Sustainability Report 2009 The Orkla Group

Orkla operates in the branded consumer goods, aluminium solutions, renewable energy, materials and financial investment sectors. Group sales total approximately NOK 56 billion. Orkla has 30,000 employees and operates in approximately 40 countries.

ORKLA ORKLA ALUMINIUM ORKLA ORKLA ORKLA FINANCIAL BRANDS SOLUTIONS MATERIALS ASSOCIATES INVESTMENTS

(39.7 %) • Foods Nordic • Profiles • Share portfolio • Brands Nordic • Heat Transfer Mkt. value (NOK million): 11,037 • Brands International • Building System • Real Estate • Food Ingredients (42.5 %) • Elkem Energi Handel

Operating revenues Operating revenues Operating revenues (NOK million): 23,046 (NOK million): 20,803 (NOK million) : 11,317 EBITA1 (NOK million): 2,793 EBITA1 (NOK million): -344 EBITA1 (NOK million): 436 EBITA1 (NOK million): -85 Number of man years: 12,866 Number of man years: 12,495 Number of man years: 3,720 Number of man years: 198

1 Operating profit before amortisation, gain on sale of power assets, restructuring and significant impairment charges.

key figures1 2009 2008 2007 2006 2005

Operating revenues (NOK million) 56,228 65,579 63,867 52,683 55,304 ¹ Operating profit before amortisation, restructuring, gaoin on sale of power assets and significant impairment charges EBITA² (NOK million) 2,448 4,240 5,112 5,084 4,805 EBITA-margin² (%) 4.4 6.5 8.0 9.7 8.7 Ordinary profit before tax (NOK million) 1,071 -2,015 10,059 8,525 7,206 Earnings per share, diluted (NOK) 2.5 -2.8 8.1 10.9 5.6 Return on capital employed, from industrial activities3 (%) 5.2 9.4 11.5 13.0 11.4 Return on Share Portfolio (%) 39.0 -45.3 16.2 27.4 38.4 Equity ratio (%) 51.7 47.7 58.3 60.4 50.8

¹ Historical figures for 2005-2007 2 Operating profit before amortisation, gain on sale of power assets, write-down inventory Sapa Profiles in 2008, restructuring and significant impairment charges. 3 See definition on page 123 in Orkla’s Annual Report.

CONTENTS

Message from the CEO 3 Shareholders 30 Information about this report 51 Corporate responsibility at Orkla 4 Orkla and society 34 Contact information 51 Dialogue with stakeholders 6 Environment 42 Employees 8 Responsible investment 46 Customers and consumers 16 Global Compact 48 Suppliers 24 GRI-index 49

2 ORKLA Sustainability Report 2009 The sustainability approach

The current global economic and climate challenges under- scores the importance of using sustainability as a parameter for measuring development. Both for society at large and for Orkla, 2009 was a year of rethinking what it takes to ­create sustainable growth.

The international crisis in the financial and proximity to the local market is also and real economy made it necessary to a strength of Orkla’s corporate responsi­ restructure operations and implement bility commitment, which is predicated workforce cuts in several parts of the on a strong awareness of the company’s Orkla Group in 2009. Restructuring at responsibility towards both the commu­ Orkla is a question of systematic re­ nity of which it is a part and the compa­ design of activities and continuous or­ ny’s stakeholders. The ability to under­ «To earn society’s trust,  ganisational development. Also when stand the needs of customers, employees, ­unforeseen restructuring processes are shareholders, authorities and other stake­ we must ensure that  required, as was the case in 2009, the holders, and to respond effectively to Group attaches importance to balancing these needs, is crucial to achieving long- DagOrkla J. Opedal businesses create short-term and long-term considerations. term trust and profitability. Konsernsjef At Sapa, management and trade union Orklapositive ASA ripple effects,  representatives agreed to implement a Orkla’s decentralised responsibility struc­ temporary reduction in working hours ture is founded on the assumption that and contribute to desirable in order to reduce the need for dismissals. every part of the Group operates on the social development» This is an example of a win-win solution. basis of a common set of norms and val­ The impact on employees was cushioned, ues. In recent years, the Group has in­ while Sapa retained its ability to increase creasingly established common stand­ capacity rapidly when the market situa­ ards to ensure more uniform practices in tion improved. areas such as EHS, food safety and sup­ plier monitoring. The Group’s environ­ The financial crisis and climate challeng­ mental policy was revised in 2009, and es have given rise to renewed debate new, common guidelines were estab­ about how to ensure a sustainable devel­ lished for suppliers. The Group also in­ opment of society that safeguards the tensified its efforts to combat all forms needs of both present and future genera­ of corruption by developing a new anti- tions in a satisfactory manner. In order corruption manual and appropriate to earn society’s trust, we must ensure training tools. Work on revising and fur­ that Orkla’s activities create positive rip­ ther developing the Group’s common ple effects and contribute to desirable so­ guidelines and systems relating to ethics cial development. In 2009, Orkla took up and corporate responsibility will contin­ the concept of corporate responsibility ue in the years ahead. These efforts will for renewed debate within the Group. also strengthen the Group’s long-term Among other things, it was a key topic at competitiveness. a conference attended by all of the Group’s Managing Directors.

In Orkla’s decentralised organisational model, each company has independent responsibility for its operations. The Dag J. Opedal Group’s emphasis on local responsibility President an CEO Orkla ASA

ORKLA Sustainability Report 2009 3 Corporate responsibility at Orkla in 2009

Corporate responsibility has been a current topic in 2009, both in general social debate and internally at Orkla. Expectations regarding the contribution of business and industry in this area are being defined more specifically. Moreover, the efforts to achieve a new global climate agreement in 2009 have increased awareness of the fact that a more sustainable society can only be created through productive interaction between public authorities, business and industry, and society at large. In 2009, Orkla continued to im- plement improvements in fields such as EHS, human resource development and product safety. At the same time, corporate responsibility became an even clearer overarching priority on the Group’s management agenda this year, and internal systems were ­improved in several areas.

A clear division of responsibility is es­ The Group will use the white paper, the juries resulting in absence per million sential to the effective use of resources upcoming ISO 26000 standard and other hours worked), was 4.5 in 2009, com­ to generate good results. Consequently, external expectations as a source of in­ pared to 6.2 in 2008. Sadly, three fatal ac­ Orkla takes a positive view of the work spiration in further strengthening its ef­ cidents occurred in 2009, underscoring now being carried out under the auspic­ forts in these areas in the years ahead. the importance of continuous, systemat­ es of the United Nations and the OECD ic efforts to prevent injury. to define what the duty of business and Orkla requires all Group companies to industry to respect man and the environ­ ensure that they operate in accordance Orkla is committed to taking responsibil­ ment should entail in practice. Greater with the Group’s Code of Conduct, and ity for the environment and limiting un­ international consensus on the obliga­ with respect for individuals, society and desired environmental impacts through­ tions of business and industry and a the environment. At the same time, the out the value chain. Life-cycle analyses clearer division of responsibility be­ Group creates positive ripple effects by are an important tool for focusing atten­ tween public authorities and the private implementing improvement measures tion on environmental conditions and sector will generate better results and en­ and investing in its businesses. Positive prioritising the measures that contribute sure that resources are used to better effect. environmental and energy measures of­ most effectively to environmental im­ ten generate cost savings. Needs such as provements. At the same time, dialogue and collabo­ more climate-friendly energy and health­ ration between business and industry ier foods, and solutions to other social Orkla prepares energy and climate ac­ and the rest of society will be increasing­ concerns, constitute new market oppor­ counts based on the international Green­ ly important both as a source of ideas tunities. Orkla believes that corporate re­ house Gas Protocol Initiative. In 2009, and input for stakeholders’ own efforts sponsibility describes a company’s over­ the Group also reported to the Carbon and for achieving mutual trust. In 2009, all contribution to society, including Disclosure Project (www.cdproject.net). the Norwegian Government published a efforts that are primarily motivated by white paper on corporate responsibility commercial considerations. Orkla works systematically to develop in a global economy, which emphasised expertise and its corporate culture. Ex­ the importance of cooperation between Main activities in 2009 amples of important activities that con­ public authorities, the private sector and Orkla’s efforts to make continuous im­ tinued in 2009 include efforts to increase other actors in society in meeting global provements to the environmental, health the proportion of female managers, to challenges. Orkla’s strong position in and safety performance of its companies provide good training opportunities for many markets and local communities en­ have continued with great vigour in young graduates, and to promote the ef­ ables it to contribute to the development 2009. EHS monitoring is a regular topic fective recruitment of skilled personnel of good industry standards, and to help of discussion at board meetings at by offering work-experience placements address some of society’s challenges. Group, business area and company level, for apprentices undergoing vocational Some of the most important areas in and EHS procedures have been im­ training. During the year, the Group pre­ which Group companies can promote proved in the past few years. Neverthe­ pared and began to implement a new an­ positive social development are climate less, the trend in the sickness absence ti-corruption manual in order to increase and energy challenges, labour standards rate for the Group as a whole was nega­ awareness of the corruption issue among within the Group and in the supplier tive in 2009: 4.3 per cent compared to Orkla’s managers and employees in pur­ chain, health and nutrition, and the de­ 3.4 per cent in 2008. The injury rate chasing and sales positions. velopment of viable local communities. (Lost Work Day Rate – the number of in­ Continuous improvement of product

4 ORKLA Sustainability Report 2009 Orkla is working to increase the proportion of women managers. Photo: Marianne Otterdahl-Jensen safety, customer advice services and cus­ within the framework of the Group’s val­ rate responsibility was one of the topics tomer dialogue have also been important ues and guidelines. In 2009, Orkla’s Cor­ at Orkla’s Senior Management Confer­ issues addressed by Orkla companies in porate Responsibility Forum prepared an ence in November 2009. The aim of the 2009. The Group continued its efforts in assessment of opportunities and chal­ conference was to establish a common the field of health and nutrition, as well lenges in Orkla’s corporate responsibility understanding of this issue, and to lay as its efforts to develop more climate- work, which will form the basis for a the foundation for further management friendly products. more uniform, systematic approach to discussions within the various companies this work across the companies. Corpo­ in 2010. In 2009, Orkla drew up ethical, environ­ mental and working-condition standards that are to be applied in companies’ pur­ chasing activities. Common procedures for supplier monitoring were also pre­ pared. These will be implemented gradu­ Company ally in all companies, with a view to im­ Vision proving the companies’ ability to identify risk factors and contribute to suppliers’ improvement processes. Broad Business Development Definition of CR: Many Orkla companies are major em­ The company’s contribution ployers in their local communities, and to society Risk Management contribute to positive community devel­ opment through dialogue and by provid­ ing support for local projects. A number Narrow of beneficial initiatives were carried out Definition of CR: Business Ethics (Core Corporate Responsibility) in 2009. Responsible business practices Under Orkla’s multi-local organisational model, each Group company is responsi­ Corporate responsibility at Orkla ble for its own strategy and operations

ORKLA Sustainability Report 2009 5 Dialogue with stakeholders

Orkla’s business operations are dependent on constructive in- teraction with society. The abil- ity to understand and address stakeholder needs is essential to the Group in many ways: to ensure the recruitment of nec- essary staff and that requisite resources, access to capital and operating parameters are present, to ensure understand- ing of market needs and what is required in order for compa- nies to create further profitable growth, and to build trust in

products and companies. Minister of the Environment and International Development Erik Solheim held a speech during the opening of Elkem Solar’s new production plant for silicon feedstock. Photo: Tomm Christiansen

Each company in Orkla must establish dialogue with the supervisory authorities in the Nordic region and Brussels on measures that ensure an ongoing dia­ in their spheres of activity in order to en­ food legislation and trade policy frame­ logue with and the involvement of its sure satisfactory compliance with official work conditions. At Group level, Orkla stakeholders, ranging from employee operating requirements and to obtain ad­ participates in KOMpakt, the Norwegian performance-assessment interviews and vice on practical problems. This dialogue Ministry of Foreign Affairs’ corporate re­ customer-service functions to contact is conducted by the relevant specialist sponsibility forum, in order to remain with authorities, communication with or­ staff at each factory. The managers of in­ informed about and contribute its views ganisations and participation in external dividual companies engage in dialogue in relevant matters. Orkla is also repre­ networks. Contact with public authori­ with local and national political authori­ sented on the Strategic Council for Envi­ ties and communication with external ties to find effective solutions to specific ronmental Technology, which is chaired organisations also take place at Group issues that affect the company’s opera­ by the Minister of Trade and Industry and business area level. Orkla’s Forum tions, and to gain acceptance for the and consists of 24 top business execu­ for Government Affairs is an internal companies’ goals, plans and needs. For tives from relevant industries, the public body comprising representatives from instance, in 2009, key Norwegian politi­ sector, the Norwegian Federation of the Group Executive Board, Orkla cians visited Elkem in connection with Trade Unions (LO) and Bellona, an inter­ Brands, Borregaard and Elkem. The Fo­ the inauguration of Elkem’s power plant national environmental NGO. The pur­ rum discusses both the principles for at Sauda and Elkem Solar’s new produc­ pose of the Council is to provide input Orkla’s public affairs work and current tion plant for solar-grade silicon in Kris­ to, and to monitor, the Government’s issues. tiansand. Borregaard’s biorefinery con­ work on preparing a national strategy cept, which includes the production of for environmental technology. Public affairs procedures second-generation bioethanol, has Orkla’s dialogue with employees, cus­ aroused increased interest among politi­ Much of the dialogue with authorities in tomers, consumers, suppliers, sharehold­ cians and professional bodies. This has the countries in which Orkla is represent­ ers, investors and local communities is resulted in a number of visits, presenta­ ed takes place through key organisations described in separate chapters later in tions and dialogues focusing on the such as the Confederation of Norwegian this report. Below is a description of the framework conditions for this business. Enterprise (NHO), the Swedish Food Fed­ Group’s procedures for maintaining a di­ Stabburet, Nidar and Põltsamaa Felix eration (LI) and the Confederation of alogue with authorities and non-govern­ were also visited by leading politicians Danish Industry (DI), as well as industry mental organisations. during the year. and trade associations.

Dialogue with authorities and politicians Orkla Brands Corporate Affairs is en­ Dialogue with organisations Orkla companies maintain an ongoing gaged in a dialogue with the authorities Orkla is a member of the United Nations

6 ORKLA Sustainability Report 2009 Global Compact, and participates in the Global Compact’s Nordic Countries net­ Area Results 2009 Objectives 2010/2011 work, which supports the exchange of Contact with authorities Maintained an ongoing Establish common practices experience and enhancement of exper­ dialogue with authorities and for dialogue with external tise relating to relevant corporate respon­ politicians on current stakeholders sibility issues. Some Orkla companies sustainability issues and have established formal cooperation framework conditions with organisations that can provide Dialogue with Orkla’s Board • Review of the status of CR • Review the status of CR them with expert assistance in connec­ of Directors work for Orkla’s Audit efforts by Orkla’s Board of tion with relevant issues. The companies’ Committee Directors trade organisations also assist them in • Regular reporting on the • Continue to report regularly identifying issues and needs that arise status of EHS work at Board on EHS work at Board during interaction between the compa­ meetings meetings nies and society at large, and in conduct­ ing a dialogue with external organisa­ tions in this connection.

Several Orkla companies have regular contact with major trade unions, and Orkla’s Group Executive Board, along with Orkla’s union representatives, meets with LO leaders annually. Orkla Brands Corporate Affairs staff have pro­ fessional contact with both LO and spe­ cial-interest organisations in the fields of food and agriculture.

Public affairs topics in 2009 The main topics addressed in the Group’s dialogue with authorities and so­ ciety in 2009 revolved around political framework conditions, climate and ener­ Minister of Petroleum and Energy Terje Riis-Johansen was given a tour of Elkem’s new power plant at Sauda in gy, and health and nutrition. connection with its opening. Photo: Elkem

Political framework conditions Orkla is committed to promoting equal new biorefinery concepts. Borregaard es, but entails a high level of risk and competitive conditions. In 2009, the will also benefit from government grants substantial development investments. Group companies engaged actively in the that were given to the energy supplier issue of competitive prices for energy Hafslund in 2009 to partially finance the Health and nutrition and raw materials for food production. construction of a waste incineration For many years, the food companies in Orkla Brands has conducted a dialogue plant in Sarpsborg. The plant will consid­ Orkla Brands have encouraged healthier with the Norwegian authorities on the erably reduce Borregaard’s oil consump­ diets by developing healthier foods, im­ need to eliminate taxes on chocolate, tion, and is an important climate meas­ proving consumer guidance and product confectionery and beverages which dis­ ure. Generally speaking, central labelling, and exercising caution with re­ tort competition. The financial crisis and government support for capital-intensive, gard to marketing directed at children. As the authorities’ efforts to deal with it often high-risk, environmental projects is part of these efforts, the companies have were also a topic in Orkla’s dialogue with important to enable business and indus­ maintained a dialogue with the health au­ the authorities in 2009. try to invest in this type of improvement thorities in the Nordic countries and with measure. In 2009, through their dialogue Scandinavian consumer organisations. Climate and energy with the authorities and through public Among other things, Orkla Brands has In 2009, REC and Elkem Solar were debate, Elkem and Borregaard highlight­ helped to prepare the implementation of granted funding by the Norwegian Re­ ed the need for financial support for pilot the Swedish keyhole labelling system in search Council of Norway for the imple­ plants focusing on the development of Norway and Denmark by participating in mentation of energy and climate projects. more energy-efficient, environmentally- the definition of criteria for it. Orkla Borregaard received a total of NOK 54 friendly production processes and prod­ Brands has also helped to draw up new million from the Norwegian Research ucts. The development of this kind of guidelines for the use of health claims in Council and an EU programme for re­ technology will make an important con­ connection with foodstuffs. search on and further development of tribution to overcoming climate challeng­

ORKLA Sustainability Report 2009 7 Employees

Orkla seeks to provide a safe, healthy working environment characterised by trust, involvement and an improvement orientation

Photo: Kyrre Lien Employees

Orkla’s primary goal is “developing people - creating value”. This expresses both Orkla’s ambitions and its obligations. The potential of each individual must be tapped in a way that offers opportunities for his or her positive development while creating value for Orkla. Moreover, working in an Orkla company must not result in injury or illness. The Group considers it a key management responsibility to promote a safe, healthy working­ environment that is characterised by trust, involvement and a focus on improvement.

