Internal controls and risk assessments in financial and sustainability reporting

An essential part of Lundbeck’s risk management and internal control systems aim to effectively identify, ad-dress, and mitigate risks in financial and sustainability reporting, minimizing errors and misstatements. Additionally, they support the operations of Lundbeck’s business by emphasizing quality, efficiency, and strong ethical principles in daily transactions and decision-making.

The Board of Directors oversees risk management and internal controls linked with financial and sustainability reporting through the advice of the Audit Committee, with the Executive Leadership Team responsible for overall financial and sustainability reporting compliance.

Control activities are guided by a continuously updated risk assessment to ensure compliance with Lundbeck’s strategies, policies, and relevant legislation. A central component is the global Internal control framework, which is based on the COSO framework (Committee of Sponsoring Organizations), and enables Lundbeck to address key risks in financial and sustainability reporting, including fraud, and standardizes controls across all entities to enhance efficiency and consistency.

Lundbeck continuously monitors and assesses risks and control activities. Within Group Finance, the Financial compliance division supports lines of business to monitor and evaluate key risks identified through the ERM process and monitors risks through procedures outlined in the annual plan. These procedures include the reassessment of key risks and the evaluation of the effective-ness of the Internal control framework. The Audit Committee reviews and approves the reports resulting from this monitoring process, ensuring appropriate oversight and alignment with the company’s governance frame-work.

External auditors also report significant control weak-nesses to the Board of Directors, while minor issues are communicated to the CFO. The Board of Directors ensures follow-up by the Executive Leadership Team, who in turn ensure subsidiaries address any findings. Annually, subsidiary managers and financial controllers confirm compliance with Lundbeck’s reporting guidelines.

Monitoring and risk assessment of internal controls for the sustainability reporting are under implementation as part of Lundbeck’s roadmap under CSRD implementation. 

In 2025, Lundbeck continued to advance the internal control framework for sustainability reporting initiated under the CSRD. This includes ongoing evaluation and redesign of internal processes to ensure accurate and complete sustainability disclosures. The governance structure mirrors that of financial reporting, with the Board of Directors providing oversight, the Executive Leadership Team holding overall responsibility, and the Audit Committee advising on the effectiveness of sustainability reporting.

Sustainability reporting controls are integrated into Lundbeck’s global Internal control framework, aligned with an established roadmap. Lundbeck continues strengthening sustainability reporting internal controls, which are informed by the double materiality assessment and embedded across business areas to ensure consistency with broader reporting processes.

The Executive Leadership Team reviews sustainability-related risks and coordinates with the Board of Directors on mitigating actions. External auditors report significant findings to the Board of Directors and minor issues to the CFO as part of the limited assurance of the Sustainability statement.