SustainabilityReport2022TABLEOFCONTENTSStrategy&management4Companyprofile9LetterfromtheCEO12Sustainabilitystrategy&goals17SustainableDevelopmentGoals19Stakeholderdialogue24MaterialityanalysisBusinessethics37Corporategovernance37Governance39Compliancemanagement45Dataprotection&cybersecurity48Interactionswithhealthsystems52Taxgovernance54Suppliers54Supplychainmanagement59Micasupplychain62Humanrights66Clinicalstudies72Animalwelfare77Bioethics81DigitalethicsProducts84Sustainableinnovation&technology88Products&packaging100Healthforall100GlobalHealth107Innovationsharing109Pricesofmedicines111Healthcapacity&awareness116Productsafety&quality116Chemicalproductsafety119Patientsafety124Product-relatedcrimeEmployees128Careerwithus134Corporateculture139Diversity,equity&inclusion147Health&safetyEnvironment152Environmentalprotection156Climateaction163Resourceefficiency163Watermanagement167Waste&recycling170Plant,process&transportsafetyCommunity174CommunityengagementFacts&figures181Reportprofile184Indicators184Economics185Businessethics188Employees202Environment209Community211GRIcontentindex211Generaldisclosures214EconomicStandards217EnvironmentalStandards221SocialStandards227Additionalmaterialtopics228SASBindex237TCFDindex242AssurancereportSTRATEGY&MANAGEMENT4Companyprofile9LetterfromtheCEO12Sustainabilitystrategy&goals17SustainableDevelopmentGoals19Stakeholderdialogue24MaterialityanalysisCompanyprofileWeareMerck,ascienceandtechnologycompany.Wearepioneersofhumanprogress,drivenbyourcuriosity.Wehaveauniquesetup,withdifferentdisciplinesunderoneroof.OurLifeSciencebusinesssectorprovidesthetools,high-gradechemicals,andconsumablesthatacceleratescientificbreakthroughsandenablethebiopharmaceuticalindustrytoensurethatmedicinesaresafeandeffectiveforaglobalpopulation.Withabroadanddeepportfolioofmorethan300,000productsandanindustry-leadinge-commerceplatform,wearefocusedonimpactinglifeandhealthwithscience.InourHealthcarebusinesssector,weadvanceinnovationthroughourpipeline;enablelife-changingtherapiesforseriousillnesses;treatmorethan90millionpatientsworldwidewithcardiovascular,diabetesandthyroiddisorderseveryday;andhelpmanycouplestorealizetheirwishtohaveachild.InourElectronicsbusinesssector,wearethecompanybehindthecompanies,advancingdigitalliving.Oursemiconductoranddisplaysolutionscanbefoundinalmosteveryelectronicdevice.Thus,wearechangingthewayinformationisprocessed,releasingthepotentialofdataandopeninguppossibilitiesforpositivelyinfluencingthewaywelive.Inaddition,ourspecialistsalsoexplorevisionarynewsolutionsattheintersectionofourthreediversifiedbusinesssectors.Establishedin1668,ourexceptionaltrackrecordshowswecontinuouslyreinventourselvesandthinklong-term.Thismindsetisrootedinresponsibility,care,andrespect:forourwork,ourpeople,ourcustomers,patients,society,andourplanet.Wewanttobecometheglobal21stcenturyscienceandtechnologypioneer,workingtowardanambitiousfuture:sustainableprogressforhumankind.WeholdtheglobalrightstotheMercknameandbrand.TheonlyexceptionsareCanadaandtheUnitedStates.Inthesecountries,weoperateasMilliporeSigmaintheLifeSciencebusiness,asEMDSeronointheHealthcarebusiness,andasEMDElectronicsintheElectronicsbusiness.Apartfromourthreebusinesssectors,ourfinancialreportingpresentsfiveregions:Europe,NorthAmerica,Asia-Pacific,LatinAmerica,theMiddleEastandAfrica.AsofDecember31,2022,wehad64,243employeesworldwide.ThefigureasofDecember31,2021,was60,348employees.In2022,our224fullyconsolidatedcompanieswithpersonnelin66countriesgeneratedsalesof€22.2billion.Our101productionsitesarelocatedacross19countries.Strategy&management4Employeesandsalesbyregion–2022EuropeNetsales€6,248millionEmployees28,244NorthAmericaNetsales€6,361millionEmployees15,847LatinAmericaNetsales€1,231millionEmployees3,490Asia-Pacific(APAC)Netsales€7,697millionEmployees15,412MiddleEastandAfrica(MEA)Netsales€695millionEmployees1,250GroupstructureInaccordancewithourstrategicorientationourcompanycomprisesthreebusinesssectors:LifeScience,HealthcareandElectronics.InLifeScience,wearealeadingglobalprovideroftools,chemicals,andequipmenttoacademiclabs,biotechandpharmaceuticalmanufacturers,andtheindustrialsector.Withastrongfocusoninnovation,wearecommittedtodeliveringtheproducts,services,anddigitalplatformstocreateasustainablefutureforgenerationstocome.Inearly2022,weannouncedthereorganizationofthesectortosupportLifeScience'slong-termgrowthstrategyandtobetterserveourglobalcustomers'evolvingneeds.TheexistingContractDevelopmentandManufacturingOrganizationandContractTestingservicesweresplitfromtheProcessSolutionsbusinessandconsolidatedintooneglobal,fullyintegratedLifeScienceServicesorganizationfortraditionalandnovelmodalities,includingmonoclonalantibodies,high-potencyactivepharmaceuticalingredients,aswellasantibody-drugconjugatesandviralandgenetherapiesincludingmRNA.TheProcessSolutionsbusinesswillcontinueitsfocusondeliveringourleadingproductofferingforpharmaceuticaldevelopmentandmanufacturing,includingfiltrationdevices,chromatographyresins,single-useassembliesandsystems,processingchemicals,andexcipients.TheResearchSolutionsandAppliedSolutionsbusinessunitswerecombinedintooneorganizationcalledScienceandLabSolutions.Thisbusinessunitservesthepharmaandbiotech,industrialandtesting,academicandgovernment,anddiagnosticssectors,providingcustomersamoreseamlessexperienceandaccesstoabroadportfolioincludingreagents,consumables,devices,instruments,software,andservicesforscientificdiscovery,inadditiontolabwaterinstruments,consumablesandservices,microbiologyandbiomonitoringproducts,testassays,analyticalreagents,andflowcytometrykitsandinstruments.OurHealthcarebusinesssectordiscovers,develops,manufactures,andmarketsinnovativepharmaceuticalandbiologicalprescriptiondrugstotreatcancer,multiplesclerosis(MS),infertility,growthdisorders,andcertaincardiovascularandmetabolicdiseases.Healthcareoperatesacrossfourtherapeuticareaswithaclearambitiontobecomeaglobalspecialtyinnovator:NeurologyandImmunology,Oncology,Fertility,andCardiologyMetabolism&Endocrinology.OurR&DpipelinepositionsuswithaclearfocusonstrengtheningourleadershipStrategy&management5positionsinoncology,neurology,andimmunology.SincethestartoftheCovid-19pandemic,wehavebeencontinuouslymakingeveryefforttoproactivelyhandlethesituationandminimizetheimpactofthepandemicandalsoofanychallengesfromtheexternalcontextonthesupplyofourmedicineslocallyandglobally.Tothisend,weareusingthreemainlevers:thethoroughimplementationandfurtherdevelopmentofourbusinesscontinuityplansacrossournetwork,theactivemanagementofourstocks,andtheassessmentofalternativetransportationroutestoreachourcustomersandpatients.WithourElectronicsbusinesssectorourmainfocusisonmaterialsandsolutionsfortheelectronicsmarket.Werealignedourportfoliotowardtheaccelerateddigitizationandthegrowthofdata.Thisdrivestheneedformoreandhighersophisticatedsemiconductorchipsanddisplays.Today,weareoptimallypositionedtoleverageourkeystrengths:Withawell-balancedandbroadtechnologyportfolioofmaterialsandequipment,industryleadingR&Dandaglobalproductionnetworkclosetoourcustomers,wehavebecomeoneofthemostrelevantsuppliersofmaterialsandsolutionsforthesemiconductoranddisplayindustries–andareontracktofurtherexpandourposition.Inaddition,ourdecorativeandfunctionalsolutionsforinnovativesurfacesofallkindsmakelifemorecolorful.Thebusinesssectorconsistsofthreebusinessunits:SemiconductorSolutions,DisplaySolutions,andSurfaceSolutions.Netsalesbybusinesssector–202235%Healthcare€7,839million18%Electronics€4,013million47%LifeScience€10,380millionStrategy&management6GovernanceBasedinDarmstadt,Germany,ourcompanyoperatesinthelegalformofacorporationwithgeneralpartners(KommanditgesellschaftaufAktien–KGaA).ThegeneralpartnerE.MerckKGholdsaround70%ofthetotalcapitalofMerckKGaA(equityinterest);theshareholdersholdtheremainder,whichisdividedintoshares(sharecapital).OurshareshavebeenincludedintheDAX®,theblue-chipindexoftheDeutscheBörse,since2007.InSeptember2008,ourcompanywasaddedtotheFTSE4GoodIndex,asustainabilityindexthatassessesthesocial,ecologicalandethicalconductofcompanies.GroupstrategyWearecuriousmindsdedicatedtohumanprogress.Webelievethatscientificexplorationandresponsibleentrepreneurshiparekeytotechnologicaladvancesthatbenefitusall.Ourvalues–courage,achievement,responsibility,respect,integrity,andtransparency–guideusineverystepwetakeandineverydecisionwemake.Asacompany,wehaveastrongfoundation.ThesefundamentalshavebeendefinedbytheMerckfamily.WealwaystakethemintoconsiderationwhendiscussinganddecidingonourEnterprisestrategy.•Wefollowariskdiversificationstrategywiththreedistinctbusinesssectors,andweavoidoverexposuretoanysinglecustomer,industry,orgeography.Weensureresilienceagainstbusinessdisruptionanddeepcrises.•Withourscienceandtechnologyfocus,wewanttobeleadersinourfieldsofexpertiseandmarkets,alwayspushingtheboundariestofindnewsolutionsanddriveinnovation.Weaimtocreatevalueforourbusinessandforsociety.•WecontinuetooperateunderourcurrentownershipwiththeMerckfamilyasthemajorityowner.•Wedeliversustainablevalue,andwewanttomaintainanattractivefinancialprofile(forexample,astrongcreditrating)whileassessingandconsideringtheESG(environmental,social,governance)impactofourgrowthambition.•Mergersandacquisitions(M&A)areanimportantdriverofourlong-termvaluecreationstrategywithafocusoninnovation-driventechnology.Ourambitionistobecometheglobal21stcenturyscienceandtechnologypioneer.Toachievethis,wewillcontinuetofocusonour“Big3”businesses:ProcessSolutionsandLifeScienceServices,newHealthcareproducts,andSemiconductorSolutions.Until2025,thesebusinessesareexpectedtogenerateapproximately80%ofthetargetedsalesgrowth,andmorethan50%oftotalsalesby2025.Strategy&management7Ourhighlyresilientbusinesssectorsarethefoundationforourboldplanstoaccelerateefficientgrowthandseizeorganicandinorganicopportunities.Weattributeourhighcapacityforresiliencetoseveralfactors,notably:•Goodfinancialposition:strongbalancesheet,sufficientcashreservesandmoderatefixedcostexposure•Highdegreeofdiversificationinthethreebusinesssectorsamidlowcyclicality•Robustsupplynetworksduetoincreasinglocalization•Lowerdependencyonsingleregionsthankstodiversifiedfootprint•Strongfocusonsustainabilityasanintegralpartofthecompanystrategy,linkedwithclearsustainabilitygoals.YoucanfindmoreinformationonourcompanystrategyinourAnnualReport2022.Detailsonthesustainabilitystrategycanbefoundthereandhereinthereport.Strategy&management8LetterfromtheCEOAcascadingseriesofglobalcrisesandconflictsstartingwiththeCovid-19pandemichasmadeourworldmuchmorecomplexanduncertain.Thethreatstheseglobalchallengesposetohealth,security,andsustainabilitywerehighlightedintwoU.N.reportsissuedin2022.Thefirststatedthatthe17SustainableDevelopmentGoals(SDG)underthe2030Agenda“areinjeopardy.”Theseconddeclaredthatthereisnolongerarealisticpathwaytorestrictingclimatechangeto1.5°C.Movingforward,theonlyviablepathtoavoidtheworsteffectsoftheclimatecrisisisthroughthe“rapidtransformationofsocieties.”Inshort,wehaveonlyafewdecadestofundamentallychangethewaysinwhichweconsumefood,energyandotherresourceswhileaddressingglobalinequityinhealth,educationandlivingstandards.Itwillrequirenothinglessthanhumanityraisingthebarhigherthaneverbefore.AstheleaderofMerck,Iamconfidentwecandoit.Mostofall,threethingswillenablesocietytoriseabovethesechallengesandthriveinthe21stcentury:resilience,collaborationandtechnology.ResilienceunderpinsusResilienceallowsustonavigatethroughtoughtimesandseizethemoment.Itiswhathashelpedourcompanyforcenturiestocopewithandemergestrongerfrommajorinternationaleconomicandgeopoliticalcrises.Ourresilienceishelpingtoensurethatweremainfirmlyontracktoachieveourmostimportantsustainabilitygoals.By2030,weaimtohaveintegratedsustainabilityintoallvaluechainsandcontributedtohumanprogressformorethanonebillionpeoplethroughsustainablescienceandtechnology.Andby2040,weexpecttoachieveclimate-neutraloperations.Wemadesignificantstridestowardstheachievementoftheseoverarchinggoalsduring2022.Forexample,theindependentScienceBasedTargetsinitiative(SBTi)confirmedourtargetstoreducedirect(Scope1)andindirect(Scope2)greenhousegas(GHG)emissionsby50%by2030comparedwith2020.Furthermore,SBTiStrategy&management9confirmedourplanstohalveScope3emissionsasapercentageofgrossprofitacrossourentirevaluechainby2030.ThesetargetswillhelpusincomplyingwiththegoaloftheParisAgreementtolimitglobalwarmingto1.5°C.OurdirectandindirectGHGemissionsfellbyalmost10%in2022,thankstoourreductionofprocess-relatedemissions,implementationofenergyefficiencymeasures,andincreasingtheshareofenergyweusefromrenewablesources.AftersigningtwonewVirtualPowerPurchaseAgreements(VPPAs)in2022,renewablesourcesnowcover90%ofourelectricityconsumptionintheU.S.and55%globally.WelookforwardtosecuringadditionalVPPAsinEurope,theAsia-Pacificandotherregions.ItisalsoimportanttohighlightsomeofourmanysignificantSDGcontributions.ForGoodHealthandWell-Being(SDG3),IreferyoutothelatestbenchmarkingreportoftheAccesstoMedicineFoundationonhowthetop20largestresearch-basedpharmaceuticalcompaniessupportlow-andmiddle-incomecountries.Ourcompanyadvancedfromeighthtofifthplaceinthe2022rankingthankstoourstrongperformanceinR&D,intellectualpropertywaiversandlocalcapacitybuilding.Regardingtogenderequality(SDG5),weincreasedthepercentageofwomeninleadershippositionsfrom36%to38%in2022andaimtoachievegenderparityby2030.Andforlifeonlandandbelowwater(SDGs14and15),wecommittedgloballytoevenhigheranimalwelfarestandardsin2022.CollaborationmakesusstrongerMysecondreasonforconfidenceinthefutureadvancementofsocietyliesinhowpublicandprivateorganizations,includingourcompany,havesuccessfullycollaboratedinrecentyears.Throughthepandemic,welearnedhowimportantitistoamplifyourcollectiveimpactbyaligningwithasenseofurgencyaroundacommonpurposeandsharedvalues.Ourcompany’spartnershipswithmorethan100organizationstodevelopCovid-19vaccines,therapeuticsanddiagnosticsolutionsareprimeexamplesofcollaborationatitsfinest.Butalsoconsideroureffortstoimprovehealthequityworldwidebybuildinglong-termpartnershipswithglobalandlocalstakeholderstohelpunderservedpatientpopulations.Asoneexample,wehavecollaboratedwiththeWorldHealthOrganization(WHO)andotherNGOsacrosssub-SaharanAfricatocombatschistosomiasis–theworld´ssecondmostdevastatingtropicaldiseaseintermsofpublichealthburdenandeconomicgrowth.Byprovidingmorethan1.7billionpraziquanteltabletstoWHOoverthelast15yearsandenablingmanyotheron-the-groundinitiativestoprevent,diagnoseandtreatschistosomiasis,weexpecttoeliminatethisdiseaseasapublichealthproblemby2030.IamalsoproudtorepresentourGrouponanewHealthSystemsTaskforcerecentlyestablishedundertheSustainableMarketsInitiative.Togetherwithsixotherpharmaceuticalcompanies,wejointlyagreedtoambitiousnear-termGHGreductiontargetsin2022andtocollaboratewithourglobalnetworksofsupplierstofurtheracceleratetheshifttoaclimate-neutralhealthcareindustry.Strategy&management10TechnologyleveragesuntappedpotentialMythirdreasonforconfidenceistheuntappedpotentialofscienceandtechnologyitself.Manyofthetechnologiesneededtodeliverasustainablefutureinthecomingdecadesarealreadyknowntoday.Most,however,suchasthoseforgreenhydrogen,carboncaptureandculturedmeat,arestillbeingdevelopedorcommercializedbyvariousinnovators.However,ifsocietyistomakeadifference,wemustbecomemoreefficientandeffectiveinhowweselectthemostpromisingtechnologiesandacceleratetheirpathtomarket.Asagloballydiversifiedscienceandtechnologybusinesswithstrongvaluesandleadingpositionsacrosslifescience,healthcareandelectronics,weareinthesweetspot.Itisourgoaltoserveasapreferreddevelopmentpartnerandsolutionsproviderforsustainability.Thatiswhysustainabilityisnowacornerstoneforfutureinnovationandgrowth.Wearecommittedtohelpingnewandexistingcustomersmeettheirsustainabilitytargets.Ourambitionistoembedsustainabilityacrossourentirevaluechainuntilitbecomesacorecompetitiveadvantageforus.Asourtransformationintoaglobalsustainabilityleaderaccelerates,wewillremainaccountableforourpositiveandnegativeimpacts,andtransparentinhowwetrackourperformance.Asoneexample,wewillmeasureourprogressinintegratingsustainabilityacrossallvaluechainstogetherwith54,000suppliersacrossmorethan140countries.Furthermore,accountabilitymustalwaysstartatthetop.ThatiswhymycompensationandthatofmyfellowExecutiveBoardmembersisnowclearlylinkedtoachievingtheseandothersustainabilitygoals.Thinkingandactingsustainablyisdeeplyimportanttome,theMerckfamilyofownersandthe64,000peoplewhoworkforourGroupcompaniesworldwide.Bycontinuingtodemonstrateleadershipinresilience,collaborationandtechnology,welookforwardtohelpingourcompany,ourcustomersandsocietytoaimhigherandthrive.Ilookforwardtokeepingyouupdatedonourprogress.BelénGarijoChairoftheExecutiveBoardandCEOStrategy&management11Sustainabilitystrategy&goalsTheworldisfacingmultiplechallengesthatwetooasacompanyface.Theseincludeclimatechange,internationalconflictsandeconomiccrises,forinstance.Ourambitionistoleveragescienceandtechnologytoachievesustainableprogressformankind.Ourapproach:sustainableprogressForus,sustainableentrepreneurshipandprofitablegrowthgohandinhand;wecanremaincompetitiveonlybycreatingaddedvalueforsociety.Throughourinnovativeandhigh-qualityproducts,wewanttohelpmeetglobalchallenges.Atthesametime,thesetypesofproductsecureourfinancialperformancecapability.Responsibleactionisanintegralpartofourcompanyculture.Thisalsoincludesrespectingtheinterestsofouremployees,customers,investors,andsociety.Formorethan350years,ourcompanyhasbeenshapedandguidedbystrongvalues.Oursuccessisbuiltoncourage,achievement,responsibility,respect,integrity,andtransparency–valuesthatunderpinourunderstandingofsustainableentrepreneurship.Wewanttosetanexampleforethicalconduct.Safetyandethicsmatterjustasmuchtousasbusinesssuccess.Wemitigateethical,economic,environmental,andsocialrisksasfaraspossible.Fromtheearlystagesofdevelopmentthroughtodisposal,wekeepaneyeontheentirelifecycleofaproduct.Weapplystrictsustainabilitystandardstoourprocurementactivities.Duringproductmanufacture,westrivetokeeptheenvironmentalimpactaslowaspossible,whichiswhysafeproductiontechniques,highenvironmentalstandardsandstrictqualitymanagementareofcoursesoimportanttous.Andwithoursustainableproducts,wealsohelpthecompaniesthatwesupplytoachievetheirsustainabilitygoals.Wecloselymonitornewglobaltrendsandchallenges.Forexample,inordertoclearlyunderstandthecomplexnatureoftheexpectedchanges,wemakeuseoftheso-calledscenariotechnique,whichenablesustoidentifyandincorporateaspectsofstrategicrelevance.Inaddition,weparticipateindialoguesandinitiatives,consultwithotherorganizationsinourindustryandassessmediaandnewscoverage.Thisallowsustominimizeriskswhilealsoleveragingnewbusinessopportunities.ImplementingthestrategygloballyTherapidlygrowingchallengesfacingbothsocietyandtheenvironmentrequireaclearobjectiveforthecomingyears.Consequently,sustainabilityisanessentialelementofourenterprisestrategy.Wearepursuingthreestrategicsustainabilitygoals.Strategy&management12OursustainabilitystrategyOurfocusareasOurfocusareasOurfocusareasFOCUSSDGsFOCUSSDGsFOCUSSDGsBy2040,wewillachieveclimateneutralityandreduceourresourceconsumption.By2030,wewillintegratesustainabilityintoallourvaluechains.In2030,wewillachievehumanprogressformorethanonebillionpeoplethroughsustainablescienceandtechnology.SustainableinnovationsandtechnologyforourcustomersImpactofourtechnologiesandproductsonhealthandwell-beingSustainabilitycultureandvaluesSustainableandtransparentsupplychainSecuringoursociallicensetooperateinallregionsClimatechangeandemissionsWaterandresourceintensityInordertoachieveoursustainabilitygoals,weareconcentratingonsevenfocusareaswithinwhichwearerealizingnumerousinitiativesandprojectstodayandtomorrow,measuringourprogressaswego.ImplementingthesustainabilitystrategyIn2022,wefocusedoncreatingtherightconditionsforachievingoursustainabilitygoals.Allthreebusinesssectorsderivedsustainabilitystrategiesfromtheoverarchingcompanystrategyandstartedexecutingthem.Wearefosteringtheculturalchangewithinthecompanybyembeddingsustainabilityaspectsevenmorefirmlyintodailyworkandthedecisionsmadebyemployees.Trainingcoursesandbest-practicesharingaretworouteswefollowtoachievethis.Onthebasisof14keyindicators,whichwedefinedbackin2021,werecordandassessourprogresstowardsachievingoursustainabilitygoals.In2022,weimplementedvariousdigitalworkingtoolsthatwebelievewillallowusgaingreatertransparencywithregardtoourachievements.Forinstance,werecordinternalandexternalsustainabilitydatainourESGdatabase,allowingustocompare,correlateandusethemasthebasisforinitiativesandmeasures.Intheyearunderreview,wespecifiedthatalsowhenassessingpotentialacquisitions,wewouldalwaysincludesustainabilityaspects.Thiswillbethecaseevenmoresointhefuture,alsowhenitcomestocapitalallocationandinvestmentdecisionsaswellasresearch&development.Toassessthepotentialimpactsofourproductsthroughouttheirentirelifecycle,weuseascorecarddevelopedin-house.Weintroducedthisscorecardforallthreeofourbusinesssectorsin2022.Moreover,weaddedasustainabilityfactortotheMerckLong-TermIncentivePlan(LTIP)in2022.Itmeasurestheperformanceofthreeselectedsustainabilitygoalsoveraperiodofthreeyears,thusmakingitpossibletoStrategy&management13increaseorreducetargetachievementresultingfromthekeyfinancialperformanceindicatorsbyupto20%.DetailsonhowthissustainabilityfactoriscalculatedcanbefoundintheCompensationReport.Wearenowintheprocessoftransformingthecompanyandareintegratingsustainabilityintotheinnovationprocessandallpartsofthevaluechain.Itisouraimtodecouplethegrowthofourbusinessesfromnegativeenvironmentalimpacts.OurkeyindicatorsGoal1:In2030,wewillachievehumanprogressformorethanonebillionpeoplethroughsustainablescienceandtechnology.FFocusarocusareaeaSustSustainabilitainabilitykykeeyindicatoryindicatorssFFururtherdettherdetailsailsSustainabilityinnovationandtechnology◆PercentageofnewlypublishedpatentfamilieswithpositivesustainabilityimpactSustSustainableinnoainableinnovvation&ation&technologiestechnologiesHealthandwellbeingimpact◆PeopletreatedwithourHealthcareproducts1SASASBindexSBindexGoal2:By2030,wewillintegratesustainabilityintoallourvaluechains.FFocusarocusareaeaSustSustainabilitainabilitykykeeyindicatoryindicatorssFFururtherdettherdetailsailsSustainabilitycultureandvalues◆PercentageofwomeninleadershippositionsDivDiverersitsityy,equit,equityandinclusionyandinclusion◆PercentageofemployeestrainedonsustainabilityAtAttractingandrtractingandretetainingtainingtalentalentSustainableandtransparentsupplychain◆Percentageofrelevantsuppliers(intermsofnumberandsupplierspend)thatarecoveredbyavalidsustainabilityassessment11RResponsiblesupplychainesponsiblesupplychainSecuringoursociallicensetooperateinallregions◆Environment,HealthandSafety(EHS)IncidentRateProcessProcess,plantandtranspor,plantandtransporttsafsafetetyy◆ViolationsofGlobalSocialandLaborStandardsPolicyHumanrightHumanrightss◆LostTimeInjuryRate(LTIR)HealthandsafHealthandsafetetyy1ThekeyindicatorisusedtodeterminethesustainabilityfactorfortheMerckLong-TermIncentivePlan(LTIP).Strategy&management14Goal3:By2040,wewillachieveclimateneutralityandreduceourresourceconsumption.FFocusarocusareaeaSustSustainabilitainabilitykykeeyindicatoryindicatorssFFururtherdettherdetailsailsClimatechangeandemissions◆Greenhousegasemissions(Scope1and2)1ClimateactionClimateaction◆Indirectgreenhousegasemissions(Scope3)ClimateactionClimateaction◆PercentageofpurchasedelectricityfromrenewablesourcesClimateactionClimateactionWaterandresourceintensity◆WasteScoreWWaste&raste&recyecyclingcling◆WaterIntensityScoreWWatermanagementatermanagement◆WastewaterqualityWWatermanagementatermanagement1ThekeyindicatorisusedtodeterminethesustainabilityfactorfortheMerckLong-TermIncentivePlan(LTIP).Inordertoassesstheimpactsofourproducts,technologiesandbusinessactivitiesontheenvironmentandsociety,wedevelopedtheSustainableBusinessValue(SBV)method.Itenablesustocalculatethepositiveandnegativeimpactsofouractivitiesalongourentirevaluechain,basedonvarioussustainabilitycriteria.Theresultisamonetaryvaluethatquantifiesthebenefitthatproducthasforconsumers,theenvironmentandsociety,forinstance.In2022,weworkedtomakethemethodmoreuser-friendly.OuroperationalsustainabilitygoalsOurthreestrategicgoalsmakeourlong-termsustainabilityambitionclear.Inordertoachievethem,wehavealsodefinedoperationalsustainabilitygoals.Thesearemorespecific,mayapplyforashortertimeframeandarealignedwithourcurrentbusinessactivities.RolesandresponsibilitiesOurExecutiveBoardhasGroup-wideresponsibilityforoursustainabilitystrategy.Ithasadoptedourthreestrategicgoals.TheGroupCorporateSustainabilityunitisresponsiblefordevelopingandshapingthesustainabilitystrategyanditinformstheExecutiveBoardatleastonceayearabouttheprogressmadeandtheneedforaction.ItispartoftheGroupfunctionCorporateSustainability,QualityandTradeCompliance(SQ),whichreportstotheChairoftheExecutiveBoard.Consequently,overarchingExecutiveBoardresponsibilityforEnvironment,Social,Governance(ESG)alsolieswiththeChairoftheExecutiveBoard.GroupCorporateSustainabilityisalsoresponsibleforcoordinatingtheMerckSustainabilityBoard(previouslyCorporateSustainabilityCouncil),whichwassetupin2022.TheMerckSustainabilityBoardischairedbytheHeadofSQandconsistsofrepresentativesfromourbusinesssectorsandfromkeyGroupfunctions,suchasProcurement,Communications,aswellasControllingandRiskManagement.MembersfromEurope,theUnitedStatesandAsiaprovideinputonregionalsustainabilityaspects.Strategy&management15TheSustainabilityBoardsteersandmonitorstheGroup-wideimplementationofthesustainabilitystrategy.Italignsthestrategywiththeindividualbusinessstrategies,definesprioritiesandspecifiesgloballyapplicablesustainabilityguidelines.Inaddition,theSustainabilityBoardensuresthattheinitiativesofourvariousbusinesssectors,Groupfunctionsandsubsidiariesalignwithourglobalsustainabilitystrategy.Moreover,itrecommendscorrespondinginitiativestotheExecutiveBoard.Withintheirrespectiveareaofresponsibility,eachExecutiveBoardmemberisalsoresponsibleforsustainability,reviewstheprioritiesthathavebeenset,anddecidesontheimplementationofinitiatives.In2022,theSustainabilityBoardmetninetimesbyvideoconference.Theparticipantsaddressedthefollowingtopics:Implementingthesustainabilitystrategyinthebusinesssectors,keyindicatorsformeasuringandsteeringsustainabilitywithinthecompany,loweringgreenhousegasemissions,andsupplychainduediligencerequirements.ThemeasuresadoptedbytheSustainabilityBoardareimplementedbyourlinemanagersaswellasbyinterdisciplinaryprojectteams.Toachieveouroperationalsustainabilitygoalsanddependingonthetopic,responsibilityisassignedtospecificteams,functionsandbusinessunits.Thoseresponsibleforimplementationexchangeideasandcoordinateactionsinanoverarchingcommittee.Theyidentifysynergiesbetweentheprojectsandaligntheirdirectionwithoursustainabilitygoals.Anexternalexpertcommitteeforsustainabilityissueshasbeensupportingourcompanysince2021.TheMerckSustainabilityAdvisoryPanel(MSAP)consistsofsixindependentexpertsonsustainability-relatedtopicsfromseveralinstitutionsworldwide.TheyadvisethemembersoftheSustainabilityBoardonselectedissuesandassessthesustainabilityofourcompany’sbusinessmodelsaswellasplannedactivities.Moreover,theyprovidetheirexternalinsightstohelpaddresssocietalandpoliticalchallengesanddevelopmentsthatcouldbestrategicallyrelevantforourbusinesses.ThispanelischairedbytheHeadofSQ.ThemembersofourSustainabilityAdvisoryPanelMichaelBraungartToddCortMajaGöpelHuiyao(Henry)WangGlyndaBathan-BaterinaIoannisIoannouFounderandScientificCEOofEPEAInternationaleUmweltforschung,ProfessoratErasmusUniversityRotterdamandLeuphanaUniversityLüneburgFacultyCo-DirectorofboththeCenterforBusinessandEnvironment(CBEY)andtheInitiativeonSustainableFinance(YISF)oftheYaleSchoolofManagementScholar,speaker,author,advisor,Expertforsustainabilitypoliciesandtransformationresearch,HonoraryProfessoratLeuphanaUniversityLüneburgFounderandPresidentofCenterforChinaandGlobalization(CCG)DeputyExecutiveDirectorofCleanAirAsiaAssociateProfessorforstrategyandentrepreneurshipattheLondonBusinessSchoolStrategy&management16SustainableDevelopmentGoalsTheUnitedNations(UN)2030Agendaisaglobalplantosustainablypromotepeaceandprosperityandtoprotectourplanet.Since2016,countriesandorganizationshavebeenworkingtoimplementthisagendawithits17SustainableDevelopmentGoals(SDGs).Ouraimisforourbusinessactivitiestocreatesharedvaluethatisbothmeasurableandmakesarecognizablecontributiontosociety.Werelyonthepowerofscienceandtechnologytomakeapositiveimpact.DoingourpartOursustainabilitystrategyfocusesonthefiveSDGsonwhichwehavethestrongestimpactthroughourentrepreneurialactions.SDG3–Goodhealthandwell-beingWithourproducts,wepositivelyimpactthehealthandqualityoflifeofpeoplearoundtheworld.Throughtechnologicalandscientificinnovations,wearealsohelpingtoimprovethehealthofunderservedpopulationsinlow-andmiddle-incomecountries.SDG8–DecentworkandeconomicgrowthWeseeitasourresponsibilitytorespecthumanrightsbothwithinourcompanyandalongoursupplychain.Thatiswhywearededicatedtoupholdingappropriateandfairlaborandsocialstandards.Wewanttodrivesustainableeconomicgrowththroughprogressiveresourceefficiency.SDG9–Industry,innovationandinfrastructureWeuseourexpertiseinscienceandtechnologytomakeourproducts,processesandinfrastructuresustainable.Inaddition,wewanttopromotetheworkofscientistsworldwidewithourinnovationsandsupportprograms.SDG12–ResponsibleconsumptionandproductionWeuseresourcesefficientlyandreducewasteandemissions.Wepayattentiontothisinourproductdevelopmentandinourmanufacturingactivities.Wealsohelpourcustomerstomanufacturetheirproductsmoresustainablyandefficientlyandtoachievetheirownsustainabilitygoals.SDG17–PartnershipsforthegoalsWeneedstrongpartnersinordertodrivesustainabledevelopmentwithinourcompanyandbeyondandtobettermeetsocietalchallenges.Wethereforecollaboratewithawiderangeoforganizations,companies,federations,andnetworks.Throughoursustainabilitystrategy,wehelptosolvechallengesglobally,notjustwithinthesefiveSDGs.OurmanagementapproachesandprojectsalsosupportSDG4(Qualityeducation),SDG5(Genderequality)–Strategy&management17supplementedbydiversityandinclusion,SDG6(Cleanwaterandsanitation),SDG7(Affordableandcleanenergy),andSDG13(Climateaction).DetailedinformationonourquantitativeandqualitativecontributionstothespecificSDGsisprovidedinourinteractiveSDGtool.OurcontributionindetailInouronlinereport,weofferaninteractivetooltovisualizehowwecontributetotheSDGsinqualitativeandquantitativeterms.Strategy&management18StakeholderdialogueEngagingwithourvariousstakeholdersiscrucialforus.Throughthisdialogue,wecommunicateourdecisionsandactionstransparentlyinordertosecureoursociallicensetooperate.Weaimtounitedivergentinterests,aswellasbuildandsustaintrust.DialogueatvariouslevelsOurkeystakeholdersincludeouremployees,customersandbusinesspartners,variouspatients,theMerckfamilyasthemajorityownerofthecompany,shareholders,andoursuppliers.Wepursueacontinuousdialoguewithourstakeholdersandusethisexchangetoidentifytrendsanddevelopmentsinsocietyandinourbusinessfieldssoastotakethemintoaccountinourcorporateresponsibilityendeavors.OurstakeholdersMediaRegulatoryagenciesEmployeesPatientsScientistsCommunityHealthcaresystemsCompetitorsCustomersSuppliersNGOsFederations/PolicymakersShare-holdersEmployeerepresen-tativesSales&businesspartnersMerckfamilyStrategy&management19Weregularlyconductasystematicmaterialityanalysistolearnaboutourstakeholders’expectations.Indoingso,weidentifytheeconomic,socialandenvironmentalissuesthatareimportanttoourstakeholders–andthusalsotous.Wehaveestablishedguidelinesandprinciplesforinteractionswithcertainstakeholders,withafocusoncompliance.Forexample,wehavedefinedinternalpoliciesandreviewprocessesforpatientrelationships,interactionswithhealthcarestakeholders,andbusinesspartnerships.TheMerckSustainabilityAdvisoryPanel(MSAP),agroupofexternalexpertsfromvariousdisciplines,hasbeenadvisingusonthetopicofsustainabilitysince2021.Itenablesourcompanytounderstandevenmorediversestakeholderperspectivesandhelpsustodevelopoursustainabilitystrategyfurther.MoreinformationonMSAPanditsmemberscanbefoundunderSustainabilitystrategyandgoals.Wecommunicateregularlywithourstakeholdersthroughavarietyofchannels.Forinstance,weconductstakeholdersurveysandorganizetopic-specificdialoguesatregional,nationalandinternationallevel.Wealsoparticipateindiscussionsandinformationalforumsaswellasthroughouradvocacyworkandindustrycoalitions.Herearesomeexamplesofthedialogueformatsused:EmployeesEmployeeengagementsurveys•Unlockingourcollectivepotential•Empoweringouremployees360-degreefeedback•EmbracingconversationanddialogueIntranet“EVA”Careerfairs•Attractingandinspiringkeytalent•SupportingthenextgenerationPatientorganizationsPatientAdvisoryBoards(PAB)toengagepatientorganizationsinourclinicalresearch•ClosedialoguewithpatientsandadvocacygroupsMemberofvariousinitiativesonthequalityandefficiencyofclinicaltrials•ClosedialoguewithpatientsandadvocacygroupsStrategy&management20EmployeerepresentativesInvolvementoflocalemployeerepresentativesincompanydecisions•Ourcommitment:Employeerepresentation•AcompetitivecompensationstructureScienceMerckEthicsAdvisoryPanel(MEAP);DigitalEthicsAdvisoryPanel(DEAP);TUDarmstadt•MerckEthicsAdvisoryPanel•DigitalEthicsAdvisoryPanel•Fruitfulstrategicpartnership•PromotingthecirculareconomyCommunitiesDiscussionandinformationforumsforresidentsinthevicinityofoursites•RoundtablesandinformationalforumsHealthcaresystemsCollaboratingwithhealthauthoritiesandotherstakeholdersaswellaseventseriesandnetworkmeetings•Engagingstakeholders•Collaboratingwithpatientadvocacygroups•ClosedialoguewithpatientsandadvocacygroupsAssociations/PoliticsCollaborationinworkinggroups•AdvocacygroupsandindustrycoalitionsSuppliersSuppliersurveys•Supplychainassessmentsandaudits•AuditingourmicasupplychainKnowledgesharing•AmbassadorsforsustainableprocurementStrategy&management21ShareholdersAnnualGeneralMeeting•InvestorRelationsEventsforinvestors•CapitalmarketsdaysPublicauthoritiesSubject-specificcooperation•PharmacovigilanceinAccesstoHealth•InspectionsandauditsfordrugsafetymonitoringFurtherinformationonstakeholderdialoguescanbefoundintheindividualreportchapters.RoundtablesandinformationalforumsWeholdroundtablediscussionsandinformationalforumsforlocalresidentsatourmajorsites.Since1994,wehavebeenholdinganannualpublicplanningforuminDarmstadttodiscussthedevelopmentofoursitewithmembersofthecitycouncil,localauthoritiesandthecommunity.InvolvementininitiativesWecollaboratewithanarrayofcivicorganizationssuchastheWorldEnvironmentCenter(WEC)andalsoparticipateinotherinitiativesthatshareourcommitmenttoresponsiblecorporateconduct,suchasChemie3andResponsibleCare®.AdvocacygroupsandindustrycoalitionsWeactivelyparticipateinthepoliticalprocessandadvocateourpositionsandviewsbyengagingpolicymakersinadirectdialogueaswellasthroughourworkwithindustrycoalitions.Themajornationalandinternationalindustryassociationsinwhichwearemembersandalsoholdpositionsinclude:•TheGermanFederationofChemicalEmployers’Associations(BAVC)•TheEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA)•TheInternationalFederationofPharmaceuticalManufacturers&Associations(IFPMA)•TheGermanChemicalIndustryAssociatione.V.(VCI)•TheEuropeanChemicalIndustryCouncil(Cefic)•NationalAssociationofManufacturers(NAM)•UnitedStatesChamberofCommerce(USCC)•AssociationofInternationalChemicalManufacturers(AICM)Strategy&management22PoliticalcontributionsOurinteractionswithactorsinthepoliticalspherefocusonpoliticaldialogue,informationexchangeandopenandtransparentknowledgesharing.Ourguidelinesstipulatethatourinteractionsandcontributionsmustcomplywithallapplicablelawsandmustneveraimtoinappropriatelyinfluenceorcompensateofficialsforpoliticalfavors.Evenifpermittedbylocallaw,wedonotmakecontributionsintheformofdonationstoorsponsorshipsofpoliticalpartiesorrelatedorganizations.Furthermore,wedonotmakedonationstoorsponsorholdersofpublicofficeorcandidatesforsuch,nordowemakeothertypesoffinancialcontributions.IntheUnitedStates,politicalactioncommittees(PACs)havebeensetupthroughwhichouremployeescandonatemoneytosupportpoliticalcandidatesandorganizations.Thesearenotdonationsmadebyourcompany,butrathercontributionsmadebyemployees.ThecontributionsdonatedarereportedtotheU.S.FederalElectionCommissionandarefullydisclosed.Strategy&management23MaterialityanalysisWithourannualmaterialityanalysis,weidentifythesocial,economicandenvironmentalissuesthatareofspecialimportancetousandourstakeholders.In2022,webroadenedthismaterialityanalysistoshowtotheextenttowhichourbusinessactivitiesimpacttheseissues,bothpositivelyandnegatively.IdentifyingthematerialissuesMaterialityanalyseshelpusdefineandverifythefocusofoursustainabilitymanagementeffortsandthecontentsofourreporting.In2022,weadaptedourmaterialanalysistothenewrequirementsoftheGlobalReportingInitiative(GRI)reportingstandards.Intheanalysis,wefocusedonactualandpotentiallypositiveandnegativeenvironmental,economicandsocialimpactsofourbusinessactivities.Basedonthesetoftopicsincludedinourmostrecentmaterialityanalysis,wehavealreadymadeaninitialcomparisonwiththepotentialtopicsoftheEUCorporateSustainabilityReportingDirective(CSRD),whichisexpectedtoapplytoourcompanyasofthe2024reportingyear.Inaddition,wedrewoninternaldataandsecondarysourcessuchasspecialistliterature,databasesandpubliclyavailableESGindicestoinvestigatetheecologicalandsocialimpactsofourwork.Indoingso,welookednotonlyatourownactivities,butalsoattheimpactswithinourupstreamanddownstreamvaluechain.Thisdataprovideduswithabasisforaquantitativeassessmentoftheactualandpotentiallypositiveandnegativeimpactsacrosstheentirevaluechain,whichwethenusedtoderiveanetassessment.Weclassifiedthenegativeimpactsintofourcategories:low,moderate,significant,andcritical.Similarly,wecategorizedthepositiveimpactsasfollows:low,moderate,significant,orsubstantial.Internalsubjectmatterexpertsvalidatedtheresultsinthreetopicworkshops.Thefollowinglistoftopicsprovidesanoverviewofouractualandpotentiallypositiveandnegativeimpacts.Atopicwasclassifiedasbeingmaterialifapositiveornegativeimpactwasatleastcategorizedas“moderate”.Acheckmarkisusedinthetabletoindicatethis.Strategy&management24Compliance(incl.anti-corruption,anti-competitivebehavior,dataprotectionandprivacy,interactionswithhealthsystems,responsiblemarketing)Chapter:•Compliancemanagement•Dataprotection&cybersecurity•InteractionswithhealthsystemsDuetothenatureofourbusinessactivities,thereisalwaysthepossibilityofcompliance-relatedrisksresultinginpotentiallymoderatenegativeimpacts.Inresponse,ourcompanyaimstoensurethatallbusinessactivitiesadheretotherelevantlaws,regulationsandethicalstandards.Inaddition,wedonotlimitourcompliancemanagementtotheboundariesofourowncompany;wealsoincludesuppliersandourinteractionswithsalespartiessuchascommercialagents,distributorsanddealers.Throughourcompliancepolicies,standardsandprocedures,wehavecomprehensivemitigationmeasuresinplace.Webelievethattherearenoadditionalpositiveimpactsthatexceedtheregulatoryrequirementsforcompliancemanagementsystems.Nevertheless,furthereffortsandcontinuousimprovementsarealwaysanalyzedandimplementedtoelevatethequalityandeffectivenessofourCompliancefunction.Supplychainmanagement(incl.workingconditions,equalopportunities,otherwork-relatedrights)Chapter:•Supplychainmanagement•MicasupplychainDuetothenatureofourbusiness,webelievethepotentialnegativeimpactregardingsustainablesupplychainmanagementtobesignificant.Wehaveguidelinesandmeasuresinplacetoimproveworkingconditionsinthesupplychain,inadditiontocarefulmonitoringthroughregularassessmentsandaudits.Thesemeasuresreducethepotentialfornegativeimpactswithinoursupplychain.Atthesametime,thepossibilityforustoinfluenceexternalorganizationsismorelimitedthanwithinourowncompany.Weactivelycontributetoamoderatelypositiveimpactinoursupplychainbyimplementingmeasuresbeyondcompliance.