SUSTAINABILITY

As one of Denmark’s largest enterprise foundations, the value creation of the Lundbeck Foundation is rooted in a commitment to society within four key areas: health, innovation, economic growth and good governance. This highlights the Foundation’s commitment to sustainability across all activities.

The Lundbeck Foundation is an enterprise foundation, which owns and invests in healthcare companies and circulates its profits back to society through investments in science and talent, and in early biotech. As a large enterprise foundation in Denmark, the Foundation carries a significant responsibility and is continuously developing and adjusting its operating model to ensure transparency, clear governance principles, and constructive collaboration with external partners.

Commitment To The Un Global Compact

In 2012, The Lundbeck Foundation was the first Danish enterprise foundation to sign the United Nations (UN) Global Compact and it continues to support the 10 UN principles as an active signatory. This is also the case for Foundation’s three subsidiaries; Lundbeck, ALK and Falck, which signed in 2009, 2019 and 2019, respectively.

The Lundbeck Foundation continues to develop its work on sustainability and does so through its ambitious 2030 strategy, ‘Bringing discoveries to lives’. In 2022, a step was taken when the Foundation formalised and articulated its commitment to sustainability through its first dedicated Sustainability report, replacing its former traditional focus on corporate social responsibility (CSR) and tying sustainability closely to its 2030 strategy.

Promoting sustainable practices and good governance

The Foundation has prioritised four global challenges, linked to the UN’s Sustainable Development Goals (SDGs), that are most relevant vis-à-vis its DNA, strategy and competencies. Delivering the 2030 strategy will drive sustainable impact in four key areas, as shown in the figure on the previous page.

Improving Health And Quality Of Life Starting With The Brain

The number of people suffering from brain diseases is growing globally and has devastating personal consequences and significant socio-economic effects around the globe.

In spite of the severe health situation and the far-reaching societal challenges that this development will bring about, brain health remains an underprioritised scientific research area, and the world lacks biomedical knowledge about the brain. The lack of knowledge is a barrier for the development of new treatments for brain diseases and the Lundbeck Foundation has therefore chosen neuroscience and brain research as key impact areas. In 2022, the Foundation awarded DKK 550m to biomedical research activities and programmes, of which, DKK 430m (78%) was focused on neuroscience and brain scientific research.

New scientific knowledge creates value when shared, understood and leveraged by others who can develop and adjust their aspirations, activities and practices: doctors, clinicians and healthcare practitioners, patients and relatives, business builders and investors.

In 2022, the Foundation launched Neurotorium.org, an online educational platform for the global community of clinicians, healthcare practitioners, educators and students who are interested in learning about the brain. The platform shares the newest scientific knowledge through the development of high-quality content, curated by the world’s leading experts within neurology and brain health. The platform and its content can be accessed free of charge and have already seen high growth in terms of visits and users from all over the world.

The Foundation’s focus on biomedical science and the brain is rooted in its DNA and its shared history with Lundbeck. In 2022, the Foundation was proud to see Lundbeck develop well as a company committed to the challenge of brain health and to building its pipeline for new treatments. In 2022, the current portfolio of Lundbeck was able to reach and improve the lives of more than 8 million patients on a daily basis, across more than 100 countries.

Supporting Responsible Economic Growth And Job Creation

As the engaged and long-term owner of international healthcare companies with total revenues of more than DKK 35bn, and more than 30,000 employees, the Foundation has a significant responsibility for driving sustainable economic growth while ensuring a healthy workplace for employees.

In 2022, Lundbeck grew revenues by 12% and ALK grew revenues by 15% and delivered solid profit. For Falck, 2022 represented considerable change, as the year saw the closedown of the COVID-19 testing that boosted income in 2020 and 2021. As expected, this change led to a decline in total revenue, while Falck grew its non-testing revenue by 3%. The Foundation is proud to see that the three subsidiaries are developing positively, with a strong people agenda, and a data driven approach to working with people, talent and employee satisfaction - which is measured on a regular basis.

In late 2022, the Foundation was able to add a fourth company, Ferrosan Medical Devices (FeMD), to its portfolio of strategic ownerships. The Foundation is looking forward to supporting the company on its forward-looking sustainability journey.

In 2022, the Foundation carried out its internal employee engagement survey, following another year of change, organisational growth and many new joiners. The Foundation has on-boarded a significant number of new people in the past two years, and the employee engagement survey of 2022 highlighted a need to increase the focus on the people agenda within the Foundation. As a result, several new initiatives were set in motion: the roles and responsibilities for the people agenda were reviewed, individual talent development was further prioritised, and the framework and activities around internal communication were further strengthened and are part of an ambitious plan to further develop the foundation culture, aligning old traditions with new expectations.

The enterprise foundation model ties the different worlds of business and philanthropy, and is a well-established model in Denmark. This model has underpinned and matured some of Denmark’s largest and most successful companies, which have grown and globalised their activities, and generated financial profits, while also making critical contributions to society. While the model is widespread in Denmark, the general awareness of foundations – and in particular the effects of the long-term ownership models – is low.

In 2022, the Foundation therefore collaborated with the Danish think tank, Kraka, which conducted and published an in-depth analysis and comparison of companies with different ownership models. This study showed a significant difference between companies with different types of ownership models, and highlighted that companies with an enterprise foundation as their majority owner, operate with a stronger focus on innovation and social issues, such as talent development, employee engagement, pay equality and diversity. Read more here: https://lundbeckfonden.com/en/news/long-termownership-brings-solid-benefits-to-society.

