We take responsibility every day – and have been doing so for nearly 350 years. This is reflected in our corporate strategy and values. Responsible conduct with respect to employees, products, the environment and society is a fundamental prerequisite for our business success.
Our corporate responsibility (CR) activities are directed by our CR Committee, which consists of representatives from the business sectors and relevant Group functions. Stefan Oschmann, Vice Chairman of the Executive Board, became chairman of this committee in January 2015.
Mankind is confronted with global societal challenges such as climate impact mitigation, resource scarcity and insufficient access to health in low- and middle-income countries. We believe that we can help resolve these global challenges through our innovative products in the Healthcare, Life Science and Performance Materials business sectors, as well as through responsible governance.
Responsible conduct means looking, listening and doing better. We respect the interests of our employees, customers, investors, and society, and minimize ethical, economic and social risks, thereby securing our success. It is firmly anchored in our corporate strategy and forms the basis of our CR strategy, enabling us to practice responsible governance every single day. At the same time, we consolidate our resources in the areas where we can make the biggest difference. We are engaged in three strategic spheres of activity: health, the environment and culture. In doing so, we always focus on securing the future of our company and our competitiveness.
Health: In low- and middle-income countries, many people do not have access to high-quality health solutions. We use our expertise and work together with strong partners to develop solutions for people locally.
Environment: We continuously work to further improve the sustainability footprint of our products. In addition, we want to help our customers to achieve their own sustainability goals.
Culture: Culture inspires people and broadens their horizons. Since our research and development activities benefit from people’s creativity and enthusiasm, we promote cultural and educational projects worldwide.
We support relevant initiatives concerning responsible corporate governance. We are a member of the United Nations Global Compact and are committed to complying with the compact’s principles regarding human rights, labor standards, environmental protection, and anti-corruption. Moreover, we also live our corporate responsibility through our commitment to follow the guidelines of the Responsible Care Global Charter, an initiative of the International Council of Chemical Associations (ICCA). This charter aims to continuously improve the products and services of the chemical industry in terms of environmental protection, health, plant safety, and security. We were among the first companies to sign the revised version of the Responsible Care Global Charter in 2014. In addition, we are a member of the “Chemie3” initiative, a collaboration between the German Chemical Industry Association (VCI), the German Employers’ Federation of the Chemical Industry (BAVC), and the German Mining, Chemical and Energy Industrial Union (IG BCE). As part of this globally unique collaboration, the partners aim to make sustainability a core part of the chemical industry’s guiding principles and to jointly drive the sector’s position within the German economy as a key contributor to sustainable development.
To us, corporate responsibility does not merely mean taking action, but also listening. The dialogue with our various stakeholder groups is therefore highly important to us. These stakeholders include our employees, our business associates, the Merck family, investors, regulatory agencies, and associations. We also engage in a continuous exchange in order to create transparency and clearly demonstrate how we live the Merck Values.
Thanks to good performance with respect to responsible, sustainable entrepreneurial conduct, we were again included in the FTSE 4Good index in 2015. To be included in this leading international sustainability index, a company must demonstrate socially conscientious, ecological and ethical conduct. In 2015, we maintained our good position in other major sustainability indices as well. For instance, we were once more included in the STOXX Global ESG Leaders index and are also listed on the Euronext Vigeo Eurozone 120 index.
Access to Health (A2H) is one of our strategic priorities. Through our A2H approach, which spans all our businesses, we aim to help improve sustainable access to high-quality health solutions for underserved populations and communities in low- and middle-income countries. Since we realize that access is a complex and multifaceted challenge with no one-size-fits-all solution, our programs and initiatives are tailored to global, regional and local needs. We consider partnerships, collaboration and dialogue to be key instruments in delivering sustainable access results. Our efforts are supportive of the United Nations Sustainable Development Goals (SDGs).
During his presidency of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Stefan Oschmann, Vice Chairman of the Executive Board, is focusing on the core topic of accelerating access to high-quality health solutions for people in low- and middle-income countries.
