We have been engaged by Novozymes A/S’ Management to obtain moderate assurance (review) as to whether Novozymes adheres to the AA1000 AccountAbility Principles and to obtain reasonable assurance (audit) as to the statement of the Board of Directors and Executive Management, Management’s review, accounting policies and the quantitative environmental and social data in Novozymes' 2010 Annual Report.
The criteria for the preparation of the environmental and social data are evident from the accounting policies described in Novozymes' 2010 Annual Report. These contain information concerning which of Novozymes’ activities and functions are included in the reporting, types of data, Management’s reasons for choosing the data included and the accounting policies and methods applied.
Adherence to the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness is the responsibility of Management. Furthermore, Management is responsible for preparing the environmental and social data as well as for establishing data collection and registration and internal control systems with a view to ensuring reliable reporting, specifying acceptable reporting criteria and choosing data to be collected for intended users of the Annual Report.
As assurance provider, it is our responsibility, on the basis of our work, to make observations and recommendations with respect to the nature and extent of Novozymes’ adherence to the AA1000 AccountAbility Principles as well as to express an opinion on the reliability of the environmental and social data in the Annual Report.
Our team of experts has competencies within performing assurance of environmental and social data and within assessing such data and information. In addition, our team has competencies with regard to assessing sustainability management systems. We have in 2010 not performed any tasks or services for Novozymes or other clients which would have conflicted with our independence, nor have we been responsible for the preparation of any part of the Annual Report. Thus, we are independent as defined in the AA1000 Assurance Standard (AA1000AS (2008)) and we consider our team qualified to carry out this independent assurance engagement.
We have planned and performed our work based on AA1000AS (2008), using the criteria in the standard to perform a Type 2 engagement, and in accordance with the International Standard on Assurance Engagements (ISAE) 3000, “Assurance engagements other than audits or reviews of historical financial information”.
We have worked to obtain:
• A moderate assurance (review) as to Novozymes’ adherence to the AA1000 AccountAbility Principles
• A reasonable assurance (audit) of the quantitative environmental and social data in the Annual Report
Our methodology has included procedures to obtain evidence of Management’s commitment to the AA1000 AccountAbility Principles and of the implementation of systems and procedures in support of the principles.
Our methodology has also included procedures to obtain evidence of the environmental and social data in the Annual Report. The procedures chosen depend on our judgment, including the assessment of the risks of material data misstatements. In conducting those risk assessments, we have considered internal controls relevant to the preparation and fair presentation of environmental and social data in order to design assurance procedures which are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Novozymes’ internal controls.
Based on an assessment of materiality and risk, our work has included:
(i) Enquiries and interviews with members of Executive Management, staff from the Sustainability Development department as well as management of different corporate functions regarding Novozymes’ adherence and commitment to the AA1000 AccountAbility Principles, the existence of systems and procedures to support adherence to the principles and the embedding of the principles at corporate level
(ii) Sample testing of key processes and controls which form part of management reporting systems, processes and procedures, and the obtaining of evidence supporting the environmental and social data disclosed in the Annual Report. Our assurance on environmental and social data has been undertaken at chosen reporting units and combined with analytical assurance procedures on data covering the Novozymes Group.
In our opinion, the environmental and social data in the 2010 Annual Report have been stated in accordance with the criteria mentioned and, based on our review, nothing has come to our attention causing us to believe that Novozymes does not adhere to the AA1000 AccountAbility Principles.
According to AA1000AS (2008), we are required to include observations and recommendations for improvements in relation to Novozymes’ adherence to the AA1000 AccountAbility Principles.
Management’s strong commitment to inclusivity and stakeholder engagement has in 2010 been reinforced through the introduction of Novozymes’ new values “Touch the World”. Processes for stakeholder mapping and ongoing engagement planning are in place across Novozymes’ corporate functions. Novozymes is in the process of further improving a situation-based stakeholder engagement tool and its application and will introduce a new tool to track stakeholder engagement. The developments continue to form the basis of structured and systematic stakeholder engagement processes being integrated and applied across the organization. We recommend that Novozymes monitor the use of the processes and tools to assess their efficiency and to facilitate learning.
Materiality is taken into consideration when making decisions regarding sustainability at management level. Also, Novozymes has in place relevant governance bodies to discuss, evaluate and determine the materiality of sustainability issues and decide on the corporate sustainability targets and strategy. In 2010, Novozymes has further developed its materiality assessment approach. We recommend the implementation of the new approach in 2011 and that the processes and criteria applied to assess materiality of sustainability issues are formalized and documented to ensure a consistent process.
Novozymes is committed to being responsive to its stakeholders, which is evident from the ongoing and wide-ranging communication on sustainability issues in media, forums and forms, including the Annual Report.
Bagsvaerd, January 21, 2011
State Authorized Public Accountant
State Authorized Public Accountant