8 ORKLA Sustainability Report 2009 Building competence and Area Results 2009 Objectives 2010/2011 ­corporate culture Anti-corruption work Prepared a new anti-corrup- Provide training in use of Systematic human resource development tion manual for the entire new anti-corruption manual Employee skills are largely enhanced Group. Implementation by means of management through on-the-job training. Everyone commenced sessions and web-based must be given opportunities to develop training tools their own abilities and improve the qual­ Gender equality  The proportion of women in the • Increase the proportion of ity of their work. The most important and diversity Group’s management teams women managers training takes place in direct connection was 14 per cent, compared to • Review the Group’s with each employee’s own work. 19 per cent in 2008 guidelines and action plan to ensure diversity Since 1993, Orkla has organised internal­ • Arrange a gathering for ly developed training programmes in Orkla’s women managers key areas of expertise. During this peri­ Human resource  More than 40 centralised Maintain the quality  od, more than 4,700 employees have at­ development Orkla courses were arranged, and scope of the Orkla tended the Orkla Academies. At the for around 800 employees Academies Group’s training and conference centre, Borregaard Manor, an average of one Guidelines for business ethics Carried out a situation • Revise the Group’s Code of centralised Orkla course is held every and corporate responsibility assessment for the Group to Conduct week, for 40 weeks a year. Every year, be­ (Orkla’s Code of Conduct) identify risk and opportuni- • Further develop internal tools tween 700 and 800 employees partici­ ties from a CR perspective pate in these skill-building programmes.

Orkla works systematically to recruit young graduates. As part of the Young Orkla’s centralised training programmes Professionals programme, the Group ar­ ranges joint sessions for employees who Number of modules Number of classes have recently completed their education Academy/programme: and days: per year: with a view to providing the young grad­ Orkla B2B2D Academy 3 modules of 4 days each 1 new class per year uates with a solid platform for further Orkla Production Academy 3 modules of 4 days each 3 new classes per year learning and development. Orkla Finance Academy 1 module of 5 days 1 to 2 new classes per year In addition to the Group’s centralised Orkla Sales Academy 4 modules of 4 days each 2 new classes per year training programmes, the various busi­ Orkla Purchasing Academy 3 modules of 4 days each 1 class per year ness areas provide a wide range of cours­ Customer and Consumer 1 module of 4 days 1 course per year es and training sessions. One example is Orientation (CCO) Sapa, which consciously uses practical Orkla Senior Sales Workshops 1 module of 3 days 2 courses per year training tools and methods to improve Orkla Senior Brand 1 module of 3 days 2 courses per year its business operations. Sapa’s business Workshops system, Genesis, incorporates principles for operational efficiency which are ap­ Orkla Brand Academy 4 modules (2 modules  2 new classes per year plied to achieve continuous improve­ of 4 days each and  ment in all the business units. These 2 modules of 5 days each) principles are based on a “learning by Orkla Senior Management 3 modules (1 module of 4 days 1 new class per year doing” approach. All production plants Programme and 2 modules of 5 days each) are required to have Genesis coaches, The Orkla B2B Academy Customer Value Management As needed who coordinate the training and skill-en­ (2 modules) hancement programmes on the basis of these principles. • The EHS University, providing training which employees may also participate. As a result of Sapa’s decentralised struc­ in environment, health and safety. • The Genesis University, a programme ture, all of its business units have their • The Sapa Academy for managers and that supplements regular systems training. own training programmes designed to potential managers. • The systems and benchmarking toolbox, support their local needs. At business-ar­ • The Sapa Profiles Academy, offering a complementary set of tools including ea level, the following training and de­ courses in aluminium profiles that are training procedures and manuals. velopment tools are offered: intended for Sapa customers, but in

ORKLA Sustainability Report 2009 9 Employees

Courses and human resource development are important parts of Orkla’s ongoing improvement efforts. Photo: Kyrre Lien

Apprentices in Orkla companies in 2009 Sapa’s aim is for more than 80 per cent Company Function/field of expertise No. of apprentices in 2009 of training to take place on the job, with Borregaard Chemical process operator, laboratory 26 (Sarpsborg, Norway) the rest taking place in the classroom. operator, industrial mechanic, electrician, automatician, logistics Training tomorrow’s workers Elkem Chemical process operator, industrial 41 (Kristiansand, Bremanger, Orkla companies require qualified staff mechanic, electrician, automatician, Salten, Thamshavn and in a wide range of specialised fields. The auto­mation mechanic, TAF-laboratory Sauda, Norway) Group therefore collaborates actively operator, and production and with various types of universities, uni­ industrial technician versity colleges and upper secondary Sapa Various apprenticeships in the fields of 93* (Finspång and Vetlanda, schools to ensure recruitment and sup­ production, maintenance, sales and Sweden; Shanghai, China; port relevant training programmes. Ork­ administration Grenå, Denmark; Harderwjik, la is also partnering with one of the re­ Netherlands; Lichtervelde and search centres of the Norwegian School Ghlin, Belgium; Remscheid, of Management (BI). Germany; Székesfehérvár, Hungary; Cressona, USA; The Orkla companies often give presen­ Ostrava, Slovakia) tations at schools and in local associa­ Orkla Brands: tions. For example, management staff Krupskaya Food technology and food production 8 (St. Petersburg, Russia) and other key employees from Sapa’s nu­ technology at university level merous companies regularly hold guest lectures at technical universities and uni­ Abba Seafoods Short traineeships for students at the versity colleges on the possibilities and Swedish University of Agricultural limitations of aluminium, and on the en­ Sciences vironmental and energy-related aspects Stabburet Technical mechanic and  6 (Råbekken, Stranda, of aluminium as a material. production operator Brumundal, Norway) Nidar Industrial food production, auto­ 13 (Trondheim, Norway) Apprentices maticians and industrial mechanics Many of the Orkla companies have estab­ Spilva Logistics 1 (Riga, Latvia) lished apprenticeship programmes in col­ Dragsbæk Office administration 1 (Thisted, Denmark) laboration with vocational training Credin Office administration 1 (Juelsminde, Denmark) schools in their local communities. In this Bakers Confectionery and bakery  9 (Trondheim, Bryne, Larvik, way, pupils gain relevant experience as a apprenticeships Molde, Nordby, Norway) supplement to their theoretical education. Lilleborg Laboratory, automation and chemistry 7 (Ski, Kristiansund, Norway) Some companies also offer trainee oppor­ Procordia Food Production, finance, innovation, 37 (Kumla, Fågelmara, tunities for students at university colleges information Örebro, Eslöv, Sweden) and universities. *The figures for Sapa are not complete.

10 ORKLA Sustainability Report 2009 Borregaard and Orkla are helping to finance a new Science Center in Østfold. Illustration: Aart a/s, Århus, www.aart.dk

An attractive employer es adapted to different age groups with a Group’s operations. The manual was The employer branding company Uni­ view to stimulating interest in mathe­ written in English, and has been translat­ versum has conducted its annual Univer­ matics, chemistry and natural-science ed into Norwegian, French, Russian, Por­ sum Student Survey since 1988. In this subjects. The centre will also serve as an tuguese and Chinese. All language ver­ survey, students in the fields of business, arena where teachers can familiarise sions are available to Group employees IT, law and engineering/natural science themselves with new methods for teach­ through the Orkla Group Manual. answer questions regarding their work ing scientific subjects, and as a meeting and career expectations. Based on their place for business and industry. Con­ The purpose of the anti-corruption man­ responses, an annual Top 100 list of Nor­ struction is due to start in 2010, and the ual is to increase awareness of and way’s most popular employers is pub­ centre is scheduled to be completed in knowledge about issues related to cor­ lished. In 2009, Orkla was ranked 2011. ruption, and to clarify the Group’s stance number ten on this list. on corruption and procedures for ensur­ Borregaard is also engaged in close coop­ ing compliance with anti-corruption leg­ Focus on the sciences in Østfold County eration with Østfold University College islation. Orkla employees must not, di­ Borregaard requires a large number of and other schools and educational insti­ rectly or indirectly, give, offer or request, employees with an education in chemis­ tutions in the area. In 2009, the company or accept or approve an actual or offered try and other natural sciences, and is ac­ supported the re-introduction of a chem­ improper advantage in connection with tively involved in strengthening the fo­ istry programme at Østfold University a post, office or commission. Orkla com­ cus on these subjects in schools in College and the establishment of a chem­ panies must take relevant steps to ensure Østfold. Among other things, a repre­ istry programme for upper secondary that Orkla’s business partners, including sentative of Borregaard’s senior manage­ schools in Østfold. The new programme suppliers, are not involved in corruption ment chairs the board of a network that is being tested at Greåker Upper Second­ or other unlawful or unethical activities. seeks to increase interest in scientific ary School, in the form of a pilot project subjects among children and young peo­ launched in the 2009/2010 school year. In addition to general guidelines, the an­ ple in the county. One of the main meas­ ti-corruption manual provides specific ures in the campaign is the decision, Intensified efforts to combat corruption guidance on questions relating to gifts, made in 2009, to establish a new Science Orkla has zero tolerance for corruption, payment of customers’ or suppliers’ ex­ Centre. Borregaard and Orkla will con­ and in 2009 intensified its efforts to penses, facilitation payments and other tribute NOK 5 million in funding for the combat all forms of corruption. A new practical issues. Implementation of project over a period of three years. The anti-corruption manual was prepared in ­Orkla’s anti-corruption policy began new centre will offer learning experienc­ 2009, which will apply to all of the in the autumn of 2009, through manage­

ORKLA Sustainability Report 2009 11 Employees

Specialist seminar for Alarga scholarship recipients and their mentors. Photo: Levent Ultanur

ment meetings and a specially designed, bers of men and women. To increase the employees’ views on matters such as web-based training programme. This recruitment of candidates with an ethnic equal treatment with regard to pay and programme is intended for employees minority background, the Group will con­ working conditions, promotion and de­ who may encounter corruption issues in tinue to work closely with the Alarga velopment opportunities, by reference to connection with their work. Several sem­ Foundation. In 2009, Orkla also entered gender, ethnicity and disability. inars on corruption will also be held for into an agreement with Ambisjoner.no, a the various Group companies. website that provides guidance and moti­ Promotion and career development vation to young people from minorities in opportunities Gender equality and diversity at Orkla relation to educational and career issues. Orkla aims to achieve a more equitable Recruitment gender balance, and to have more wom­ Orkla strives to ensure diversity in its Pay and working conditions en in management positions than there workforce, and is committed to recruit­ Orkla aims to ensure that all employees are today. In total, 14 per cent of the ing, developing and retaining the best are paid in accordance with the pay tar­ members of the Group’s management employees, irrespective of gender or gets and collective wage agreements teams are women, compared to 19 per background. An internal diversity com­ drawn up by employers’ organisations cent in 2008. The number of female mittee was established in 2009. In the and other bodies in the relevant coun­ managers at Orkla is still too low, and ef­ course of 2010, the committee is to iden­ tries. Orkla emphasises expertise, the forts to increase the proportion of wom­ tify and analyse challenges and the need complexity of the position, performance en will continue. Examples of action tak­ to implement necessary measures within and competitiveness in the market, re­ en to raise the percentage of women, the Group to promote gender equality gardless of gender, ethnicity or disability. particularly in the Nordic businesses, in­ and prevent discrimination on the basis A further factor that is considered im­ clude the mentor programme, a special of gender, ethnic background or disability. portant in promoting gender equality is focus on female managers in annual In 2009, 33 per cent of Orkla employees measures that make it easier to combine management evaluations, giving women were women. a career with family life. In the course of priority in connection with management 2010, Orkla plans to carry out a global development courses, the requirement The Group currently recruits equal num­ employee opinion survey to ascertain always to identify a female candidate for

12 ORKLA Sustainability Report 2009 management positions, and the measure­ The employee share purchase ment of changes in the gender balance. ­programme Further measures will be considered in Orkla has had a programme for several connection with the work of Orkla’s in­ years which offers employees the oppor­ ternal diversity committee. tunity to purchase a specified number of Shares for Shares for Orkla shares at a discount. This pro­ employees employees Protection against harassment gramme makes it possible for employees Orkla does not tolerate any form of in­ of Group companies to participate direct­ sulting behaviour, harassment, discrimi­ ly in the Group’s value creation. The pro­ nation or other conduct which col­ gramme is also intended to increase em­ leagues, business contacts or others may ployees’ knowledge about the Group and find threatening or demeaning. All em­ strengthen their loyalty to Orkla. ployees are entitled to fair and equal Orkla’s whistle-blowing service treatment. The topic of discrimination is Under the programme, which complies Orkla considers an open corporate culture included in the general working-environ­ with the provisions of the Limited Liability to be a vital prerequisite for a constructive ment training given by companies, and Companies Act, shares were offered to dialogue on difficult matters. A whistle- discrimination is defined as a potential around 28,500 employees in 26 countries blowing service has also been established risk factor in Orkla’s risk-assessment sys­ in 2009. The employees were given a to give employees and others the opportu- tem. There are established routines for ­discount of 25 per cent – the same as in nity to alert the Group’s governing bodies dealing with harassment in the form of 2008 – and were able to purchase up to 697 to possible breaches of Orkla’s ethical guidelines in cases in which it is difficult to a whistle-blowing service for the Group. Orkla shares. A total of 2,451 employees address matters at local level. Two elec- took part in the programme in 2009, rep­ tronic mailboxes have been established:  Guidelines and support for companies resenting just under ten per cent of those  In recent years, Orkla has introduced who received the offer. The employees [email protected] (English)  more common guidelines and policies ­purchased a total of 1,289,452 shares, for [email protected] (Norwegian) on important responsibility issues. In a total value of close to NOK 52 million.  Emails to these addresses are automati- 2010 and 2011, the Group will carry out cally directed to the head and deputy head a revision of the Orkla Group Manual, in Health and safety of the Internal Audit Department. The In- which these common guidelines are col­ ternal ­Audit Department reports on such lected. This will entail, among other Health-promoting workplaces matters to the Board of Directors’ Audit things, a review of the Group’s guide­ The sickness absence rate in the Orkla Committee, and is therefore formally in- lines for business ethics and corporate Group was 4.3 per cent in 2009, while dependent of Orkla’s line management. Information about the whistle-blowing responsibility. At the same time, an as­ the corresponding rate for 2008 was 3.4 service may be found on www.orkla.com. sessment will be made of how the con­ per cent. The rules for recording sickness tents of the Orkla Group Manual can be absence and follow-up vary from coun­ In 2009, one matter was reported to Ork- communicated through the use of appro­ try to country. In 2009, attention was la’s Internal Audit Department through the priate teaching methods. ­focused on creating health-promoting whistle­-­blowing system, compared to six workplaces, and in the course of 2010 matters in 2008. The small number of In 2009, Orkla established a corporate Orkla companies will continue to explore matters reported may mean that, on the whole, the Orkla businesses operate with- responsibility function at Group level ways of utilising this approach in their in the ethical guidelines adopted by the that provides companies with specialist improvement efforts. Group, or that employees of Group compa- support for their work in this area. nies are not sufficiently aware of the sys- Influenza prevention activities tem. In 2010, the Group will begin using a Cooperation with employees Early in 2009, Orkla Brands contacted the new Group intranet to inform employees Orkla considers a well-functioning system Norwegian Institute of Public Health to about the service in a more effective manner. Other information activities will of corporate democracy to be important, ascertain the risks related to the new also be considered, for instance in con- and in the Nordic countries an estimated ­influenza variant (also called swine flu). nection with the work of Orkla’s internal 75 per cent of the Group’s employees are In June, Orkla Brands began work on a diversity committee. members of unions. The corresponding pandemic plan, and ensured its rapid percentage for management staff is sig­ ­implementation in 70 companies in the nificantly lower. summer of 2009. Orkla Brands arranged ees through the companies’ own informa­ nine centralised pandemic contingency tion channels. These measures helped to The Group has put in place procedures meetings in 2009 in this connection to reduce the risk of infection, and kept sick­ that facilitate positive cooperation be­ underpin the prevention efforts of the ness absence at a more moderate level tween the members of the various trade Group companies. Senior managers and than would otherwise have been the case. unions. key personnel at Orkla and Orkla Brands were briefed regularly, and information Injury prevention was distributed internally to all employ­ The Lost Work Day Rate (the number of