Our Access to Health strategy focuses on four areas, the 4As of Availability, Affordability, Awareness, and Accessibility.
Availability entails the research, development and refinement of health solutions that address unmet needs and are tailored to local environments. Together with our partners, we are working to fight widespread diseases in developing countries. One example is the Pediatric Praziquantel Consortium. Through this public-private partnership, we are working on a pediatric formulation of praziquantel to treat the worm disease schistosomiasis in children under the age of six. In 2015, the consortium completed a Phase I trial with healthy subjects in South Africa as well as a taste study with children in Tanzania. In June 2015, the consortium was awarded a prestigious research grant from the Japanese Global Health Innovation Technology Fund for the second time. Another example is Merck’s partnership with the Medicines for Malaria Venue, a non-profit research foundation, to develop new antimalarials. In addition, our Healthcare and Life Science business sectors are currently developing a malaria diagnosis kit based on the Muse cell analysis system. The aims are to detect and determine the malaria pathogen as well as to determine relevant immune cells in the case of a possibly concurrent HIV infection.
We seek to address affordability challenges through our efforts to provide assistance to those who are unable to pay for the health solutions they need. To tackle these challenges, we have taken a pro-access approach through our intellectual property initiatives and are engaging in equitable pricing strategies. We are a member of WIPO Re:Search, an open innovation platform, sponsored by the World Intellectual Property Organization, to accelerate early discovery of active ingredients to treat infectious diseases through intellectual property and knowledge sharing. In 2015, we started our first collaboration with the University of Buea in Cameroon, which aims to repurpose compounds from our library to develop a treatment for onchocerciasis, also known as river blindness. To this end we are strengthening the development of local skills and research expertise. Furthermore, we are working with the World Health Organization (WHO) to combat the worm disease schistosomiasis in Africa. We donate Cesol® 600 tablets containing the active ingredient praziquantel to WHO, and in 2015 we donated more than 100 million tablets. Since the start of the program, around 74 million patients, primarily school children, have been treated. As of 2016, we will supply WHO with up to 250 million praziquantel tablets annually. As a founding member of the Global Schistosomiasis Alliance, we are helping to eliminate schistosomiasis worldwide.
We help to raise awareness by empowering health workers, communities and patients with appropriate tools, knowledge and skills to make informed decisions. With our Access Dialogues series, we aim to promote information exchange and discussion with numerous public and private stakeholders. In 2015, the focus was on the topics of intellectual property and supply chains. In India, we are supporting the Suswastha project together with various non-governmental organizations and the Indian Health and Family Ministry. The aim is to provide underserved rural populations with affordable health solutions and to engage patients through community-level meetings as well as educative health programs. In 2015, the project reached a total of more than 15,000 people through 717 community meetings and 43 health workshops. The non-profit organization Global Pharma Health Fund (GPHF), which is funded by Merck, combats counterfeit medicines in developing and emerging countries. To date, the GPHF has supplied more than 700 Minilabs at cost to detect counterfeit medicines in more than 90 countries. In addition, through our Capacity Advancement Program (CAP), we want to raise awareness and further the prevention of non-communicable diseases such as diabetes and cancer, as well as address the issue of infertility. (Detailed information can be found in the story entitled “Awareness” in the magazine section of this Annual Report.
We promote initiatives to strengthen supply chains and to develop localized health solutions in order to deliver and reach out efficiently at the point of care. Using heat sensors, for example, we monitor the transportation conditions of our primary shipments from Europe to the rest of the world. Patients can therefore be assured that our products are kept and released under the right conditions according to registration. Furthermore, we support the expertise and training of the managers of our partners in Africa, Asia and Latin America to strengthen local quality manufacturing standards. In India, we are cooperating with the non-governmental organization River Narmada Samagra. Our river ambulance transports health workers and provides healthcare solutions to local populations living in the remote region along the Narmada River. At the beginning of 2016, we donated a new boat to River Narmada Samagra so that even more people can be reached in the future. Additionally, in the Jharkhand region of northeastern India, we are financing a health center visited by approximately 150 patients per month.