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management25HumanrightsChapter:•HumanrightsWhenitcomestoourglobalsupplychains,wepaycloseattentiontohumanrightsrisks.Weexpectoursupplierstoexercisethegreatestcareindealingwithhumanrights.Unlikeinourownbusinessactivities,wecanoftenonlyhaveanindirectinfluencealongoursupplychaintopreventnegativeimpacts.OurprincipleshavebeensetoutinGroup-widepolicies,whichweusetoderivemeasurestoavoidnegativeimpacts.Weclassifyouroverallnegativeimpactswithregardtohumanrightsasmoderate.Weaimtoincreasetheawarenessofouremployeesandsuppliersonthetopicofhumanrightsandtheassociatedduediligenceobligations.Tothisend,weusevariouscommunicationformatsandoffertraining.Inaddition,weareactiveinvariousinitiatives.Throughtheseefforts,wemakeapositivecontributiontotheprotectionofhumanrights.Nevertheless,weassessourpositiveimpactsontheprotectionofhumanrightsoutsideourcompanyaslow.ClinicalstudiesChapter:•ClinicalstudiesOurcompanyisconductingclinicaltrialsofitsproducts.Weaddressthepotentialrisksofnon-complianceandnon-adherencewithinternationallawsthroughmeasuressuchasimplementingstrictstandards,policies,auditsandcountryselections.Wethereforeassessourpotentialnegativeimpactsasmoderate.Weconductourclinicalstudiesadheringtothehighestethicalandscientificstandards,goingbeyondtheminimumlegalrequirementsandimplementingpatient-focuseddrugdevelopmentthatmoreactivelyinvolvespatients,caregivers,andtheiradvocates.Theseactivitiesultimatelyimprovethehealthcarepeoplereceiveandenablethedeliveryofnewtreatmentsforpeopleworldwide.Inaddition,wemakeourresearchstudiesavailabletothepublicandotherinstitutionstoenhancetheefficiencyandeffectivenessofmedicineandtreatmentsglobally.Therefore,webelievethepositiveimpactofourethicalconductinthefieldofclinicalstudiestobesignificant.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management26AnimalwelfareChapter:•AnimalwelfareTheuseofanimalsisoftenalegalandregulatoryrequirementacrossmanyareasofourbusinesstoensurethequality,safetyandefficacyofourproductsandprocesses.Consequently,ouruseofanimalsinevitablycreatesanegativeimpact.However,wehaveimplementedthe4Rsforanimal-basedresearch(replacement,reduction,refinement,andresponsibility)andhavesetourselvesanambitiousgoalofphasingoutanimaluseandreplacinganimalswithbetteralternativesonalongtermbasis.Untilweachievethisgoal,weaccepttheethicalstandardsasdefinedinourqualitydocumentsinanimalscienceandwelfare.Webelievethatthroughourstrongmitigationmeasures,ournegativeimpactonanimalwelfareismoderate.Wearedevelopingandcommercializingvarioustechnologiesandsystemsinordertoreplacetheuseofanimalsbyalternativesstep-by-step,andeventuallyentirely.Wealsoengageinexternalpartnershipstopromoteanimalwelfarebeyondourowncompanyandcontractresearchorganizationsandfostertransparencyinanimalresearchcommunication.Additionally,weareinvolvedindevelopingsustainabletechnologies,suchasculturedmeat,whichcouldeventuallysupportaglobaltransitiontowardsmoresustainablenutritionsystemsandreducedmeatconsumption(andinterlinkedhealthandenvironmentalimpacts).Furthermore,weareworkingtoreplacefetalbovineserumandotheranimal-derivedproductsincellculturewithanimal-freealternatives.Therefore,webelieveourpositiveimpactsonanimalwelfaretobemoderate.BioethicsChapter:•BioethicsOurcompanyiscommittedtoethicalresearch.Whenweadviseoninnovationsfromabioethicalperspective,questionsmaywellarisethatgofarbeyondtheapplicablelegislation.Suchissuesoftenonlycometolightafteranin-depthethicalanalysis.Therefore,thereisariskthatwemaynotalwaysbehaveinabioethicallycorrectmanneralongourvaluechain.Ourgoalistominimizethesepotentialnegativeimpactsbydevelopingclearguidelinesandestablishingregulationsforbioethicalissues.Thus,weconsiderthecompany-specificnegativeimpactsonsocietytobelow.TheMerckEthicsAdvisoryPanelforScienceandTechnologyenablesourvariousbusinessunitstoadequatelyaddress(bio)ethicalissuesthatariseinconnectionwithourscientificandtechnologicalinnovations.Throughourwork,wedemonstratehowbioethicalprinciplesandguidelinescanbeconsideredandintegratedinscientificandtechnologicalprogressinacorporatecontext.TheMEAPprovidesethicallysoundguidance–especiallyforcasesofscientificandtechnologicalprogressthatarenotyetcoveredbyexistingguidelines.WithguidelinessuchastheGenomeEditingPrincipleortheStemCellPrinciple,wehelptoestablishethicalpositionsNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management27beyondtheboundariesofourcompanyandthusassessourpositiveimpactsonresponsibleresearchasmoderate.DigitalethicsChapter:•DigitalethicsNon-compliancewithdigital-ethicalstandardsposesrisksforpeopleandtheenvironment.Weusevariousinitiativestosupportdigitalethicsandassessnegativeimpactsattributabletoourcompanyaslow.ThroughourCoDEandtheDigitalEthicsAdvisoryPanel(DEAP),weaddressethicalissuesresultingintheareaofdata&digital.Wethushaveapositivecross-borderimpact,whichsetsanexampleforthefurtherdevelopmentofethicalstandardsbeyondtheborderofourcompany.Overall,weclassifyourpositiveimpactsasmoderate.Sustainableproducts(incl.productdesign,packaging,innovationandR&D)Chapter:•Sustainableinnovation&technology•Products&packagingManufacturingourproductscreatesanegativeenvironmentalfootprintowingtotheuseofalargevarietyofresources.Wereducethisimpactthroughinternalmeasures,suchasutilizingmoresustainablerawmaterialsandpackagingandbyresearchinginnovativeandsustainablematerials.Additionally,wehavelaunchedseveralinitiativestofostersustainableresourceuseanddevelopandimplementsustainableproductalternatives.Therefore,webelievewehaveonlyamoderatelynegativeimpactonthistopic.Weexpecttoseethelargestpotentialpositiveimpactsfromaprojectthatstrategicallyincorporatessustainabilitycriteriaintoourproductdevelopment.However,wewillonlyrealizethepositiveimpactsoftheseactionsinthefuture.Intheshort-term,weaimtocreateapositiveimpactbyimplementingtheSMASHpackagingstrategy,whichcandirectlycontributetomoresustainableproductsandpackagingdesign.Werecognizethatmostoftheseactivitieswillmitigatenegativeimpactsbutwillnotresultinapositiveimpactoverall.However,oneparticularinitiativethatgeneratesapositiveimpactisourDOZNTMtool,whichenablesourcustomerstoidentifytoxicorhazardousmaterialsandsuggestssustainablealternatives.Additionally,theinvestmentactivitiesofMVenturesmaycontributetomoresustainableproductionprocessesandproductswhilesupportinginnovativebusinessideas.Partnershipswithcustomersalsohelptodevelopmoresustainableproductsandenableotherindustryplayerstoactmoresustainably.Therefore,ourcurrentpositiveimpactonthetopicofsustainableproductscanbeclassifiedasmoderate.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management28Healthforall(incl.accesstohealth,pricesofmedicines,healthawareness)Chapter:•Globalhealth•Innovationsharing•Pricesofmedicines•Healthcapacity&awarenessWestrivetomakehealthsolutionsaffordableandaccessibleandcollaborativelyworkwithpartnersandstakeholderstospeedupaccesstoqualityhealthsolutionsforall–focusingonlow-andmiddle-incomecountries.Aspartoftheseefforts,wehaveimplementedpatientaccessprogramsandourequitablepricingpolicytoenablemorepatientstoaffordourproductportfolio.Wehavealsoinvestedininitiativestostrengthenhealthsystemsandimproveaccesstohealth.Oureffortshavebeenrecognizedbyexternalassessmentsandrankings.Whentakingourmeasuresandprojectsintoaccount,webelievetohavealownegativeimpactonthetopicofhealthforall.Weaddressunmetglobalhealthchallenges.Forexample,wemakesubstantialinvestmentstoeliminateschistosomiasisasapublichealthproblem.Furthermore,weembedinitiativestodefinenewmodelstoensureequitableandsustainableaccesstoourinnovationsforneglectedtropicaldiseases.Wearealsoengagedinthefightagainstmalaria,developingandprovidingaccesstonewdrugsandtoolssupportingitsprevention,controlandelimination.Wealsoimplementcapacityandawareness-buildinginitiatives.Therefore,webelievethatwehaveasubstantialpositiveimpactonhealthforall.ChemicalproductsafetyChapter:•ChemicalproductsafetyTomitigatepotentialnegativeimpactsofhazardouschemicals,wehavestrictguidelinesandmeasuresinplacethatensuresafeworkingconditions.Someuncertaintyexistsregardingthestateofchemicalproductsafetyatthesupplierlevel.Forusersofourproducts,weprovidethenecessaryinformationfordealingwithhazardoussubstancessafely.Therefore,thepotentialnegativeimpactisclassifiedasmoderate.Ourcommitmenttochemicalproductsafetyisoneofthecornerstonesofourbusinessasweprocessandhandlehundredsofthousandsofhazardouschemicals.Wecontinuouslyimproveouractivitiesaroundproductsafety,thusbenefittingtheenvironmentaswellasourcustomersandemployees.Inaddition,weproactivelyandregularlydevelop,assessandimplementnewsafety-relateddataandinformationandadaptourriskmitigationmeasuresaccordingly.Consequently,ourpositiveimpactisclassifiedassubstantial.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management29PatientsafetyChapter:•PatientsafetyPatientsafetyisfundamentaltodeliveringqualityhealthservicesandthereforehashighrelevancethroughouttheHealthcarebusinesssector.Ourcompanyfollowsinternationalguidance,standardproceduresandallrelevantpharmacovigilanceregulationstomitigatethepotentialnegativeimpactsonpatientsafety.Webelieveournegativeimpactonthetopicofpatientsafetytobemoderate.Wecollaboratewithhealthauthoritiesinlow-andmiddle-incomecountriestohelpimprovetheirpharmacovigilancesystemsandoperatingenvironments.Themeasuresarewidelyimplementedandbenefitpatientsaroundtheworld.In2022,weincludedthetopicofpatientsafetyintheupdateofourSupplierCodeofConduct,whichwewillpublishin2023.Therefore,webelieveourpositiveimpactonthetopictobesubstantial.Product-relatedcrimeChapter:•Product-relatedcrimeIllegal,counterfeitandsubstandardmedicinesposeasignificantrisktopublichealth,andchemicalsmaybemisusedforcriminalpurposessuchasmanufacturingillicitdrugs.Therefore,wehaveenactedvariousmeasurestomitigatetheriskofproduct-relatedcrime,reducingthepotentialnegativeimpacttomoderate.Inaddition,ouractionsandinitiativestoreducetherisksassociatedwithproduct-relatedcrimeoftenexceedtheminimumlegalrequirements.Forexample,wesupportauthoritiesindetectingandresolvingcasesofproduct-relatedcrime.Wealsoprovidetrainingforemployeesandbusinesspartnerstostrengthentheircompetenciesindetectingproduct-relatedcrime.Overall,weassessourpositiveimpactsassignificant.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management30Attractiveemployer(incl.attractingemployees,recruitingandretainingemployees)Chapter:•Careerwithus•CorporatecultureAnegativeworkingenvironmentcannegativelyimpactqualityandproductivityandpoorwork-lifebalancemaybedetrimentaltoemployees’physical,mentalandemotionalwell-being.Forthisreason,wehaveimplementedseveralcharters,policiesandstandardstocreateanattractiveandhealthyworkingenvironmentforallemployees.Webelievethenegativeimpactonthetopicofattractiveemployertobelow.Inaddition,weareenhancingourattractivenessasanemployer,forinstancebycreatingflexibleworkingenvironmentsandtakingbeneficialmeasuresforouremployeesextendingwellbeyondcompliancewithnationallawsworldwide.Therefore,webelieveourpositiveimpactonthetopicofattractiveemployertobesignificant.Employeedevelopment(incl.employeetrainingandeducation,goodleadership)Chapter:•Careerwithus•CorporatecultureEmployeedevelopmentandvocationaltrainingplayacrucialroleinenablingustoimproveouremployees’skills.Wehaveavarietyofleadershipmeasuresinplacetomitigatepotentialmonetaryandnon-monetaryconsequencesthatcouldbecausedbydeviantbehaviors,stress,anxiety,turnoverintentions,orpoororganizationalperformance.Therefore,webelievethepotentialnegativeimpactonthetopicemployeedevelopmenttobelow.Inmanycases,wegobeyondcompliancewithouremployeedevelopmentandvocationaltrainingapproaches.Webelievewehaveasignificantlypositiveimpactonthetopicofemployeedevelopmentasaresultofbuildingsocialcapitalthroughouremployeetrainingandpersonaldevelopmentopportunities.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management31Diversityandinclusion(incl.equalopportunity,non-discrimination,inclusiveculture)Chapter:•Diversity,equity&inclusionDisrespectingequalopportunitiesandnon-discriminationcanleadtohumanrightsviolationsintheworkplaceandthereforehavepotentialnegativeimpactsonhumansandsociety.Oureffortstopromoteandsupportdiversity,equity,inclusion,non-discrimination,andLGBTQI+rightsareextensive,whichiswhywebelieveournegativeimpactondiversity,equityandinclusiontobelow.Ouraspirationtobuildaninclusivecultureinwhichemployeesfeelwelcomeandvaluedextendswellbeyondcompliancewithexistinglawsandregulations.Forexample,wehavemorethan60internalDE&IemployeegroupsandnetworksworldwidethatactivelycontributetoourDE&Istrategy.Therefore,webelieveourpositiveimpactonDE&Iissignificant.OccupationalhealthandsafetyChapter:•Health&safetyHealthandsafetyaspectsplayamajorroleinthemanufactureofchemicalandpharmaceuticalproducts–especiallyforemployeesworkinginresearchandproduction.Toreducehealthandsafetyrisksforouremployeesglobally,wehaveintroducedGroup-widestandards,initiativesandtrainingprograms.Wethereforeestimatenegativeimpactsonhealthandsafetytobelow.Ouractivitiesaimtoensurethesafetyofthepeoplewhoworkforussincewecontinuouslyassessandreducesafetyrisks.Throughtrainingmeasures,wearealsoraisingawarenessbothofoccupationalhazardsandbehaviorsthatpromotehealthandsafety.Bytakingvariousmeasures,weencourageouremployeestoliveahealthylifestyle.Thesemeasuresgobeyondcompliancewithregulationsandmitigatingnegativeimpacts.Thus,webelieveourpositiveimpactstobemoderate.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management32Non-GHGemissionsChapter:•EnvironmentalprotectionManufacturingprocessescanreleaseemissionsintotheair,waterorsoil.Whereneeded,weinstallexhaustairpurificationsystemsorwastewatertreatmentplantstoreduceoravoidemissions.Despitethesemeasuressuchemissionscanstillbeunintentionallyreleased.Additionally,ourcustomersmayincorrectlydisposeofourproducts.Thiscouldpotentiallylead,forexample,toabuild-upofpharmaceuticalsorotherchemicalsintheenvironmentandleavetracesofactivepharmaceuticalingredientsinwater.Inresponse,wehavetakenvariousmeasurestomitigatetheseriskssothatwebelieveournegativeimpactsofournon-GHGemissionstobemoderate.Intheareaofnon-GHGemissions,wehavevariousmitigatingmeasuresinplace.Beyondthis,wecouldnotidentifyanyadditionalpositiveimpactsonsocietyortheenvironment.BiodiversityChapter:•EnvironmentalprotectionOurproductionsitesarepredominantlylocatedinindustrialareaswithlowbiodiversityvalue.Nevertheless,unintentionalchemicalleakagescancontaminatesoilorwaterresourcesanddamageecosystems.Therefore,wehavetechnicalandorganizationalmeasuresinplacetopreventthereleaseofsubstancesintotheenvironment.Forexample,wearesealingrelevantsurfacesatoursitestoprotectsoil,groundwaterandtheassociatedecosystemsfromchemicalspillages.Theseeffortsmayimpacthabitatsandanimalsthatpotentiallyliveinunsealedsurfaces.Wateruseandthereleaseofgreenhousegasesarealsolinkedtobiodiversityloss.Inaddition,asamanufacturer,weusevariousrawmaterialsandunderstandthattheirextractionandprocessingcannegativelyimpactbiodiversity.Overall,duetoourtechnicalandorganizationalmeasuresthatareinplace,weclassifyournegativeimpactonbiodiversityasmoderate.Someofoursitesarebiodiversity-certifiedandassessedannually.Theseassessmentsshowthatbiodiversityatthesesitesisincreasing.Inaddition,variousothersitesaremakingeffortstofosterbiodiversity.Therefore,webelievetohavealowpositiveimpactonbiodiversity.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management33Climateaction(incl.GHG-emissions,energyefficiency,renewableenergies)Chapter:•ClimateactionCompany-specificGHGemissions(Scope1and2)contributetoglobalenvironmentaldegradation.Overall,theGHGemissionsassociatedwithourpurchasedgoodsandservices(partofScope3)representthelargestshareofourtotalcarbonfootprint.Webelieveournegativeimpactonthetopicofclimatechangetobesignificant.Weareintheearlystagesofalongcarbon-reductionjourney.Therefore,weareinvestigatingandimplementingavarietyofmitigationmeasurestosignificantlyreduceourcarbonfootprint.WealsoaimtogeneratevaluefortheenvironmentviainitiativessuchassigningVirtualPowerPurchaseAgreements(VPPAs)thatbringadditionalrenewableelectricitytothegrid.Overall,weclassifyourpositiveimpactregardingGHGemissionsaslow.WatermanagementChapter:•WatermanagementAsamanufacturerofchemicalandpharmaceuticalproducts,werequiresignificantvolumesofwater.Theextractionofwaterreducesitsavailabilityinthenaturalenvironmentandforotherwaterusers.Additionally,thereisalwaysariskofnegativelyimpactingthehealthandviabilityofecosystemsduetowastewaterdischargeandthepotentialpollutionofwaterandsoil.Wehavemanyinitiativesinplacetoreduceourimpactonwaterqualityandavailability.Forexample,wehaveimplementedstrictglobalstandardsandrequirementsatallofourmanufacturingsitesforwastewatertreatment.Someoftheserequirementsalsoexceedourownbusiness,suchastheResponsibleMineralsSourcingCharter,whichrequiressupplierstohavewastewatermanagementsystemsandprocessesinplace.Theseactivitiesmitigateournegativeimpacts;therefore,webelieveouroverallnegativeimpactsonwatertobemoderate.Withrespecttoourwatermanagementactivities,wehavestrongmitigatingmeasuresinplace.Theseareprimarilyaimedatcomplyingwithregulations.Beyondthis,wecouldnotidentifyanyadditionalpositiveimpactsonsocietyortheenvironment.