ORKLA Sustainability Report 2009 13 Employees

The Orkla companies work systematically to prevent injury. Photo: Kyrre Lien

injuries resulting in absence per million hours worked), was 4.5 per cent in 2009, compared to 6.2 per cent in 2008. This In 2009, Borregaard established a new control centre, which will support improvement and effectivisation. reduction is the result of an organisa­ Photo: Kyrre Lien tion-wide emphasis on important EHS principles such as tidiness and cleanli­ ness, engagement, skills enhancement administrative functions in the business ture the company in a way that entailed and willingness to learn from others. It area, primarily at Elkem’s head office, substantial staffing cuts. The company is important to record all types of injury, sales office and the Elkem units at Fiskaa adjusted its strategy, and in October and to implement improvement meas­ in Kristiansand. The project resulted in 2008 reduced the number of employees ures to prevent them from recurring. workforce cuts of around 135 employees. from around 150 to about 90. This re­ However, the most important factor in (See separate box on page 15). structuring was a significant reason for preventing incidents and assigning pri­ the company’s operations breaking even ority to improvement measures to pre­ Skills enhancement and new in the fourth quarter of 2009, compared vent serious injury is the preparation of ­technology at Borregaard to a loss of NOK -70 million for the 2008 risk analyses. In 2009, Borregaard initiated a major accounting year. The staff reductions project aimed at improving production were made in close cooperation with the Reorganisation and structural efficiency at Borregaard Fabrikker in employees, all of whom were offered as­ development Sarpsborg. The project entails the group­ sistance in finding new jobs. Four em­ Several of Orkla’s business areas were con­ ing of 15 control rooms in a single, new ployees who were affected by the down­ siderably affected by the global economic control centre. Production is also being sizing nevertheless chose to bring downturn in 2009. A sudden plunge in extensively reorganised, and new tech­ proceedings against the company due to sales volume made it necessary to under­ nology and management systems are be­ disagreement about the process and con­ take staffing cuts and to restructure opera­ ing introduced. A prerequisite for this ditions. Following a unanimous district tions at Sapa, Elkem and Orkla Finans. The process, and the most important compo­ court judgment in favour of Orkla Finans restructuring processes were carried out in nent of the project, is a comprehensive in the first case, settlements were reached close dialogue with union representatives programme to enhance employee skills. in the other three cases at levels reflecting in the companies concerned, and emphasis The project will continue in 2010 and the company’s view of the matter. was given to finding good alternatives to 2011, and will reduce the workforce by dismissal. The net reduction in the a total of around 200 man-years. This Structural changes at Sapa number of man-years in the Orkla compa­ downsizing will be implemented over Through Sapa’s merger with Alcoa’s­ nies from 2008 to 2009 was 1,374. a long period of time, and job cuts will aluminium profiles business in 2007 largely be achieved through natural staff and the acquisition of Indalex in 2009, Cost-reduction project at Elkem turnover. This process is being imple­ ­Swedish-based Sapa has grown to become In 2008 and 2009, Elkem’s operations mented in close cooperation with the ­global market leader in the aluminium were significantly impacted by declining employee organisations, and steps are profiles industry. In 1999, the company demand and customers’ inability to pay being taken to help employees to find had 10 production plants in Europe, and as a consequence of the financial crisis new jobs. one plant in China. Ten years later, Sapa and the global economic recession. To has operations in 30 countries, and a to­ ­reduce costs and ensure long-term profit­ Restructuring at Orkla Finans tal of 56 production plants in Europe, ability, the company implemented an As a result of a sharp drop in demand the US, Canada, Mexico and China. ­efficiency improvement project in 2009 for financial services in the autumn of The amalgamation of these businesses which entailed a complete review of all 2008, Orkla Finans decided to restruc­ has necessitated a comprehensive review

14 ORKLA Sustainability Report 2009 of the business structure aimed at their organisations, and consisted of the – Environment, health and safety achieving cost-effective operations and following: – Genesis (Sapa’s business system) exploiting economies of scale. The need • Talks were held with all employees and – Customer Value Management for rationalisation and cost reductions employee representatives was heightened by the financial crisis, • Open selection procedures were carried Furthermore, Sapa reduced production which led to a severe decline in the auto­ out to ensure that the right candidates at a number of plants in 2009. The reor­ motive and construction industries. In were found for key positions ganisation process was carried out in total, four aluminium-profile production • Synergies were identified, and a close cooperation with the company’s plants were closed down in 2008, while a number of factories were optimised/ union representatives. Through this further four plants in the US were closed closed down: ­dialogue, Sapa’s management and the down in 2009. Sapa has reduced its – Banbury ,UK union representatives agreed to intro­ workforce by approximately 3,800 em­ – Noblejas, Spain duce a temporary system of part-time ployees as a consequence of the econom­ – Keystone Heights, US work for selected groups of employees ic decline. – Louisville, US in order to reduce the need for dismissals. – Parsons, US In this process, Sapa has emphasised – Morris, US Local management has played an impor­ openness and conserving and utilising • Relevant compensation mechanisms, tant role in the integration and restruc­ the companies’ local experience, exper­ adapted to the above points, were as­ turing process. This has ensured a good tise, systems, training and employees. All sessed working environment, in which Sapa key positions and commercial structures • Integration training was provided for has retained its decentralised structure were put in place shortly after the merg­ all new units while exploiting economies of scale. er with Indalex. • A programme was implemented to fa­ Sapa’s basic values and well-established cilitate the strategic adaptation of all EHS procedures have served as important The processes were carried out in close companies to the Sapa system, with a guiding principles for the development cooperation with the employees and focus on three main pillars: of the new Sapa.

Downsizing and corporate responsibility “Management’s responsibility is to ensure Elkem’s manage- – a contradiction in terms? profitable operations. If a company has to re- ment emphasised Efforts to increase efficiency and improve duce its workforce, management has a great the importance of operations should be made continuously responsibility as regards how the process is close cooperation to ensure the company’s long-term carried out, and what, besides cutting costs, with the employees ­competi­tiveness and avoid the need for the goals of such a process are. That is where and their unions, extensive, short-term workforce reduc- the question of corporate responsibility fact-based informa- tions. However, swift, unexpected changes comes in,” Karin Aslaksen points out. tion, a good imple- in markets or operating parameters, can mentation plan and ­necessitate sweeping, unplanned cost-­ Elkem’s overarching goal in downsizing help in finding a reduction measures. This was the case ­processes is to help redundant employees  new job, primarily for Elkem in 2009. to transition into an active life outside the through personal Karin Aslaksen.  company, either in a new job or in education. counselling. Photo: Walter Jacobsen The decline in Elkem’s markets in the autumn The following principles are key guidelines  of 2008 led to the establishment of Project for the company: “We worked hard during the months in 2009, which had the objective of cutting which this process took place; cooperation costs substantially and strengthening the • Ensure the continuous development of employ- was particularly intense between company company’s long-term competitiveness. The ees, so that they will always be attractive em- management and union representatives in project was carried out during the first half of ployees both in the company and elsewhere the works council that was established. We 2009, and culminated in a reorganisation in didn’t agree on everything. Several disagree- which around 135 people lost their jobs. • Establish a range of measures to provide ments were noted along the way, but we both practical and emotional support to help managed to agree on what was most impor- “I consider it a defeat to have to make the employees through what is, for many of tant: the fact that we had a joint responsibility kind of sudden, major workforce cuts we them, a difficult period for ensuring the continued operation and made in 2009, both out of respect for our ­development of Elkem and a good exit employees and because, ideally and in a “With the exception of three people, all those ­strategy for those for whom no place could long-term perspective, a company ought to we could no longer keep at Elkem have found be found in the new organisation,” Aslaksen be able to regulate cost and revenue levels new jobs, and many have reported that they explains. in other ways,” says Elkem’s Karin Aslaksen, are very happy with their new situation. They Senior Vice President, Human Resources. are competent individuals who are sought after However, she sees no contradiction between and appreciated by new employers,” says downsizing and corporate responsibility. ­Karin Aslaksen.

ORKLA Sustainability Report 2009 15 Customers and consumers

Quality assurance is an important part of product development for Orkla’s companies

Photo: Svein Erik Dahl, Samfoto Customers and consumers

Whatever the industry or geographical market, Orkla bases its operations on products and solutions that offer relevant advantages and that are safe with regard to human health and the environment. For the Orkla Group, corporate responsibility means supplying good products in a responsible manner, thereby earning the trust on which it is dependent.

16 ORKLA Sustainability Report 2009 In their efforts to create value and win Area Results in 2009 Objectives 2010/2011 customer loyalty, an active dialogue with customers, consumers and public author­ Health and nutrition • Initiated several research- • Continue efforts to develop ities provides the companies with valua­ related projects nutritionally improved ble feedback about the job they are do­ • Increased use of GDA labelling. products ing. This dialogue helps business units • Improved information on • Reduce the content of salt to identify critical expectations and cor­ nutrition and health on the and artificial additives porate responsibility issues, and gives Orkla Group and individual them an opportunity to develop new company websites products and play an active role in shap­ ing sustainable framework conditions. Food safety • Revised the OFSS standard Carry out a minimum of 50 • Carried out around 50 audits per year Responsibility issues that are important audits of Orkla companies for Orkla in relation to customers and Customer dialogue Consumer service procedures Establish common guidelines consumers include food and product improved in Pierre Robert for consumer service in Orkla safety, responsible marketing and good Group and Axellus Brands consumer information. Orkla companies are also engaged in product development that helps to resolve important social challenges such as overweight and cli­ supplier of financial products and servic­ customers to offer the market more com­ mate change. es. In March 2008, the company decided petitive products. One example of a suc­ to terminate its contracts with all its ex­ cessful project is Sapa’s collaboration Dialogue with customers ternal distributors. At the same time, with Alstom, a company that is to supply Orkla companies interact with their cus­ Orkla Finans opened several sales offices train car bodies to Stuttgart in connec­ tomers and consumers in a variety of ar­ itself, ensuring that it has full control tion with the expansion of the city’s rail eas. Consumer research and customer over the quality of its sales and customer network. The project must satisfy clear satisfaction surveys are important sourc­ advisory services. environmental criteria, and the alumini­ es of insight into customer needs, and um profiles supplied by Sapa are an im­ are utilised actively as a basis for the Sapa’s collaboration with customers portant component of the expansion companies’ product development. Sever­ More and more companies are signing plans. The low density of aluminium sig­ al companies involve their customers di­ up for Sapa’s Profile Academy, a training nificantly reduces the weight of full train rectly in development projects to ensure course that provides a deeper under­ sets, thereby substantially reducing ener­ that their needs and interests are met as standing of aluminium profiles and their gy requirements. Combined with regen­ accurately as possible. The companies potential future applications. The pro­ erative brakes that allow braking energy also attach importance to establishing gramme consists of lectures on materi­ to be recovered and fed back into the good customer and consumer service als, production processes and construc­ electricity grid and a focus on more effi­ procedures. tion technology, as well as visits to cient methods of heating the cars, this Sapa’s production plants. Programme will reduce energy consumption by 40 Complaint management and good advice participants include product developers, per cent compared to the previous gener­ Many Orkla Brands companies are im­ designers, technicians and purchasers ation of train sets. portant suppliers of foodstuffs and other from Sapa’s customers, in addition to the products for the consumer market. These company’s own employees. Aluminium is a long-lived metal that can companies have consumer service de­ be recycled with no loss of quality and at partments that deal with complaints, Sapa has also established Innovation low energy cost (only five per cent of the questions and other inquiries from con­ Centers around the world, which offer energy required to produce the metal in sumers. Companies like Stabburet, Pro­ customers access to the Group’s aggre­ the first place). cordia and Nidar are often asked ques­ gate experience and expertise. Sapa con­ tions relating to allergies, health and siders close contact with its customers to Product liability nutrition, while Lilleborg has provided be a key prerequisite for further growth, consumers with advice on cleaning and and in 2009 further consolidated its Food safety at Orkla Brands laundry for several decades. position as partner to a number of its Healthy, safe products of a good, stable customers. quality are essential to maintaining con­ Consumer confidence in the sumer confidence and to brand-building. financial market Alstom Food safety is therefore a high priority Orkla Finans has strict internal proce­ Sapa is often involved in customers’ for the Orkla Brands companies. They dures relating to business ethics to en­ product development processes, helping have developed their own standard, the sure that the company’s practices pro­ to find profitable, sustainable solutions Orkla Food Safety Standard (OFSS), with mote confidence in the company as a wherever possible. Its goal is to enable which all Orkla factories that manufacture

ORKLA Sustainability Report 2009 17 Customers and consumers

Orkla’s food production complies with the Orkla Food Safety Standard. Photo: Kyrre Lien

food or beverages must comply. The panies in the red category are followed OFSS is based on internationally recog­ up particularly closely, and re-audited nised standards, but also includes re­ within six months. quirements and guidelines developed specifically for Orkla Brands’ factories. All audits are documented by written re­ ports that focus on necessary improve­ The OFSS imposes requirements relating ments. Based on these reports, binding to company management, the Hazard action plans are drawn up by the facto­ Analysis and Critical Control System ries. The action plans and audit reports (HACCP), quality assurance systems, then serve as the basis for the next audit. ­factory strategy, personnel, and process and product control. It also requires The food safety audits are conducted by proper procedures for supplier approval a special team of auditors, who are hand- and monitoring. picked experts on food safety and quali­ ty, and whose job responsibilities include To ensure that all Orkla Brands factories carrying out audits. Their primary task is comply with the OFSS requirements, in­ to assess whether the OFSS require­ ternal food-safety audits are conducted ments are met, and to make recommen­ on a regular basis. The audits consist of dations and offer encouragement for fur­ a systematic review of all activities (both ther improvement. Providing advice and the quality management system and pro­ suggesting specific solutions is therefore duction operations), and also covers stor­ an important part of the team’s work, age facilities, changing rooms, canteens and plays a key role in the factories’ on­ and outdoor areas around the factories. going improvement efforts. Great em­ Based on the results of the OFSS audits, phasis is placed on the fact that the team each company is placed into one of the has the same qualifications as, and car­ following three categories: ries out assessments that are identical to • green – meets OFSS requirements those of, external auditors. To ensure • yellow – almost meets OFSS requirements their independence, no auditors audit • red – does not meet OFSS requirements their own companies. As a general rule, companies in the green Since the introduction of the OFSS in and yellow categories are audited every 2004, more than 330 audits of close to 18th and 12th month, respectively. Com­ 100 factories have been carried out.

18 ORKLA Sustainability Report 2009 Substitution logical and ecotoxicological data, and to Under the Norwegian Product Control provide information on safe use of the Act, companies that use substances that substances in the supply chain. may be hazardous to human health and the environment are required to assess The Orkla companies that use chemicals the use of substitutes. Lilleborg has for in their production processes have estab­ many years, even before the substitution lished procedures for implementing these requirement was imposed, systematical­ regulations. Borregaard and Elkem stay ly sought good alternative ingredients continuously updated on the REACH which carry less health and environmen­ process through, among other things, tal uncertainty. their European and Norwegian trade or­ ganisations (CEFIC, CEPI, EuroAlliages, In recent years, Lilleborg has devoted Federation of Norwegian Industries, etc.) considerable effort to assuring the quali­ The industry is obliged to comply with all ty of the perfume used in its products, statutory requirements relevant to its ac­ for both the consumer and the profes­ tivities as manufacturer, importer, distrib­ sional markets. The company’s Develop­ utor and downstream user of chemicals. ment Department works to find substi­ Borregaard and Elkem are reviewing and tutes for undesirable perfume preparing their operations for compliance components. Examples of components with the requirements, and have already that have been minimised or replaced in pre-registered all relevant substances that recent years include aromatic musk com­ are manufactured in and/or imported into pounds, polycyclical musk compounds, the EEA area. The companies and their in­ geranyl nitrile, rose compounds and lil­ dustrial partners have made good ial. In 2009, Lilleborg Profesjonell also progress as regards preparing for the ac­ replaced a complex binder in a number tual registration process, giving priority to of its products, and is currently working the substances that are imported and The Orkla companies have reduced the on replacing a tenside in several products. manufactured in large volumes and that salt content of a must be registered by 1 December 2010. range of foodstuffs, Also in 2009, the Dr Greve Pharma range The companies are also conducting a dia­ including Felix ketchup. of skin care products was launched with­ logue with customers and suppliers to out parabens, a class of substances about share the necessary information. which questions have been raised in re­ cent years. In the course of the year, Nutrition and health work was also completed on a project to The food companies in Orkla Brands replace a softening ingredient used in take responsibility for promoting a several products. Lilleborg regards the healthier diet by developing healthier substitution requirement as a useful tool products, providing better nutritional la­ in its efforts to lead the way in safe­ belling, and adopting a cautious ap­ guarding the environment and consum­ proach in the marketing of food and bev­ er safety. erages to children.

