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Promoting sustainable practices and good governance
In its very different roles as owner, investor, philanthropist and public voice, the Lundbeck Foundation has the opportunity to use its influence to promote sustainable practices across environmental-, social- and governance-related dimensions.
As a foundation, the footprint of the Lundbeck Foundation is primarily defined by the companies it owns, the investments it makes, and the recipients of its grants. The basis for promoting sustainable development is the Foundation’s governance model.
A HISTORY OF GOOD GOVERNANCE The Foundation has, over the past decade, developed a strong focus on governance. This has led to four principles, which constitute the core of the Foundation’s approach to governance: compliance, independence, transparency, and checks and balances.
Moreover, the Foundation has taken a shared responsibility for driving environmental considerations and socially sustainable practices, and this will be further expanded in the years to come. THE LUNDBECK FOUNDATION’S GOVERNANCE MODEL AND KEY PRINCIPLES
Compliance
• General compliance with the Danish Recommendations on Foundation Governance • Where relevant, additional compliance with the Danish Recommendations on Corporate Governance, applicable for listed companies
Independence
• All members of the Board of the Foundation are external and independent. Former CEOs and executives of the Foundation and its subsidiaries cannot become members of the Board of the
Foundation • The three chairmen of the Foundation’s subsidiaries are external appointments and independent of the
Foundation • The Chairman of the Board of the Foundation cannot become non-executive board member of the subsidiaries • The CEO of the Foundation and one non-executive Board member of the Foundation have seats on the board of directors of each of the three subsidiaries. The CEO of the Foundation holds the Deputy chairmanship on each board
Transparency
Checks and balances
• The Lundbeck Foundation publishes its annual accounts in full alignment with the principles for listed companies (IFRS standards) • Key policies and governing documents are made publicly accessible on the Foundation’s website • Major decisions on philanthropic grants are communicated proactively via the website, social media and press
• The Foundation’s organisation and key processes are designed to prevent the concentration of decisionmaking power • All grant-making-decisions are subject to external reviews by international experts to verify quality levels
THE FOUNDATION’S WHISTLEBLOWER SYSTEM The Lundbeck Foundation has a whistleblower system that provides both employees and partners with a secure and confidential reporting channel managed by an independent provider. The whistleblower system can be used to report on concerns that involve legal or other serious risks to the Lundbeck Foundation. During 2021, no reports were made via the whistleblower system.
A RESPONSIBLE ASSET MANAGER By the end of 2021, the net wealth of the Foundation amounted to more than DKK 67bn. The largest part of this was invested in Lundbeck, ALK and Falck, however, a significant part (around DKK 24bn) was invested in a broad portfolio of shares, bonds and alternative investments (Invest). These investments were made with a dual purpose: to contribute to the further growth of the Foundation’s asset base, and to act as a ‘war chest’ in times of crisis, providing the Foundation with the ability to support its subsidiaries, and to ensure a continuing ability to make annual grants totalling DKK 500m or more.
As a result, there is a clear need to drive financial return while also investing responsibly with a solid focus on sustainability. The guidance for the Foundation’s behaviour is the Foundation’s investment policy, which integrates environmental, social and governance (ESG) factors. Investments are made based on the view that companies that act responsibly and ethically are able to create significant financial value. Therefore, financial return and sustainability go hand in hand.
The Foundation’s investment policy balances risk with longterm value creation. All investments must comply with the Foundation’s ESG principles. An external screening is conducted twice a year by an external company –Sustainalytics - which screens the financial investments for issues related to the ESG policy, and develops an ESG status report twice a year, which is then reviewed and approved by the CEO and the Investment Committee. In 2021, no investments were identified as being in violation of the ESG policy.
The Foundation continues to invest in forest land with a positive CO2 footprint. In 2021, the Foundation took further steps in this area by acquiring a 25% stake in Cresco Capital Services, an asset management company specialising in direct investments in, and the development of, forests.
DIVERSITY AT THE LUNDBECK FOUNDATION A core belief in the Lundbeck Foundation is that complex problems are best addressed by diverse teams – combining diversity of gender, functional skills, competences, nationalities etc. At the same time, it is also recognised that diversity may lead to complexity if not embraced by strong and effective leadership. The focus on diversity needs to be paralleled by a conscious leadership approach, and this belief has led to organisational adjustments in recent years, as the Foundation is a small organisation with a very broad range of activities and competencies.
The Foundation’s Board of Directors counts two women and five men among its external members, and the Foundation’s top management team of six has a balanced gender distribution of three women and three men.
The Foundation also welcomes the fact that all three subsidiaries, with their large organisations, have defined gender-balance targets for their own top management teams. Furthermore, Lundbeck, ALK and Falck report on their individual targets in their annual reports, as well as on their individual policies concerning gender balance at other management levels, if applicable. With regards to international diversity, the Lundbeck Foundation values international experience highly, but is also an organisation that derives its ‘licence to operate’ from legitimacy in its immediate local surroundings. The Foundation has, in some of its activities, a local focus on Denmark, while other activities are truly global, including its financial investments, its ownership of three international healthcare companies, and its philanthropic investments in neuroscience and brain research. These activities each require a strong international outlook. The Foundation values the international understanding and diversity that international experience brings, and this value is fundamental to its organisational development. The majority of people working in the Foundation therefore have significant working experience outside Denmark and the Foundation has, in its philanthropic activities, developed a network of international experts, who peer review projects and programmes, ensuring the international competitiveness of the Foundation’s activities.
WORKING FOR DIVERSITY IN RESEARCH In 2021, the Foundation also initiated a new dialogue with Danish universities around their talent nominations and talent management in general. As a result, nominations from Danish universities for the Foundation’s talent awards showed a significant increase in females compared to earlier years.
The Foundation also supported the international organisation ALBA, which a is focused on growing gender diversity in international scientific research. Finally, in 2021, the Lundbeck Foundation took additional steps to increase gender diversity for The Brain Prize – the world’s largest brain research prize. As a result of this, the share of female nominees for the 2022 award has increased from 21% to 25%.
DATA ETHICS IN RESPONSE TO THE DANISH FINANCIAL STATEMENTS ACT §99d Data Ethics Policy for the Lundbeck Foundation (including Lundbeckfond Invest A/S) has been developed and approved by the Board. It is based on five principles:
• Human interests before commercial interests • Transparency • Anonymisation • Autonomy • Accountability and governance
Please find the Foundation’s policy at the Foundation’s website: https://www.lundbeckfonden.com/en/policies
Lundbeck and ALK For further information about Data Ethics Policy of Lundbeck and ALK please see page 26 and 82,respectively. Falck In the Annual Report 2021, Falck reports the following on data ethics:
Falck’s Data Ethics Policy was developed and approved by the Board in 2021. It is based on the basic principles of data ethics set out by the think tank, Data Ethics, and covers the following areas:
• Purpose and usage: Human interests prevail over commercial interests. The data that we are legally required to store are held for the benefit of the individual
• Individual data control: Individuals should have primary control over the usage of their own data
• Transparency: We strive to be transparent when we communicate purposes and interests of data usage to individuals via privacy notices and policies
• Accountability and governance: Efforts are made to reduce the risks to individuals and to mitigate undesirable social and ethical implications.
A working group with representatives from global functions and business segments has been established as an advisory board to local and global managements on data ethical matters. The policy is available at www.falck.com/dataprotection.
