Dear reader

Having your heart in your work has always come natural to Palsgaard. Already when the company was founded more than a century ago a mission, vision and values encompassing the concepts known today as Corporate Social Responsibility became part of the foundation. The continuation of these values means that having a high employee satisfaction is an important part of our business strategy. With a staff turnover of just 4.8% in 2011 and several 25 and 40 year anniversaries over the years, we should be content, but we continuously carry o Palsgaard Corporate Social Responsibility Report 2011 - finalut enhancement measures for our employees.

With our company slogan "Heart working people" we work in correspondence to Palsgaard's traditional work with CSR. We manage our business in a socially, environmentally and financially sustainable manner and in compliance with the principles of the United Nations Global Compact, which are implemented in Palsgaard's business processes in an international perspective.

Located in scenic surroundings among the agricultural and forest land, owned by the Schou Foundation, we run our globally working enterprise. Our financial foundation and geographic location combines employees, nature and environment, product development and production with sound economic management, and allows us to make sustainable investments in the company and ensure future activities. We want to increase the profiling of our CSR related activities so that our customers and stakeholders will to an even larger extent get to know Palsgaard as a responsible, reliable and quality conscious partner. In tune with the constantly increasing interest and sustainability requirements from customers and stakeholders, it feels absolutely right that we can now launch a report based on our strategic work with CSR.

In 2010 we set down a framework for a CSR strategy and in 2011 we have clarified the focus areas and established action plans for implementing our strategic CSR goals. We have selected four focus areas where we particularly want a sustainable development within CSR:

• Energy and Environment
• Employees
• Corporate governance
• Products

The CSR strategy describes the specific actions planned, ensuring continuous operation and development of the areas. In a global context, we consider it important to contribute to reducing CO2 emissions and we have set an ambitious goal within Energy and Environment of becoming CO2-neutral by 2020. This ambitious objective is necessary because our production processes are very energy intensive. In the strategy we have also set targets for environmental and safety improvements in our production and for extending of the skills of our employees.

Palsgaard's products are mostly comprised of natural ingredients and we have extended the accountability requirements to our suppliers in relation to the UN Global Compact. Palm oil is an important ingredient in the food chain and we have set targets of exclusively using certified palm oil-based raw materials in our products. Openness and continuing local efforts will be our tool for sustainable commodity purchases.

The formation of a CSR organisation must ensure implementation of the strategic CSR work, both internally and in our internationally located subsidiaries, and we will continuously assess and implement further CSR initiatives in the global organization.

We have in our first award-winning CSR Report for 2010 and in this subsequent report, reported on existing values and launched initiatives that show how Palsgaard works with accountability and sustainability and thus is able to present itself as a worthy representative of responsible corporate governance. The concept of responsibility is not only a real ingredient in our history and everyday work, but will now also be treated strategically with continuous improvements.

We hope you will enjoy reading our report.