Reach Developing healthier foods REACH is a set of regulations on chemi­ Orkla Brands wishes to offer a broad cals and their safe use which is being im­ portfolio of food products, comprising plemented in the EEA area. The regula­ both products for enjoyment and prod­ tions are intended to ensure that the ucts with positive nutritional properties. chemicals used in industry are safe as re­ Considerations related to nutrition and gards human health and the environ­ health are incorporated into the compa­ ment. The main elements of the regula­ nies’ product development processes. De­ tions are registration, evaluation, veloping healthier products is a question authorisation and restriction/prohibi­ of responsibility, but also an area that of­ tion. The aim of REACH is to improve fers interesting business opportunities. the protection of human health and the Whenever possible in view of taste and Ingers SuperRug environment through increased knowl­ commercial considerations, the Orkla bread from Bakers edge about the intrinsic properties of Brands companies seek to develop prod­ contains rye, and chemical substances and their uses. It is ucts that help to promote a healthier has a high fibre content. industry’s responsibility to obtain toxico­ diet. Products with special nutritional ad­

ORKLA Sustainability Report 2009 19 Customers and consumers

Product development is a key element of the strategy of Orkla’s food companies (such as here at Jästbolaget). Photo: Kyrre Lien

vantages account for a growing percent­ Area Objectives 2008/2009 Some results for 2008/2009 age of the food companies’ total sales. Energy density Reduce fat and sugar content Launch of beverages with low In 2009, the companies have focused ac­ where possible. sugar content: Fun Light, Nora tively on product development relating and Fun Fruit. to energy density, fat content, salt, carbo­ Fat content  • Increase use of the nutritionally • None of Orkla’s Scandinavian hydrates and fibre. Several development and type of fat best types of fat. food companies use trans fats projects have also been carried out in • Continue efforts to reduce and in production. which artificial additives were eliminat­ eliminate trans fats. • Palm oil was replaced by ed, or replaced by natural ingredients. • Replace palm oil with a sunflower oil or rapeseed oil healthier alternative like in all crispy products at KiMs, Health products from Borregaard sunflower oil. OLW and Chips Denomega, which is part of Borregaard Ingredients, has developed unique ma­ Salt Avoid unnecessarily high salt The content of salt has been rine omega-3 oil products for the food in­ content. reduced in a number of food dustry. These products are used, among products, such as Felix ketchup other things, in foods that have health ef­ and ready meals, Pastella fects. For instance, Denomega’s tasteless pasta, Grandiosa pizzas and and odourless Omega 360 product is Ingers Super Rug bread. used to enrich many foodstuffs with Carbohydrates and fibre Promote a better balance • Use of high-fibre flour and omega-3, which has beneficial effects on between carbohydrates and flour types in bread-baking health. The company is concentrating fibre. • Launch of LHL heart-friendly primarily on products for the bakery sec­ bread from Idun tor including a proprietary product cus­ • Launch of Naturlig Sunt tomised to bakery needs (PureMix). The Kompis and Ingers Super Rug product is also used in dietary supple­ breads from Bakers. ments. Furthermore, Denomega has de­ veloped a high-quality cod liver oil for Additives Reduce use of artificial A number of food products the international market. The oil is man­ additives. containing no artificial additives ufactured using a method (PurEvap TM) were launched in 2009, such developed by Denomega, which produc­ as Felix mashed potatoes, a es extremely pure cod liver oil with an potato-and-vegetable dish appealing taste and colour. from Procordia, and Bergene Melk milk chocolate from Nidar Borregaard has also developed a new cel­

20 ORKLA Sustainability Report 2009 lulose-based product, PowerFiber, which mation. The labelling also offers guid­ may have a positive health effect. The ance on recommended portion sizes. Should higher responsibility stand- ards apply to the sale of products product is used as an additive in food­ Orkla Brands provides financial support that promise better health? stuffs, and makes it possible to reduce for the development and running of sev­ “Yes,” says Axellus, Orkla’s dietary supple- fat content while retaining the positive eral websites on which more informa­ ment company. Axellus supplies and mar- perceived qualities of fat, such as consist­ tion on GDA labelling may be found: kets well-known, long-established prod- ency and texture. PowerFiber is expected www.gdainfo.dk, www.gdainfo.se and ucts such as Möller’s, Collett, Sana-Sol, to have great potential as a fat-replace­ www.gdainfo.no. Gerimax, Curamed and Nutrilett. The com- pany operates in a market characterised by ment product in segments like yoghurt, complex rules as to what kind of market- mayonnaise, dressings and ice cream. Orkla’s food companies in Sweden and ing is permitted. PowerFiber has been introduced in food Norway use the keyhole labelling system products in close cooperation with sever­ to identify products that are healthy “The main reason why consumers buy di- al Orkla Brands companies. A number of choices in their product categories, and etary supplements is because they expect Orkla products, such as dressings with a Bakers indicates the whole-grain content a health benefit. It is therefore absolutely crucial for the industry’s credibility that fat content of only 3 per cent, now con­ of their bakery products through the we ensure that we market our products tain PowerFiber. Norwegian Brødskalaen (“Breadscale”) la­ in an honest, responsible manner,” em- belling system. phasises Kristina Johansen, Information Liva Energi – high-energy food Manager at Axellus. for the elderly Responsible marketing Undernourishment is a problem for some The aim for all of Orkla Brands’ market­ “More than 30 people are currently em- ployed in our Quality and Regulatory De- elderly persons. Liva® Energi, which was ing is to achieve good, effective commu­ partment, and around 10 people work in launched by Procordia in 2009, is a range nication that helps to build a long-term our Development Department. They all en- of high-energy food for the elderly, in relationship of trust between consumers, sure that we can always deliver what we which 3/4 of a portion provides the same brands and Orkla companies. Orkla’s promise. Here, it’s not just the Marketing amount of energy as a full portion of ordi­ Norwegian food companies endorse the Department that is responsible for market- nary food. Procordia teamed up with nu­ guidelines for food and beverage market­ ing products,” Johansen explains. trition experts to develop the new range, ing directed at children and young peo­ “We consider it important to communi- which initially comprised five different ple that were introduced in 2007. After cate honestly. By that I mean that we products. The range consists of ordinary the guidelines were issued, Orkla Brands don’t just think about what we are al- food that provides extra energy, and is de­ drew up an internal guide for its compa­ lowed to say about a product, but also signed to make life simpler for the elderly, nies, which contains more detailed infor­ about what we can and should say. There their relatives, and kitchen and health mation on the guidelines and explains are great variations in the way dietary personnel. how they are to be interpreted. supplements are marketed, and we ex- pect regulatory changes to shape our in- The Orkla Brands companies apply these dustry in the future. We hope that the Consumer guidance guidelines actively in their ongoing as­ changes that are coming will, among oth- To make it as easy as possible for con­ sessment of new marketing activities. er things, make it easier for consumers to sumers to plan their diets, Orkla Brands These include innovation projects, adver­ compare products. For instance, in the emphasises good consumer guidance tising campaigns and the development market for omega-3 products, there is no and nutritional labelling of products. of end-user marketing. When the guide­ common practice as regards indicating The product information must be fact- lines were first introduced, all of the amounts. Consumers based and easy to understand. Orkla companies reviewed their marketing are dependent on the Brands has established special websites practices and made relevant adjust­ manufacturers mar- containing dietary information, and pub­ ments. These included: keting their products lished a report in 2009 describing the • stricter assessment of advertising and ­responsibly, which principles on which its health and nutri­ other marketing activities to make sure is something tion work is based. The report is updated that they are not perceived to target they should be ­entitled to annually. Furthermore, each food compa­ children under the age of 12 ­expect from ny publishes product and nutritional in­ • stricter procedures for the distribution all of us who formation on its own website. of samples and demonstrations sell dietary • stricter practices in connection with supple- In 2009, work on implementing the com­ sponsorship inquiries. ments,” mon European Guideline Daily Amount ­concludes ­Johansen. (GDA) labelling system continued in As a result of the guidelines, Sætre, Orkla’s food companies. This voluntary KiMs, Nidar and Stabburet have adjusted labelling system is supported by most of their message or communication tools the major European food companies, on several occasions when developing thus making it easier for consumers to new products, advertising or other mar­ compare products and nutritional infor­ keting measures. Among other things,

ORKLA Sustainability Report 2009 21 Customers and consumers

Borregaard’s biochemicals are attractive, eco-friendly alternatives to oil-based products. Photo: Kyrre Lien

the four companies have declined a large The debate about cod and other vulnera­ number of invitations to sponsor events ble fish species has sparked greater inter­ for children. The companies also say no est in tracing the journey of fish from to product placement in films or televi­ sea to plate. In response to growing de­ sion programmes for children. In accord­ mands and expectations from all quar­ ance with the guidelines, Sætre has ters relating to the sustainable manage­ stopped putting plastic figures in boxes ment of fish resources, Abba Seafood has of Tom & Jerry children’s biscuits. significantly expanded its selection of MSC and KRAV-labelled products since Environmental management the spring of 2008. The company has Production, packing and distribution are also eliminated all fish species on the red stages of the cycle of most Orkla prod­ list in the WWF’s Fish Guide for 2008 ucts. The Group’s aim is to reduce the en­ from its production. For Abba Seafoods, vironmental costs at all stages (the life-cy­ the sustainable management of marine cle approach), while maintaining its resources is important for both the quality and product-protection standards. brand and for access to good raw materi­ als in the future. Abba Seafood – the green fish In September 2009, Abba Seafood re­ Packaging optimisation ceived the Green Fish award for its ef­ Orkla Brands companies use large quan­ forts to increase the proportion of envi­ tities of packaging, and are engaged in a ronmentally labelled fish and shellfish broad range of packaging optimisation products in its product range. The award efforts with a view to developing envi­ was the result of a competition organ­ ronmentally sound packaging solutions. ised by WWF Sweden, Foreningen Årets Packaging optimisation necessitates Kokk and Restaurantakademiet, in close cooperation across a variety of in­ which 14 fish producers and grocery ternal functions, as well as between gro­ chains participated. cery suppliers, packaging manufacturers and the retail trade.

22 ORKLA Sustainability Report 2009 In its product and packaging develop­ Borregaard produces second-generation ment, the industry is focusing on the en­ bioethanol, which is used as a fuel for tire value chain. The emphasis is on opti­ buses and other vehicles. A life-cycle misation, and not necessarily analysis has documented the fuel’s high minimisation, of packaging. If packag­ climate utility, and efforts are being ing is reduced too much, it may result in made to secure Swan labelling for it. damage to products and wastage, there­ by negatively impacting the environ­ ment, food safety and profits. The goal is to minimise packaging without impair­ ing its functionality.

In the autumn of 2009, Lilleborg received the Optimisation Award for 2008 for its many years of optimisation work. The award is presented by the Norwegian Pack­ aging Association (DNE) and Næringslivets Emballasjeoptimeringskomite (NOK), a joint industry committee established in 1998 to optimise packaging.

In its grounds for the award, the jury stated, “Lilleborg has worked continuous­ ly for ten years to produce effective packaging solutions that take account of the needs of both the environment and customers. For 2008, Lilleborg AS report­ ed, among other things, reductions of over 70 per cent in material usage in connection with refill bags. The compa­ ny also reports smarter packaging for disposable wet mops and examples of pallet optimisation, reduced transport needs and lower emissions. In the course of ten years of documented packaging optimisation in Norway, Lilleborg AS has supplied examples to NOK’s annual re­ port to the Norwegian Climate and Pollu­ tion Agency (SFT).”

The Swan label Lilleborg is an active user of the Swan official environmental label. As early as 1993, Lilleborg was the first grocery sup­ plier to market a Swan-labelled product, and since then has gradually been able to offer Swan-labelled laundry, cleaning and dishwashing products. In recent years, a number of products designed for the professional cleaning market have also qualified for the Swan label. System­ E JØM RKE atic, verifiable efforts to substitute more IL T environmentally friendly components M are an important prerequisite for Swan labelling. The Swan label makes it easier for consumers to make good environ­ x x y x y mental choices. Moreover, the label is y < widely known, and has high credibility. u > ndertekst

ORKLA Sustainability Report 2009 23 Suppliers

The Pierre Robert Group regularly discusses working conditions with its Chinese suppliers

Photo: Margrethe Vikanes Suppliers

Orkla has long made active efforts to promote the Group’s values in its supplier chain. The Group maintains an ongoing dialogue with its most important suppliers, and imposes clear requirements regarding human rights, working conditions, environmen- tal impact and corruption. Although Orkla’s decentralised structure means that respon- sibility for following up on suppliers lies with the individual Group companies, the Group introduced common requirements and guidelines in 2009. Over the course of the next two years, the Group will implement a common work methodology and shared systems in its business areas.

24 ORKLA Sustainability Report 2009 Orkla’s business areas operate in very Area Results 2009 Objectives 2010/2011 different supplier markets. The scope of Orkla’s purchases from developing coun­ Procedures • Prepared common All companies must tries is relatively limited at present, but requirements and procedures implement Orkla’s new growing rapidly. This means that, in the for responsible purchasing by procedures for responsible years ahead, the Group may be exposed the Group purchasing. to greater risk as regards unacceptable • Established routines using environmental, health and safety (EHS) Sedex and working conditions in the supplier chain. Orkla has more than 40,000 direct Supplier monitoring Carried out systematic risk Ascertain the risk of breaches suppliers, and fewer than five per cent of assessment of suppliers of Orkla’s supplier require- these are currently located in developing representing a total of 25 per ments with regard to all countries. The suppliers in question are cent of the Group’s purchases Group suppliers. primarily suppliers of raw materials, and Training • Module on responsible All purchasing staff must in some cases of finished products. purchasing introduced in the have completed training on Orkla Purchasing Academy Orkla’s guidelines for Monitoring human rights and • Training on Orkla’s guidelines responsible purchasing. working conditions given to 25 per cent of the Group’s purchasing staff Introduction of common guidelines for suppliers In 2009, new, common guidelines for sup­ standard contracts, and will initially be risk assessment that is to be implement­ pliers were introduced. These guidelines communicated to new suppliers and ex­ ed by all companies in the course of are to be used by all subsidiaries, and are isting suppliers who are expected to 2010 and 2011. based on the ETI (Ethical Trading Initia­ present a medium or high risk. Purchasing risk must be assessed on the tive) Base Code, which covers human basis of a number of factors, the most rights, child labour and working condi­ Risk assessment of suppliers significant of which are: tions such as pay and working hours. The The Orkla companies have an independ­ • the supplier’s country of origin, Group has additionally included require­ ent responsibility for following up on • the product’s country of origin and ments relating to anti-corruption, envi­ their suppliers, and have established a • the size of Orkla’s total purchases from ronmental impact and the establishment wide range of procedures for doing so. the supplier of management systems. The guidelines In 2009, Orkla’s central purchasing de­ The Group’s purchasing experience were added as a separate annex to Orkla’s partment developed a model for supplier shows that the ability to influence the

LOW RISK SUPPLIERS (ASSUMPTION) OBJECTIVE: SUPPLIERS COMPLY WITH CODE OF CONDUCT

SUPPLIER

SUPPLIER

SUPPLIER SUPPLIER

SUPPLIER SUPPLIER

SUPPLIER SUPPLIER

1st screening: 2nd screening: 3rd screening/ improvement:

RISK CRITERIA LOW MEDIUM HIGH On-site Monitoring supplier corrective audit action (SMETA)

In 2009, Orkla developed a new model for assessing risk linked to suppliers.

ORKLA Sustainability Report 2009 25 Suppliers

Participants in the Orkla Purchasing Academy received training in responsible purchasing in the autumn of 2009. Photo: Claudia Schille.

supplier to make the desired changes in­ tries outside Europe. During 2010, pur­ creases when Orkla is one of the suppli­ chasing staff employed locally by Group er’s major customers. companies in Asia, Africa and South America will receive training. Moreover, In the case of suppliers who are consid­ the exchange of expertise and experience ered to represent a medium or high risk, will be facilitated by the establishment Orkla companies must carry out a more of internal web forums and the holding thorough risk assessment. The supplier of webinars. will be requested to submit relevant doc­ umentation, and to complete a self-as­ Pilot project relating to Responsible sessment. If the risk associated with the Purchasing by Orkla Brands supplier is still rated as high, the suppli­ In 2009, Orkla Brands implemented a er’s EHS conditions and working condi­ project aimed at establishing require­ tions must be audited. The purpose of ments and procedures for responsible such audits is to identify risk factors and sourcing, covering all of Orkla Brand’s uncover non-conformance with the largest companies. The project developed Group’s guidelines, and to conduct a dia­ and tested a standard procedure for risk logue with the supplier about how the assessment and supplier monitoring. situation may be improved. The pilot phase of the project was com­ pleted, and the methods developed will Internal training to increase be rolled out in 2010 and 2011, through understanding the “Responsible Purchasing” pro­ In 2009, responsible sourcing was added gramme. Companies that conduct a as a new module in the Orkla Purchasing growing proportion of their purchasing Academy. In addition, training was given outside the OECD area will be given roll- to the central purchasing function in out priority. Orkla Brands, which is responsible for a The project emphasised the use of inter­ large proportion of purchases from coun­ nationally recognised standards, systems