Through our products we are helping to overcome global challenges such as climate impact mitigation and resource scarcity. At the same time, we are also helping our customers achieve their own sustainability goals.
We strive to continuously enhance the sustainability footprint of our products and are working to offer our customers products that enable them to reduce the negative impact of their own activities, as well as to achieve their own sustainability goals. For instance, we are developing innovative materials for energy-efficient liquid crystal and OLED displays and are thus helping our customers develop environmentally sustainable processes. Thanks to our liquid crystal technology PS-VA, displays consume approximately 20% less energy in comparison to the preceding VA technology. The new UB-FFS technology (ultra-brightness fringe field switching) provides displays with up to 15% more light transmittance, thus further reducing energy consumption. We are also developing liquid crystals for new applications. For instance, we are working with architects, glass makers and façade manufacturers to create the windows of tomorrow. Our ambitious goal is to use smart windows to make buildings more energy-efficient.
We have developed a series of environmentally friendly specialty chemicals and materials for the semiconductor industry – including PFOS-free antireflective and photoresist coatings that contain no trace of dangerous chemicals.
Within the scope of our cosmetic products business, we are working to sustainably procure and produce cosmetic ingredients as well as optimize the related production processes. In dialogue with our customers from the cosmetics industry, we are also developing cosmetic formulations that meet strict sustainability criteria and address the current trend towards more natural cosmetics. Several of our products have been certified by Ecocert, an independent organization that represents high international standards for environmentally sustainable products.
Within Life Science, the Design for Sustainability (DfS) program aims to reduce environmental impacts, also through customers’ own use. Beginning with the concept stage, product teams identify potential environmental impacts in various product life cycle stages as well as opportunities to make improvements. A scorecard is used to assess product design in six focus categories: Materials, Energy and Emissions, Waste, Water, and Packaging, as well as Usability and Innovation. In 2014, we completed the integration of the DfS approach into the product development process. We set ourselves the goal of improving sustainability criteria in at least 10% of our Life Science product ranges, reaching this goal at the end of 2014 for our products in the former Merck Millipore business.
In addition, Life Science works together with customers and recycling companies to design sustainable recycling programs.
Furthermore, we use our technical and scientific expertise in the field of water analysis to support clean water supply and adequate wastewater handling. A prime example of this is our participation since August 2015 in Semizentral, a Sino-German infrastructure project developed by the Technical University of Darmstadt and sponsored by the German Federal Ministry of Education and Research (BMBF). In May 2015, Semizentral won the GreenTec Award, Europe’s biggest environmental and business prize, in the Urbanization category; in November 2015, the initiative ranked among the top three in the Research category of the 2015 German Sustainability Award.
Cultural promotion is a core element of our engagement in society that reflects Merck’s centuries-old tradition of supporting art and culture. After all, culture nurtures characteristics that are indispensable to our business activities as a high-tech company: creativity, enthusiasm for new discoveries, and the courage to transcend boundaries. Our cultural engagement focuses on music, literature and education.
The Deutsche Philharmonie Merck is our musical ambassador. We consider classical music to be the universal language that brings people together; as such, it is an important part of our culture. The concerts of this professional ensemble are highly popular, with around 26,000 people attending them per year. They represent an integral part of the cultural life in the vicinity of our global headquarters in Darmstadt. Special events for children and adolescents as well as collaborations with schools, such as the orchestra workshop held once a year since 2010, aim to make classical music more accessible to young people.
In addition to this, the Deutsche Philharmonie Merck regularly invites international ensembles to play in Darmstadt while itself also touring the globe. In 2015, the orchestra gave concerts in the United Kingdom and Israel. Furthermore, the Deutsche Philharmonie Merck went on a tour of Latin America to mark the 85th anniversary of our presence in Mexico and the 40th anniversary of the opening of our production facility in Brazil, performing in Mexico City, Rio de Janeiro and São Paulo.