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management34Waste&recyclingChapter:•Waste&recyclingTheuseofchemicalandpharmaceuticalproductsischaracterizedwithahighriskofimproperuse,wrongdisposalandparticularlyindevelopingcountrieswithweakwastemanagementsystems.Forwastegeneratedwithinourownoperations,wemitigatenegativeimpactsbyadheringtoregulationsaswellasfosteringeducation,wastereductionandrecyclinginitiatives.Weclassifyouroverallnegativeimpactstobemoderate.Regardingwasteandrecycling,wehavestrongmitigatingmeasuresinplace.Astheseactivitiesconcentrateoncomplianceandthemitigationofnegativeimpactsanddonotspecificallyaimatgeneratingvalueforenvironmentorsocietybeyondourownscope,wedidnotidentifypositiveimpacts.Plant,processandtransportsafetyChapter:•Plant,process&transportsafetyThepharmaceuticalandchemicalsectorisassociatedwithaparticularriskofpollutionstoair,soil,andwaterthroughchemicalspills.Wehaveimplementedstrongstandardsandsafemanufacturingpracticesatallsitesworldwidetosignificantlyreducetheriskofaleakageintotheenvironmentatmanufacturinglocations,duringstorageandtransportation.Therefore,webelievethepotentialnegativeimpactofourcompanyismoderate.Ourregulationsandmeasuresdonotonlyfulfilllocallegalrequirementsbutgobeyondthese.Webelieveourpositiveimpactonthetopicplant,processandtransportsafetytobelow.Thesetoftopicscoveredbythematerialityanalysisdidnotchangeincomparisonwith2021.Intheanalysis,“TaxGovernance”onceagainfellbelowthematerialitythreshold.Nevertheless,wehaveincludedtherelevantinformationinthisreportasweexpectthattaxmatterswillbecomeincreasinglyimportanttoourstakeholdersinthefuture.Inaddition,wereportonthetopicof“CommunityEngagement”aswehavebeensupportingandrunningawiderangeofactivitiesandcampaignsformanyyearsnow.Wewouldliketocontinuetoplayanactiveroleinthecommunityandtocontinuereportingonouroutreachefforts.Section289c(3)oftheGermanCommercialCoderequiresustoreportontopicsofdoublematerialityinacombinednon-financialstatement.Pursuanttosection289c(3)oftheGermanCommercialCode,theprincipleofdoublematerialityrequirescompaniestodisclosenon-financialinformationwhenthefollowingtwocriteriaaremet:First,theinformationmakesitpossibletounderstandhowthecompany’sbusinessactivitiesaffectnon-financialaspects.Andsecond,theinformationisnecessarytounderstandthecompany’scourseofbusiness,resultsofoperationsandeconomicposition.NegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainNegativeimpactsalongthevaluechainPositiveimpactsalongthevaluechainStrategy&management35BUSINESSETHICS37Corporategovernance37Governance39Compliancemanagement45Dataprotection&cybersecurity48Interactionswithhealthsystems52Taxgovernance54Suppliers54Supplychainmanagement59Micasupplychain62Humanrights66Clinicalstudies72Animalwelfare77Bioethics81DigitalethicsCorporategovernanceGovernanceFormorethan350years,responsibilityhasbeenanintegralpartofourcorporateidentity.Itisoneofoursixcompanyvalues,alongsidecourage,achievement,respect,integrity,andtransparency.Weseektobalanceenvironmental,socialandgovernanceaspectsandfindsolutionsfortheworldoftomorrow.Ouractionsserveallpeoplewhoneedourmedicinesormedicaltreatment,thecompanieswesupplyandthepeopleorpartnerfirmswecollaboratewith.OurapproachtoresponsiblegovernanceTherequirementsweplaceonresponsiblecorporategovernancearederivedfromourcompanyvaluesontheonehandandfromtheregulations,externalinitiatives,andinternationalguidelinestowhichwearecommittedontheotherhand.WeintegraterequirementssuchastheseintooursustainabilitystrategyandourGroup-wideguidelines.Theseguidelinescomprisechartersandprinciplesthatarevalidfortheentirecompanyaswellasspecificstandardsandproceduresforindividualbusinesssectorsandsites.Someexamples:OurHumanRightsCharteralignswiththeUNGuidingPrinciplesforBusinessandHumanRights.OurGroup-wideSocialandLaborStandardsPolicyreflectsthelaborstandardsoftheInternationalLabourOrganization(ILO).OurEHSPolicy(CorporateEnvironment,HealthandSafetyPolicy)forenvironmentalimpactmitigationandhealthandsafetyformsthebasisforimplementingthechemicalindustry’sResponsibleCare®GlobalCharterwithinourcompany.OurstandardentitledCorporateChemicalsRegulationsGovernancedescribestheprocessesandmanagementstructuresrequiredtoensureglobalcompliancwiththepertinentchemicalandproductsafetyregulations.Wecomplywithallapplicablelawsasamatterofprinciple.Wherenecessary,wereviewourinternalguidelines,standardsandinstructionmanualsoncompliantbehaviorandadaptthemtoreflectchangesintheregulatorylandscape.RolesandresponsibilitiesBasedontherequirementssetforthincharters,principlesandpolicies,ourinternalstandardsgivespecificguidanceforoperationalprocesses.Theyareconstantlyupdatedbytherelevantdepartmentsandareavailableonourintranet.Ourmanagersimplementthesestandardsintheirrespectiveareasofresponsibilityandensurethattheyareadheredto.Inaddition,weeducateandtrainouremployeesonallguidelinesthatapplytothem.Weusemanagementsystemstosteerprocessesaswellasdefinegoals,actionsandresponsibilities.ThesesystemsarebasedonstandardssuchastheinternationallyrecognizedqualitymanagementstandardISO9001,goodworkingpractices(GxP)inthepharmaceuticalindustry,andISO14001forenvironmentalmanagement.OurcompanyregularlyundergoesISO14001andISO9001certification,whichisconductedbyanindependentauditingfirm.Weholdgroupcertificatesforbothstandards.Businessethics37Wesupportthefollowingresponsiblegovernanceinitiatives:•WehavebeenaparticipantintheUnitedNationsGlobalCompactsince2005andarecommittedtocomplyingwithitsprinciples.•Asasignatorytothechemicalindustry’sResponsibleCare®GlobalCharter,wevoluntarilygoaboveandbeyondwhatisrequiredbylawandhaveadoptedmandatorystandardsforproductresponsibility,environmentalimpactmitigationandhealthandsafety.•AsamemberoftheTogetherforSustainability(TfS)network,wearededicatedtoimprovingthesupplychainwithrespecttoenvironmental,complianceandsocialstandards.•WeareamemberofthePharmaceuticalSupplyChainInitiative(PSCI),whichaimstocontinuouslyimprovehealth,safetyandenvironmentalaspectsthroughoutthesupplychain.•WearealsoamemberofInitiativeChemie3,acollaborationbetweentheGermanChemicalIndustryAssociation(VCI),theGermanEmployers’FederationoftheChemicalIndustry(BAVC),andtheGermanMining,ChemicalandEnergyIndustrialUnion(IGBCE).Thepartnersinvolvedthisgloballyuniqueallianceseektomakesustainabilityacorepartofthechemicalindustry’sguidingprinciplesandtojointlydrivethesector’spositionwithintheGermaneconomyasakeycontributortosustainabledevelopment.Businessethics38CompliancemanagementResponsibleentrepreneurshipstartswithcompliance.Weaimtoensurethatallouractivitiesadheretorelevantlaws,regulationsandethicalstandardsaroundtheworld.Thisalsohelpsustoprotectourreputationasanemployerandbusinesspartner.OurapproachtocomplianceAsaglobalcompany,wehavestringentrequirementsforeffectivecompliancemanagement.Importantly,weseektoemphasizecompliancebyactinginlinewithourcompanyvaluesandbelievethatprofitablebusinessoperationsshouldgohandinhandwiththehighestethicalstandards.RolesandresponsibilitiesOurGroupCompliancefunctionisresponsiblefortheframeworkofthefollowingcoretopics:theMerckCodeofConduct,anti-corruptionandanti-bribery(includinghealthcarecompliance,third-partyduediligence,transparencyreporting),anti-moneylaundering,antitrust,andconflictsofinterest.Tocoverthesetopics,wehaveGroup-widepolicies,standardsandproceduresinplacethatensureourbusinessactivitiescomplywiththerelevantlaws,regulationsandinternationalethicalstandards.Othercompliance-relatedissues,includingtherespectiveinternalregulationsandguidelines,suchasPharmacovigilance,ExportandImportControls,andEnvironment,Health,Safety,Security,Quality,aremanagedbytheresponsiblefunctions.OurGroupCompliancefunctionisresponsibleforourcomplianceportfolio,whichconsistsofthefollowingelements:•RiskAssessment:Identifyinginternalandexternalcriticalrisksinregularbusinessoperations•Policies&Procedures:Globalpolicies,proceduresandstandardstomitigateidentifiedrisks(seetheOurcommitment:guidelinesandstandardssectionformoredetails)•ComplianceCommittee/Forums:Platformforcompliance-relateddiscussionanddecisionmaking,includingrelevantkeyfunctions•Training&Awareness:Appropriatetrainingandadditionalmeasurestoeducateandkeepawarenesshigh•Programs&Tools:Comprehensivecomplianceprogramsandsupportingtoolscontributingtointernalcontrolsandoverallgovernance•Monitoring&Reporting:Trackingofcompliance-relateddata;performinternalandexternalreporting•CaseManagement:Timelyresponsetoreportsofmisconductandimplementationofcorrectiveactions•ContinuousImprovement:BasedonandapplicabletoallcomplianceprogramelementsWecontinuouslyreviewourcomplianceportfolioandupdateourinitiativesandprogramswherenecessary.Thisapproachreflectsnewrequirementsaswellasinternalandexternalrisks,suchasthoseresultingfromamendmentstolegislation,relevantindustrycodesorchangesaffectingourcompany.Wediscusscurrentcompliancematters,trendsandgoalswithourstakeholders,bothinternallywithinourcomplianceorganizationandexternally.Wekeepthefocusonourpeoplebyensuringtheavailabilityofappropriateresourcesandskills,maintainingclearrolesandresponsibilitiesandbasedonemployeefeedback,settingalignedandharmonizedgoals.Wealsoensurethatourorganizationalstructureisuptodateandmeetsbusinessneeds.Businessethics39OurChiefComplianceOfficerreportsonthestatusofourcomplianceactivities,potentialrisksandseriouscomplianceviolationstotheExecutiveBoardandSupervisoryBoardtwiceayearataminimum.Aspartofourregularreportingprocesses,wecompileacomprehensivecomplianceanddataprivacyreportannuallyfortheExecutiveBoard.Thisincludesthestatusofourcomplianceprogram,continuousimprovementinitiativesandkeyfiguresoncomplianceanddataprivacycases.Additionally,weprepareamid-yearupdatetohighlightongoingdevelopmentsandthestatusofrelevantprojectsandinitiatives.OurChiefComplianceOfficeroverseesallCompliancedepartmentsandtheunderlyingComplianceOfficersandComplianceexpertsaroundtheworld.TheComplianceOfficersimplementourcomplianceprogramwithintheirrespectiveareasofresponsibility(adaptingtolocalregulations)andreceiveguidancefromourGroupComplianceCenterofExpertise.ThisisacentralizedbodythatdrivesthedesignandevolutionofourcomplianceprogramacrossallbusinesssectorsandGroupfunctions.AspartoftheGroupComplianceCenterofExpertise,ourglobalteamforcoordinatingtransparencyreportingisresponsibleforimplementingcurrentandupcomingtransparencyreportingrequirementsintheHealthcarebusinesssector–includingthoseoftheEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA)andtheUnitedStatesPhysicianPaymentsSunshineAct.MoreinformationonourHealthcaregovernanceandcomplianceactivitiescanbefoundintheResponsibleinteractionswithhealthsystemssection.Businessethics40Ourcommitment:GuidelinesandstandardsOurcomplianceprogrambuildsonourcompanyvaluesandintegratestheseintoourcomplianceframework,whichconsistsofGroup-widepolicies,standardsandproceduresforentrepreneurialconduct.Thefollowingaremandatoryforallouremployees:•TheMerckCodeofConductguidesourpeopleinconductingbusinessethically–inlinewithourvaluesandthelaw.Itisavailabletoallemployeesworldwidein22languages.•OurHumanRightsChartersupplementsourCodeofConductwithgloballyrecognizedprinciplesonhumanrights.•OurAnti-CorruptionStandardstipulatesthatallbusinessactivitiesmustbeconductedinlinewithapplicableanti-corruptionregulationsandstandards.Allformsofbriberyarestrictlyprohibited.•OurglobalAnti-MoneyLaunderingGroupStandarddefinesanddescribestheinternalglobalprocessandassurancemeasurestoprotectourcompanyfrombeingmisusedbythirdpartiesformoneylaunderingorterroristfinancingactivities.•OurConflictofInterestPolicysetsaframeworktoexplainthenatureofaConflictofInterestandtherelatedrisks.Itadviseshowtopreventthesekindsofsituationsorhowtosetrulesforidentifying,disclosing,mitigatingandmanagingtherisksthatcouldarisefromsuchsituations.•OurGroup-wideAntitrustandCompetitionLawPolicystatesthatallbusinessactivitiesacrosstheGroupmustbeconductedincompliancewithapplicablecompetitionregulationsatalltimes.Weacknowledgetheimportanceoffaircompetitionandexpectthesameofpartiesactingonourbehalf.•OurComplianceReportingandInvestigationPolicyincludesthebasicstepsforaninternalcomplianceinvestigation.Itspurposeistoensureanappropriate,timelyandthoroughresponsetocompliance-relatedreportsofpotentialmisconductpertainingtoanykindofinternalorexternalregulationsorpolicies.•OurDawnRaidPolicydefinescoursesofaction,setsoutgeneralrulesofconduct,andadvisesonrightsandobligationsduringunannouncedinvestigations,searchesandseizuresbyauthoritiesonourpremises.•OurStandardonLocalComplianceStandardsimplementsareviewandapprovalprocessforlocalgovernancedocumentsinareasundertheresponsibilityoftheGroupCompliancefunction.Inthisway,ourlocalteamscanadheretoourcomplianceprinciplesandguidancewhileimplementingspecificlocalpoliciesorproceduresthatcomplywithlocalregulations.•Furthermore,wedevelopedanewSupplierCodeofConduct(SCoC)in2022.IttookeffectinandisimplementedasofJanuary2023,thusreplacingourResponsibleSourcingPrinciples.TheSCoCwilllayouttheminimumstandardsoursuppliersandbusinesspartnersareexpectedtofulfillregardinghumanrights,healthandsafety,businessintegrity,environmentalprotection,continuousimprovement,andmanagementoftheirrespectivesuppliers.Tomaintaincompliance,weannuallyreviewandcompilealistofchangestotheapplicablelawsandregulationsandupdatethepolicies,standardsandproceduresaccordingly.Whileformajorcountrieswerelyonexternallegalcounseltostayabreastofthesechanges,forothercountries,werelyonourComplianceOfficers.Ourannualreviewsalsoidentifywhetheranycorrectiveactionsfrominvestigationsorinternalauditsrequireustoupdateourpolicies,standardsorprocedures.Businessethics41RiskassessmentPropercomplianceriskmanagementiscrucialtoidentifyundetectedrisksandensureourcompanyremainsprotected.Forthispurpose,weareimplementingacomplianceriskidentificationprocess.Westartedthisinitiativebylaunchingaglobalcomplianceriskprocessforallourbusinesssectorstoimproveobjectivityandenableamoredata-drivenriskapproach.Inaddition,weestablishedacomprehensiveriskmatrixthatfocusesonbriberyandcorruptionrisks,illustratedthroughin-depthriskcategorizationandriskscenarios.Asanextstep,in2022,westartedconductingcountry-basedriskassessments.Thisapproachconsidersgrossandnetriskswhilelookingattangibleriskscenariosfortherespectivebusiness.Duringthisprocess,GroupComplianceworkscloselywiththebusinessestoenhancetheirriskawarenessandcreateabetterunderstandingofcompliancerisks.Thefirstroundofthisprocessincludeshigh-riskcountries.Furthermore,in2022,weupdatedourcountryrisksegmentationapproach.Withit,wedeterminetheriskexposureofthecountrieswhereourcompanyisactivelyoperating.Theprimaryaimofthisanalysisistoclassifycountriesintermsoftheirriskexposurerelatingtobriberyandcorruptionbyapplyingobjectiveandconsistentcriteria.Wethenusetheresultingoutcomeasabasicmodeltoprioritizeprojectsandinitiativesandsupportorintensifyactivitiesincountrieswithspecificrisklevels.ConflictsofinterestWetakeallpotentialconflictsofinterestseriously.Employeesmustavoidsituationswheretheirprofessionaljudgmentmaycomeintoconflictwiththeirpersonalinterests.Theymustalsodiscloseeverypotentialconflictofinteresttotheirsupervisoranddocumentthedisclosure.SuchissuesaretypicallyresolveddirectlybetweentheemployeeandthesupervisorbutcanalsoberoutedtoHumanResources,Legal,Compliance,orotherrelevantfunctions.In2022,wefurtherraisedemployeeawarenessofconflictsofinterestbyestablishingadedicatedglobale-learningcourseandenhancingourcommunication.Inaddition,asdescribedintheAnnualReportunderAvoidanceofconflictsofinterest,ExecutiveBoardandSupervisoryBoardmembersareexclusivelycommittedtothecompany’sobjectivesandneitherpursuepersonalinterestsnorgrantunjustifiedadvantagestothirdparties.ManagementandrequirementsofthirdpartiesForcompliancemanagementtobeeffective,itmustnotberestrictedtotheboundariesofourowncompany.Whileoursuppliermanagementprocessesfocusonvendorcompliancewithourstandards,ourglobalThirdPartyRiskManagementprocessgovernsinteractionswithsalesparties,suchascommercialagents,distributorsanddealers.Weexpectourthirdpartiesworldwidetoadheretoourcomplianceprinciples.Wecollaborateonlywithpartieswhopledgetocomplywithrelevantlaws,rejectallformsofbribery,andadheretoenvironmental,healthandsafetyguidelines.Weapplyarisk-basedapproachtoselectthethirdpartieswithwhomwedobusiness.Thegreatertheestimatedriskregardingaparticularcountry,region,ortypeofservice,themorein-depthweexaminethethirdpartybeforeenteringintoabusinessrelationship.Wealsoexplorebackgroundinformationfromvariousdatabasesandinformationreportedbythirdparties.Ifweencountercomplianceconcerns,wefurtheranalyzeandverifytherelevantinformation.Basedontheoutcome,wedecidewhethertorejectthepotentialthirdparty,imposeconditionstomitigateidentifiedrisksorterminatetheexistingrelationship.Businessethics42CompliancetrainingWeprovideregularcomplianceclassroomandonlinetrainingcoursesonourCodeofConduct,anti-corruption,antitrust,dataprivacy,anti-moneylaundering,andhealthcarecompliancestandards.Werequireemployeestotakethesecoursesbasedontheirexposuretorisk.Somecoursesalsoapplytoindependentcontractorsandsupervisedworkers,suchastemporaryemployees.WeintroducedanewConflictsofIntereste-learningmodulethatexplainswhatconflictsofinterestsareandhowtheseshouldbemanagedwithinourcompany.Thecourseisavailableinninelanguages.Furthermore,welaunchedanewe-learningcoursetoprovideanoverviewofourThird-PartyRiskManagementandtoemphasizetheimportanceofThird-PartyRiskAssessments.Wealsoregularlyupdateourtrainingcurriculaandadaptittonewdevelopments.Theseongoingeffortsensurewecontinuouslyeducateouremployeesonexistingandnewcompliancerequirements,guidelinesandprojects.Aspartofourtargetedawarenesscampaigns,ourtwoAnti-MoneyLaunderingandAnti-Corruptionstandardswererolledouttoseniormanagementin2022viaourinternalcommunicationchannels.Anti-moneylaunderingWehaveimplementedaglobalanti-moneylaundering(AML)programconsistingofaglobalAnti-MoneyLaunderingGroupStandard,trainingandadedicatedprocesstoreportandinvestigateredflagsaswellasanyhigh-risktransactions.SuspicioustransactionsarereportedtotheGermanFinancialIntelligenceUnitorotherauthoritiesasrequired.WeaimtocontinuouslyimproveourAMLprogram.Followingaworldwideriskassessmentin2021toidentifyjurisdictionsimposingthestrictestlegalandregulatoryframeworksapplicabletoourbusinesses,weinitiatedin-depthAMLriskassessmentsforhigher-riskjurisdictions.Basedontheseassessmentsandconstantreviewofchangesinthelegalenvironment,weareimplementingstricterlocalAMLprogramswhererequired.ReportingpotentialcomplianceviolationsWeencourageallemployeesworldwidetoreportpotentialcomplianceviolationstotheirsupervisors,Legal,HRorotherrelevantdepartments.Globally,theycanalsouseourcentralwhistleblowingcompliancehotlinefreeofchargeandanonymouslytoreportviolationsintheirlocallanguagebytelephoneorviaaweb-basedapplication.ReportsofpotentialcomplianceviolationsthatwereceiveviaourcompliancehotlinearereviewedbytheComplianceInvestigationsandCaseManagementteam.CaseswithacertainriskprofilearepresentedtotheComplianceCaseCommittee,whichcomprisesseniorrepresentativesfromourCompliance,CorporateSecurity,DataPrivacy,HumanResources,InternalAuditing,andLegaldepartments.TheCommittee’sdutiesincludeassessingandclassifyingcertaincomplianceissues,investigatingtheirbackground,andaddressingtheseissuesusingappropriatemeasures.BasedontheinvestigationoutcomeandrecommendationsfromthecomplianceinvestigationteamortheComplianceCaseCommittee,appropriatedisciplinaryactionmaybetakenagainstemployeeswhohavecommittedacomplianceviolation.If,duringtheinvestigation,arootcauseisidentifiedthatcouldleadtotheriskoffurthercomplianceviolations,wetakepreventiveandcorrectiveactions.Thecompliancehotlineisalsoavailabletoexternalstakeholders.TherelevantinformationcanbefoundintheComplianceandEthicssectionofourwebsite.Businessethics43Thenumberofsuspectedcomplianceviolationsreportedremainedstablecomparedwiththepreviousyear,whilethenumberofconfirmedcomplianceviolationsdecreased.In2022,wereceived79compliance-relatedreportsviathecompliancehotlineandotherchannelsthatwereprocessedascases.28violationsoftheCodeofConductorotherinternalandexternalruleswereconfirmed.ComplianceauditsComplianceisensuredbyGroupComplianceandGroupInternalAuditingasthesecondandthirdlinesofdefense.Aspartoftheaudits,GroupInternalAuditingregularlyreviewsfunctions,processesandlegalentitiesworldwide.Thesereviewsincludeanassessmentoftheeffectivenessoftherespectivecomplianceguidelines,processesandstructuresinplace.TheunitsalsocheckforviolationsofourCodeofConductandourAnti-CorruptionStandard.Ourauditplanningaimstoprovidecomprehensiveriskassurancethroughthebestpossibleauditcoverageofourprocesses.Wetakearisk-basedapproachtoourannualauditplanningprocess,consideringfactorssuchassales,employeeheadcount,systematicstakeholderfeedbackandtheCorruptionPerceptionsIndex(CPI)publishedbythenon-governmentalorganizationTransparencyInternational.Ifaninternalauditgivesrisetorecommendations,GroupInternalAuditingperformsasystematicfollow-upandmonitorstheimplementationoftherecommendedcorrectiveactions.In2022,GroupInternalAuditingconducted79internalauditsinvolvingbriberyandcorruption-relatedrisks,including52operationaland24ITauditsand3specialauditswhichmay,forexample,beinitiatedaspartofincident-specificinternalinvestigations.EngagingstakeholdersWearemembersofvariousorganizations,includingtheGermanChemicalIndustryAssociation(VCI),theGermanInstituteforCompliance(DICO),theEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA),theGermanAssociationofVoluntarySelf-RegulationforthePharmaceuticalIndustry(FSA),theInternationalFederationofPharmaceuticalManufacturersandAssociations(IFPMA),theAllianceforIntegrity,theGermanAssociationforSupplyChainManagement,ProcurementandLogistics(BME),andtheInternationalAssociationofPrivacyProfessionals(IAPP).Businessethics44Dataprotection&cybersecurityComplianthandlingofinformationishighlyimportantforaleadinginnovative,science-andtechnology-drivencompany.Whenusingpersonaldata,theindividuals’rightsmustbeappropriatelyprotected.Westrivetosafeguardtherightsofanypersonwhosedataweprocess,includingbutnotlimitedtoouremployees,patients,customers,andhealthcareprofessionals.Whenitcomestocybersecurity,ourcompanyunderstandstheimportanceofprotectingourbusinessfromcybercrimeandensuringourinformationissecurefromanyassociatedinternalandexternalrisks.OurapproachtodataprivacyThemandateandgoalofourGroupDataPrivacyunitistomitigaterisksandcreateaglobalframeworkfordataprivacy-compliantbusinessoperations.Thisunithelpstotrainouremployeestohandledataresponsiblyandwithclearaccountability.Itsafeguardsourcompanybyprovidingdataprivacyriskassuranceandensuringcompliancewithrelevantdataprivacylawsglobally.GroupDataPrivacyalsocontributestocreatingvalueforthedevelopmentofdigitalbusinessmodels.OurapproachtocybersecurityItisofcriticalimportanceforourbusinessthatweprotectourinformationsystems,theircontents,andourcommunicationchannelsagainstanycriminalorunwantedactivities.Theseincludee-crimeandcyberattacks,suchasunauthorizedaccess,informationleakageandmisuseofdataorsystems.RolesandresponsibilitiesGroupDataPrivacyisanindependentfunction,organizationallyintegratedintoGroupComplianceandDataPrivacy.WehaveaGroupDataPrivacyOfficerandanetworkoflocalDataPrivacyOfficersatvarioussitesGroup-wide.Inlinewithexternalregulations,theDataPrivacyOfficersandtheirrespectiveteamsactindependentlyandwithoutreceivinginternalorexternalinstructions.GroupDataPrivacyregularlypreparesdataprivacyupdatesandacomprehensivedataprivacyreport.ThisreportissubmittedtotheExecutiveBoardandtheSupervisoryBoard.CyberSecurityispartofourGroupCorporateSecurityOffice.Inaddition,wehaveaGroupChiefInformationSecurityOfficerandanetworkofInformationSecurityOfficerswithinthebusinesssectors,eachinturnsupportedbydedicatednetworks.Theindividualsectorsholdriskownershipandactasourfirstlineofcybersecuritydefense.OurGlobalCyberSecurityfunctionactsasasecondlineofdefenseandhasresponsibilitiesregardingcybersecurityriskgovernanceandoversight.Ourthirdlineofdefensecomprisesinternalaudits.OurDataPrivacyManagementSystemOurgoalistocompletetheimplementationofaglobalandconsistentdataprivacymanagementsystem(DPMS)bymid-.OurDPMSappliessimilarelementsasthecomplianceportfoliobutadaptedtotheneedsofdataprivacy.Theseincludepoliciesandprocedures,riskassessmentanddocumentation,trainingandawareness,programsandtools,individualrequests,monitoringandreporting,incidentmanagement,andcontinuousimprovement.Businessethics45NewCyberSecurityorganizationAtthebeginningof2022,wecreatedanewCyberSecurityorganizationwithamandatetoimprovetrustandstrengthenresilienceagainstcyberattacksanddatabreaches.OurCyberSecurityteamdefinespoliciesandstandardsforcybersecurity(includingdatasecurity)whileprovidingoversight,toolsandsystemstomanageandmonitorouroverallcybersecurityriskexposure.Theteamisalsoresponsibleforproviding24/7cybersecuritymonitoringandincidentresponsecapabilitiesacrosstheentirecompanyenvironmentaswellastrainingemployeesacrosstheorganizationonhowtoprotectdataappropriately.Ourcommitment:GuidelinesandstandardsDataPrivacyFrameworkOurDataPrivacyPolicyandthecorrespondingstandardsandproceduresdefineourprinciplesforprocessingpersonaldata.Thisapproachallowsustoachieveahighlevelofdataprotectionforouremployees,contractpartners,customers,andsuppliersaswellaspatientsandparticipantsinclinicalstudies.OurGroup-wideunderstandingofdataprivacyisbasedonEuropeanlegislation,inparticulartheEuropeanUnionGeneralDataProtectionRegulation(EUGDPR).Wearealsotakingstepstomeetlocaldataprivacyrequirements,wherethesearestricterthanourGroup-widestandards.CyberSecurityFrameworkOurGroupCyberSecuritygovernanceframeworkcomprisesorganizational,process-relatedandtechnicalinformationsecuritycountermeasuresbasedonrecognizedinternationalstandards.Inaddition,weapplyharmonizedelectronicandphysicalsecuritycontrols(e.g.accesscontrolandsecuritymonitoring)tobolsterourabilitytohandlesensitivedata,suchastradesecrets.DataprivacytrainingInlinewiththeEUGDPRandourglobalapproachtodataprivacy,weregularlyconducte-learningtrainingcoursesintenlanguages.In2022,thecompletionrateforoure-learningcourseswas98%.Additionally,LocalDataPrivacyOfficerssupporttheexecutionofourGroup-widetrainingplanbyconductingtrainingforspecifictargetgroupsonrequest.ITtoolsfordocumentationWemaintainacentralITtooltoprovideasinglesourcefordataprivacyprocesses,suchasregisteringdataprocessingactivitiesandreportingpotentialdataprivacyincidents.In2022,werolledoutanewdataprivacytool.Additionally,weuseourcorporateintranetforfurthercommunication,includingansweringdataprivacyquestionsandprovidingstandardizedtemplates.In2022,weregisterednosanctionedcomplaintsorincidentsconcerningbreachesofcustomerprivacy,dataleaks,theft,orlossofcustomerdata.Inthreeoutof57cases,minorpersonaldatabreacheswerereportedtothesupervisoryauthority.Thesewerenotsanctioned.Businessethics46CyberSecurityAwarenessTheCyberSecurityorganizationhasestablishedmultiplecampaigns–inadditiontothemandatoryITSecurityAwarenesse-learningtraining–toensureahighlevelofawarenessamonginternalandexternalemployees.Oneexampleisthecyberherocampaign,whichfeaturesaseriesofvideosdemonstratinghowtoapplyinformationsecurityeffectivelythroughreal-lifeexamples.Inaddition,allemployeesreceivemonthlyphishinge-mailsimulationstolearnhowtoidentifyandreportpotentialattemptedbreachesinaninteractiveway.Businessethics47ResponsibleinteractionswithhealthsystemsItisimportantthathealthcarestakeholders,suchasresearchinstitutes,healthcareprofessionalsandpatientadvocacygroups,haveaccesstoup-to-dateinformationondiseasesandtreatmentswhilesafeguardingtheirindependenceatthesametime.Wehelptofacilitatethisaccess.Wealsosupportcutting-edgeresearchprojects.OurapproachtointeractingwithhealthsystemsWesupporthealthsystemsbyprovidinginformationtoourhealthcarestakeholders,suchasprofessionalmedicalassociations,patientadvocacygroups,universityclinicsandotherinstitutionsthatprovidehealthcare.Wefollowclearlydefinedinternalapprovalrequirementsandproceduresforeachtypeofinteraction,inlinewithapplicablelawsandcodes.Incountrieswithstatutoryorindustryobligationsonthedisclosureoftransfersofvaluetohealthcarestakeholders,weaimtocomplywiththeseobligations.Wearecommittedtoadheringtoallregulationsconcerningthepromotionofpharmaceuticalproducts.Inmostmarkets,pharmaceuticalcompaniesarepermittedtoadvertiseprescriptionmedicinesonlytohealthcareprofessionals,suchasphysiciansandpharmacists.Thesepromotionalactivitiesmustalwaysdisclosetheactiveingredient,potentialadverseeffectsandcontraindicationsofthemedicine.OurinternalgovernancedocumentsonthepromotionofpharmaceuticalproductsarepartofourGroup-wideprogram,whichrequiresustoconductbusinessincompliancewiththelawandindustryobligations.Ouraimistoapplyhighethicalstandards.OurinternalgovernancedocumentsonthepromotionofpharmaceuticalproductsarepartofourGroup-wideprogram,whichrequiresustoconductbusinessincompliancewiththelaw,industryobligationsandinlinewiththehigheststandardsWeregularlyreviewallourinternalgovernancedocumentsandrevisethemasrequiredinresponsetoanynewdevelopments.Weclearlydifferentiatebetweeninformation-sharingactivitiesandpromotionalactivities.Theformerareactivitieswherewesharescientificinformationbuthavenointentionofpromotingorincreasingthesalesofpharmaceuticalproducts.Thelatterareactivitieswithaclearintentiontopromoteorincreasesalesofpharmaceuticalproducts.Thedifferentiationiscriticalforvariousinternalpoliciesandstandardoperatingprocedures,responsiblefunctions,andlevelsofreviewandapproval.Direct-to-consumeradvertisingonlyincertaincountriesDirect-to-consumer(DTC)advertisingforprescriptionmedicinesispermittedinsomecountries,suchastheUnitedStates.Inlinewithapplicablelocallaws,weuseDTCadvertisinginthesecountriestohelpincreasepeople’sawarenessofcertaindiseasesandtheavailabletherapies.Indoingso,weempowerpatientstomakeinformeddecisionsabouttheirowntreatment.RolesandresponsibilitiesForallinteractionswithhealthcarestakeholders,wehaveestablishedinternalpoliciesandreviewprocessesandtools,suchasrecord-keepingsystems,toensureadherencetostatutoryrequirementsandtransparencyobligations.OurGlobalRegulatoryAffairsunithasestablishedadedicatedstandardandcorrespondingprocessdocumentonthereviewandapprovalofourpromotionalmaterialsforourHealthcarebusinesssector.Attheoperationallevel,therelevantbusinessandallemployeesinvolvedinoursalesandmarketingactivitiesmustadheretoourinternalpolicies,standardsandprocedures.Businessethics48Toensurethatallpromotionalmaterialsmeetourstandardsaswellaslocalregulationsend-to-end,weapplyaharmonizedGroup-widereviewandapprovalsystem.InourHealthcarebusinesssector,weuseasingleglobalsoftwaretool.Thishasenabledustounify,simplifyandmonitorthereviewandapprovalprocessforpromotionalmaterialsandmonitorthatprocessinaccordancewiththedual-controlprinciple.Ifthematerialhaspromotionalintentandisproduct-related,areviewisconductedbyourMedical,LegalandRegulatoryfunctions.Thisalsohelpsusidentifyopportunitiesforimprovement.Allemployeesinvolvedincreating,reviewingandapprovingpromotionalmaterialsundergotrainingonthecurrentprocessforreviewing,approvinganddecommissioningpromotionalmaterialsbasedonourprinciplesandstandards.Ourcommitment:Group-wideguidelinesandindustrystandardsInadditiontoapplicablelawsandourowninternalstandards,wecomplywiththecodesofconductofvariousinternationalindustryorganizations,suchastheCodeofPracticepublishedbytheInternationalFederationofPharmaceuticalManufacturers&Associations(IFPMA)andtheCodeofPracticeoftheEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA).Wearealsomembersofvariouslocalindustryassociations,suchastheGermanAssociationofVoluntarySelf-RegulationforthePharmaceuticalIndustry(FSA)andtheU.S.PharmaceuticalResearchandManufacturersofAmerica(PhRMA).Ouractivitiesadheretotheassociations’codesforcollaborationbetweenhealthcareprofessionalsandthepharmaceuticalindustry.OurGroup-widePharmaCodeforConductingPharmaceuticalBusinessandPharmaceuticalOperations(PharmaCode)definesthegeneralcomplianceforouractivitiesintheHealthcaresector.Itprovideshigh-levelandoverarchingprinciplesthatgovernourinteractionswithphysicians,medicalinstitutions,andpatientadvocacygroups,alongwithourpromotionalpractices.OurHealthcareEthicalGuidingPrinciplessupplementthePharmaCodeandguideourHealthcareemployeeswithsixethicalprinciplesfordecisionsandactivitiesspecifictotheparticularchallengesandresponsibilitiesofthisbusinesssector.UndertheumbrellaofourPharmaCodeandHealthcareEthicalGuidingPrinciples,wehavespecificgovernancedocuments,proceduresandtoolsfordifferenttypesofinteractionswithhealthcarestakeholders,coveringtopicssuchasserviceengagements,hospitality,payments(atfairmarketvalue),donationsandsponsorshipstoparticipateinevents.OurStandardonMedicalActivitiesprovidesthegeneralprinciplesandrequirementsthatmustberespectedinallmedicalactivities,includinginteractionswithhealthcareproviders.Thespecificgovernanceforthedifferenttypesofactivitiesandinteractionsisdetailedinfurtherpoliciesandstandards,standardoperationalproceduresandothergovernancedocuments.CollaboratingwithpatientadvocacygroupsOurPolicyonInteractionswithPatients,PatientOpinionLeadersandPatientOrganizationsprovidesacomprehensiveframeworkforourinteractionswiththesekeystakeholders.OurguidelineentitledGoodPracticeandProcessGuidance:EngagementwithPatients,PatientOpinionLeadersandPatientOrganizationsprovidesadditionalguidanceforourinteractionswiththesestakeholders.Itreflectsourcommitmenttoprioritizingpatientwell-beingandguidesappropriatepatient/caregiverengagementthatenablesourpatient-directedapproach.Throughthispolicy,thesupplementaryguidelineandspecificlocalpolicies,weprovidearobustguidancestructuretosupportouremployeesinremainingcompliantthroughouttheirinteractionswithpatients,patientopinionleadersandpatientorganizations.Businessethics49Weseektoimprovepatients’qualityoflife,whichiswhywesupporttheworkofpatientadvocacygroups.Inturn,thesegroupsprovidepatients,familymembersandcaregiverswithinformationondiseasemanagementandeducationalandadvocacyresources.SupportingmedicaleducationTocontributetomedicaladvancesthatbenefitpatients,weorganizenon-promotionalmedicaleducationprogramsworldwidethroughourGlobalMedicalEducationandAcademicOrganizationRelationsdepartment.WeofferanIntegratedMedicalEducationPortfoliobyfundingindependentthird-partymedicaleducationproviderssuchasmedicalsocietiesandacademicorganizations.Wealsooffercompany-ledmedicaleducationprograms.Wetakeanethical,transparentandresponsibleapproach,providingfairandbalancedcontentthatallowstheexpressionofadiverserangeoftheoriesandrecognizedopinions.AllrequestsformedicaleducationfundingaresubjecttoanapprovalprocessthroughourR&DandCompliancefunctions,inlinewithourStandardonMedicalEducationFundingandPolicyonCompanyPrograms.Thisprocessensuresallfundsgrantedformedicaleducationprogramscomplywithourinternalguidelinesandcriteriaaswellasallapplicablelawsandindustrycodes.Inaddition,wepartnerwithindustryassociations,suchastheGlobalAllianceforMedicalEducation(GAME)andtheInternationalAllianceforContinuingMedicalEducation(iPACME).WearealsoanactivememberoftherelevantworkinggroupsestablishedbytheEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA)andtheMedicalAffairsProfessionalSociety(MAPS).Togetherwiththeseassociations,wediscusswaystoharmonizeandimprovequalitystandardsformedicaleducation.TransparentreportingWepublishthefinancialandnon-financialcontributionswemaketohealthcarestakeholdersinthehealthcareindustry,suchashealthcareprofessionalsandhealthcareorganizations,asappropriateandinaccordancewithlocallawsandcodes.Thepublishedinformationincludesthenamesofindividualrecipients,theiraddresses,thepurpose,andthecontributedamountorvalueasrequiredbytheapplicablelawsandcodes.Inaddition,beforepublishing,wesecureallnecessaryinformedconsentforms,asrequiredbytheapplicabledataprivacyregulations.Inadditiontodisclosingmonetarytransfersofvalueonanindividuallevel,wecontinuetopublishoverallspendingonourresearchanddevelopmentactivities,asrequired.Apartfromdisclosingtransfersofvaluetohealthcareprofessionalsandhealthcareorganizationsasrequired,weensuretransparencyonourvoluntaryunsoliciteddonationstoEuropeanpatientorganizationsbypublishingthecontributiondetailsonourwebsite.Thereportisupdatedannuallyandincludesallamounts,recipientsandthepurposeofeachtransferofvalue,thusalsomeetingourobligationasanEFPIAmember.RegularemployeetrainingWearecontinuingourCodeofConducttrainingcurriculumonmanagingdilemmasinsector-specificsituations.Thiscomprehensiveandinteractivetrainingcourseseekstoimproveparticipants’awarenessandunderstandingofrelevantdilemmas,suchasoverhearingaconversationthatmayormaynotconstituteattemptedbribery.WeplantofurtherimplementthistrainingprograminallcountriesinwhichourHealthcarebusinesssectoroperates.Inaddition,thesuccessofthisprogramhaspromptedustofurtherimplementtheprograminourLifeScienceandElectronicsbusinesssectors.Businessethics50Employeeswhoareresponsibleforthepromotionofourpharmaceuticalproductsreceiveregulartrainingoncurrentguidelines.Thisappliestoindividualsinsales,marketingandfunctionswhoworkdirectlywithhealthcareproviders.Weconducttheseseminarseitherlocallyinaclassroomsettingorase-learningcourses.Dependingontheirrolesandresponsibilities,newemployees,participateinonboardingtrainingdealingwiththereviewandapprovalofpromotionalmaterials.Additionally,employeesinchargeofmarketingandpromotionofpharmaceuticalproductscanalsoaccessourrespectiveguidelinesonourcorporateintranet.Basedontheirrolesandresponsibilitiesandtoremainup-to-date,employeesparticipateinmandatorye-learningcoursesandclassroomtrainingonourpoliciesandguidelines,aswellasimportantchangestothereportingrequirementsfortransfersofvalue.Businessethics51TaxgovernanceOurcompanyoperatesinacomplexlegalenvironmentandissubjecttovarioustaxobligationsduetoitsdomesticandforeignbusinessactivities.Itisourresponsibilitytoensurecompliancewithtaxlegislationinallcountriesinwhichweoperateandtobetransparent.Tothisend,wehaveataxorganizationinplacethatclearlydefinesresponsibilities,processesandcontrols.OurapproachtotaxesWebelievethatfairtaxationservesasabackboneofanyfunctioningsociety.Therefore,weexpectpublicauthoritiestotaketransparency,predictabilityandnon-discriminationintoconsiderationwhenimplementingtaxationmeasures.Weunderstandthattaxisembeddedinalmosteveryaspectofcommercialoperationsandourcompanythereforeactsasaresponsibletaxpayerwithrespecttothefollowingobjectives:•Ensuringtimelyandproperexecutionoftaxobligations;•Securingmaterialcorrectnessoftaxpositionsdeterminedintheannualfinancialstatementsandtaxdeclarations;•Ensuringeffectivetaxriskmanagementandtaxmonitoring;•Avoidinginappropriatestructuringleadingtobenefitsnotprovidedforbytaxlaw.RolesandresponsibilitiesTaxesaremanagedindifferentunits.GroupTaxisgenerallyresponsiblefortaxmattersofMerckKGaAandprovidestaxstandardsfortheMerckGroup–withtheexceptionofcustoms,consumptiontaxandwagetax.TheExportControlandCustomsRegulationsunitwithintheCorporateSustainability,QualityandTradeCompliance(SQ)functionisresponsibleforcustomsandconsumptiontax.HumanResourcesisresponsibleforwagetax.TheGroupChiefFinancialOfficer(CFO)isresponsiblefortheGroupTaxfunction.HedelegateshistasksrelatedtotaxmatterstotheHeadofGroupTax.TheHeadofGroupTaxisalsoresponsiblefordefiningtheorganizationalstructureofthefunction,formonitoringitonanongoingbasisandforadaptingitifnecessary.Inaddition,thelocaltaxunitintheUnitedStatesreportsdirectlytotheHeadofGroupTax.Atthesubsidiarylevel,thelocalCFOisgenerallyresponsiblefortaxmatters,managedeitherbylocaltaxunits,byexternaladvisors,or,forGermanyandourU.S.subsidiaries,byGroupTax.ThelocalCFOsreporttotheregionalCFO.TheregionalCFOsultimatelyreporttotheHeadofMerckBusinessServices,whoreportstotheGroupCFO.IfnolocalCFOisassigned,thetasksareundertakenbyadesignatedemployeeintheFinanceunit.Tax-relatedcompliancetopicscanalsobereportedthroughourcompliancehotline,ourGroup-widewhistleblowingsystem.Businessethics52Ourcommitment:ataxprincipleOurTaxPrincipleispartofourtaxinternalcontrolsystem.Itrepresentstheframeworkandminimumrequirementsforalltax-relevantprocesses,methodsandstructureswithinourcompany.Thisprinciple•outlinesthetaxcomplianceculturewithintheGroup;•definesourtaxcomplianceobjectives;•specifiestheorganizationalframeworkfortasks,rolesandresponsibilities,whichensurescompliancewithtaxruleswithintheGroup;•establishesbasicrulesfortheexchangeoftax-relevantinformation.TheTaxPrincipleisissuedbyGroupTaxandappliestotheentireGroup.Itisrevieweditatleastonceayearandmodifiedifnecessary.Shouldextraordinaryeventsoccur,suchaschangestothebusinessstrategy,organizationalstructuresorriskmanagementprocesses,theprincipleisreviewedonanadhocbasisandadaptedasappropriate.TheHeadofGroupTaxisresponsibleforannualandadhocreviewsaswellasmodificationstotheprinciple.AnymaterialmodificationsarediscussedandcoordinatedwiththeGroupCFO.Businessethics53SuppliersSustainablesupplychainmanagementOurcompanyprocuresmanyrawandpackagingmaterials,technicalproducts,components,andservicesfromaroundtheworld.Weaimtopromotesupplychainstabilitywhileprovidingourcustomerswithhigh-qualityproductsandservices.Weexpectoursupplierstorespectourethical,socialandcompliancestandardsandapplythesetotheirownsupplychains.OurapproachtosustainableprocurementIn2022,thetotalvalueofthegoodsandserviceswepurchasedfromaround54,000suppliersinmorethan140countrieswasapproximately€10.2billion,comparedwithapproximately€8.6billionin2021,representinganincreaseof18.5%.Supplierspendandsuppliersperregion–20221NorthAmerica30%ofspend8,817suppliersLatinAmerica2%ofspend4,330suppliersEurope43%ofspend25,293suppliersAsia-Pacific(APAC)20%ofspend14,549suppliersMiddleEastandAfrica(MEA)1%ofspend1,364suppliers1)Fordataprocessingreasons,2%ofoursuppliers(1,203suppliers)arecurrentlynotassignedtoanypurchaseregion.Thisequatesto4%ofoursupplierspend.Businessethics54Withoursuppliermanagementendeavors,weaimforcompliancewithfundamentalenvironmentalandsocialstandardsinadditiontohighquality,reliabledeliveryandcompetitiveprices.Therefore,wehaveintroducedrelevantstrategies,processesandguidelinestopreventviolationsofsupplychainstandardsandcontinuouslyimprovingoursustainabilityperformance.Unlessstatedotherwise,theapproachespresentedapplytodirectsuppliers.Furthermore,oursuppliermanagementactivitiesincludespecialmeasuresparticularlyforindirectsuppliersworkingintheareaofconflictminerals.Toachieveoursustainabilitygoals,ourGroupProcurementteamisworkingcloselywithoursuppliers.Weaimtocreatetransparencyinalloursourcingregionsandfullyintegratesustainabilityintoallourvaluechains.Tothisend,wehavedefinedtwokeyindicatorstomeasureourjourneytowardsincreasingthistransparencybyevaluatingthesustainabilityperformanceofourrelevantsupplierswithvalidsustainabilityassessments.Ourdefinitionofvalidsustainabilityassessmentincludesassessmentscarriedoutoverthelastthreeyearsandperformedbyareliable,approvedsource.Relevantsupplierseitherindicateaspecificcountryandindustryriskorcontributetoasignificantpercentageofoursupplierspend(atleast50%).Fortheriskevaluation,wepreviouslyusedtheriskdataprovidedbyEcoVadis.Forthecountryrisk,wehavedevelopedourownmorecomprehensivecountryriskscorein2022.In2022,46%(2021:33%)ofourrelevantsupplierswerecoveredbyavalidsustainabilityassessment;82%(2021:74%)ofourspendgeneratedfromthesesupplierswerecoveredbysupplierswithavalidsustainabilityassessment.Toachievecomparabilityofourkeyindicatorsovertheyears,weappliedthisnewcountryriskscorealsoretrospectivelyfor2021data,thestartingpointofourmeasurement.Weviewourapproachtosupplychainsustainabilityasajourneyandcontinuouslyworktoimproveanddevelopourpoliciesandprocesses.Whiledoingso,weconsiderallapplicablelegalrequirementsandinitiatecorrespondingmeasureswherenecessary.Forthispurpose,in2022,weimplementedmeasurestooperatecompliantwiththeGermanSupplyChainDueDiligenceAct.Amongotherthings,theHeadofCorporateSustainability,QualityandTradeCompliancehasbeenappointedasHumanRightsOfficer.OurSupplierDecarbonizationProgramisakeyelementofachievingourScienceBasedTarget.Throughtheprogram,weaimtoreducegreenhousegasemissionsassociatedwithpurchasedgoodsandservicesaswellascapitalgoods.Moredetailsonthisprogramcanbefoundhere;moreinformationonourclimate-relatedtargetscanbefoundintheClimateactionchapter.RiskmanagementprocessToensuresecurityofsupply,weselectoursuppliersbasedoncriteriasuchascountryrisk,materialrisk,supplierrisk,andtheirstrategicimportancetothebusiness.Thisprocesshelpsoursourcingmanagersidentifypotentialmitigationactionswithrelevantsuppliersandsupportstheminmakingimprovements.Theapproachtowardsourstrategicsupplierswhichaccountforapproximately49%ofourtotalsupplierspendincludestheidentification,monitoringandassessmentofsupplysecurityrisks.Itcomprisesfourmainelements:•SupplierRiskAssessments:tocapturetheoverarchingrisksatthesupplierlevel,consideringmultipleriskdomains.