26 ORKLA Sustainability Report 2009 and approaches to ensure thoroughness ation projects to promote improvements and clarity on the part of companies and in the supply chain. One of the projects SMETA greater predictability and simpler imple­ relates to joint training of the members’ SMETA (Sedex  Members Ethical mentation for suppliers. In its work on suppliers to reinforce the message that Trade Audit) has risk assessment and supplier monitor­ good working conditions are important. three elements: ing, Orkla Brands cooperates with the In Istanbul, where the first round of 1. A best Practice Supplier Ethical Data Exchange (Sedex). training took place, 135 representatives Guide for carrying The audit efforts are based on the SMETA from 55 supplier companies participated. out ethical audits. Best Practice Guide (see separate box). 2. A standard audit report format. Several of AIM-PROGRESS’s members 3. An activity plan for improvement efforts. The use of third-party audits is advanta­ also utilise Sedex and the SMETA frame­ geous in high-risk countries because it work in their improvement and monitor­ SMETA is not a standard that results in a ensures that local knowledge and experi­ ing efforts, thus increasing the influence ­certification of the supplier. ence are utilised to uncover problem are­ and impact of the solutions higher up the as, and that interviews are carried out supply chain. Joint systems and methods The SMETA Best Practice Guide contains ­information/recommendations on: professionally and in employees’ own prevent the duplication of efforts and re­ - the planning of an audit language. Orkla has therefore concluded duce the burden on suppliers. - communication with the supplier in an agreement for an external coopera­ ­advance of the audit, and what docu- tion partner to conduct supplier audits Improved supplier monitoring by mentation is required based on the SMETA methodology. How­ Elkem - the format of the audit, including the ever, primary responsibility for the dia­ In recent years, Elkem has increased the number of employee interviews and logue relating to monitoring efforts will number of supplier audits it carries out, how to conduct ­factory inspections - which controls must be implemented  lie with the purchasing department of giving emphasis to raw-material suppli­ (in accordance with the ETI Base Code, the subsidiary in question. ers. Over 100 Elkem employees have com­ etc.) pleted internal training on Elkem’s corpo­ - how dialogue relating to improvements Orkla conducts a dialogue with its sup­ rate responsibility principles and their should be handled pliers about responsible purchasing to effect on the selection and follow-up of - how the audit should be concluded increase suppliers’ awareness of the need suppliers. The requirements Elkem has - how the audit report is written and im- provement activities are planned to respect fundamental human rights, introduced are based on the UN Global - what expertise an audit team should and to safeguard health, safety and the Compact, SA8000 and the ETI Base Code, have. environment, and business ethics. Sup­ as well as Elkem’s own EHS system. plier audits are not about approving or SMETA is multi-stakeholder framework, not approving a supplier, but rather Supplier monitoring is carried out joint­ and can be downloaded free of charge about identifying non-conformance with ly by Elkem’s purchasing personnel and from Sedex’s website. A new, expanded version is expected in 2010. Sedex en- Orkla’s guidelines and assessing how specialists with wider expertise in the ar­ courages companies to use the frame- these may be remedied. By using the eas of EHS and corporate responsibility. work even if they are not members of the purchasing power of the Orkla compa­ Elkem’s requirements are communicated organisation. nies where it has the greatest effect, the when contracts are concluded, and fol­ Group hopes to contribute to positive lowed up on in connection with routine changes in both the short term and the visits to suppliers. The objective is for long term for many individuals who are corporate responsibility to be an equally Sedex Members Ethical Trade Audit subject to unacceptable environmental, natural part of discussions as specifica­ (SMETA) Best Practice Guidance working and employment conditions. tions, quality, delivery dates and prices. (Version 2.1, January 2009) Risk assessments and feedback from International cooperation has supplier visits determine whether indi­ a greater effect vidual suppliers are monitored by means In 2009, Orkla Brands became a member of expanded audits. Such audits include of AIM-PROGRESS in order to gain ac­ workplace inspections at suppliers’ facto­ cess to a standardised procedure for sup­ ries, reviews of detailed checklists and plier monitoring, and to use the forum’s discussions about how improvements joint purchasing power (which amounts can be made in respect of non-conform­ to well over NOK 1,000 billion), as a ances and observations. common voice for quicker improve­ Supplier monitoring is a demanding ments in the globalised supply chain. process. Elkem recognises the enormity This best practice guidance for conducting ethical trade audits was developed by the current members of the Sedex AIM-PROGRESS is a cooperation forum of the task, and acknowledges that much Associate Auditor Group (AAG). This document is intended to supplement the knowledge of experienced, trained ethical trade auditors; it is not intended to be involving a number of international pro­ remains to be done. Its international op­ used as a stand-alone, complete set of instructions. ducers of branded goods that, despite be­ erations mean that Elkem has many sup­ ing competitors, jointly implement cooper­ pliers in countries in which breaches of www.sedex.org.uk

ORKLA Sustainability Report 2009 27 Suppliers

fundamental human and workers’ rights tem covers all suppliers of raw materials, of the IT system to Orkla Brands compa­ occur. In practice, influencing suppliers primary packaging and finished prod­ nies in the Nordic region, the Baltics, Po­ in countries with different cultures and ucts for Orkla Brands operations that land, Austria, the Czech Republic, Roma­ weaker public scrutiny can be difficult produce food and drink. Approval is nia and Portugal began in October, and and take time. The travelogue of EHS granted separately for each supplying will continue until February 2010. The Manager Mark Breidenthal below pro­ factory, and takes into account the fol­ Russian and Indian companies will be vides a small insight into some of Elkem’s lowing factors: the supplier’s self-assess­ included as of the autumn of 2010. challenges and working methods. ment, a risk assessment carried out by the relevant Orkla Brands company and, More new auditors were trained in 2009. Monitoring of product quality if required, a physical audit. At the end of the year, 32 persons from Regardless of business area, market or 20 companies were certified as Orkla product, the Orkla companies impose Responsibility for approval and monitor­ Brands Supplier Auditors. In addition, strict quality requirements on their sup­ ing is shared by Orkla Brands compa­ 90 other key persons received training in pliers. The quality requirements are in­ nies. The companies are responsible for the new system. corporated into supplier agreements, and the actual work involved in granting ap­ are followed up on by means of delivery provals, while Orkla Brands Corporate In total, 210 food safety supplier audits receipts, goods certificates, ongoing dia­ Affairs is responsible for the system, in­ were carried out in 2009. The results of logue and, when needed, quality audits cluding system development, training of the audits showed that many suppliers of suppliers. auditors and harmonisation of assess­ are maintaining a good or acceptable lev­ ments. To support the companies, cate­ el of compliance with regard to Orkla Increased focus on food safety through gory coordinators have been appointed Brands’ quality requirements. Some sup­ supplier follow-up in Orkla Brands Corporate Affairs. These pliers are not complying with the re­ In 2009, Orkla Brands continued the im­ coordinators are responsible for provid­ quirements satisfactorily, particularly in plementation of its new system for ap­ ing support to companies in their respec­ the case of documentation requirements. proving and following up on suppliers in tive categories. In these instances, concrete improve­ the area of food safety. The system was ment measures have been implemented. developed in 2008, and is an extension A new IT-based support system was de­ of Orkla Brands’ food safety system for veloped in 2008. In 2009, the system was In 2010, the focus will be on carrying out its own production facilities, the Orkla completed and tested in a pilot project at audits, and on implementing the IT- Food Safety Standard (OFSS). The sys­ Abba Seafoods in Sweden. The roll-out based support system.

Per Røhnebæk headed Orkla Brands’ pilot project for responsible purchasing in 2009. Photo: Marit Mosnesset.

28 ORKLA Sustainability Report 2009 In 2009, Elkem conducted several supplier audits in China. Photo: Elkem.

Supplier monitoring in practice I wake to a new day well rested. Like most Chi- rate responsibility principles. The managers are By: Mark Breidenthal, EHS Manager, Elkem AS nese cities, Baotou is full of contrasts – opulent keen to communicate that they too are focusing wealth and deep poverty live side by side. Traf- on these matters, and that they are working to On Sunday afternoon, a car picks me up in Dawu- fic is chaotic, and a heavy blanket of pollution make improvements. When the meeting is over, kou. Ahead of us lies a five-hour drive through covers the city. we go out to inspect the facility. The entire group parts of Ningxia and Inner Mongolia in China. I wants to come along, and we are given permis- greet the rest of our party: a colleague from our The first supplier has a strong position in its sion to look at and take pictures of whatever we plant in Dawukou, who speaks excellent English, product sector, and we are regarded as a small wish. We observe non-conformance, but those two suppliers and a driver. The first topic of con- customer. Our nervousness mounts during the who have visited the factory before notice major versation is seatbelts, which everyone somewhat review of Elkem’s standards, as the company’s changes since their last visit. Most areas are tidy reluctantly agrees to wear. As soon as we hit the representatives seem a little disinterested. We and clean, and workers have been given safety motorway, speed becomes the next issue. The are assured that they have been told by their equipment and begun using it. We stop at the best I achieve here is smiles and assurances of owners to be attentive to corporate responsibility various work stations, pointing out dangerous the driver’s outstanding driving abilities. and to follow relevant guidelines. The audit  conditions and discussing solutions with the of the production plant also gives grounds for management team just as we would in Norway. Our destination is Baotou, an industrial city with concern. The facility is very tidy and clean, but  The supplier shows great willingness to make im- almost two million inhabitants, located in Inner no work is being done in production areas that provements, but, in our assessment, requires Mongolia. We plan to visit two suppliers, and to should normally be buzzing with activity. We more expertise and more systematic improve- have meetings with two more. At the hotel, we see no concrete non-conformance indicating ment procedures. Where this supplier is con- meet several colleagues, both Norwegian and Chi- that we should consider terminating our relations cerned, therefore, we must consider how we can nese, who want to discuss our plans for tomorrow. with the supplier, but a lack of transparency al- provide support for his further efforts to achieve Everyone seems tense. We are going to meet sev- ways leaves us worried. The supplier will under­ improvements. eral suppliers to discuss our EHS standards and go continued monitoring and further audits. ethics, and find out how these are safeguarded in These two very different experiences illustrate their operations. We will also conduct an audit of The next day, we are to visit a privately owned how challenging it is to promote corporate re- EHS and working conditions at two production magnesium factory. Magnesium producers have sponsibility. On the one hand we have a suppli- plants. Much of the tension relates to uncertainty really felt the credit crunch, and are experiencing er who shows little interest, who is entirely sat- about how I will deal with any non-conformance tough domestic competition within China. Many isfied with the status quo, and who may well be we find. Most of the group knows Chinese indus- factories have either shut down production for exploiting its relative strength vis-à-vis a small try well, and knows that we may find serious periods or pursued cost-cutting measures. Those customer. On the other hand, we have a hum- health, safety and environment breaches. I assure who have visited the factory before are wonder- ble supplier who is exposed to competition and them that the purpose of such visits is always to ing how this has affected improvement efforts, wants to learn and make improvements, but assist in making improvements, and not to reduce which after all often result in a short-term in- who lacks knowledge and resources. We natu- the number of suppliers. As long as the suppliers crease in costs. The supplier greets us with open rally impose the same ethical requirements on are willing to amend conditions, and show arms and hot tea. The entire management team both, but have to work in different ways to en- progress in their improvement efforts, we will attends, pays close attention and makes copious sure compliance with our guidelines and sup- continue to pursue cooperation. notes during our presentation of Elkem’s corpo- port their respective improvement efforts.

ORKLA Sustainability Report 2009 29 Shareholders

Communication with shareholders, potential investors and analysts is an important priority for Orkla

Photo: Heiko Junge, Scanpix Shareholders

Through sound business operations, Orkla aims to achieve long-term value growth for its shareholders which exceeds that of relevant, competitive investment alternatives. For shareholders, this is reflected in the combination of the long-term price performance of the Orkla share and the dividend that is paid out.

30 ORKLA Sustainability Report 2009 Orkla has about 48,000 shareholders, matters as necessary. In 2009, the Group External evaluations and it is important for the company to Board was given quarterly reports on the Orkla’s work on corporate responsibility ensure effective, transparent communi­ status of the Group’s EHS work, includ­ and the results that are achieved are eval­ cation with the financial market. Share­ ing updates on serious incidents. A more uated regularly. For the Group, this con­ holders, investors and analysts must comprehensive review of the plans for firms whether its efforts produce the de­ have access to up-to-date information on Orkla’s EHS work was undertaken dur­ sired results, and provides valuable the Group’s situation at all times. This is ing the first quarter of 2009. EHS moni­ feedback from external experts. Orkla ensured through regular, open dialogue toring is also a permanent agenda item therefore uses this information actively with important stakeholders. Providing at board meetings of individual compa­ to identify potential for improvement in correct information at the right time and nies and business areas. Orkla companies. In 2009, the Orkla ensuring transparency about the compa­ Group was evaluated by Covalence, Ethi­ ny’s affairs creates confidence and leads In the autumn of 2009, Orkla held a man­ bel, Eiris and Sustainable Value Creation, to the correct pricing of the Orkla share. agement conference at which corporate a cooperation project involving Norwe­ Compliance with the principles for good responsibility was an important topic. gian investors. Orkla reports climate-re­ corporate governance lays the founda­ The objective was to improve knowledge lated information to the Carbon Disclo­ tion for long-term value creation, to the about the Group’s views in this area, and sure Project, and in 2009 achieved a benefit of shareholders, employees, other to shed light on specific challenges and ranking of sixth among 48 Norwegian stakeholders and society at large. opportunities for Group companies. The companies. Orkla scored 68, compared to conference formed the starting point for an average result of 55 for the Nordic Corporate responsibility further management discussions within companies participating in the project. Group companies in 2010. The work of the Board of Directors and Ownership interests management on corporate responsibility The organisation of Orkla’s work on Orkla wishes to support sustainable so­ corporate responsibility Orkla’s long-term return cial development through responsible In accordance with Orkla’s multi-local or­ Orkla’s goal is to achieve a long-term re­ business management and systematic ganisational model, the individual Group turn that is higher than the return from improvement efforts linked to the exter­ companies have independent operation­ relevant investment alternatives. For nal environment, climate and energy, al responsibility, which includes the ex­ shareholders, this is expressed as a com­ and by investing in profitable business ercise of Orkla’s corporate responsibility. bination of the long-term performance projects with positive potential social This work must take place within the of the Orkla share price and the dividend ripple effects. The Group’s position on framework of the Group’s values and paid out. Orkla makes continuous efforts corporate responsibility is set out in its guidelines. Responsibility for drawing to improve its underlying operations. In Goals and Values and in business ethics up and revising the Group’s guidelines conjunction with structural measures, guidelines, guidelines on corporate re­ on business ethics and corporate respon­ this results in increased cash flow, and sponsibility and, where relevant, more sibility has been given to Orkla Corpo­ thus in a long-term increase in value for specific guidelines. rate Functions, which is represented on shareholders. For Orkla and investors the Orkla Group Executive Board. A new, with a long investment horizon, it will Orkla’s Board of Directors considers it specialist corporate-responsibility func­ therefore be important to measure value desirable to review the status of the tion was established at Group level in creation in terms of the development of Group’s corporate responsibility work 2009. Corporate responsibility efforts are the Group’s underlying operations. In annually. The most recent review was discussed continuously in the Orkla Cor­ the past decade the annual return has av­ submitted to the Board of Directors’ Au­ porate Responsibility Forum, in which eraged 12%, while the average return on dit Committee in December 2009. The central specialist functions and all busi­ the Oslo Stock Exchange was 6%. Board also deals with relevant individual ness areas are represented. Orkla’s mission statement In accordance with its mission state­ ment, Orkla ASA operates in several dif­ VALUE OF NOK 1 INVESTED ferent areas. Orkla is a leading supplier of branded consumer goods to the Nor­ dic grocery market, and also has strong 500 positions in sectors including aluminium profiles, metals and materials, and re­ 250 newable energy. Its activities also in­ clude financial investments. The compa­ NOK ny takes a long-term approach, and has 83 85 87 89 91 93 95 97 99 01 03 05 07 09 generated substantial added value for Orkla shareholders. The goals and main strate­ Oslo Stock Exchange gies of both the Group and the individu­

ORKLA Sustainability Report 2009 31 Shareholders

the 20 largest shareholders as of 31.12.20091 In a 2009 survey by the Swedish analyst Shareholder No. of shares % of capital agency Regi of 167 analysts in the Nor­ dic region and the UK, Orkla was rated 1 Canica-gruppen2 238,342,000 23.2 % the best Norwegian listed company with 2 Folketrygdfondet 111,226,810 10.8 % regard to market communication. More­ 3 Franklin Templeton 81,298,529 7.9 % over, Orkla’s website was ranked fourth 4 Capital Group 55,364,000 5.4 % among Norwegian websites by Hallvars­ 5 Taube Hodson Stonex Partners 29,792,263 2.9 % son & Hallvarsson Webranking, the larg­ 6 BlackRock 21,885,705 2.1 % est European survey of company web­ 7 DnB NOR Asset Management 16,278,586 1.6 % sites. Orkla has been awarded the 8 SAFE Investment Company 15,926,957 1.5 % Farmand Prize several times for its annu­ 9 Storebrand Investments 15,550,070 1.5 % al reports, and regularly achieves high 10 SSGA 12,451,301 1.2 % scores for its website in international 11 Vital Forsikring ASA 10,500,215 1.0 % surveys. 12 Rasmussengruppen AS 9,804,000 1.0 % 13 Bank of Ireland Asset Management 9,559,906 0.9 % Orkla’s principles for corporate 14 KLP 7,803,720 0.8 % governance 15 Pareto AS 6,828,800 0.7 % Orkla’s principles for corporate govern­ 16 Legal & General Investment Management 6,611,598 0.6 % ance are intended to lay the foundation 17 Artio Global Management 6,264,766 0.6 % for long-term value creation, to the bene­ 18 AMF Pension 5,155,000 0.5 % fit of shareholders, employees, other 19 Dimensional Fund Advisors 5,096,208 0.5 % stakeholders and society at large. 20 Vanguard Group 4,962,959 0.5 % Total shares 670,703,393 65.2 % These principles cannot replace efforts to Total all Orkla shares 1,028,930,970 100.0 % promote a sound corporate culture in all Number of shares outstanding 1,019,073,155 99.0 % parts of the Group, but must be viewed in conjunction with them. Openness, trans­ 1 The data is provided by RD:IR and VPS, through the Nominee ID service. The data is obtained through the analysis of beneficial parency, accountability and equal treat­ ownership and fund manager information provided in replies to disclosure of ownership notices issued to all custodians on the ­Orkla share register. Whilst every reasonable effort is made to verify all data, neither RD:IR nor VPS can guarantee the accuracy of ment underpin confidence in the Orkla the analysis. For a list of the 20 largest shareholders as of 31.12.2009 from the official VPS list, see Note 28 on page 111 of the Annual Report. Group, both internally and externally. 2 The Canica Group: Canica AS, Canica Investor AS, Tvist 5 AS, Stein Erik Hagen AS. Total share ownership including related parties amounts to 23.3% (239,942,000 shares). Orkla aims at all times to organise its ­activities and otherwise conduct its affairs shares by size of shareholding as of 31.12.2009 in accordance with the Norwegian Code No. of shares No. of shareholders % of capital of Practice for Corporate Governance. The 1-500 19,969 0.4 % Annual Report for 2009 reports on ­Orkla’s principles in accordance with the 501-5.000 22,944 3.8 % recommendation of 21 October 2009 5,001-50,000 4,464 5.9 % (www.nues.no). 50,001-500,000 588 8.5 % 500,001-2,500,000 123 13.3 % The recommendation provides informa­ over 2,500,000 49 68.1 % tion on, and sets out principles for, mat­ ters such as: • Equal treatment of shareholders • Transactions with related parties al business areas are described in Orkla’s practices are highly transparent, and • Freely negotiable shares Annual Report. since 2005 Orkla has presented its finan­ • Governing bodies; composition, inde­ cial statements in accordance with the In­ pendence and activities Contacts and communication ternational Financial Reporting Standards • Information and communication with investors (IFRS). The Board of Directors’ Audit • Risk management and internal control One of the overarching objectives for Committee monitors the company’s re­ • External auditor Orkla’s investor-relations activities is to porting on behalf of the Board of Direc­ create confidence by giving all actors tors. Orkla seeks to communicate actively Orkla has also drawn up its own guide­ equal access to financial information. and openly with the market. Further, all lines for corporate, ethical and social re­ shareholders must be treated equally as sponsibility and behaviour, which may be Orkla seeks to ensure that its accounts regards access to financial information. found on Orkla’s website, under “Corpo­ and financial statements are worthy of in­ The Board is regularly briefed on the rate Responsibility”. vestor confidence. Orkla’s accounting company’s investor-relations activities.

