioned party screening (export control)
• Approved Danfoss binding corporate rules for Data Privacy

Climate Goals & Targets

Environmental Challenges

• Ethical conduct of companies and employees, with stricter laws and possible sanctions worldwide
• Severe weather or natural disasters disrupting manufacturing facilities or supply chain
• Failure to comply with increasing product regulations
• Supply chain emissions (782,000 tons CO2, 3.5 times Danfoss' own emissions)
• Unsatisfactory response rate (50-75%) from suppliers regarding conflict minerals

Mitigation Strategies

• Implemented ethical guidelines and compliance programs
• Established an inquiry function (AskUs) and an Ethics Hotline
• Comprehensive insurance program and Business Continuity Planning
• Proactive risk mitigation, building safety standards, and a Global Fire Risk Program
• Established a Product Compliance Team and Group Regulatory to monitor legislation and coordinate efforts

Supply Chain Management

Supplier Audits: 115 audits in 2016

Responsible Procurement

• Danfoss Code of Conduct for Suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather or natural disasters

Transition Risks

• Increasing energy prices

Opportunities

• Growing demand for energy-efficient solutions
• Increased need for intelligent energy and heating infrastructure

Reporting Standards

Frameworks Used: UN Global Compact

UN Sustainable Development Goals

• Goal 6
• Goal 7
• Goal 11
• Goal 12
• Goal 13
• Goal 17

Danfoss' activities contribute to these goals through energy efficiency, sustainable water management, sustainable cities, responsible consumption, climate action, and partnerships.

Environmental Metrics

ESG Focus Areas

• Energy and climate
• People, health and safety
• Product compliance
• Ethics and compliance

Environmental Achievements

• Reduced CO2 emissions by 27% since 2007
• Reduced energy consumption by 43% since 2007
• Improved energy productivity by 77% from 2007 to 2017
• 34% of electricity came from renewable sources

Social Achievements

• Very high employee engagement score of 79 out of 100 in 2017
• Launched initiative to help people with autism find jobs
• Continued focus on safety with a Lost Time Injury Frequency (LTIF) of 3.4 in 2017

Governance Achievements

• Implemented Global Incident Management System for work-related injuries and incidents
• Strengthened compliance programs regarding export controls and data privacy
• Launched "Taking Ethics to the next level" initiative

Climate Goals & Targets

Environmental Challenges

• Increasing regulatory landscapes for product and supply chain compliance
• Potential for unethical conduct by employees
• Severe weather or natural disasters disrupting manufacturing or supply chain

Mitigation Strategies

• Implemented ethical guidelines and compliance programs
• Established an inquiry function (AskUs) and Ethics Hotline
• Comprehensive insurance program and Business Continuity Planning
• Proactive risk mitigation and best-in-class building safety standards

Supply Chain Management

Supplier Audits: 39 third-party audits in 2017

Responsible Procurement

• Danfoss Code of Conduct for Suppliers
• Danfoss Negative List

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather or natural disasters

Reporting Standards

Frameworks Used: UN Global Compact

Certifications: ISO 14001

UN Sustainable Development Goals

• SDG 6
• SDG 7
• SDG 11
• SDG 12

Danfoss focuses on SDGs related to affordable and clean energy, sustainable cities and communities, responsible consumption and production, and clean water and sanitation.

Awards & Recognition

• Golden Peacock Award (Danfoss India)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Energy Efficiency

Environmental Achievements

• Achieved carbon neutrality (Scope 1 & 2) at its Nordborg headquarters in 2022.
• Reduced heat consumption by 79% from manufacturing processes and buildings.
• Reduced electricity consumption by 41%.

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Reducing carbon emissions while continuing growth and investment in green technologies.

Mitigation Strategies

• Implementing a 'Reduce, Reuse, Re-source' approach to decarbonization.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Circularity
• Decarbonization
• Diversity, Equity & Inclusion

Environmental Achievements

• 73% less aluminum content in iC7 series drives compared to previous generation, leading to a proportional reduction in virgin material use.
• Changed iC7 series drive packaging from Styrofoam to cardboard.
• Increased energy efficiency potential of iC7 series drives, reducing system energy consumption over its lifetime.

Social Achievements

• Trained and authorized distributor Mecanizza in Brazil to remanufacture Series 90 High Power Pumps.
• System-wide service collaboration on Refrigeration-as-a-Service with ANEO Retail.

Governance Achievements

• Developed a robust, holistic framework for embedding circularity in innovation and product design.
• Third-party validation of RE:CIRC tool and circularity hierarchy.

Climate Goals & Targets

Environmental Challenges

• Lack of universal consensus on approaches and methods to design products for circularity, and a common metric to quantify circularity.
• Difficulty in identifying and selecting the right tools for assessing circularity from a wide range of existing approaches.
• Balancing sustainability with factors such as quality, cost, customer needs, regulations, and market constraints.

Mitigation Strategies

• Developed a Danfoss Circularity Framework with 10 Sustainability Strategies (Rethink, Reduce, Recirculate) and 30 guidelines.
• Created a comprehensive toolbox of quantitative and qualitative tools (RE:CIRC, Circularity Index, Carbon Footprint tool, Green Materials Guide, Sustainable Packaging tool, Danfoss Negative List).
• Integrated sustainability assessment into the company-wide innovation management tool, conducted at key milestones throughout the product development cycle.

Supply Chain Management

Responsible Procurement

• Danfoss Negative List (bans or restricts the use of chemical substances)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Ellen MacArthur Foundation's butterfly diagram, EN 45560, WBCSD’s circularity metrics

Sustainable Products & Innovation

• iC7 series drives
• Series 90 and H1 High Power Pumps
• CCMT electronically operated valve