Novo Nordisk – Greener Through Partnerships

Producing diabetes medicine is an energy-intensive process. To aerate and cool the large fermentation tanks requires a lot of energy – and money. In 2007, Novo Nordisk signed a unique partnership deal with Danish energy company DONG Energy to help them green electricity supply in Denmark. The partnership is an important step on Novo Nordisk's way to achieving the company's ambitious goal of cutting CO₂ emissions by 10% from 2004 to 2014 – while still continuing to grow.

Saving energy finances green electricity

Novo's partnership with DONG is as follows: DONG Energy assists Novo in identifying energy-savings potential. Novo saves energy and money. The financial savings are then earmarked by Novo Nordisk to purchase green electricity based on energy from a new wind farm currently being built by DONG in the North Sea.

The solution is a win-win-win – for the two companies as well as the environment. Novo Nordisk gets free access to valuable expert knowledge on how to save energy and is able to go green through energy savings alone. For DONG Energy, Novo Nordisk's long-term commitment to buying green electricity was the tipping point that made the new wind farm project financially feasible. Finally, Denmark will soon be able to add a new wind farm to its grid.

According to Novo, it is going well. For a big energy consumer like Novo, there is great potential for reducing energy, and finding new ways to decrease the use of energy. Through DONG's consultancy on how to optimize cooling, ventilation, and other utilities, Novo is on the right track towards reaching the target of transforming all of its electricity consumption in the Danish factories into green energy by 2014.

Partnerships drive innovation

The partnership between Novo and Danish energy company DONG is at least partially induced by Danish energy policies that require the nation's energy suppliers to help costumers reduce their energy consumption. But, to infer from the apparent success of the collaboration, it looks as if this kind of partnership is here to stay.

As in all areas of business, partnerships can be the central drive of innovation. In fact, the partnership with DONG Energy is an example of one partnership spurring another. In 2006, Novo Nordisk joined WWF's Climate Savers program and committed to the 10% reduction target. A clause on additionality in this partnership is the direct cause of Novo Nordisk searching for green electricity from a new source of renewable energy.

Communication synergies

The synergies to be derived from engaging in partnerships not only relates to the energy savings. Joining partnerships also helps the companies stick to their goals, and strengthens the communication synergies to be derived from teaming up with other companies. Partnerships are sound business, as they activate the stake that both parts have in communicating the efforts made.

Teaming up with WWF not only gave Novo extra incentive to stick to its energy-saving commitment, it also gave WWF an incentive to make this commitment known in wider public circles. Thus far, the strategy seems to have worked.

In a recent study by Pleon – an international communications consultancy which has investigated and ranked the climate strategies of 500 international companies – Novo was acknowledged as the leading company in the area of climate partnerships. And in the fall of 2007, Novo was proclaimed by Ethisphere as one of the most ethically responsible company within the whole pharma industry.

Interest from global companies

The achievements of Novo Nordisk in saving energy and communicating its green strategies have attracted the attention of domestic and global companies and organizations. So far, Novo's partnership with DONG Energy has been copied by seven Danish corporations and municipalities; and in the summer of 2008 DONG Energy established a new partnership department dedicated to driving this new business area.

Novo Nordisk communicates the model to partners worldwide, including those in the Climate Savers network such as Nike, Johnson & Johnson, Nokia, and Sony. The recipe for Novo seems simple: Join smart partnerships, involve the stakeholders and the experts in mutual arrangements, and gain access to new ways of thinking and new ways of saving energy and growing greener.

This applies for energy-intensive industries such as Novo Nordisk, and it should also apply to less energy-intensive types of companies as well. Factory production lines are only one place to start looking for energy savings. Carbon and cost reductions are also likely to be found in other areas of business, such as transportation, sales, and business travels. A partnership-based solution like Novo's thus seems to be relevant for all kinds of companies that want to cut their energy expenses and become more sustainable.

Lasse Skjoldan, Copenhagen Climate Council