32 ORKLA Sustainability Report 2009 Orkla shareholders Orkla’s management. See also the chap­ annual salary for members of the Group As of 31 December 2009, Orkla had ter on “Corporate Governance” in Orkla’s Executive Board and 1 x annual salary for 48,137 shareholders, compared to 50,613 Annual Report. other participants. Further information on the previous year. At year-end, 37 per the option programme can be found in the cent of shares were owned by foreign in­ Employee representation Annual Report, in Note 6 to the financial vestors, compared to 35.9 per cent at the in governing bodies statements for Orkla ASA, relating to “Pay­ beginning of the year. At the end of the Under Norwegian law, employees must roll Expenses”. year, 17 analysts (12 of which are based be represented in the company’s govern­ in Norway), were tracking the perform­ ing bodies. Accordingly, and in accord­ Orkla’s Board of Directors proposes that ance of the Orkla share regularly. A list ance with the current system of corpo­ the option programme for senior manag­ of brokerage houses and analysts that rate democracy, Orkla employees are ers and key personnel be continued. The regularly track the Group can be found entitled to elect seven out of a total of 21 proposed framework is 7,000,000 op­ in the “Share Information” chapter in the members to the Corporate Assembly of tions. This is equivalent to approximate­ Annual Report. An updated list is availa­ Orkla ASA. Similarly, Orkla employees ly 0.7 per cent of outstanding shares. ble at www.orkla.com/investor. Presenta­ have the right to elect three members tions, interim reports, annual reports, fi­ and two observers to the Board of Direc­ Options are awarded by reference to the nancial statements, stock exchange tors of Orkla ASA. following criteria: notifications and press releases are pub­ • Human resource development lished on Orkla’s website on an ongoing Option programme • Achievement of financial targets basis. The Orkla Group has an option pro­ • Improvements in the employee’s gramme for approximately 300 senior sphere of responsibility The website also contains general infor­ managers, under which each manager is • Collaboration mation about the Orkla share, share entitled in future to buy a number of Orkla • Application of Orkla’s basic values in price performance and shareholder mat­ shares at a specified exercise price. At year- practice ters. Moreover, shareholders and other end, 14,967,000 options were outstanding. • Potential for further development stakeholders have live access to quarterly The option programme is moderate in • Market considerations – securing key presentations on Orkla’s website via scope, since it represents less than one per expertise webstreaming. The website also has a cent of outstanding shares. Ceilings on the • Other factors function for submitting questions to potential annual gain have been set at 1.5 x

HOW ORKLA’S GOVERNING BODIES ARE ELECTED

Employees of Orkla companies The General Meeting

elect in accordance with the Orkla Group’s Elects on the basis of a recommendation system of corporate democracy by the Nomination Committee

The Corporate Assembly 7 employee-elected members The entire Corporate Assembly 14 shareholder-elected members elects its own Chair and Deputy Chair

Elects on the basis of a recommendation by the Nomination Committee

3 employee-elected members The Board of Directors 2 employee-elected observers the entire Corporate Assembly elects the 7 shareholder-elected members Chair and the Deputy Chair of the Board

ORKLA Sustainability Report 2009 33 Orkla and society

Engagement in areas such as education, research and culture benefits both the companies and society

Photo: Deanna Haslerud Orkla and society

Orkla’s many companies are dependent upon positive interaction with society, but also generate positive social ripple effects. The most important of these is the economic welfare boost that the companies provide in the form of employment and tax rev- enues, although engagement in areas such as education, research and culture also benefits both the companies and society.

34 ORKLA Sustainability Report 2009 Positive economic ripple effects nomic Development, Industrial Policy Net sales by geographical area Orkla’s activities have a great potential and Trade, based on nominations sub­ as regards promoting economic growth mitted by the city’s local population. Central and Asia 8% Eastern Europe 9% America and and prosperity, and the Group’s value Krupskaya is one of Russia’s oldest choc­ the rest of creation is channelled back into society olate-makers, with a broad-based com­ the world 14% in a number of areas. Salaries paid to mitment to the development of culture, employees, payments to suppliers, divi­ sports and industry in St. Petersburg, as Rest of Western Husk punktum i Europe 27% dends paid to shareholders and taxes evidenced by the support provided for a Norway 21% y-aksen! paid to the State and local authorities are large number of organisations and examples of how profitable business events in the city. management within Orkla generates Other Nordic countries 21% positive external ripple effects. The part In September 2009, the Norwegian com­ Gul, Brands Total net sales NOK 54,324 million of the added value that is not distributed pany Nidar was awarded the title of is reinvested as equity, strengthening the Trondheim’s Business of the Year by a Orange, finans invest Group’s capacity for further develop­ jury composed of Trondheim’s mayor Capital employed by ment and long-term profitability. and representatives from the city’s busi­ geographical area ness sector. Nidar was received the Central and Eastern Europe 5% Rest of Western Europe 7% Rød, Jotun REC Orkla’s companies contribute to signifi­ award for its systematic efforts over Asia 3% cant local value creation. Orkla currently many years to ensure the company’s Other Nordic America and the countries 22% has around 30,000 employees, and cre­ long-term competitiveness through fac­ rest of the world 6% Mørkrød, Alumin.solu ates an estimated 100,000 external jobs tory investments, food safety efforts, Husk punktum i via suppliers and within the public ad­ EHS work, HR development and a focus y-aksen! ministration. Moreover, cooperation with on company culture. Nidar donated the Lysgrønn, Materials, suppliers and external partners supports prize of NOK 35,000 to Trondheim’s Borregaard, Elkem the transfer of expertise. Orkla’s multi-lo­ training office for food and service, to Norway 57% cal organisational model ensures a high strengthen vocational food industry Gul,80 % Brands sort degree of local employment. Orkla’s aim training in Trondheim. Total capital employed (capitalised) NOK 58,944 million is to be a good employer that offers a safe working environment and attractive Food aid for flood victims Orange,30 % sort, finans stroke invest training opportunities that build on local In September 2009, the Indian company Employees by expertise. MTR Foods provided emergency aid in geographical area Husk punktum i the form of foodstuffs and financial sup­ Rød, Jotun REC Asia 7% y-akse! 20 % sort, fill Engagement in local communities port to flood victims in the northern part Central and Eastern Europe 21% America and the rest Over time, many Orkla companies have of Karnataka state, where MTR Foods is of the world 13% Mørkrød, Alumin.solu become cornerstone businesses in their based. Heavy rain and floods resulted in local communities. The companies often the deaths of approximately 300 people VALUE CREATION AT ORKLA Husk punktum i y-aksen!Gul, Brands have a well-developed interaction with and around 6,000 domestic animals. Rest of Western Norway 21% Lysgrønn, Materials, local authorities and other businesses, Moreover, about 400,000 hectares of ara­ Europe 17% 15000 Borregaard, Elkem and make various contributions to the ble land and around 400,000 houses Orange, finans invest development of a positive local environ­ were damaged by the floods. MTR Foods Husk punktum12000 i Other Nordic countries 21% 80 % sort ment. Orkla’s corporate responsibility employees donated a day’s pay to the re­ y-akse! Gul, Brands guidelines describe the responsibility of No. of employees 900030,167 Rød, Jotun REC each individual company to deal with 30 % sort, stroke problems arising in the company’s inter­ 6000 Orange, finans invest VALUE CREATION AT ORKLA action with the community in which it Gul, Brands Mørkrød, Alumin.solu operates in a positive manner, and to 3000 15000 20 % sort, fill conduct an open dialogue with impor­ Rød, Jotun REC NOK tant stakeholders. The Group’s multi-lo­ mill0 Orange, finans invest Lysgrønn, Materials, 12000 Borregaard, Elkem cal organisational model gives the com­ Mørkrød, Alumin.solu panies freedom to assess independently -3000 9000 To employees as wages (payroll expenses) how this responsibility should be met. To society in the form of taxes (tax costs1)Rød, Jotun REC 80 % sort To shareholders in the form of 6000 dividends and share buybacks/sales Lysgrønn, Materials, Honoured by the local community Retained profit, reinvested Mørkrød, Alumin.solu Borregaard, Elkem (year’s results minus proposed dividend for 2010) Two of Orkla’s chocolate manufacturers 3000 30 % sort, stroke were awarded local distinctions in 2009. 80 % sort In November 2009, Krupskaya of Russia NOK 1) Of which NOK 1.071 million in deferred taxes are mill0 retained in connection with sale of energy assets.Lysgrønn, Materials, was named ”The Legend of Petersburg” Information on taxes for 2009 may be found in Note 20 % sort, fill 11 to Orkla’s consolidated financial statements inBorregaard, Elkem by St. Petersburg’s Committee for Eco­ -3000 Orkla’s Annual Report 2009. 30 % sort, stroke To employees as wages (payroll expenses) To society in the form of taxes (tax costs1) 80 % sort To shareholders in the form of ORKLA Sustainability Report 2009 35 dividends and share buybacks/sales Retained profit, reinvested 20 % sort, fill (year’s results minus proposed dividend for 2010) 30 % sort, stroke

20 % sort, fill Orkla and society

Elkem Carbon employees are supporting the attitude-forming school project Colorir. Photo: Elkem Carbon.

lief efforts. In addition, 30,000 packages gramme. “Colorir” means to colour, and of ready meals were distributed to flood is an acronym for cooperate, organise, victims through the distribution network keep clean, inform, recycle, influence of the Deccan Herald newspaper and and implement. A training manual has MTR Foods’ own network of distributors. been developed for each of these topics. Schoolyards have been equipped with Awareness-raising school project large signs showing the number of vio­ In Brazil, Elkem Carbon has run the lence-free days. The participating schools awareness-raising project Colorir at a are audited annually. Pupils are also in­ number of publicly funded schools in vited to visit Elkem’s factories in Brazil. the Espirito Santo province for several years. The initial aim was to reduce vio­ Efforts to promote health lence and the destruction of public build­ In recent years, several Orkla companies ings. The project’s objective is to develop have engaged in efforts to increase responsible, aware citizens, and the con­ knowledge about HIV/AIDS and combat duct of participating children has im­ discrimination of affected employees. proved significantly. Elkem is leading the These measures have positive ripple ef­ project itself, and is responsible for the fects on the employees’ families and lo­ development of materials, standard pro­ cal communities, as the employees pass cedures, the training of school personnel on their knowledge. and the holding of events. The project is reliant on the dedicated engagement of Borregaard’s partly owned subsidiary Elkem’s employees. Since 2002, more Ligno Tech South Africa has run an HIV/ than 10,000 primary and lower-second­ AIDS programme for several years that ary pupils have completed the pro­ offers employees regular tests and an ad­

36 ORKLA Sustainability Report 2009 vice and follow-up service, as well as free imise health risks and the risk of injury medical treatment and medicines to in connection with buildings and opera­ those who are HIV-positive. The HIV in­ tional processes, the Group has adopted fection rate among employees is signifi­ common guidelines on dealing with cantly lower (by about a third), than the emergency preparedness situations. rate for the rest of the local population. Among other things, Orkla’s manage­ ment teams regularly participate in In 2009, the Indian food company MTR emergency preparedness exercises, and participated in the CONNECT project, a annual fire and industrial defence drills multi-stakeholder initiative that helps are organised for individual factories. companies to meet the challenges pre­ sented by HIV/AIDS and tuberculosis in Despite the attention given to preventing a positive manner. MTR’s aim in partici­ occupational accidents, three tragic inci­ pating in the project is to create a work dents occurred in 2009. A female em­ environment in which further infection ployee at Sapa’s factory in Slovakia, Sapa is prevented and affected employees are Profily, was killed when aluminium pro­ given support. In July, the company ar­ files fell in connection with a lifting and ranged gatherings for a total of 180 em­ storing operation. At Sapa Heat Transfer ployees, at which an introduction was in Shanghai, China, an external mechan­ given to the two illnesses, their associat­ ic died after falling from a crane beam ed legal and ethical problems, and MTR’s during maintenance work. At Beauvais’ guidelines. factory in Svinninge, Denmark, a person became lost, entered the factory grounds Emergency preparedness and drowned in a purification plant. Orkla’s injury prevention procedures are These events show that all parts of the described in the chapter on Employees Orkla organisation must give their full and in Orkla’s EHS Report for 2009. In attention to risk avoidance efforts. addition to making active efforts to min­

Põltsamaa Felix – a good neighbour With roots dating back to 1920, under the own- ership of Procordia and later Orkla, Põltsamaa Felix of Estonia has become a leading food com- pany in Estonia. Põltsamaa Felix has strong mar- ket positions in dressings and other condiments, pickled vegetables, ready meals and beverages; the company’s sales increased six-fold from 1994 to 2008. Põltsamaa Felix has about 170 employees and is a cornerstone enterprise in the little town of Põltsamaa, with 5000 inhabit- ants. The company maintains a close dialogue with local as well as central authorities and, in September 2009, the president of the Republic of Estonia visited the facility.

Põltsamaa Felix supports various local and na- tional sports and cultural programmes. For ex- ample, the company engages in long-term sponsorship cooperation with the Estonian na- tional cross-country skiing community. In 2009, Põltsamaa Felix provided support in the form of food products for the Estonian junior cross- country skiing series and for 130 000 partici- Estonia’s President visits Põltsamaa Felix in September 2009. Photo: Väino Valdmann pants at the Estonian song and dance festival. For several years, the company has provided related cooperation with two important institu- opment of new foods and in its efforts to en- support for Felix Hall, Põltsamaa’s largest in- tions of higher education in Estonia: Tallin Tech hance the nutritional content of existing prod- door sports hall. University and Tartu University. The purpose of ucts. For the two universities, cooperation with these cooperation agreements is to introduce Põltsamaa offers financial support and the op- In 2009, Põltsamaa Felix established research- additional expertise into the company’s devel- portunity to engage in applied research.