Pioneering Innovation Within Healthcare

The Lundbeck Foundation invests in business, science and people at the frontiers of their fields, and one of its ambitions is to pioneer innovations and bring new treatments to patients and their relatives. This requires a dynamic biotech industry with smooth collaboration between the scientific and business communities.

To further develop Denmark’s biotech community, the Foundation combined its two biotech investment arms into one unit, Lundbeckfonden BioCapital. This was launched in 2022 with an expanded team which will continue to work with the existing portfolio while seeking new investments in the dynamic and promising Danish biotech sector.

Complementing the efforts of BioCapital, the Foundation also launched the Frontier Grant in 2022. This new grant targets the challenging early phase of commercialisation of science projects with market potential. The first grant went to a science project exploring an innovative approach to the treatment of Parkinson’s disease.

Promoting Sustainable Practices And Good Governance

In its different roles as owner, investor and philanthropist, the Lundbeck Foundation has many opportunities to promote sustainable practices both inside and outside its organisation. The Foundation does this with a clear governance model, based on four key principles:

■ Compliance with Danish recommendations on good governance

■ Board director independence

■ Transparency in reporting and grant decisions

■ Internal checks and balances in decision-making

Moreover, the Foundation has developed five policies, which guide key activities: grant administration, investments, communication, tax, and remuneration, and shared these policies on the Foundation’s website. The Foundation has also implemented a whistle-blower system, which can be used by external and internal parties in case of concerns involving legal and other serious risks. The whistle-blower system can also be accessed via the Foundation’s website.

The investment policy guides the Foundation’s approach to asset management, and integrates environmental, social and governance (ESG) factors into decision-making. The Foundation’s investment decisions are made based on the view that companies that act responsibly and ethically, create important financial value, and are therefore relevant investment targets. All financial investments must comply with the Foundation’s ESG principles, and screening is conducted twice a year by an external company. This reflects the Foundation’s belief that financial return and sustainability go hand in hand.

A Shared Responsibility For The Environment

Climate change is among the most important issues facing the planet. While the Lundbeck Foundation’s strategic focus is on health and innovation, it also recognises its shared responsibility to live and promote environmentally sustainable practices.

The Foundation’s climate footprint is primarily driven indirectly through its ownerships of Lundbeck, ALK and Falck, and it is therefore critical for the Foundation that these companies set ambitious targets. A highlight of 2022 was therefore the commitments by ALK and Falck to define science-based targets. Lundbeck had its own targets approved by the Science Based Targets initiative in 2021.

Although the Foundation’s internal climate footprint is small relative to its business portfolio, it cannot be ignored, and the energy efficiency of the Foundation’s office building remains a continuous focus area. In 2022, the production from the Foundation’s solar panels covered 18% of its electricity use.

The Foundation has taken the first steps towards measuring its Scope 3 emissions, focusing on emissions from airline travel as a starting point. A study was carried out to define a 2022 baseline of 152 tonnes in CO2 emissions, and the Foundation decided to purchase high-quality carbon offset credits based on carbon removal projects to compensate for its travel activities.

Additionally, the Foundation took steps in limiting the emissions of grant holders by instituting restrictions on travel budgets for some of its grants. However, as international collaboration remains a key element in all scientific discovery projects, grant recipients’ international travel and collaboration remain an important priority for the Foundation’s grant administration.

STATUTORY REPORT CF. SECTION 99B OF THE FINANCIAL STATEMENTS ACT

The purpose of section 99b of the Financial Statements Act is to ensure that all Danish companies of a certain size have a diversity policy, and the Lundbeck Foundation is committed to building gender equality and diversity and inclusion across all areas.

The Foundation’s Board of Directors comprises two women and five men, excluding employee representatives. This gender balance is in accordance with the guidelines on gender equality issued by the Danish Business Authority (‘Guidelines on target figures, policies and reporting on the gender composition of management’).

Inside the Foundation, the Management Team of the Foundation counts two women out of a team of seven, and the overall organisation counts 21 female employees out of 48 employees in total. Diversity and inclusion will also remain critical focus areas for the Foundation in the years to come.

In 2022, the Foundation took measures to promote gender diversity in its grants administration. This was spearheaded by the launch of the first annual LF Scientific Enrichment Prize, established in 2021. This prize celebrates science leaders at Danish universities who champion diversity and inclusion in order to develop creative solutions to complex scientific problems.

The diversity focus was also reflected in the Foundation’s three subsidiaries, each of which has defined gender-balance targets for its top management team. Furthermore, Lundbeck,

ALK and Falck reported individual targets in their 2022 annual reports and defined individual policies concerning gender balance at other management levels.

Learn more about sustainability at the Lundbeck Foundation Group

For more information on how the Lundbeck Foundation works to create impact within its four key sustainability areas, important developments in 2022, and what the future holds, please refer to the Foundation’s Sustainability Report 2022

(https://www.lundbeckfonden.com/en/sustainability).

This report is the Lundbeck Foundation’s statutory statement on sustainability in accordance with sections 99a and 99d of the Danish Financial Statements Act.

For information about Lundbeck, ALK and Falck’s approaches to sustainability, please visit their websites.