Literature can stimulate the imagination; it can alleviate fears and give courage. Literature can also address scientific topics, thus furthering a deeper understanding of science and research. Through our engagement, we aim to help society better accept science and scientific progress. In addition, as an international company, we foster writers who further cultural exchange in our globalized world.
We grant and promote five literary prizes worldwide. Since 1964, we have been sponsoring the renowned Johann Heinrich Merck Award for Literary Critique and Essay, which is presented by the German Academy for Language and Poetry at its annual autumn conference. The award, which comes with a € 20,000 prize, went to publicist Gabriele Goettle in 2015.
For 13 years, we have been sponsoring the Premio Letterario Merck in Italy. This award is worth € 10,000 and recognizes authors who build bridges between literature and science, thereby making them accessible to a wide audience. In 2015, the awards went to French author Maylis de Kerangal and American author and science writer David Quammen.
In India, we collaborate with the Goethe-Institut Calcutta to present the Merck Tagore Award; worth 500,000 Indian rupees (around € 6,800), this literary prize is granted every two years to authors who have made a distinctive contribution to the cultural exchange between Germany and India. In Japan, we also present the Merck Kakehashi Literature Prize together with the Goethe-Institut Tokyo. Worth a total of € 20,000, this award is granted every two years to contemporary works by German authors that are made accessible to a wider readership in Japan. As of 2016, we will also grant a literature prize in Russia.
We view education as a key component of culture – and vice versa. Education can help us understand culture. But culture can also build a bridge to education; it can stimulate curiosity and nurture creativity. We therefore support educational projects at many of our sites, by granting scholarships for instance, or sponsoring specific classes. In order to promote young scientists, every year since 1996 Merck has, for example, been organizing the renowned annual “Jugend forscht” competition for the German federal state of Hesse.
To mark our 125th anniversary in the United States, we launched the “Smarter, Together in the Classroom” initiative, committing US$ 125,000 to fund 132 scientific projects at 100 schools in low-income regions in Massachusetts. To date, nearly 18,000 pupils have benefited from the program. By 2016, we want to have reached more than 36,000 children in Massachusetts and Missouri with the campaign. In China, we won the 2015 Corporate Social Responsibility Award presented by the European Union Chamber of Commerce for our School Water project. To date, five primary schools in Shanghai and one primary school in Sichuan Province have received drinking water purification facilities free of charge. In addition, our employees educate the pupils on environmental protection on a regular basis.
The safety of our products is at the core of our corporate responsibility. When used properly, they should pose no risk to customers, patients, consumers, or the environment. Our goal is to ensure a positive benefit / risk profile for our products. Therefore, we regularly examine safety across the entire life cycle of our products and continuously take steps to minimize risks. We provide our patients, consumers and customers with extensive information material so that they can use our products in a responsible, safe and proper manner.
Through our compliance policies for our Biopharma and Consumer Health businesses, we set standards for responsible marketing activities relating to our medicines. These aim to ensure that patients and healthcare professionals have access to the relevant information, and that patients receive effective treatment.
There are numerous regulations intended to ensure that chemicals pose no risk to humans or the environment. Compliance with these regulatory requirements is an important part of our work. With our Group-wide Product Safety Chemicals policy, we have established global processes for defining, steering and implementing product safety, as well as the corresponding management structures. We incorporate all relevant national and international chemical regulations into our policies and regulations and adhere to them. This includes for instance the EU chemicals regulation REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) and CLP (Classification, Labelling and Packaging of Substances and Mixtures, EU GHS). Furthermore, we are committed to transparency. For instance, in line with the Global Product Strategy, an international initiative of the chemical industry, we provide our customers with product safety summaries for hazardous materials.
We have successfully completed the second phase of REACH implementation. All substances we produce or import in quantities ranging from 100 to 1,000 metric tons per year – 70 different substances in total – were successfully registered with the European Chemicals Agency (ECHA) by June 1, 2013. We are currently in phase three, in which we are working to register all substances produced or imported in quantities between one and 100 metric tons per year by mid-2018. We are fully on schedule with our activities.