ORKLA Sustainability Report 2009 37 Orkla and society

From crisis management clic aromatic hydrocarbons in particle- to long-term research induced pneumonia (Norwegian Insti­ In 2005 and 2008, Sarpsborg experi­ tute of Public Health) enced outbreaks of Legionnaires’ disease among the town’s residents. In total, 100 Renergi persons were infected, and 12 of them In 2009, Elkem Solar, together with Te­ died as a result of the disease. One of knova and the University of Agder (UiA), Borregaard’s biological treatment plants was awarded a grant of NOK 2.9 million was identified as the likely source of the through the RENERGI programme of the outbreaks of Legionnaires’ disease. The Research Council of Norway. The grant company implemented extensive dam­ was allocated to the project “Field- and age limitation and prevention measures. accelerated lab testing qualifying PV The treatment plant was closed, and Bor­ modules made of solar grade silicon regaard initiated studies to identify alter­ from a low cost energy efficient metal­ native treatment technologies. Borre­ lurgical route”, which has a total invest­ gaard’s research in this area will have a ment budget of NOK 8.7 million for the broad utility for biological treatment period 2010–2013. plants in general, and the company is working actively to share its experience. The aim of the project is to obtain relia­ ble scientific data on the performance Socially useful research and degradation of solar-cell modules Orkla engages in different types of re­ that are exposed to external environmen­ search at both group and company level, tal effects, both through laboratory tests benefiting both the Group and society at and through tests conducted under dif­ large. ferent climatic conditions. In the tests, solar-cell modules made of silicon pro­ Donation to the duced by Elkem Solar using its ground­ Research Council of Norway breaking energy-efficient metallurgical In 2005, Orkla and Elkem donated NOK process will be compared to reference 45 million to the Research Council to modules made of polysilicon produced Norway to finance socially useful re­ using existing commercial processes. search in the fields of the environment, resource management, nutrition, obesity The project will make an important con­ and materials science. Of these funds, tribution to the ongoing project of the NOK 6.5 million has been allocated to Research Council of Norway entitled, projects launched in 2009. The status of “End Use of Photovoltaic Technology in the projects is reported to the Research Norway”. This is also a cooperation Council at agreed intervals. project involving Elkem Solar, UiA and Teknova. The promise of support for a Examples of ongoing projects in 2009: new project in the solar-cell technology • Marine omega-3 fatty acids and health. field will ensure continuity in the further Use of systems biology in controlled di­ development of expert R&D institutions et-intervention studies. (Akershus Uni­ in the Agder region that focus on solar- versity College) cell technology. • The effect of probiotics and polyunsat­ urated fatty acids on gut epithelial cells Instructive solar-cell research and the immune function (Norwegian In 2008, Elkem Solar started researching University of Life Sciences) the efficiency of solar panels in conjunc­ • Identification of Norwegian foods and tion with the University of Agder, beverages that reduce oxidative stress, Kvadraturen skolesenter (Kvadraturen strengthen anti-oxidant defences and school centre) in Kristiansand, Kisumu reduce inflammation (University of Polytechnic School in Kenya, the devel­ Oslo) opment aid organisation ARC-aid in • The development of second-generation Kristiansand and the ARO Development biofuels and the effect on the biomass Center in Kenya. In 2009, solar-panel test market (Norwegian University of Life stations were established in both Kris­ Sciences) tiansand (Kvadraturen skolesenter), and • The significance of metals and polycy­ Kenya (ARO Development Center). The

38 ORKLA Sustainability Report 2009 Elkem Solar is testing the effect of solar panels in cooperation with Kvadraturen school center in Kristiansand. Photo: Elkem. two test stations will enable analysis of Solar received by virtue of its status as a how efficiently the product Elkem Solar demonstration business. Elkem Solar Silicon® functions in solar panels in was made a demonstration business for Norway and Kenya respectively. At the the period 2007–2009 in recognition of same time, two doctoral fellows from the its systematic efforts to improve the University of Agder (Grimstad campus), quality of relevant apprentice subjects. will investigate which solar-cell technolo­ The research project also has benefits for gy is most suitable for use in Norway, Kisumu Polytechnic, the organisation and whether there are differences in effi­ ARC-aid and the ARO Development ciency between solar cells based on met­ Center in Kenya. North-South student ex­ allurgical technology and solar cells changes are part of the project, and elec­ based on other technology. tricity generated by the solar panels is The results of the research will be used used to light and power the ARO Devel­ in Elkem Solar’s ongoing innovation ef­ opment Center. forts. This school cooperation project is also a part of Elkem’s long-term focus on Other research generating interest in science among In 2007–2008, Orkla Brands set up a re­ school pupils and ensuring long-term re­ search cooperation project with the Antid­ cruitment to the company. The two solar iabetic Food Center (AFC) at Lund Univer­ panels on the roof of Kvadraturen skole­ sity in Sweden. In 2009, a new agreement senter provide electricity for one of the was signed, committing Orkla Brands for classrooms, an environment room in another three years. The objective of the which all activities are powered by alter­ AFC is to improve knowledge and exper­ native energy. A training package on so­ tise relating to the development of foods lar energy for use in primary and sec­ that can help to reduce the risk of obesity, ondary schools is also being developed, type-2 diabetes, and heart and vascular financed by public funds which Elkem diseases. The results of the research will

ORKLA Sustainability Report 2009 39 Orkla and society

and Business, an arena for dialogue be­ tween Norwegian cultural organisations and trade and industry. The Group also has long-term sponsor relationships with the Norwegian National Opera & Ballet, the Nobel Peace Center, the Oslo Center for Peace and Human Rights, and SOS Children’s Villages.

Renewed support for the Opera The Orkla Group is both a cooperation partner of the Norwegian National Opera & Ballet and a box holder in the new op­ era house. During the past year, Orkla representatives have used the box for 44 meetings and events, in addition to at­ tending productions. Orkla has extended the agreement until 2013, and has an op­ tion for a further extension of three years.

The Nobel Peace Center Orkla is one of the main sponsors of the Nobel Peace Center in Oslo. The Center puts the spotlight on peace and human rights through exciting displays. The Center’s 2009 exhibition on the Civil Rights Movement in the US, entitled “From King to Obama”, became even more relevant when the Nobel Peace Prize was awarded to Barack Obama in December. The exhibition on the new laureate, “A Call to Action”, was inspired by the connection between Alfred No­ Orkla is providing financial support for a new SOS Children’s Village in Vietnam. Photo: SOS-archive. bel’s will and President Obama’s vision for and efforts to promote strengthened international diplomacy and cooperation. be incorporated into Orkla companies’ work on developing healthier foods. Orkla is able to use the Center’s premises In 2008, Orkla also provided support for for its own events outside normal open­ the GRAINITY project, a research project ing hours. All Orkla employees and their focusing on wholegrain, run by Norden, guests may visit the Nobel Peace Center the Nordic Innovation Centre. In 2009, the free of charge, and almost 300 have tak­ project launched two websites containing en advantage of this offer. The Group information about rye and oats, and held will continue the cooperation agreement information meetings for Scandinavian in 2010. and Baltic businesses on the health effects of wholegrain. The Oslo Center for Peace and Human Rights Support for culture, sports and Orkla is one of 10 companies that are charitable work providing financial support for the oper­ Many Orkla companies support cultural ation of the centre in the period 2006– and sporting events and other positive 2010. The Center works internationally social initiatives, either as part of wider to promote peace and respect for funda­ sponsorship cooperation or due to their mental human rights through dialogue desire to be a good neighbour in their lo­ at government level. cal communities. At Group level, Orkla participates in the Forum for Culture

40 ORKLA Sustainability Report 2009 The winners of Krupskaya’s essay-writing competition visit the State Russian Museum. Photo: Vyacheslav Viktorov

New SOS Children’s Village in Vietnam enhance the company’s own role in Blåbärssoppa. The Vasalopp is one of the Orkla has been the main cooperation Russian cultural history. world’s largest long-distance ski competi­ partner of SOS Children’s Villages since tions, and in 2009 about 46,000 litres of 2000. In the years ahead, the Group will In 2009, in close cooperation with the soup, or around one litre per competitor, contribute USD 2.4 million to a new SOS Russian State Museum, Krupskaya or­ were consumed. The blueberry soup has Children’s Village in the mountain town ganised a creative competition among been a staple of Vasalopp racers since its of Pleiku in Vietnam. When completed, 6000 pupils at a total of 30 upper sec­ launch in 1958. the children’s village will provide safe ondary schools in the northwestern cit­ homes for 140 orphans and neglected ies of Tikhvin, Petrozavodsk, Chudovo children. In addition, an SOS day care and Kirishi. The pupils wrote essays on centre will be built for children in the the works of art depicted on Krupskaya’s children’s village and the local communi­ chocolates, in the process learning about ty. The plans also include a cistern for the painters in question. The winners of collecting rainwater for irrigation use dur­ the competition won a trip to St. Peters­ ing the dry season. The local authorities burg, where they were given guided are contributing land, but the welfare sec­ tours of the museum and Krupskaya’s tor in Vietnam is otherwise severely un­ factory. The competition and the portray­ der-resourced. Now gifts of all sizes from als of the museum’s works of art on Orkla’s companies and employees will en­ Krupskaya’s products are helping to able the realisation of the project. make the works of art better known to people outside St. Petersburg. Profitable museum cooperation For many years, Krupskaya has been a Ekström’s Blåbärssoppa (blueberry mainstay for the State Russian Museum soup) at the Vasalopp in St. Petersburg, where the company is Many Orkla companies sponsor sporting located. This cooperation programme events. One example of this is Procordia, allows Krupskaya to use portrayals of which in 2009, for the 51st year in suc­ works of art from the museum to deco­ cession, ensured that the participants in rate its chocolate products, thus helping the Vasalopp race were served Ekström’s

ORKLA Sustainability Report 2009 41 Environment

Orkla prepares energy and climate accounts based on the international GHG Protocol

Photo: Sapa Environment

Orkla considers it important to help to limit environmental consequences throughout the value chain. Several life-cycle analyses were completed in 2009, and attention was focused on energy efficiency in Orkla’s operations.

42 ORKLA Sustainability Report 2009 Orkla operates in many different areas, Area Results 2009 Objectives 2010/2011 which impact the environment to differ­ ing degrees. It is important to have am­ Environment • Continued work on situation Further develop Orkla’s bitious, yet realistic, environmental tar­ analysis of products’ environmen- climate and environmental gets that are adapted to the various tal effects (Orkla Brands) strategy businesses. Responsibility for environ­ • Completed life-cycle analyses for mental efforts, like work on corporate re­ additional products (Orkla Brands, sponsibility in general, is decentralised, Borregaard and Elkem) and rests with the individual companies.

Environmental activities are largely rect choice of raw materials, process im­ and maximise the use of renewable ener­ based on the guidelines in the ISO 14000 provements, and the question of what emis­ gy. Energy management is an integral international environmental standard, sion and discharge levels are achievable. part of EHS work. The emphasis is on re­ under which several Orkla companies ducing oil consumption, either through are certified. National legislation and lo­ Orkla wants to be open and trustworthy efficiency improvement measures or by cal environmental requirements must be with regard to its environmental efforts, switching to other sources of energy for complied with, and Orkla companies and seeks to conduct an active dialogue heat production. Many of Orkla’s pro­ work hard to meet the growing environ­ with important stakeholders. A number duction plants have initiated and carried mental expectations of customers, con­ of internal and external activities took out projects aimed both at optimising sumers, employees and society at large. place in 2009. These are detailed in the energy utilisation in their own opera­ Orkla EHS Report 2009. tions and at exploring the potential use In several cities and urban areas, Orkla’s www.orkla.com/ehs/2009 of energy in the local community in the factories are major employers that gener­ form of district heating. ate a high level of activity. This presents Energy and climate the local community with a number of One consequence of Orkla’s industrial op­ Improving energy efficiency is perhaps challenges. The consequences of Orkla’s erations is the consumption of substantial one of the most important ways of re­ industrial activities include substantial amounts of energy and various raw mate­ ducing greenhouse gas emissions in the energy consumption and emissions and rials as input factors in production proc­ short term. In the long term, the devel­ discharges to the environment, as well as esses. This in turn leads to the emission opment of alternative energy sources transport activity both inside and outside of greenhouse gases. Orkla’s greenhouse and new technologies will probably be the factory site. Orkla is focused on mini­ gas emissions primarily result from crucial to making the required quantum mising the noise and odours generated by Elkem’s activities, while other Orkla emis­ leap forward in reducing greenhouse gas production and transport activities. sions are linked to the production of ther­ emissions. mal energy from fossil energy carriers. Emissions to air from Orkla operations, In recent years, Orkla has invested heav­ i.e. emissions of the greenhouse gases, Energy efficiency ily in solar energy, based on the Group’s SO2 and NOx, are caused by the use of All of Orkla’s businesses pursue energy- silicon expertise and its extensive re­ fossil materials for energy production saving and investment projects on an on­ search efforts in the field of metallurgy. and as raw materials in the electro-chem­ going basis to cut energy consumption Some of Orkla’s other products, such as ical production of metals.

Active efforts are being made to reduce and control discharges to air, grounds, water and sewage systems, and surveil­ lance programmes have been established to monitor and control pollution.

Efforts to reduce and sort waste have had priority for several years, and most factories have invested in waste manage­ ment centres or sorting systems (con­ tainers) to rationalise these efforts.

Orkla’s focus on continuous improve­ ment entails control and reduced emis­ sions, and improvement activities are based on “the best available technology”. In other words, emphasis is given to the cor­ In 2009, Borregaard installed two new, more efficient generators at its power plant at Sarpsfossen. Photo: Kyrre Lien.

ORKLA Sustainability Report 2009 43 Environment

CONSUMPTION OF ENERGY ® aluminium, Husklignin punktum and Microsilica i , may activities affect the environment and cli­ also be instrumentaly-akse! in lowering energy mate. These accounts provide essential consumption and thereby reducing background data that can be used as a start­ 12,000 greenhouse gas emissions. ing point for developing a climate strategy that highlights important measures in the 10,000 Carbon footprint entire value chain. Gul, Brands 8,000 Orkla wishes to assist in the reduction of greenhouse gas emissions and limitation of In addition, life-cycle analyses are undertak­ environmental consequences throughout en to document the effects of different 6,000 Orange, finans invest the value chain. Climate accounts are pre­ products, production processes and the use

4,000 pared to increase awareness of how Orkla’s of resources and input factors on the envi­ Rød, Jotun REC 2,000 Climate accounting puted for all the 29 countries in which Orkla GWh0 Orkla reports its greenhouseMørkrød, gas (GHG) Alumin.solu operates. In order­ to calculate these factors, 05 06 07 08 09 emissions within scopes 1 and 2 of the information was collected on the countries’ Electrical energy Greenhouse Gas Protocol. Separate emis- specific power production mix. The follow- Heat energy sions inventories have beenLysgrønn, prepared Materials, for ing sources were used in this process: Inter- Orkla ASA, asHusk well punktum as for the ibusiness areas national Energy Agency (IEA) Energy Statis- Borregaard, Elkem and businessy-akse! units. tics, Nordel (a body for cooperation between the Nordic transmission system operators The inventories are drawn80 up% onsort the basis of Statnett (Norway), Svenska Kraftnät (Swe- historical data from 2004, which have been den), Fingrid (Finland) and Energinet.dk TOTAL CO2-EMISSIONS FOR ORKLA 2005-09 updated to include emissions generated by (Denmark) and the UK Department of Envi- electricity consumption andGul, district Brands heating, ronment, Food and Rural Affairs (DEFRA). and reported as CO -equivalents.30 % sort, stroke 5,000,000 2 The factors are calculated on the basis Country-specific emissionsOrange, factors finans for elec invest- of the actual production mix, taking account 4,000,000 tricity and district heating20 have % sort, been fill com- of imports and exports.

3,000,000 Rød, Jotun REC Methodology es. The standard is adminis- 14064-I. The GHG Protocol tered by the World Resourc- bases its climate reporting Orkla ASA’s climate accountsgrønnMørkrød, Alumin.solu 2,000,000 are based on the total ener- es Institute (WRI) and the on three “scopes”, or cate- gy consumption linked to World Business Council for gories, of emissions, and 1,000,000 the operation of the Group’s Sustainable Development distinguishes between ­direct businesses. The accountsLysgrønn, (WBCSD). Materials, and indirect emissions. contain an overview of COBorregaard,2 Elkem ­Reports take the following Tonne0 CO2 emissions measured in CO2 The GHG Protocol comprises greenhouse gases into ac- 05 06 07 08 09 equivalents, and are based two accounting standards count: CO2, CH4 (methane), Emissions from process 80 % sort on the international Green- that explain how to quantify N2O (laughing gas), SF6, District heating Electricity house Gas Protocol Initiative and report greenhouse gas HFCs and PFCs. All of these Natural Gas (GHG Protocol), the most emissions. In 2006, the Pro- are converted into CO2 Propane important standard for tocol was adopted as the equivalents. Heavy oil 30 % sort, stroke Oil measuring greenhouse gas- basis for ISO standard Coke 20 % sort, fill

Scope 3: indirect Waste Employee business travel Optional: purchased Use of products goods and services Transport Mørk grønn Subcontractors

ALLOCATION OF CO2-EMISSIONS Scope 2: indirect FOR ORKLA 2009 Purchased electricity District heating Natural Gas 13.3 % Propane 1.0 % Mandatory: purchased energyGrønn Scope 1: direct Heavy oil 6 % Company own vehicles Oil 2.1 % Coke 0.4 % Ownproduced electricity, Electricity 30.9 % Husk punktum i (boilers, use of gas) Mandatory: emissions Chemical or physical fromy-aksen! own production industrial processes

Emissions from District heating 0.7 % process 45.6 % Gul, Brands

44 ORKLA Sustainability Report 2009

Orange, finans invest

Rød, Jotun REC

Mørkrød, Alumin.solu

Lysgrønn, Materials, Borregaard, Elkem

80 % sort

30 % sort, stroke

20 % sort, fill

Mørk grønn

Grønn ronment and climate. Expertise and knowl­ edge are used to make improvements and ensure progress, so that the burden on the environment is reduced and limited. Ork­ la’s production must be sustainable at all times.

Energy and climate accounting Orkla’s total energy consumption in 2009 was 8,2 TWh, down 26% on 2008. The drop is largely the result of reduced production in parts of Orkla due to the financial crisis. Electricity consumption amounted to 4.9 TWh, and in 2009 ac­ counted for approximately 60% of the total energy consumed. In 2009, Elkem’s and Borregaard’s hydropower plants pro­ duced 3.8 TWh of electricity.

