At Genentech, we recognize that climate change is an issue of global concern, and we are committed to participating in the effort to reduce emissions of greenhouse gases into the atmosphere. In this section, we discuss our commitments to accurate and transparent greenhouse gas reporting, our strategy for reducing our climate change impacts, our progress towards our 2010 greenhouse gas efficiency goal and our planned activities for 2008.

Our Greenhouse Gas Reporting Commitments In 2006, Genentech voluntarily joined the California Climate Action Registry (the Registry), and was among the first biopharmaceutical companies to do so. During 2007, we calculated our 2005 and 2006 greenhouse gas emissions in accordance with the Registry's General Reporting Protocol and submitted this to the Registry for third-party verification. The inventory was successfully verified and we are now a member of the Registry's Climate Leaders group. At the time of publication of this Sustainability Report, the third-party review of our 2007 emissions calculations will have been completed as part of the Registry's verification process. We place importance on ensuring the high quality of the data on which we base our management decisions, and we believe that the Registry's rigorous reporting and verification protocols help us to meet our data quality objectives.

As Genentech is located in the State of California, climate change presents particular issues for our company. California has been proactive in passing legislation to limit emissions of greenhouse gases from industry and other sectors. The California Global Warming Solutions Act of 2006 (Assembly Bill 32) commits the State of California to reduce greenhouse gas emissions to 1990 levels by 2020. When the bill is fully implemented, this commitment will translate into new requirements for California companies. These include mandatory greenhouse gas reporting regulations, which will require certain California facilities to report their greenhouse gas emissions annually to the California Air Resources Board (CARB) starting in 2009 (for reporting year 2008). Our South San Francisco facility may be covered by the new reporting requirements. Since Genentech is an existing member of the Registry and is already annually reporting emissions, the company is well prepared to meet CARB's new reporting requirements, as these will largely be based on the Registry's existing standards and protocols.

Our reporting to the Registry encompasses emissions from our facilities, including electricity, natural gas and fuel use in our emergency power generators and Genentech owned and controlled vehicles. As the graph below shows, electricity and natural gas use at our facilities are our most significant emission sources. Consequently, our current greenhouse gas reduction strategy is focused on improving the energy efficiency of our operations and evaluating onsite renewable energy options. Other emissions, such as those arising from business travel, are not required to be reported to the Registry, but we do provide data on these in the Sustainability Data & Supporting Notes section of this report. In addition, we have recently estimated the emissions arising from our South San Francisco employee commuting activities during 2006 and 2007. This exercise was led by the Genentech gRide team, which runs our award winning employee commute program.

Carbon Dioxide Emissions Profile

Genentech and the Carbon Disclosure Project Genentech participated in the Carbon Disclosure Project (CDP) for the first time in 2007 and will be participating again in 2008. CDP is a global non-governmental organization that works with investors and corporations to help them share information on climate change in a standard, secure, and accessible way. The CDP represents investors, with combined holdings of $57 trillion in assets under management, who are interested in understanding the way in which companies view and manage climate change risks and opportunities. We were pleased to receive the highest Carbon Disclosure Leadership Index (CDLI) rating among the biotechnology CDP participants for our 2007 climate change submission to the CDP. The CDLI rating takes into account information provided by companies on a range of climate change issues, such as business risks and opportunities, strategies, targets and action plans, and greenhouse gas emissions accounting and reporting. We received a CDLI rating of 75 out of a maximum possible 100 for our 2007 response. This compares favorably with the pharmaceutical sector group, which had an average CDLI rating of 58.

2010 Greenhouse Gas Goal Progress During 2005, our Sustainability Steering Committee committed to the following goal:

Improve energy efficiency* by 10 percent by the year 2010, compared to 2004.

* Energy efficiency is measured as total weight of energy-related carbon dioxide¹ emissions divided by units of marketed product produced.

During 2007, we built on the progress made towards the goal in 2005 and 2006, as shown in the following graphs. Our greenhouse gas efficiency in 2007 improved by 28 percent when compared with the 2004 baseline and 9 percent when compared with 2006.

Carbon Dioxide Emissions from Energy Use




Genentech's Goal for Carbon Dioxide Emissions per Unit of
Marketed Product 2004 to 2010

We have updated our 2005 and 2006 greenhouse gas figures to reflect the commencement of operations at our new Oceanside facility in mid-2005, and these updated figures are reflected in the graphs above. For the first 12 months of operation, the Oceanside facility was preparing to commence manufacturing and did not start actual production until mid-2006. In November 2006, Genentech announced that it entered into an agreement with Lonza by which Lonza would purchase our manufacturing facility in Porriño, Spain. Consequently our energy consumption data for 2007 do not include the Porriño facility.

We are pursuing energy efficiency options in each of the following areas:

• Increasing manufacturing process efficiency
• Integrating energy efficiency into new building design standards
• Incorporating energy efficiency into existing building upgrades and renovations
• Achieving energy efficiency in equipment (e.g., motors, HVAC and lighting)
• Educating and engaging employees towards changing behaviors

Continued successes in improving the efficiency of our manufacturing processes have contributed significantly to our greenhouse gas efficiency gains, with production rate increases outpacing the growth in greenhouse gas emissions for a third consecutive year. We completed or commenced a range of projects and initiatives during 2007 that also contributed to these gains, examples of which are summarized below.

• Our Vacaville facility implemented a building management software program that models energy use across the facility-related systems, including cooling towers, chillers and HVAC, in order to gain a system-wide view of its energy consumption and better target energy saving opportunities.
  
  
• In the last quarter of 2007, our Oceanside Maintenance and Engineering Group changed the operating sequence on the facility's chilled water plant to operate only one chiller during periods of low load. Prior to this change, two chillers were running, resulting in inefficient electricity consumption. This led to an 8.2 percent annual reduction in energy use associated with the chillers, equivalent to an annual reduction in carbon dioxide emissions of 220 metric tons.
  
  
• Genentech is working in partnership with a range of stakeholders to realize energy efficiencies. Our South San Francisco and Oceanside facilities have both participated in energy demand management programs run by their energy suppliers (Pacific Gas and Electric for South San Francisco and San Diego Gas and Electric for Oceanside) during 2007, and each facility has been recognized by its supplier for its participation and associated energy conservation efforts.
  
  

Going Forward We have expanded our internal energy management team with expertise in energy efficiency and conservation, and renewable energy opportunities. Our energy management team utilizes a number of tools for forecasting expected energy and water consumption for our new complexes and developments, and for anticipating performance towards our company sustainability goals.

Overall, we have numerous projects underway or under evaluation that will either reduce or conserve natural resources or take advantage of renewable energy opportunities.

We look forward to reporting on the progress of these and other projects in our next Sustainability Report.

 

¹ Carbon dioxide represents >99.9 percent of our energy related greenhouse gas emissions.