Patient and consumer safety is our number-one priority in everything we do. During the entire life cycle of our medicines and consumer health products, we provide patients, consumers and physicians with up-to-date risk-benefit evaluations. To this end, our experts process safety-relevant information from various sources such as clinical trials, adverse reaction reports and scientific literature. Ultimate responsibility for the safety of our biopharmaceuticals is borne by our Global Chief Medical Officer, with support from our Medical Safety and Ethics Board (MSEB). Our Global Drug Safety unit continuously monitors and evaluates the safety and risk-benefit ratio of our medicines worldwide (pharmacovigilance). For our Consumer Health products, this function is performed by the Global Product Safety unit. Overall responsibility for the safety of our over-the-counter products falls under the Chief Medical Officer for the Consumer Health business, supported by the Safety & Labelling Committee (SLC).
For products in our Allergopharma business, we have developed comprehensive clinical efficacy and safety profiles that we continuously update. For the safety of our patients, we have established a global pharmacovigilance system that we continuously work to enhance.
Our goal is to provide customers and patients with high-quality brand-name products at all times. Through our quality vision – “Quality is embedded in everything we do!” – we remind our employees of their responsibility – across all businesses, all Group functions and all levels of the company.
We source raw materials, packaging materials, technical products, components, and services from suppliers in more than 120 countries. Our basic expectations for suppliers and service providers include their compliance with fundamental environmental and social standards, which are primarily derived from the core labor standards of the ILO (International Labour Organisation), from the UN Global Compact, and from the Code of Conduct of the BME (German Federal Association for Materials Management, Purchasing and Logistics).
Our Group Procurement Policy and Responsible Sourcing Principles define our procurement practices and are integrated into our general terms and conditions. They therefore constitute the foundation of every sourcing transaction and procedure.
Due to the growing significance of emerging markets as sourcing markets for Merck, we reinforced our efforts to ensure adherence to our supply chain standards.
We joined the Together for Sustainability (TfS) chemical industry initiative at the end of 2014 and since then have been able to jointly use the results of supplier assessments and audits with other member companies and in compliance with all competition law restrictions. Through TfS, we currently have access to assessments of more than 300 of our most important suppliers. Around 100 of these were generated for the first time in 2015 thanks to our initiative. For 2016, in addition to further assessments, we also plan to extend local TfS supplier audits.
Employees are crucial to the success of a company. They therefore play a central role in our business endeavors. In accordance with the Merck Values, we live a culture of mutual esteem and respect. We want to contribute to entrepreneurial success by recruiting, developing and motivating the most suitable employees. We therefore place a strategic focus on the topics of talent development, compensation and performance management. Furthermore, we want to strengthen the diversity of our employees (Detailed information can be found in the chapter entitled “People at Merck”).
In the manufacture of our products, we seek to impact the environment as little as possible. This especially includes efficiently conserving resources such as energy, water and raw materials while also continuously reducing our emissions and waste.
In our Corporate EHS Policy, we have defined our principles and strategies for the environment, health and safety. It is implemented through internal guidelines and instruction manuals on compliant behavior in day-to-day operations, such as the Merck Group EHS Security and Quality Manual. At all sites, the local EHS managers are in charge of operational environmental protection measures. These employees continually receive training and obtain additional qualifications.
Since our businesses are constantly changing, our environmental management system must also remain flexible and adaptable. For this reason, we have internal and external audits conducted on a regular basis to determine whether the ISO 14001 requirements are still being met. In 2015, we received the ISO 14001 group certificate for our environmental management system for the seventh consecutive year. This certificate covers 57 sites. Seven sites belonging to the recently acquired company Sigma-Aldrich are already certified according to ISO 14001.
Our spending on environmental protection, health and safety totaled € 148 million in 2015, which also includes investments made during the year.