Greenhouse gas emissions from Orkla’s Elkem Saudafallene is the largest power-plant development in Norway for many years. Photo: Elkem. own operations totalled 1.85 million tonnes of CO2 equivalents, representing a drop of 18% on 2008. Reduced produc­ Bioproducts that replace tion by several operations due to the fi­ oil-based alternatives nancial crisis also resulted in reduced Borregaard’s biochemicals and biomaterials emissions. However, Indalex’s plant in are environmentally attractive alternatives the US, which became a part of Sapa in to oil-based products. An integrated produc­ 2009, contributed to increased green­ tion concept has been adopted, whereby the house gas emissions. same renewable biological raw material (timber) is used. A life-cycle analysis by Orkla’s climate accounting for 2009 in­ ­Ostfold Research has confirmed that the ap­ clude emissions from purchased energy, proach has high climate utility, which is resulting in a CO2-emissions total of 2.7 now being further increased by the use of Elkem Solar’s factory in Kristiansand produces silicon feedstock for the solar-panel industry. Photo: Elkem. million tonnes. Purchased energy ac­ better energy solutions. The concept is be­ counts for around 32% of the emissions. ing improved by means of enhanced proc­ esses and research into the use of new raw Investments with positive materials, such as agricultural waste. Biofu­ Svartkulp, Sønnå Høy and Sønnå Lav. environmental effects els are one product that may be derived Building works began in 2005, when through the new processes. ­Orkla’s Board of Directors approved the Solar-grade silicon for the future investment. When all works are complet­ Elkem Solar opened a new factory in New, renewable hydropower ed, the development will have cost over Kristiansand in the summer of 2009. The In 2009, Borregaard completed two new NOK 2 billion, and will provide 650 GWh factory produces silicon feedstock for generators at its power plant at Sarpsfos­ of new renewable energy. In total, Elkem the solar panel industry, using just one- sen. The new generators are more effi­ Saudafaldene will produce 1,850 GWh. quarter of the energy consumed by simi­ cient than the old ones, and produce lar plants based on traditional technolo­ more energy from the same flow of wa­ An important guiding principle has been gy. The world’s energy needs are ter. Moreover, the new generators make that the construction work and major op­ growing rapidly, while climate change is better use of increasing flood waters, erations must come second to the land­ challenging societies to identify green meaning that total power production scape, and must harmonise with the sources of energy. Elkem Solar’s ambi­ will increase by about 55 GWh. The flow structure of the surrounding terrain. One tion is for the sun to become the world’s rate will be unaffected, and no other in­ environmental initiative taken by Elkem most important energy source as quickly terventions in the river will be necessary. Saudafaldene was to construct spawning as possible. The new production plant in pools for trout in Nyggjelebeitevatnet, Kristiansand is the result of Elkem’s will­ Elkem’s Sauda project is the largest power which originally offered few natural ingness to invest in advanced technology plant development in Norway for many spawning grounds. and long-term development based on the years. The facility was officially opened company’s core expertise. on 21 April 2009, and comprises five pow­ Further details in Orkla’s EHS Report er plants in total: Dalvatn, Storlivatn, 2009, www.orkla.com/ehs/2009

ORKLA Sustainability Report 2009 45 Responsible investment

In 2009, share sales helped to finance industrial acquisitions by the Group

Photo: Kyrre Lien Responsible investment

Orkla’s capital management helps to strengthen the Group through profitable invest- ments, sound property management and access to capital reserves. In a year featuring challenging financial markets, share sales helped to finance industrial acquisitions by the Group. In 2009, Orkla’s property business focused on the development of existing projects, and no new investments were made.

46 ORKLA Sustainability Report 2009 Active share management main shareholdings 31.12.2009 The Share Portfolio is to generate long- Security Share of portfolio Equity interest Fair value term returns on Orkla’s share invest­ (NOK million) ments, help to develop the Group’s in­ Tomra Systems 6 % 15.3 % 637 dustrial positions, and function as a Rieber & Søn 5 % 16.0 % 503 capital buffer when necessary. In 2009, Amer Sports 4 % 5.7 % 397 share sales helped to improve the Elekta B 3 % 2.8 % 358 Group’s financial leeway, and facilitated Telenor 3 % 0.2 % 294 Sapa’s acquisition of Indalex, as well as Enter Select 2 % IA 270 other long-term investments. Orkla Fi­ Kongsberg Gruppen 2 % 2.5 % 265 nancial Investments reported a positive Schibsted 2 % 1.8 % 253 trend in 2009, due to a strong upturn in stock markets. The Share Portfolio gener­ Network Norway 2 % 26.2 % 246 ated a return of 39.0%, while the MSCI AstraZeneca SEK 2 % 0.1 % 244 Nordic benchmark index increased by Sum 31 % 3,467 36.1%. At year-end, the Share Portfolio had a market value of NOK 11,037 million.

The bulk of Orkla’s shareholdings are Structure of share portfolio as of 31.12 linked to Nordic listed companies, but 2009 2008 the Group has also invested in some companies in Russia and Asia. The Share Percentage Nordic investments 85 % 87 % Portfolio utilises its expertise to identify Percentage remaining investments 15 % 13 % and invest in individual companies that create value. In recent years, the Share Portfolio has chosen to apply the thor­ ough assessments prepared by the Gov­ ernment Pension Fund – Global. Orkla ed in 2010. Orkla Eiendom has also Elkem’s sale of its hydropower opera­ does not invest in companies in which prepared for the construction of approxi­ tions at Salten and Bremanger. the Pension Fund’s Council of Ethics de­ mately 200 flats in Idun’s former yeast cides not to invest. The Share Portfolio is factory at Sandaker in Oslo. Industrial Orkla performs a thorough risk assess­ reconciled on a monthly basis with the activity on the property has ended, and ment in connection with all acquisitions, Pension Fund’s list of excluded compa­ in 2008/2009 raw material and chemical in accordance with its risk management nies. In 2009, no companies had to be ex­ residues were removed and dealt with in procedures. The purpose of the assess­ cluded from Orkla’s Share Portfolio. accordance with the applicable regula­ ment is to identify all relevant risk fac­ tions. Building works on the site will be­ tors, to assess whether it is possible to re­ Profitable property development gin in 2010, and are expected to take duce any risk factors to an acceptable Orkla Eiendom’s mandate is to provide about four years. The project will open level, and to identify any risk factors that sound management of the Group’s real- up previously inaccessible natural areas indicate that the acquisition should not estate investments, and to advise Group along the Aker River for the town’s resi­ take place. The matters assessed include companies on property issues. It uses the dents. The plans for the new residential breaches of human rights, environmen­ expertise it develops in this role to invest area include large recreational areas tal effects, business ethics, management in property development projects. The along the river, a new footpath on the of natural resources and other corporate “raw materials” for such projects may river bank, and a path linking the former responsibility topics. In preparing such also come from outside the Orkla Group. industrial site to large public parks. risk assessments, Orkla uses its interna­ Orkla Eiendom utilises its expertise and tional network of cooperating lawyers networks to identify and invest in prop­ International industrial and accountants to identify suitable local erty projects with profit potential. ­development consultants who can conduct the neces­ The Group Corporate Development Op­ sary input analyses. Urban renewal in Oslo erations department plays a key role in The development of former industrial Orkla’s strategic development efforts. It sites can be positive for the surrounding is responsible both for assisting business areas. In 2009, Orkla Eiendom cooperat­ areas in identifying companies that ed with Macama AS to complete around could strengthen their industrial posi­ 280 new residential units in Ringnes tions and for facilitating mergers, acqui­ Park, the site of a former Ringnes brew­ sitions and business sales. Important ery in Grünerløkka, Oslo. About 200 ad­ projects completed in 2009 are Sapa’s ditional residential units will be complet­ acquisition of Indalex in the US and

ORKLA Sustainability Report 2009 47 Global Compact

Orkla became a member of the UN Global Compact in 2005, and is now one of more than 5,000 companies and organisations that are promoting the ten core principles of the initia- tive in connection with human and workers’ rights, the environment and anti-corruption. Participation in the Global Compact obliges Orkla to make annual status reports. Orkla uses the Sustainability Report and EHS Report to document the Group’s efforts in these areas.

Efforts in the area of corporate responsi­ Principle 4: bility largely rest on the Global Compact’s We work to eliminate all forms of forced ten principles, and Orkla is purposefully and compulsory labour. developing systems and making improve­ Page 25-28 ments to ensure that the principles have a tangible effect on the Group’s operations. Principle 5: This encompasses both matters internal to We work to eliminate all forms of child the Group and responsibility issues linked labour. to the Group’s external stakeholders. Page 25-28

The summary below shows where more Principle 6: information may be found about the We will not discriminate in respect of Group’s efforts relating to the ten princi­ employment and recruitment. ples for sustainable development. See also Page 11 the GRI Index on page 49 for additional references. Environment Principle 7: We will apply the “precautionary” principle in all issues related to the environment. Human rights Page 4, 19, 42-45 of the EHS Report. Principle 1: We will support and respect internation­ Principle 8: ally proclaimed human rights. We will promote initiatives to assume Page 4, 11, 12, 25-28, 47 greater environmental responsibility. Page 42-45 of the EHS Report. Principle 2: We will ensure that the company is not Principle 9: complicit in human rights abuses. We will encourage the development and Page 4, 25-28, 47 diffusion of environmentally friendly technologies. Labour standards Page 42-45 of the EHS Report. Principle 3: We uphold the freedom of association and Anti-corruption the right to collective bargaining. Principle 10: Page 13 We will work against corruption in all its forms, including extortion and bribery. Page 11, 25

48 ORKLA Sustainability Report 2009 Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) is a long-term institution run by various stakeholders, who co- operate in the development of global guidelines and standards for sustainability reporting. Both Orkla’s corporate responsibility efforts­ and its Sustainability Report for 2009 are based on recom- mendations found in the GRI’s guidelines (G3). Given the emphasis the GRI gives to the impor- tance of considering which result indicators should be reported, Orkla has chosen to concentrate on the topics that are most relevant from a strategic perspective. The table below shows where infor- mation about the matters covered by the GRI may be found in Orkla’s reports. A complete GRI Index is provided on Orkla’s website.

GRI also defines ten reporting principles. In Orkla’s view, the Group’s reporting practices largely conform with these principles.

indicator Summary Reference PROFILE Strategy and analysis 1.1 Statement from the CEO 3 1.2 Impacts, risk, opportunities Several, several, several

Organisational profile 2.1 – 2.8 Description of the Group/organisational profile Cover, 30-33, 35, cover, 52-55, 82-83, 88, 111, 124-128 2.9 Significant changes during the period 14-15, 4-5, 8-11 2.10 Awards received during the period 22, 31-32, 35

Report scope 3.1 – 3.9 Reporting parameters 51, cover, 80-81 3.10 – 3.11 Changes relating to collection of information 51 3.12 GRI Index 49-50 3.13 Independent assurance report 51

Structure and governance 4.1 – 4.5 Corporate governance 31-33, 88-89, 63-67, 129 4.6 Conflicts of interest 63-67 4.7, 4.9 – 4.10 Involvement of senior executives and the Board 3-5, 13, 31, 18-20, 63-67 4.8 Code of ethics, CSR-related policies and guidelines Several, Code of conduct (1) 4.11 The precautionary principle 48, 51, intro, 13-14 4.12 Commitment voluntary organisations 4, 6-7 4.13 Membership industry and interest groups 6-7, 19-21, (1) 4.14 – 4.17 Stakeholder dialogue 6-7, (1)

Economic indicators Management approach 3-5, 8-21, 63-67, Orkla’s mission statement, Goals and Values EC1 Economic value generated and distributed 35-36, 69 EC2 Consequences, risk and opportunities due to 42-44, several climate change EC3 Defined benefit plan obligations 13, 89-90 EC4 Assistance received from government -

ORKLA Sustainability Report 2009 49 Global reporting initiative (GRI)

indicator Summary Reference EC6 Guidelines and practice, local suppliers 17-21, 35 EC7 Procedures for local hiring and proportion of local employees 35 EC8 Investments in infrastructure and services 36-41

Environmental performance indicators Management approach 4-5, 48, Environmental policy, Goals and Values EN1, EN2 Materials Several (2) EN3 – EN6 Energy 43-44, several (2) EN8 Water withdrawal Several (2) EN11 – EN15 Biodiversity Several (2) EN16 – EN21 Emissions and discharges 43-44, several (2) EN22 Waste: weight by type and disposal method Several (2) EN26 Mitigate environmental impacts of products and services Several, several (2) EN27 Reclaim percentage Several (2) EN28 Fines/sanctions in the event of breach of laws or regulations Several (2)

Labour practices and decent work Management approach 4-5, 13-14, 48, 17-19, Environmental policy, Code of conduct, Goals and Values LA1, LA2 Information about employment matters and scope 35, 17 LA4, LA5 Relations employees/management 13-15, 17, 129 LA7, LA8 Injuries, occupational diseases and absence, prevention 4, 13-14, 14-15, several (2) LA10 Training, implementation and opportunities 8-11 LA13 Diversity on the Board, management level and workforce overall 9, 12-13, 6, 22 LA14 Average basic salary, men vs. women -

Human rights Management approach 48, Code of conduct, Goals and Values, HR1, HR2 Importance of investment, acquisitions and in the supplier chain 24-29, 47 HR4 Discrimination, frequency, measures and training - HR5 – HR7 Safeguarding ILO core principles -

Society Management approach 48, Code of conduct, Goals and Values, SO1 Impacts on local communities 34-39 SO2 – SO4 Corruption analyses 9, 11-12 SO5 Orkla’s political positions and lobbying activities 6-7 SO8 Fines/sanctions in the event of breach of laws or regulations Several (2)

Product liability Management approach 16-23, Goals and Values PR1, PR3 Product information: health, safety and marking 16-23, several PR6 Marketing principles 21-22 PR9 Fines/sanctions in the event of breach of laws or regulations Several (2)

Green indicates the Sustainability Report, blue the Annual Report, and red the EHS Report. ’-’ indicates that the subject either is not covered in the report or that it is not relevant for Orkla.

(1) Complete information is to be found on Orkla’s website: www.orkla.com/sustainability (2) Orkla’s EHS Report is composed such that the business areas and their environmental impact are presented individually. This gives the reader a good overview, but it becomes  difficult to provide page references to the GRI indicators. Relevant indicators are described for Orkla Brands, Orkla Aluminium Solutions and for Orkla Materials in their respective chapters.

50 ORKLA Sustainability Report 2009 About the report

This report presents Orkla’s corpo- The report should be read in conjunction with other Contact person for the report: rate responsibility work conducted information available in Orkla’s Annual Report and Ellen Behrens (Orkla ASA) in 2009. Orkla’s Sustainability Re- EHS Report, and on its website. The information in the report is based on input from many different Contributors: port is published annually, at the units and sources of data. Great emphasis has been Håkon Mageli, Terje Solbakken, Anders Högberg, same time as Orkla’s other reports. given to ensuring that the information is correct. Sofia C. Lindgren, Anne Gjemdal, Kristina Johansen However, the report does not aim to cover all the (Orkla Brands), Eva Ekselius, Paul Hogg (Sapa), In 2010, all reports were published detailed matters that may be important for individ- Betzy Thangstad, Mark Breidenthal, Karin Aslaksen on 25 March. The next report will ual local businesses, activities or products. Orkla (Elkem), Dag Arthur Aasbø (Borregaard), Roar be published at the same time in values external views on its efforts to develop and Engeland, Bjørn Slåtto, Gjert Brun, Thomas Øybø improve the Group’s corporate responsibility profile. (Orkla Financial Investments), Inger Johanne Eike- 2011. The report relates to the fi- Comments on the report and feedback on the land, Rune Helland, Geir Aarseth, Natalia Mathis- nancial year 2009. Unless otherwi- Group’s work may be sent to [email protected]. en, Pål Eikeland, Per Røhnebæk, Tonje Vang, Ellen se specified, key figures are quo- The thematic approach and the treatment and se- W Ronæss, og Preben Føyn (Orkla ASA) lection of information are based on the GRI princi- ted as at 31 December, and for the ples for good reporting practice. In its corporate re- Advisor: Jørgen Hanson (Vipe AS) Orkla Group as whole, including sponsibility work, Orkla attaches importance to Group companies. identifying the material and relevant challenges Design: that the Group faces, and concentrates its efforts on Cox Oslo areas in which the Group has great influence. The precautionary principle and the life-cycle principle Web production: must permeate both the Group’s decisions and its Odin media as activities, and information about the results of Ork- la’s corporate responsibility efforts must be provided in an open and confidence-building manner. The re- port has not been verified by an external third party.

Contact us

Orkla ASA Orkla Brands Orkla Aluminium Solutions Orkla Materials Orkla Materials Ellen Behrens Kari Westersund Sapa Elkem AS Borregaard Erika Ahlqvist Betzy Thangstad Dag Arthur Aasbø Pb. 423 Skøyen Pb. 711 NO-0213 Oslo NO-1411 Kolbotn Humlegårdsgatan 17 Pb. 5211 Majorstuen Pb. 162 Tel: + 47 22 54 40 00 Tel: + 47 66 81 61 00 Box 5505 NO- 0303 Oslo NO-1701 Sarpsborg Fax: + 47 22 54 45 90 Fax: + 47 66 80 63 78 SE -114 85 Stockholm Tel: + 47 22 45 01 00 Tel: + 47 69 11 80 00 E-mail: E-mail: SWEDEN Fax: + 47 22 45 04 95 Fax: + 47 69 11 88 01 [email protected] kari.westersund@ Tel: +46 84 59 59 00 E-mail: [email protected] E-mail: dag.arthur.aasbo@ orklabrands.no Fax: +46 84 59 59 50 borregaard.com E-pmail: erika.ahlqvist@ sapagroup.com

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Copyright notice The content of this Sustainability Report is copyright protected material. The content may be freely distributed, reproduced and electronically stored. This consent is given on the condition that the source of the material is correctly cited. © 2010 Orkla ASA Orkla ASA Tel: +47 22 54 40 00 P.O. Box 423 Skøyen Fax: +47 22 54 44 90 NO-0213 Oslo, Norway Enterprise number: NO 910 747 711 Office address: Karenslyst allé 6 www.orkla.com NO-0278 Oslo, Norway

In addition to the Sustainability Report Orkla also publishes an Annual Report and an EHS Report. These are available at www.orkla.com