Climate impact mitigation and resource scarcity are central challenges facing society in the 21st century. As a responsible company, it is especially important to contribute to this, which is why we have set ourselves the goal of reducing total direct and indirect greenhouse gas emissions by 20% by 2020, measured against the 2006 baseline.
To achieve this goal we have launched EDISON, a climate impact mitigation program that consolidates all our climate protection and energy efficiency activities. In 2016, as in the four preceding years, the Executive Board will earmark funds specifically for measures to conserve energy and reduce greenhouse gas emissions. Through the more than 400 EDISON projects that have been initiated since 2012, we aim to annually save around 90 metric kilotons of CO2 in the medium term. In 2015, we lowered our greenhouse gas emissions by around 8% relative to the 2006 baseline, despite growth in our operating business.
Around 60% of the EDISON projects planned Group-wide have already been or are being rolled out. The Life Science business sector is making a major contribution. In 2014, we reduced our process-related emissions per production unit through optimizing processes by around two-thirds at our site in Jaffrey, New Hampshire, USA, while in 2015, we launched a project to realize additional savings. In summer 2015, we commissioned a new photovoltaic plant with a power output of 400 kW in Shanghai, China, which will reduce the site’s CO2 emissions by around 280 metric tons per year.
|Total energy consumption||1,474||1,528||1,549||1,602||1,720|
|Direct energy consumption||905||924||991||1,056||1,171|
|Liquid fossil fuels||103||98||105||110||103|
|Biomass and self-generated renewable energy||13||13||15||27||135|
|Indirect energy consumption||569||604||558||546||549|
|Steam, heat, cold||58||113||65||86||83|
|Emissions in kt, Scope 1 and 2||2011||2012||2013||2014||2015|
|Total CO2 eq emissions||529||543||559||517||518|
|Direct CO2 eq emissions||315||318||348||321||327|
|Indirect CO 2 eq emissions||214||225||211||196||191|
Energy management plays a key role in our efforts for sustainable energy efficiency and climate impact mitigation. Our production sites in Darmstadt and Gernsheim account for around 40% of our global energy consumption. In 2012, both of these sites qualified for ISO 50001 – Energy Management System certificates, which were reaffirmed in 2015. Currently, nine of our production sites have a certified energy management system. The results of the Carbon Disclosure Project likewise indicate that we are on the right path. In 2015, we achieved 98 out of 100 points in the Climate Disclosure Scoring, which assesses the level of reporting details as well as transparency, and were thus clearly in the upper range of all participating companies in the Germany, Austria and Switzerland category. In the Climate Performance Scoring, we ranked in performance band C, putting us above average. The Carbon Disclosure Project, an independent non-profit organization, assessed the emissions reduction progress and climate impact mitigation reporting of companies.
In addition to energy, in 2015 we also focused on the topic of water. We systematically examined our sites to determine which ones have a high annual water consumption and are also located in regions where water is scarce and thus an especially precious resource. Based on a detailed assessment, we plan to implement sustainable water management systems stepwise at these sites in the coming years.
We see ourselves as part of society, not only at our individual locations, but also at a global level. Taking responsibility towards society is an integral part of our entrepreneurial approach. We believe that we can make an important contribution to the community through our knowledge, our skills and our products.
Our social responsibility activities are primarily focused on those areas in which we have problem-solving expertise stemming from our core businesses. We are thus engaged in health and environmental projects and support education, specifically in the natural sciences. We provide disaster relief in emergency situations, especially in those regions in which we operate. In April 2015, we signed a three-year agreement with the German Red Cross (DRK). According to the terms of the agreement, in the event of a catastrophe we will primarily support the activities and projects of the German Red Cross by donating money and supplies. In December 2015, we donated € 50,000 to the German Red Cross to support health projects for refugees in Lebanon.
Our subsidiaries are engaged in a wide variety of local projects. We have defined overarching criteria for selecting projects, and the decisions concerning specific local projects are made by our subsidiaries. In 2015, we spent a total of around € 100 million on community engagement activities.