•Alertsystem:tonotifyourProcurementorganizationaboutriskeventsarisingwithanyofoursuppliers.•MaterialRiskAssessments:toidentifyandmitigatetherisksofthematerialsusedinourmostsignificantfinishedproducts.•RiskResponseTracker:asystemtocreateandmonitorriskmitigationactivitiesininter-disciplinaryteams.Wecalculateriskfactorsforsuppliersandrawmaterialsbymultiplyingriskprobabilityandriskimpact.Wehavesimplifiedourriskmethodologytofocusonthetenmostrelevantriskcategories-includingbutnotlimitedtoBusinessethics55economicfreedom,socialunrest,unfairbusinesspractices,andpoorlaborpractices-groupedintothreeriskdomains.Wealsoincludecriteriaforidentifyingsupplierrelationshipsimpactedbykeysustainabilityrisks,suchasmineralsourcingandanimalwelfare.In2022,numerousinitiativesweredevelopedtoensureoursupplycontinuityincludingsecondsourcequalifications,regionalizationofsupplyandfinancialsupporttosuppliersunderspecialcircumstances,amongothers.DuediligenceprocessforresponsiblesourcingofmineralsWesourceandsellproductsthatcontainmineralscommonlyreferredtoas“3TG”(tin,tungsten,tantalum,gold–collectivelyalsoknownasconflictminerals).Thesemineralsinvolvetheriskofbeingextracted,traded,handled,andexportedfromconflict-affectedandhigh-riskareas(CAHRAs)wherehumanrightsarenotalwaysrespectedandviolationsthereofneedtobeprevented.Ourcompanyoperatesinglobalandcomplexsupplychains,inmanycaseswithseveraltiersofsuppliersbetweenusandtheoriginalsourcesofthemineralsusedinourproducts.Toaddresstheriskofthiscomplexity,weareamemberoftheResponsibleMineralsInitiative(RMI).RMIprovidesuswithtoolsandresourcestomakesourcingdecisionsthatimproveregulatorycomplianceandsupportresponsiblesourcingofmineralsfromCAHRAs.Ouraimistosourcematerialsinaresponsibleandconflict-freemannerandnottocontributetoadverseimpactsthroughouractivities.Therefore,wehaveaduediligenceprogramthatappliesacrossallourbusinesssectorsandisinlinewithapplicablelawsandinternationalstandards.Inordertocontinuouslyimproveourduediligencepractices,wehaveasystemtostoreandmaintainsupplierinformationacrossourbusinesssectors.Thissystemsupportsincreasedtransparencyofoursupplychain.Inaddition,weareworkingontheintegrationoffurthercontrolmechanismsintoourduediligenceframeworkforhigh-risksuppliers.Furthermore,weareinconstantexchangewithsuppliers,industrypeersandcross-companycollaborationstoenhanceregulatorycompliance.RolesandresponsibilitiesGroupProcurementisresponsibleforintegratingsustainabilityrequirementsintotherelevantstagesofoursourcingandsuppliermanagementprocesses.OurCenterofExcellenceforSupplySecuritycoordinatestherelevantmeasures,suchasupdatingourguidelineswherenecessary,examiningprocessesandcoordinatingourparticipationinexternalinitiatives.Sourcingmanagersresponsibleforselectingandcontractingsuppliersaremadeawareofandregularlyupdatedonourguidelinesandsustainabilityrequirementsthroughinternalcommunicationchannelsandtraining.Ourcommitment:GuidelinesandstandardsWeexpectalloursuppliersandserviceproviderstocomplywithourenvironmentalandsocialstandards,whichareprimarilyderivedfromthecorelaborstandardsoftheInternationalLabourOrganization(ILO)andtheUNGlobalCompact.Weexpectoursupplierstoensurethattheirsubcontractorsrespectthesamerules.Inthereportingyear,wehavedevelopedaSupplierCodeofConductwhichdetailsourexpectationstowardssuppliersandbusinesspartnersregardinghumanrights,healthandsafety,businessintegrity,environmentalprotection,continuousimprovement,andmanagementoftheirrespectivesuppliersmorecomprehensively.ItreplacesourResponsibleSourcingPrinciplesasofJanuary2023.OurResponsibleMineralsSourcingCharterdemonstratesourcommitmenttoresponsiblesourcingofmineralsfromconflict-affectedandhigh-riskareas.Itappliestoallourlegalentitiesandsubsidiariesworldwide.ThechartercomplementstherequirementssetoutinourSupplierCodeofConduct.Businessethics56Toensurethatweworkbasedonindustrystandardsandcanrelyoncomparabledataanalyticsandexpertanalysis,wecollaboratewithourpeercompaniesinindustryinitiatives.Forexample,weareamemberofTogetherforSustainability(TfS),thePharmaSupplyChainInitiative(PSCI),theResponsibleMicaInitiative,andtheResponsibleMineralsInitiative(RMI).Wecallonoursupplierstoletusortrustedpartnersconductassessmentsorauditstoincreaseoursupplychaintransparencyandidentifyfieldsofactivitytoimprovesustainabilityperformanceormitigateinfringementrisks.Regardingourmicasupplychain,weengagewithaglobalconsultancyfirmtoconductauditsandtheIndianorganizationIGEPtoconductinspections.SupplychainassessmentsandauditsTogetherforSustainabilitysupplierassessmentsandauditsThroughtheTfSinitiative,suppliersareassessedeitherbasedoninformationobtainedduringauditsorbasedonself-reportedandpubliclyaccessibleinformationprovidedbyEcoVadis,anindependentratingagency.EcoVadisassessessuppliersfrommorethan160countriesand200sectorsacrossthefourcategoriesofEnvironment,LaborandHumanRights,Ethics,andSustainableProcurement.Ontopoftheassessments,suppliersarealsomonitoredthrougha360-degreenewswatch.TheresultsaresharedamongTfSmembercompaniesincompliancewithallrestrictionsstipulatedbyantitrustlaw.ThroughtheTfSinitiativealone,wehaveaccesstomorethan1,700validscorecardsontheassessmentofoursuppliers,morethan1,100ofwhichcompletedanewassessmentorre-assessmentin2022.Insomecases,thesewereinitiatedbyusandinothercasesbyotherTfSmembers.In2022,wecollaboratedcloselywithmembercompaniesinTfSworkstreamsfocusingonsustainabilitycapacitybuildingandsupplierdecarbonization.Wesupportedthedevelopmentofacapability-buildingconceptanddeployedtheTfSAcademy.Thistrainingplatformofferssourcingmanagers,interestedemployeesandsuppliersofTfSmembercompanies165coursesinuptoninelanguagesontopicssuchassustainableprocurement,environment,healthandsafety,aswellaslaborandhumanrights.WealsocontributedtoseveralbestpracticesharingandcollaborationformatssuchastheTfSTalksaswellasTfSCoordinatorRoundtable.Furthermore,wesupportedthedevelopmentandlaunchoftheTfSProductCarbonFootprint(PCF)Guideline,whichharmonizesPCFcalculationmethodologyacrosstheindustry,andledthedevelopmentofdecarbonizationtrainingmaterialsforTfSmembercompaniesandtheirsuppliers.SupplierDecarbonizationProgramOurcross-functionalSupplierDecarbonizationProgramteamwithinGroupProcurementisdrivingtheexecutionofaten-yearprogramaspartofthedecarbonizationstrategythatwasdefinedin2021.In2022,wecontinuedtoprovidetrainingsessionsandmaterialsforprocurementmanagersandsourcingteamsandengagedfurtherwithsuppliersbysharinginformationaboutourclimatetargets.Follow-updiscussionswereagainheldregardingthesupplierdecarbonizationquestionnairetoassessthecurrentdecarbonizationstatusandprogressmadesincelastyear.Thisallowsoursourcingmanagerstocollaterelevantsupplierdatainaglobalmonitoringdatabase.WehavealsodevelopedanautomatedcarbonaccountingtooltomanagethelargequantitiesofdataontheCO2emissionsofoursuppliers.Ithasbeenavailablesincethebeginningof2022andwewillcontinueaddingnewfunctionalitiesinthecomingyears.Businessethics57SupplierdiversityIntheUnitedStates,wehavespecificsupplierdiversityprogramsinplacetocomplywithlocallegislation.WearefocusingoureffortsintheUnitedStatesonenhancingourcurrentsupplierlocatortoolbybroadeningtherolloutamongsourcingmanagerstoimproveourabilitytoconnectwithandpotentiallyawardbusinesstoawiderangeofvendors.Additionally,wecontinuetoworkoninternalawarenesscampaignsandtrainingseminarsforoursourcingmanagersandareinvestingintoolstoexpandourdatabaseofsmallanddiversevendors.Startingin2023,weplantoexpandtheseeffortsbeyondthecurrentfocusonthesourcingcategorymarketing&sales.AmbassadorsforsustainableprocurementWeareactiveparticipantsandcontributorstotheSustainableProcurementPledge,aTfSinitiativeestablishedoutofthesocialnetworkLinkedInin2019.Sincethen,ithasevolvedtobecomeaknowledgeexchangeplatformforprocurementprofessionals,academicsandotherstakeholders,hostingvariousonlinebestpracticeexchangeevents.Businessethics58MicasupplychainMicaisanimportantrawmaterialforoureffectpigments,whichareusedinautomotive,cosmeticandindustrialcoatingsaswellasplastics.WeprocurethemajorityofourmicafromtheIndianstatesofJharkhandandBihar.Wehavespecialmeasuresinplacetocomplywithhighsocialandenvironmentalstandardsinourmicasupplychain.OurapproachtoresponsibilityinthemicasupplychainByprocuringmicafromtheIndianstatesofJharkhandandBihar,wheresocialandeconomicfactorscontributetopoorworkingconditions,includingchildlabor,wearesupportingthisregionbysafeguardinglocalemploymentandlivelihoods.Wesourcetherawmaterialonlyfromsuppliersoperatinginformalworkingenvironmentsandwemonitorcompliancewithourstandards,includingtheprohibitionofchildlabor.OurmicasuppliersareinformedofourstandardsandhaveconfirmedthattheyadheretotheprinciplesofourHumanRightsCharteraswellastherequirementsofourSupplierCodeofConduct(formerlyResponsibleSourcingPrinciples).Intheeventofnon-compliancewithourstandards,weworkwithsupplierstoensuretheappropriateimplementationofcorrectivemeasures.Wedonottoleratechildlaborandcontractuallyprohibitoursuppliersfromemployingchildren.Ifoneofoursupplierswerefoundtobeusingchildlabor,wewouldterminatethebusinessrelationshipimmediately.Wearedrivinginitiativesandtakingmeasurestoimprovetheconditionsofmicasourcingbasedonourhighstandards.Wecontinuouslyreviewourmonitoringprocessestoimprovetheireffectiveness.RolesandresponsibilitiesGroupProcurementhasoverallresponsibilityforsourcingmica.AsteeringcommitteeisinplacetoinvolvetherelevantfunctionsandinformtherespectiveBoardmembersaboutsignificantdevelopments.WehavedirectbusinessrelationshipswithsuppliersforourmicasupplychaininIndiainplace.Ourprocurementunitisindirectcontactwithsupplierstoreiteratetheimportanceweplaceonethical,socialandenvironmentalstandards.Ourcommitment:CompliancewithguidelinesandstandardsAsasignatorytotheUnitedNationsGlobalCompact,weareactivelyinvolvedinworkingtoabolishchildlabor.OurHumanRightsCharterunderscoresthiscommitment.InourSupplierCodeofConduct(formerlyResponsibleSourcingPrinciples),wesetoutourexpectationsforoursuppliersintermsofsustainabilityandhumanrights,includingprohibitionofchildlabor.OurResponsibleSourcingPrinciplesarealsoanintegralpartofoursuppliercontracts.AuditingourmicasupplychainWehaveimplementedaseriesofoversightmechanismsusingasystemthatmonitorsandauditsconformitywithoursocialandenvironmentalstandards.Inadditiontovisitsbyourcompany’semployees,regularinspectionsareconductedbythirdparties,whoconductcomprehensiveannouncedauditsaswellasfrequent,unannouncedverificationvisits.Businessethics59ExternalauditsEnvironmentalResourcesManagement(ERM),aleadingglobalproviderofenvironmental,health,safety,risk,andsocialconsultingservices,conductsexternalauditsofminesandprocessingplants,investigatingworkingconditionsaswellasenvironmental,healthandsafetyissues.Theauditreportsdocumentanyidentifiedshortcomingsinthisrespectandproposecorrectiveactions.Findingsconcerningtheventilationofworkplacesandfirepreventionweresuccessfullyaddressed.OuremployeesinKolkata(India)andDarmstadt(Germany)takeactiontoaddressanyidentifiedissues.Ifthecorrectivemeasuresarenotrespected,wemaysuspendoreventerminateourbusinessrelationship.UnannouncedinspectionsSince2013,IGEPConsult,anIndiannon-governmentalorganization,hasconductedregularunannouncedinspectionstoreviewlaborstandardsthroughoutoursupplychain.Duringthesevisits,IGEPofficialsmonitoroccupationalsafetyandcompliancewithlawspreventingchildlabor.In2022,itsinspectionsfocusedoncheckingtheavailabilityofphysicalexaminationsforworkersandconductingmockfiredrills.Additionally,weregularlyoptimizetheescalationprocesstogetherwithIGEP,whichholdsbi-weeklyreviewmeetingswithrepresentativesofourcompanytoassesssuppliers.Thesemeetingshelptoidentifyanyrequiredactions,whichoursourcingteamsthendiscussandimplementwithoursuppliers.Asaresult,oursuppliershavesuccessfullyimprovedtheworkingconditionsatthesesites.EvaluatingandtrackingmicasourcesWeuseatrackingsystemtohelpensurethatthemicawepurchaseisderivedfromsourcesqualifiedbyourcompany.Wealsousethistrackingsystemtomonitorproductivityofourmicasources.Basedonwrittenrecordsofthedailyextractionquantities,wereviewthevolumesofmicareportedandsuppliedtotheprocessingfacilities.Furthermore,weuseadigitaltraceabilitysolutiontoincreasetransparencyinthemicasupplychain.Tomaintainaccuracy,ourprocessesundergoconstantreviewandimprovement.Wearealsoevaluatingothermicasourcesinaccordancewithourquality,socialandenvironmentalstandards,bothinIndiaandotherregions.Forexample,in2022,wesourcedaconsiderableamountofmicainBrazil,wherewehavealsoestablishedoversightmechanismstomonitorandauditadherencetothesestandards.CommunityoutreachinthemicasupplychainWeareworkingtoimprovethelivingconditionsofthefamiliesinmicaminingareas.Since2012,oureducationaleffortsinJharkhandincludefundingthreeschoolswithcurrentlyaround500studentsaswellasfivevocationaltrainingcenters,allrunbyourlocalpartner,theNGOIGEP.Atafourthschooloperatedbyoneofourmicasuppliers,weprovideonanannualbasisscholarshipfor200childrenoutofthe450enrolledattheschool.Inadditiontooursupportforeducation,wearealsohelpingtoimproveaccesstohealthcare.Forexample,wearefullyfundinganIGEP-operatedhealthcenterinSapahi,Bihar,thatservesapproximately20,000residentsinthelocalregion.Businessethics60Strongertogether:JointactioninthemicasupplychainWearealsoafoundingmemberofthemulti-stakeholdergroupResponsibleMicaInitiative(RMI).Since2017,wehaveheldthepresidencyoftheorganization.TheinitiativeaimstoeradicatechildlaborandunacceptableworkingconditionsintheIndianmicasupplychainbyjoiningforcesacrossindustries.Duringthereportingyear,wecontinuedtosupporttheRMI’swork,asdescribedbelow.Responsibleworkplacestandards:•TheRMIconductedtrainingsessionswithsupervisorsandworkersinseveralMicaprocessingunits.Communityempowerment:•TheRMIhasfurtherexpandeditsprogramstoinclude50additionalvillages.Thescopenowcomprises180villages,reachingmorethan16,000householdsin2022.TheRMI’sgoalistoaddresstherootcausesofchildlaborandimprovelivelihoodswithinlocalcommunities.•In2022,anexternalandindependentimpactassessmentofRMI’sCommunityEmpowermentProgramhasassessedtheconditionsin40villages,whichhavereceivedsupportoverthelast3years.Thevastmajorityoffamiliesinthesevillageshavereportedincreasedschoolattendance.Businessethics61HumanrightsAsaninternationalcorporategroup,wehaveadutytorespecthumanrightsworldwidewithinourrespectivesphereofinfluenceandtoensurethatourbusinessactivitiesdonotinfringeupontheserights.Byfulfillingourhumanrightsduediligenceobligations,wemeetourresponsibilitytosociety.Atthesametime,thisenablesustoremaincompetitiveoverthelongterm.OurapproachtohumanrightsduediligenceWearecommittedtoupholdinghumanrights,whichiswhywebecameasignatorytotheUNGlobalCompactbackin2005.Weendeavortopreventtheriskofhumanrightsviolationsasfaraspossible,notonlyatourownsitesbutalsoalongourentiresupplychain.Thatiswhyweintegratehumanrightsduediligenceintoourbusinessprocesses.Ourapproachtohumanrightsduediligenceencompassessixmaincomponents.OurhumanrightsduediligenceprocessPolicycommitment:OurHumanRightsCharter,developedwithinternalandexternalstakeholderandexpertinputIdentifyingemergingrisksaswellasactualandpotentialhumanrightsviolationsEnsuringeffectivegrievancemechanismsareinplaceAddressingourimpactsviaclearlydefinedresponsibilities,manage-mentprocessesandmeasuresTrackingandcommunicatingperformanceviaourSustainabilityReportandwebsiteTrainingandcapability-buildingonhumanrightsthroughouttheorganizationandbeyondMerckHumanRightsDueDiligenceApproachBusinessethics62Weviewourhumanrightsduediligenceasacontinuousprocess,whichweconstantlyadaptandimprove.Thisalsopromptsustocontinuallyreviewourapproach.Wecloselymonitorregulatorydevelopments–forexample,theplannedEUdirectiveonhumanrightsduediligence.RolesandresponsibilitiesOurExecutiveBoardhasultimateresponsibilityforhumanrightswithinoursphereofinfluence.TheExecutiveBoardexercisesthisresponsibilitybyrequiringourManagingDirectorstorespecthumanrights.OurGroupCorporateSustainabilityunitisresponsibleforcoordinatingallhumanrightsduediligenceactivitiesacrosstheGroup.ThepersonsresponsiblefortheseissuesintherespectiveGroupfunctions,businesssectorsandlocalunitsimplementthespecificmeasures,forinstancebyintegratinghumanrightsduediligenceintoexistingprocesses.Thecross-sectoralhumanrightsworkinggroupexchangesinformationonactivitiesandthelatestdevelopmentsintheareasofbusinessandhumanrights.In2022,twomeetingswereheld.WithintheUNGlobalCompactNetworkGermany,weareamemberoftheBusiness&HumanRightsPeerLearningGroup.Inthiscontext,wediscusschallenges,currentissues,experiences,andsuccessfulapproachesinexercisinghumanrightsduediligencewithothercompanies.Ourcommitment:Guidingprinciples,chartersandlawsOurHumanRightsCharteralignswiththeUNGuidingPrinciplesforBusinessandHumanRights.Itisouroverarchinghumanrightsgovernancedocumentanddefinestherelevantrequirementsforourcompany.Theserequirementscoverabroadrangeoftopicsrelatedtohumanrights,including,forinstance,productsafety,clinicalstudies,occupationalhealthandsafety,equalopportunity,fairpay,freedomofassociationandcollectivebargainingaswellastheexclusionofchildandforcedlabor.Thecharterinterlinksandcomplementsourexistingrulesandregulationspertainingtohumanrights.Theseinclude,forexample,•ourCodeofConduct,•ourSocialandLaborStandardsPolicy,•ourEHSPolicy(CorporateEnvironment,HealthandSafetyPolicy),•ourSupplierCodeofConduct(formerlyResponsibleSourcingPrinciples),•ourResponsibleMineralsSourcingCharter,and•ourCharteronAccesstoHealthinDevelopingCountries.Weexpectouremployeesaswellasoursuppliersandallcompanieswithwhichwehavebusinesstiestocomplywiththischarter.In2022,wefurtherdevelopedourexistingapproachtohumanrightsduediligence,promptedbythespecificrequirementsofthenewGermanSupplyChainDueDiligenceAct.Westrengthenedtheexistingprocessesforriskidentificationinordertofulfillourduediligenceobligationsevenbetter.Amongotherthings,weappointedtheHeadofCorporateSustainability,QualityandTradeComplianceashumanrightsofficertomonitorcompliancewithhumanrightsduediligencerequirementsandtheimplementationofprocessesthroughouttheGroupinthefuture.Businessethics63IdentifyingactualandpotentialimpactsonhumanrightsWeperformriskassessmentstounderstandthepotentialimpactsouroperationsandbusinessrelationshipscouldhaveonhumanrights.Forinstance,weinvestigatehumanrightsrisksatoursitesaswellasrisksrelatedtoproductandservicesourcing.Theseriskassessmentsenableustoderivethecorrespondingstrategiesandmeasures.Wetrackhumanrightsrisksthroughourstrategicsupplierriskprocess.MoreinformationonhowweengagewithsupplierscanbefoundunderSustainableSupplyChainManagement.Wealsomeetourhumanrightsduediligenceobligationswhendeployingnewtechnologies.OurCodeofDigitalEthicsdefinesdigitalethicsprinciplesandformsthebasisfortheworkoftheDigitalEthicsAdvisoryPanel.MoreinformationcanbefoundunderDigitalEthics.MeasurestoprotecthumanrightsAuditingoursitesandsuppliersOurGlobalSocialandLaborStandardsPolicystipulatesthesocialandlaborstandardsatoursites.Weregularlycheckcompliancewiththerequirementsusingarisk-basedapproach.Amongotherthings,thistakesintoaccountrisksthatmayariseifrelevantlawsandregulationschangeorifthereareviolationsofinternationallyrecognizedlaborrightsbygovernmentsandcompanies,asassessedbytheInternationalTradeUnionConfederationanddocumentedintheannualITUCGlobalRightsIndex.Ifweidentifyaviolationduringtheaudit,wedefineremedialactionstogetherwiththeresponsibleManagingDirectorand/orlocalHRstaff.Inaddition,wereviewhumanrightsaspectsatoursitesthroughsecurityaudits.Theauditsareonecontrolmechanismofoursecuritygovernanceframework.IncreasedrisktransparencyandcentralizedCAPAtrackingallowsustoensurethatoursitesmeetsecurity-relevanthumanrightsaspects.ThroughtheTogetherforSustainability(TfS)initiative,wedeterminewhetherourstrategicallyimportantsupplierscomplywithhumanrightsstandards.HumanrightsandinvestmentdecisionsWhenprojectsexceedacertaincostthreshold,ourInvestmentCommitteemustapprovetheexpenditure.Initsdecision,thecommitteeconsidersvariousaspectsrelatedtotheproject,includingenvironmentalimpactandhealthandsafety.Furthermore,ourCodeofConductisbindingwhereinvestmentdecisionsareconcerned.Wealsointegratehumanrightstopicsintoourdecision-makingprocessesregardingmergersandacquisitions.CreatingawarenessamongouremployeesTotrainourManagingDirectorsandseniormanagement,weofferane-learningcourseonimplementingtherequirementsofourSocialandLaborStandardsPolicyintheirareasofresponsibility.OuronboardingtrainingforallnewEHSmanagerscontinuestocoverthetopicofhumanrights,withaparticularfocusontheissueofmodernslavery.Inaddition,theSupervisoryBoardreceivedtrainingontherequirementsandimplementationofthenewGermanSupplyChainDueDiligenceActin2022.Businessethics64ToembedrespectforhumanrightsevenmorestronglythroughouttheGroup,wearecontinuouslyexpandingourinternalcommunicationandawarenesstrainingonhumanrightsandmodernslavery.Throughourglobalsustainabilitynetwork,forexample,weheldawebinaronhumanrightsinthecorporatecontextin2022.Inaddition,virtualinformationeventsontheimplementationoftheGermanSupplyChainDueDiligenceActwereofferedtoselectedtargetgroups.TrainingcoursesforoursuppliersTogetherwithTfS,werolledouttheTfSAcademytrainingplatformin2022.TheplatformoffersemployeesofTfSmembercompaniesandtheirsuppliers165coursesinuptoninelanguages.Themoduleonhumanrightsduediligence,forinstance,coversthetopicsofchildlabor,forcedlabor,humantrafficking,discrimination,andharassment.Wealsoparticipatedinthe#TfSTalks,aninteractivewebinarseries.OurreportingpracticesWeinformthepublicaboutourapproaches,measuresandresultsofhumanrightsduediligence.WeprovideinformationonthisannuallyinourSustainabilityReport.Additionally,legislationinAustraliaandtheUnitedKingdomrequiresustopublishthestepswearetakingtocounterforcedlaborandhumantrafficking.ApartfromtheUKModernSlaveryStatement,wealsopublishedourMerckAustraliaModernSlaveryStatementin2022.BothhavebeensignedbytheChairoftheExecutiveBoardandpublishedonourwebsite.OurcomplaintmechanismsOurcompliancehotlineisthemostimportantchannelforreportingcomplaintsaboutpotentialhumanrightsviolations.OuremployeesaswellasexternalstakeholderscanreportsuspectedcasesviathisGroup-widewhistleblowingsystemintheirrespectivenationallanguage,freeofchargeandanonymously,eitherbytelephoneoraweb-basedapplication.Wethoroughlyinvestigateallcomplaintsthatwereceiveandtakecountermeasuresifnecessary.Moreinformationonthecompliancehotlinecanbefoundundercompliancemanagement.In2022,therewerenoindicationsfromourcompliancehotlineofchildorforcedlabororviolationsoftherighttocollectivebargainingorfreedomofassociationwithinourownglobalbusinessoperations.Regardingforcedlabor,wewereinformedthatweofferedrubberglovesforwhichamanufacturerisaccusedoflaborabusesincludingforcedlaborinMalaysia.Thematterisbeinginvestigatedfurther.Oursupplierhasalreadyterminatedbusinessrelationswiththemanufacturer.Consequently,ourcompanyalsonolongerhasanybusinesstiestothemanufacturerintheaffectedsupplychain.Businessethics65ClinicalstudiesBeforeobtainingregulatoryapprovalforourmedicines,weconductclinicalstudieswithpatientsand,ifnecessary,alsowithhealthyvolunteerstoinvestigatethesafetyandeffectivenessofourproducts.Wealsoperformextensivepreclinicalresearch,includinganimaltesting,todemonstratethatourtreatmentsposenounacceptableriskstohumans.OurapproachtosafeandtransparentclinicalstudiesOuraimistoconducthigh-caliberclinicalresearchthatalwaysisincompliancewithapplicablelawsandregulations.Asaresponsiblecompany,wesetGroupwiderequirementstoensurethatthehighestethicalandscientificstandardsworldwidearemetwhenconductingclinicaltrials.Weonlyconductclinicalstudiestoinvestigateissuesthatarerelevanttopatients,healthcareprofessionalsorsociety,andonlywhenthemedicinesbeingtestedshowsignificanttherapeuticpromiseandhaveapositivebenefit-riskratio.Inaddition,asound,establishedscientificmethodologymustbeavailabletoinvestigatethesescientificormedicalquestions.Weonlyenrollthespecificnumberofparticipantsrequiredtoanswereachofthesequestions.Protectingthesafety,well-being,dignityandrightsofthepatientsandhealthyvolunteersparticipatinginourclinicalstudiesisofutmostimportancetous.Wedonotintentionallyexposestudyparticipantstoundueriskorirreversibleharm.Personaldataprivacyisalsoveryimportanttous,andwemaintainastrongfocusondataprotectionandconfidentialityincompliancewithstatutoryregulations.BasedonourStandardonHumanResearchweaimtodesignandplanourstudiestoensurethatdiversepatientpopulationswhoareexpectedtouseaproductwhenapprovedareadequatelyrepresented.Studyparticipantsshallnotbediscriminatedagainstduetoe.g.gender,ethnicorigin,religion,disabilities,sexualorientationorsocio-economicstatus.Patient-focuseddrugdevelopmentWeareimprovingourapproachtoresearchanddevelopmentbycommittingtopatient-focuseddrugdevelopmentthatmoreactivelyinvolvespatients,caregivers,andtheiradvocatesinourwork.Theirvaluableinsightsintodiseaseandtreatmentmanagementwillhelpusmakemoreinformeddecisionsateachstageofthemedicinedevelopmentprocess.Weaimtomakeourstudieseasyforpatientstounderstandwhileensuringallparticipantshavepositiveexperiencesastheycontributetoourunderstandingoftheparticulardiseaseanditstreatment.Ateverylevelofourorganization,weareadditionallyeducatingstaffaboutthevalueofaclose,moreconsistentpatientinteractionandtherequirementstoprotectourpatients’independenceandprivacy.Businessethics66Clinicalstudiesinlow-andmiddle-incomecountriesWeconductallourclinicalstudiesinaccordancewithlocallawsandregulations,andweadheretoallrelevantinternationalscientificandethicalstandards,irrespectiveoftheregionorcountry.Wearedeliberatelyexpandingourmedicinalproductdevelopmenttomorediversemarketsinordertoaddresspressinghealthcareneedsinlow-andmiddle-incomecountriesandsupportthedevelopmentoftheirhealthcaresystems.Whenperformingclinicalstudiesinlow-andmiddle-incomecountries,wherethereisusuallyalowerlevelofhealthcareandlimitedhealthcareinfrastructure,thefollowingalsoapplies:•WeonlydosoinanenvironmentinwhichtheprinciplesofGoodClinicalPracticecanbeupheld.•Weonlyinvestigatediseasesandinnovativemedicinesthatarerelevanttothelocalpopulation.•Weonlyconductclinicalstudiesincountrieswhereweexpectthatthedrugbeingtestedwillbesubmittedformarketingauthorizationandmadeavailabletopatientsafterwehaveprovenitsefficacyandsafety.RolesandresponsibilitiesClinicaldrugdevelopment,includingclinicalstudiesandtherelatedgovernanceprocess,aretheresponsibilityofourGlobalDevelopmentunit.TheHeadofGlobalResearch&DevelopmentreportstotheCEOHealthcare,whoisamemberoftheExecutiveBoard.Wereviewtheprogressofnewdrugdevelopmentatdefinedmilestones,andmakedecisionsaboutthecontinuation,modificationordiscontinuationofdevelopment,dependingontheresultsofclinicalstudies.Wehaveestablishedtwointernalcommitteestooverseeourclinicalstudies.TheIntegratedProtocolReviewCommitteeisresponsibleforthestudiesperformedbythecompanyonmedicinesthatareunderclinicaldevelopment,whiletheGlobalMedicalDecisionBoardisresponsibleforourownstudieswithapprovedmedicines,aswellasforallstudiesperformedbyindependentinvestigatorsandsupportedbyus(so-calledinvestigator-sponsoredstudies).Bothbodiesconsistofmedical-scientificexpertsandexecutiveswithlong-standingexperienceinclinicalresearch.Ourdevelopmentandstudyteamspresentclinicalstudyconceptstotheappropriatecommittee.Eachcommitteemeetsregularlytoconductacomprehensivereviewoftheproposedconceptsandascertainsthatourstudiesarescientificallysound,havealegitimatescientificpurpose,andareperformedinaccordancewiththelateststandardsandbestpractices.Beforeadministeringanewdrugtohumans,theremustbesufficientevidencethatitoffersapotentialtherapeuticbenefit,issufficientlysafeforuseinhumansandhasapositivebenefit-riskratio.Weonlytakethecriticalstepofafirst-in-humanclinicaltrialafterdiligentlyconductingextensivepreclinicaltesting.Thedecisionlieswithaseparatecommittee,theHumanExposureGroup,chairedbyourGlobalChiefMedicalOfficer.Wecontinuouslyanalyzepotentialrisksforstudyparticipantsbeforeandduringourclinicalstudies.OurMedicalSafetyandEthicsBoard(MSEB)overseesthesafetyoftheparticipantsinourclinicalstudiesand,asnecessary,reviewsthebenefit-riskprofilesofinvestigationaldrugs.YoucanfindfurtherinformationontheMSEBunderPatientsafety.Issuesmaybesubmittedtotherelevantcommitteesbyproductteamsorothercommittees(asdefinedinrelevantstandardoperatingproceduresorcommitteecharters).Ifindividualemployeeswishtoseekadviceorreportconcernsonethicalquestions,theycancontactthemembersofacommitteedirectly.Businessethics67Ourcommitment:InternationalguidelinesandrequirementsOurHumanSubjectsResearchandDevelopmentPolicyprovidestheframeworkforconductingclinicalstudiesandhelpsensurethatweadheretoallapplicablelegal,ethicalandscientificstandards.Inadditiontotherelevantnationallawsandregulations,thesestandardsalsoinclude:•TheGoodClinicalPractice(GCP)guidelinesoftheInternationalCouncilforHarmonisationofTechnicalRequirementsforPharmaceuticalsforHumanUse(ICH)•TheDeclarationofHelsinki,publishedbytheWorldMedicalAssociation•TheBelmontReportbytheU.S.OfficeforHumanResearchProtections•GoodPharmacovigilance/Laboratory/Manufacturing/DistributionPractices(GVP/GLP/GMP/GDP)•TheInternationalEthicalGuidelinesforHealth-relatedResearchInvolvingHumans,publishedbytheCouncilforInternationalOrganizationsofMedicalSciences(CIOMS)•TheJointPositionontheDisclosureofClinicalTrialInformationviaClinicalTrialRegistriesandDatabasesandtheJointPositiononthePublicationofClinicalTrialResultsintheScientificLiterature,publishedbytheInternationalFederationofPharmaceuticalManufacturers&Associations(IFPMA),theEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA),theJapanPharmaceuticalManufacturersAssociation(JPMA),andthePharmaceuticalResearchandManufacturersofAmerica(PhRMA)•ThePrinciplesforResponsibleClinicalTrialDataSharing,publishedbyEFPIAandPhRMA,andtheIFPMAPrinciplesforResponsibleClinicalTrialDataSharingRegularsupervisionofclinicalstudiesOurclinicalstudyprocessesandproceduresareregularlyinspectedbyrelevantregulatoryauthoritiestoverifytheircompliancewithapplicablelawsandguidelines.TheResearch&DevelopmentQualityunitappliesarisk-basedidentificationstrategytodetermineareasthatneedtobeaudited.QualityassuranceauditsareperformedinternallywithinHealthcareR&D(forexample,processaudits)andexternally(forexample,atvendors’sitesandinvestigationalsites).Werespondimmediatelytoobservationsduringauditsbyinvestigatingtheirrootcausesand,accordingtotheircriticality,definingandimplementingcorrectiveandpreventiveactionstoimproveprocesses,preventreoccurrenceofirregularitiesandensurecompliance.Ahybridauditingapproachcombiningremoteandon-siteauditswassuccessfullyimplementedandmostoftheauditsoftheAnnualAuditPlan2022werecompletedasplanned.ConductingclinicalstudiesresponsiblyPriortoenrollingparticipants,everyclinicaltrialmustfirstbeassessedandapprovedbyaqualifiedindependentethicscommittee.Furthermore,allregulatoryauthorizationsrequiredintherespectivecountrymustbeobtained.InaccordancewithGoodClinicalPracticeguidelines(ICH-GCP),allstudyparticipantsmustgivetheirexplicitinformedconsentbeforeenrollinginaclinicalstudy.Participantsarefullyinformedaboutallaspectsoftheclinicaltrialinalanguagethattheyunderstand.Thisincludesthepotentialrisksandbenefitsfromparticipatinginthestudyandtheopportunitytoinquireaboutdetails.Asfaraspossible,non-interventional(observational)studiesarealsoassessedbyanethicscommittee.Businessethics68Everyclinicalstudyfollowsdefinedprocedurestoensureitisconductedtothehighestqualitystandardsinlinewithgoodworkingpractices(GxP)forthedevelopmentandmanufacturingofdrugs,theethicalprinciplesoftheDeclarationofHelsinkiandotherinternationalguidelinesandregulations.In2022,regulatoryauthorityinspectionsdidnotunveilissueswhichhadasignificantimpactonpatientrights,patientsafety,orthedataintegrityofastudy.Wecontinuouslycollectandcommunicatesafetydataonourinvestigationaldrugsandpromptlyprovideclinicalinvestigatorswithimportantnewfindingsrelevanttothesafetyofthestudyparticipants.Inthisway,wehelptoensurethesafeuseofourmedicines.Potentialadverseeffectsandrisksaretakenintoconsiderationtoevaluatethebenefit-riskratioofourproductsandmanageanyrisk.Productinformation,includingtheinvestigator’sbrochureandinformationforstudyparticipants,isupdatedaccordingly.MoreinformationisavailableunderPatientsafety.ConductingclinicaltrialsinvulnerablepopulationsTheimplementationofclinicalstudiesinvulnerablepopulations,suchaschildrenorpeoplewithdisabilities,requiresspecialattentionandcaretocomplywiththehighestethicalandscientificstandards.Thewell-beingoftheindividualisourhighestpriority.Forthisreason,weonlyconductstudieswithparticipantsfromvulnerablepopulationgroupsifscientificallyjustifiedandifthereisnootherwaytoachieveconclusiveresults.Whenperformingsuchstudies,especiallywheninformingstudyparticipantsandobtainingtheirconsent,wetakestatutoryregulationsintoaccount.TeaminguptogetresultsTheclinicaltrialinvestigatorsparticipatinginourclinicalstudiesbyenrollingandcaringforpatientsarecriticaltothesuccessfuldevelopmentofnewmedicines.Furthermore,toachieveabroad,in-depthbasisforthedevelopmentofnewtreatments,weseekadvicefrommedical-scientificadvisoryboardsandfrequentlyconductclinicalstudiesincollaborationwithexternalpartnersinacademiaandindustry.Wealsorelyonthesupportofcontractresearchorganizations(CROs)andotherserviceprovidersandvendors.Weexpectfromourpartnersthattheyapplythesamehighstandardsintermsofethicalconductandqualityinclinicalresearch.AsamemberofTransCelerate,aconsortiumof20pharmaceuticalcompanies,wearecurrentlycollaboratingonseveralinitiativestoimprovethehealthofpeoplearoundtheworldbyacceleratingandsimplifyingtheresearchanddevelopmentofinnovativenewtherapies.ClosedialoguewithpatientsandadvocacygroupsWewanttoensurethatthevoicesandneedsofpatientsandtheircaregiversareadequatelyheardandtakenintoconsiderationthroughtheentirelifecycleofourmedicines.Wehaveastronginternalpolicyaswellascomplianceguidancedocuments,whichprovideaclearframetoensurethatsuchengagementstakeplacewithinanethicalframework.Inaddition,weestablishedthePatientAdvisoryBoards(PAB)asoneofourcrucialcommunicationchannels.OurPABCharterdescribeshowtoinvolvepatientsandcaregiversinourclinicalresearchprocess.DuringAdvisoryBoardmeetings,patients,caregiversandrepresentativesfrompatientadvocacygroupsareinvitedtosharetheirexperiencesrelatedtoclinicaltrials.Weusethisopportunitytodiscussmultipleaspectsofthedrugdevelopmentprocess,includingbutnotlimitedtoprotocoldesign,educationalmaterials,technologyandinnovativeapproachestoclinicaltrials.Businessethics69Furthermore,weareinvolvedinmultipleactivitiesthatfocusonthisrelevantaspectofpatientcentricityinclinicalstudies.Forexample,intheUnitedStates,weareanactivememberoftheClinicalTrialsTransformationInitiative(CTTI),whichfocusesonqualityandefficiencyinclinicaltrials.ResponsibledatasharingWesupportprofessionalcirclesinadvancingmedicalandscientificknowledge,therebyenablinginformedhealthcaredecisionsforthebenefitofpatients.Uponrequest,weprovidequalifiedresearcherswithstudyprotocols,anonymizedindividualpatientdata,studydata,andclinicalstudyreports.WesharedataandinformationinamannerthatisconsistentwiththejointPrinciplesforResponsibleClinicalTrialDataSharingoftheEFPIAandPhRMA:•Safeguardingtheprivacyofpatients•Respectingtheintegrityofnationalregulatorysystems•MaintainingincentivesforinvestmentinbiomedicalresearchDisclosureofclinicalstudiesandpublicationofresultsWeareobligatedtodisclosefindingsfromourclinicalstudies.Wedothispubliclyinacomplete,accurate,balanced,transparent,andtimelymanneraslaidoutinourClinicalTrialDisclosurePolicy.OurclinicalstudydesignsandresultsaremadepublicintheinternationalClinicalTrials.govdatabaserunbytheU.S.NationalInstitutesofHealth(NIH),whichcanalsobeaccessedviatheWorldHealthOrganization’sInternationalClinicalTrialsRegistryPlatform(ICTRP).Furthermore,inaccordancewithEUregulations,wepublishresultsfromourclinicalstudiesintheEUDrugRegulatingAuthoritiesClinicalTrials(EudraCT)database,whichisrunbytheEuropeanMedicinesAgency(EMA).Ifrequiredbylocallawsandregulations,wepublishstudyresultsonotherpubliclyaccessibleplatforms.Weprovideclinicalstudyreportsynopsesandsummariesofstudyresultsinplainlanguageonourclinicaltrialswebsite.Wepublishresultsfromourclinicalstudiesinmedicaljournalsinlinewithapplicablelawsandindustrycodes.Inthisway,weadhereinparticulartothecurrentversionoftheGoodPublicationPractice(GPP3)andfollowtherecommendationsoftheInternationalCommitteeofMedicalJournalEditors(ICMJE).OurMedicalPublicationsPolicyensuresthatweconsiderrelevantstandards,andweusedefinedstandardproceduresforscientificpublicationsonourproducts.Inaddition,wereferenceourclinicaltrialpublicationsonourwebsite.OurStandardonClinicalTrialDataTransparencyunderscoresourstrongcommitmentinthismatter.TheseongoingeffortstoincreasethetransparencyofourclinicalstudieshavereceivedcreditfromBioethicsInternational.Theorganizationranksbio-pharmaceuticalcompaniesandnewdrugsbasedonethicsandpublichealthperformancecriteria,focusingonissuesthatarecriticaltopatients.In2021,werankedinequalfirstplaceamongsevenofthe42pharmaceuticalcompaniesthatwererated.Businessethics70EnablingearlyaccesstonewmedicinesNotallpatientshavetheopportunitytotakepartinaclinicalstudyandmustthereforewaitforanewpharmaceuticalproducttobeapproved.ThroughourEarlyAccessProgram,wecan,underspecificcircumstances,enablepatientstogainearlyaccesstonew,potentiallylife-savingmedicines.Theofferisaimedatpeoplewithseriousconditionswhohavealreadyreceivedallavailabletherapieswithoutsuccess.Itallowsthemtobetreatedwithmedicinesthathavealreadybeenclinicallytestedbuthavenotyetbeenapproved.Furthermore,weofferpatientswhoparticipatedinoneofourclinicalstudiespost-studyaccesstotheinvestigationalproduct,providedthatcertainconditionsaremet.Here,too,wemeetstringentstatutory,ethicalandscientificstandards.Byperformingathoroughassessmentofallavailabledata,weensurethatthepotentialbenefitsoutweighthepotentialrisksforpatients.Positionpapersonearlyaccessandpost-studyaccessareavailableonourwebsite.SupportingindependenthumansubjectresearchInadditiontoconductingourownclinicalresearchprogramsandstudies,wealsosupportstudiesproposedbyindependentinvestigators,so-calledinvestigator-sponsoredstudies(ISS).OurISSPrincipledefinesISSasunsolicitedrequestforfundingand/orsupplyofaninvestigationalormarketedproductbyindependentinvestigator/institutionthatinitiatesandconductsascientificinvestigationastheregulatorysponsor.Bygrantingfinancialormaterialsupportforindependenthumansubjectresearch,weseektostimulatetheadvancementofclinicalandmedicalknowledgeandpatientcareinourtherapeuticareasofinterestandsupportthesafeandeffectiveuseofourproducts.Wegiveprioritytoresearchthatisinnovativeandhasthepotentialtoaddressspecificunmetmedicalorscientificneeds.Ourprinciples,frameworkandstandardsforgrantingsupportforISSandourcollaborationwithindependentinvestigatorsarespecifiedinourISSPrinciple,whichisavailableonourwebsiteandinourcorrespondingpolicyandstandardoperatingprocedure.Businessethics71AnimalwelfareInternationalandnationallegislationmandateanimaltestingofmedicinalcompoundsandchemicalsduringtheirdevelopmentandpriortotheirapprovalforcommercialuse.Inaddition,fromanethicalandscientificperspective,animalresearchisindispensablebasedonthecurrentstateofknowledge.Weperformanimal-usingactivitiesinallthreeofourbusinesssectors.OurapproachtoanimalwelfareOurlong-termaspirationistobeapioneerinphasingoutanimaluseandreplacinganimalworkwithbetter,cutting-edgealternatives.Weaimtooutperformastheleaderinnon-animal-derivedproductsandtestinginthelifescienceandhealthcareindustries.Ourbusinesssectorsdevelopindividualstrategicroadmaps,prioritiesandtimelinestowardsthisaspiration.Animaltestingwillbeanunavoidablenecessityformanymoreyears,especiallyindrugdevelopmenttoensurethesafetyandefficacyofmedicaldevices,medicinesandvaccines.Aslongasanimalusagecannotbecompletelyavoided,wearecommittedtoapplyingthehighestethicalandanimalwelfarestandardsrelatedtothehousing,husbandryandveterinarycareofallanimalsinvolvedinourwork.Weensurecomprehensivetransparencyandongoingassessment,monitoring,auditing,andimprovementofallworkinvolvingtheuseofanimalsbyourcompanyandbytrustedthirdparties.Wecontinuouslyimproveouranimaltestingprocesses,strivingtoenhancetheanimals’qualityoflife.Wealwaysuseasfewanimalsaspossibleandreplacetheirusewheneverfeasiblewithalternativemethods.Inaddition,weadvocatefortheglobalacceptanceofreplacementmethods.Tothisend,wejoinforceswithindustryandacademia.Wesubscribetotheinternationallyrecognized3Rsforanimal-basedresearchandhaveaddedResponsibilityasourfourthanimalwelfareprincipleinlinewiththeethicalconsiderationspublishedin2019byDavidDeGraziaandTomBeauchampinPrinciplesofAnimalResearchEthics:•Replacement–replacinganimalstudieswithnon-animalsystems•Reduction–usingtheminimumnumberofanimalsrequired•Refinement–minimizingdistressordiscomfortbefore,duringandaftertesting•Responsibility–acceptingresponsibilityforallanimalsinourreachinternallyandamongourbusinesspartnersWithinourLifeSciencebusinesssector,animalactivitiesincluderequiredregulatorysafetytestingofourownproductsandonbehalfofcustomers.TheLifeScienceproductportfolioalsoincludesvariousmaterialsneededforresearchthatarederivedfromanimalsorby-productsfromfoodproduction,suchasblood,plasma,orserum,oritemsspecificallyproducedinanimals,suchasantibodies.OurHealthcarebusinesssectorconductsanimaltestingasamandatorypartofthedrugandmedicaldevicesdevelopmentprocessandconductsbiologicalqualitycontrolinanimals.OurElectronicsbusinesssectorconductsanimaltestsasrequiredbyapplicablechemicalregulations.InlinewiththeEUCosmeticsRegulation,noanimaltestsareconductedforcosmeticingredients.Businessethics72RolesandresponsibilitiesOurCorporateAnimalAffairsunitgovernstheimplementationoftheCorporateAnimalWelfarestrategy.Theunitactsgloballyandlocally,settingandoverseeingguardrailsfortheuseoflaboratoryanimalsbasedonfourpillars:•AnimalWelfare•AnimalUsingVendorManagement•MerckVivariumOversight•The4RprincipleOurGroupAnimalWelfareCouncil,sponsoredbytheCEOofourcompany,comprisesrepresentativesfromallbusinesssectorsandmeetsquarterly.Thecouncilactsassoundingandadvisoryboard,assessingwhichofourservicesandproductinnovationscanhelptoavoidanimaltestinginthefuture.Moreover,itconsultsonbusiness-criticalissues,adoptskeyindicatorsandservesasanescalationbody.In2022,weestablishedtheMerckAnimalUsageReview(MAUR)boardsinEuropebyutilizingexistinginternaldecision-makinganimalwelfarebodiesthatreviewandapproveallinternalanimalworkconductedbyourvivaria,whereavailable.IntheUnitedStatesandIsrael,thesetasksareperformedbyalreadyexistingcomparablecompany-ownedboardssuchastheInstitutionalAnimalCareandUseCommittees(IACUC,inaccordancewiththeU.S.ILARGuide).Inaddition,theseglobalMAUR/IACUCboardsnowalsoreviewandapproveanyanimal-basedactivitiesatallourvendors,contractresearchorganizationsandacademicpartners.GlobalandlocalanimalwelfareofficerssupportingthelocalbusinessreportdirectlytoCorporateAnimalAffairsandareadvocatesoftheanimals.Theirtasksentailanimalscienceandwelfaremanagementaswellasacknowledgingtheindividualskillsandabilitiesofallpersonnelworkingwithanimals.Furthermore,theyregularlyinspecttheanimalfacilitiesaswellasreviewandapproveprotocols.TheAnimalUsingVendorManagementunitqualifiesoursupplierswithregardtoanimalscienceandwelfare.Thegroupalsocontinuouslymonitorsourcontractresearchorganizations,suppliersandbusinesspartners.Ifemployeesidentifyanissueregardinganimalwelfare,theycanreportitdirectlytoCorporateAnimalAffairs,tolocalandglobalanimalwelfareofficersorviaourcompliancehotline.The4Rteamandcross-functionalworkstreamsdevelopandguideprojectstoimplementour4Rprinciples.The4Rteamregularlyreportsprogressmadewiththe4RstotheGroupAnimalWelfareCouncil.Italsocoordinatesthe4RAward,withwhichwerecognizecontributionstotheReplacement,Reduction,Refinementof,andResponsibilityforouranimalwork.ComprehensiveemployeetrainingWithournewAnimalAffairsAcademy,wedefineaholistictrainingconceptforourentirecompany,providetrainingsessionsonanimalwelfare,andoverseeandprovidestafftrainingonpracticalwork,rulesandregulations.Allemployeesinvolvedinanimalactivitiesreceiveappropriatetrainingandcontinuingeducation.Forexample,throughourVivariumRotationProgram,employeesofeachofourvivariavisitanothervivariumeveryyeartoexchangeknowledgeandsharebestpractices.Theprogramhasbeensuccessful,andtheUniversityofHeidelberginGermanyhasexpresseditsinterestincollaboration.Additionally,ouremployeesregularlyparticipateinexternalcontinuingeducationprograms.Businessethics73WorkwithcommitteesandassociationsAspartofoureffortstoimproveanimalwelfare,weareinvolvedinseveralorganizationsandinitiatives,includingtheEuropeanFederationofPharmaceuticalIndustriesandAssociations(EFPIA)andInterpharma,afederationofresearch-basedpharmaceuticalcompaniesinSwitzerland.Interpharmaconductsauditsatcontractresearchorganizationsandanimalbreederstogetherwithselectedmembercompanies.WeareamemberoftheEuropeanAnimalResearchAssociation(EARA),acommunicationsandadvocacyorganizationrepresentingbothpublicandprivateinstitutionsinthebiomedicalsector.WearealsoinvolvedwiththeAssociationforAssessmentandAccreditationofLaboratoryAnimalCareInternational(AAALAC).Thisprivate,nonprofitorganizationpromotesthehumanetreatmentofanimalsinsciencethroughvoluntaryaccreditationandassessmentprograms.In2022,oneofouremployeesservedasthechairoftheAAALACInternationalBoardofDirectors.Ourcommitment:Group-widestandardsBeyondcompliancewithallapplicablelawsandregulations,wearecommittedtoourownsetofinternalguidelines.OurAnimalAffairsPolicy,ourGroupanimalwelfarestandardsandourproceduresforanimaltestingconductedinternallyandbytrustedthirdpartiescorroborateacomprehensiveandstringentgovernanceframeworkbasedonourfourpillarsofanimalusegovernance.Ourstandardsandproceduresentail,forexample,thehousingandhusbandrystandardsthatalsoapplytoexternalpartners,andhowwemonitorthem,includingauditprocedures.TheAnimalUsingVendorManagementstandarddescribestherequirementsfortheapprovalofcontractresearchorganizationsandsuppliers.Furtherdocuments,includingguidanceforour4Refforts,incidentreportingandriskmanagement,augmentthegovernanceframework.In2022,weimplementedfurthercompany-widestandardssuchastheGlobalBloodSamplingStandard(GBSS),whichdefinesparametersandmethodsforbloodcollection,maximumbloodsamplingfrequenciesandvolumesinagiventimeframe.Weareconvincedthattherightleveloftransparencyhasthepotentialtoimprovethescientificoutcomeandvalueofanimaltestingandcreatesbenefitsforsociety,patientsandanimalwell-being.AfterjoiningtheGermanTransparencyInitiativein2021,wewereawardedtheSealofQualityforBestPracticeinAnimalResearchcommunicationparticularlyforourachievementsincommunicatingtransparentandopenaboutanimalexperimentsinresearch.Businessethics74NumberoflaboratoryanimalsusedformedicalstudypurposesIn2022,atotalof149,643animalswereusedwithinthescopeofourbusinessactivities,eitherinourownvivariaoronthepremisesoforganizationscontractedonourbehalf.Thisrepresentsanoveralldecreaseof17%comparedwith2021.Rodents(miceorrats)comprised144,941ofallanimalsusedin2022,comparedto175,522in2021.Regulatoryagenciessometimesrequirestudiesofthesafetyofinvestigationaldrugsinnon-rodentspecies.Thisallowsresearcherstoidentifypotentialadverseeffectsaccuratelyandincludethemintheriskassessmentofasubstance.AnimaltypesOther2,541(indescendingorder)rabbits,hamsters,fish,non-humanprimates,dogs,minipigs,tadpoles,goats,camelids,chickenRodents144,941miceandratsGuineapigs2,161total149,643CollaboratingwithpartnersandsuppliersWeperformthemajority(94%)ofouranimalstudiesourselvesandprocuretherequiredanimalsfromspecializedbreeders.Wealsocommissioncontractresearchorganizationstoconductanimalstudiesonourbehalf.Furthermore,weworkwithacademicinstitutions.Wheneverwecollaboratewithsuchorganizations,werequirethemtocomplywithourstandards.Businessethics75ConductinganimalwelfareauditsCorporateAnimalAffairsconductsanauditofeachofourvivariaeverythreeyears.In2022,twovivariawereaudited.Furthermore,weimprovedCorporateAnimalAffairs’oversightofinternalanimalworkregardingaspectssuchasanimalusage,purposeandincidents.Inthereportingyear,weimplementedadigitalsolutionthatmonitorsourkeyindicators.Anintegralpartofourstrategyisthequalificationofallanimal-usingvendorsweconductbusinesswith.Wecompletedtheimplementationofanauditingstrategyanddevelopedprocedurestoidentifyandtrainauditors.In2022,atotalof45vendorauditswereperformed,38ofthemon-siteand7virtuallyduetotheCovid-19pandemic.4RAwardforanimalwelfareWeaimtomotivateallouremployeestocontributetothe4Rprinciple.Therefore,withourbiannual4RAward,werecognizebestpracticesinanimalwork,suchaspioneeringbettersolutionstoReduce,ReplaceorRefineorleadingbyexampleinResponsibility.Ourannual4RDayin2022focusedonthenewCorporateAnimalWelfarestrategyandgaveanoverviewofcurrent4Ractivities,highlightingcompany-wideprojectsubmissionsrepresentingeachofthe4Rcategories.ThegrandprizewassplitevenlybetweentwooutstandingprojectsrepresentingtheReplacementandReductioncategories.Businessethics76BioethicsScientificadvancescansparkcontroversialdebatesoverbioethicalissues.Wewanttomakeresponsibleuseofthegrowingpotentialofthelifesciencestocreatemaximumbenefitforbothhumankindandotherlivingbeings.Forus,itisimportanttoadoptourownpositiononbioethicalissues.OurapproachtoethicalconductAsaglobalcompany,itiscriticallyimportantforustoidentifyandaddressemergingbioethicaltopicsandissuesearlyonsothatwecandefineourownposition.Althoughwedoalignallouroperationswithinternationalandnationallaws,manydiscussionsonbioethicsposequestionsthatextendfarbeyondtheframeworksetforthbycurrentlegislation.Wethereforealsoseekadvicefromexternalexperts.Inourwork,weencountervariousbioethicalissues,includinganimaltestingandclinicalresearch,stemcelluse,theuseofgeneticallymodifiedmicroorganisms,andthepotentialimpactofnewgenomeeditingtechniquessuchasCRISPR/Cas.Ourgoalistoconductresearchinanethicallyresponsiblemannerandtodevelopethicalframeworksthatguideusinmakingforward-lookingbusinessdecisions.Patientbenefitandwell-beingarealwaysourtoppriority,whetherinclinicalstudies,treatmentwithourmedicines,orthedistributionofourproductstoacademicresearchersandthebiopharmaceuticalindustry.Wecarefullyevaluateourpositionswhenitcomestocontroversialtopics.RolesandresponsibilitiesSince2010,theMerckEthicsAdvisoryPanelforScienceandTechnology(MEAP)hasbeenissuingclearrecommendationsonscientificandtechnologytopicsinvolvingethicalquestionsaswellasissuesextendingbeyondpurebioethics,inlinewithourtransformationintoascienceandtechnologycompany.Co-chairedbytwoofourleadingscientificexpertsfromourseniormanagementteam,theMEAPprovidesrecommendationsthatguideouractionsandbusinessactivities.Inadditiontorenownedinternationalexpertsfromthefieldsofbioethics,medicine,philosophy,law,andthenaturalsciences,thepanelalsoconsistsoftechnologyandsustainabilityexperts.TheMEAPreceivesitsmandatefromtheExecutiveBoard.TheMEAPmeetsmultipletimesayearandcanalsobeconvenedonanad-hocbasisinresponsetoemergingurgentethicalissues.Themeetingminutescanbeaccessedonourintranet,alongwiththerecommendationsissuedbytheMEAP.Ouremployeescanalsosubmittopicsfordiscussiontothepanel.Inaddition,theymayreportethicalconcernsthroughourcompliancehotlineorbyreachingouttoourBioethicsteam.OurStemCellOversightCommittee(SCROC)wasestablishedontherecommendationoftheMEAPbackin2011.Thiscommitteereviewsandapprovesallplannedin-houseresearchactivitiesinvolvingtheuseofhumanstemcells,andensurestocompliancewithlegalrequirementsaswellasourethicalguidelines.Thisalsoincludesjointprojectswithexternalpartners.Thecommitteeconsistsofinternalexpertsfromourbusinesssectorsaswellasexternalprofessionalsfromthefieldsofbioethics,medicineandlaw.Businessethics77In2022,weexpandedtherangeofconsultingservicesonethicsissues.Ourgoalistoalsotakeethicsperspectivesintoaccountwhenmakingforward-lookingbusinessdecisions.Tothisend,welaunchedtheEthicsForesightproject,inwhichexternalexpertsandselectedMEAPmemberssupportouremployeesfromthebusinessunitsonstrategicallyrelevantethicalissues.IncontrasttotheMEAP,theexpertswillnotdevelopconcreterecommendationsinthefuturebutwilldeterminetherespectiveethicalriskforvariousscenariosandmapseveraldecisionpathsinstead.Ourcommitment:GuidelinesandstandardsOurGenomeEditingPrincipleprovidesamandatoryethicalandoperationalframeworkforouremployees.Itsetsclearboundariesforusbothasasupplierofcustomizednucleasesandgeneticallymodifiedcelllines,andasauserofgenomeeditingtechnologiesforscientificresearch.Thisprincipleincludesbackgroundinformationonthetopicandexplainsourpositionongenomeediting.Moreover,itspecificallyaddressesthesubjectofhumangermlineediting.Thisiscomplementedbyadditionalguidelinesthatdefinehowweconductresearchandbusinessinanethicalmanner.OurStemCellPrinciplesetstheethicalboundariesfortheuseofhumanstemcellsinourresearch.OurFertilityPrincipleregulatesourresearchinfertilitytreatmentandin-vitrofertilization.Itsetsaclearframeworkforpracticesthatreflectthemostrigorousethicalstandards.Ourprinciplesonwhetherinformationontheoff-labeluseofmedicinesmaybepassedonarebasedonGroup-wideguidelines.Biologicalsamplesobtainedfrompatientsduringclinicalstudiesareindispensabletothedevelopmentofnewtargetedtreatmentsandadvanceddiagnosticmethods.WehavedefinedourapproachtomanaginghumanbiospecimensinourFertilityPrincipleandinstandardoperatingprocedures.Accordingly,wehandlethesesamplesinaresponsibleandethicalmanner;indoingso,weadheretoallregulatoryrequirementsandabidebytheconsentgivenbypatientsfortheuseoftheirsamples.Thismayincludeanoptionalconsentthatprovidespermissiontousethebiospecimensforfurthermedicalresearchbeyondtheclinicalstudy.Businessethics78TopicscurrentlybeingdiscussedbytheMEAPTheMEAPlastconvenedinMay2022anddealtwithethicalissuessurroundingcellculturemediathatcouldbeusedinthefertilitysector.Inaddition,thepanelcompletedtherevisionsoftheStemCellPrinciple,theGenomeEditingPrincipleandtheFertilityPrinciple,thusharmonizingthemwiththeGuidelinesoftheInternationalSocietyforStemCellResearch(ISSCR),whichwereupdatedin2021.Theseaddressscientificadvancesandtherelatedethical,socialandpoliticalchangessince2016.Thebasictenetsofourpositionsremainunchanged,withsomedetailsnowadaptedtothenewguidelines.Inaddition,wemarkedthetenthanniversaryofMEAPwithasymposiumin2022.Tomarkthisoccasion,MEAPmembersproducedacommemorativepublication;thecontributionscontainedthereindiscussbothpastandfuturebioethicalissuesandtheirsignificanceforscienceandpractice.MEAPmembersJeremySugarmanJochenTaupitzJeanneLoringDanielFu-ChangTsaiYimtubezinashWoldeamanuelMulateNikolausKnoepfflerChristophRehmann-SutterJeremySugarmanJochenTaupitzJeanneLoringDanielFu-ChangTsaiYimtubezinashWoldeamanuelMulateNikolausKnoepfflerNikolausKnoepfflerRafaelaHillerbrandChristophRehmann-SutterMicrobiologyAddisAbabaUniversityBoardmemberandSecretaryofPan-AfricanBioethicsInitiativeMolecuarBiology,StemCellsFormerlyScrippsResearchInstituteLaJolla(Advisor)Bioethics,MedicineJohnsHopkinsUniversityMedicallaw,bioethicsFormerVice-ChairGermanEthicsCouncilPhilosophy,Theology,EthicsUniversityJenaPhilosophy,Ethics,BiologyUniversityLübeckFormerChairSwissNationalAdvisoryCommissiononBiomedicalEthicsBioethics,MedicineNationalTaiwanUniversityPhilosophy,Physics,TechnicethicsKarlsruherInstituteforTechnologyBiotechnologyandgeneticengineeringWithintheGroup,wemanufactureourbiotechproductsinaccordancewithrigorousstandardsatallsites.Alltheseactivitiesaresubjecttostrictstatutoryregulationsworldwide,andcompliancewiththeseregulationsismonitoredbyourbiologicalsafetyofficers.Wecontinuouslytracklocalregulatorychangesthatrelatetobiotechproductsandadaptourprocessesaccordingly,thusensuringcompliancewithallstatutoryrequirements.Businessethics79Usinggenome-editingtechniquesWearealeadingsupplieroftechnologiessuchasCRISPR/Cas9,whichcanbeusedtotargetandmodifyspecificgenes,aprocessknownasgenomeediting.CRISPR/Cas9opensupnewpossibilitiesingeneticengineeringresearchthatcouldbringaboutmajoradvancesinthetreatmentofseriousdiseases.Lawsindifferentcountriesallowforavaryingdegreeoflatitudeinapplyingthistechnique.Bioethicalpositionsongermlineeditinghavebeenevolvingforyearsthroughacademicandsocialdiscourse.Ourpositiononhumangermlineeditingisasfollows:“InaccordancewiththeGermanEmbryoProtectionAct,wedonotsupporttheuseofgenomeeditinginhumanembryosandclinicalapplicationsofgermlineinterventionsinhumans.Werecognizethattheremaybevalueinresponsiblyconductedrelatedresearch.”StemcellresearchWeneitherparticipateinclinicalprogramsthatutilizehumanembryonicstemcellsorclonedhumancellsforthetreatmentofdiseases,nordowepursuesuchapproachesourselves.However,weusehumanembryonicstemcellsinourresearchandofferourcustomersseveralselectstemcelllines.Inbothapplications,weonlyallowtheuseofhumanembryonicstemcellsifclearlydefinedconditionshavebeenmet.Forinstance,weonlyutilizestemcellsforresearchpurposesifourSCROChasreviewedtherespectiveprojectandgivenapproval.In2022,reviewandapprovalweregrantedinonecase.WeexclusivelymakeuseofcelllinesthathavebeenapprovedbytheUnitedStatesNationalInstitutesofHealth(NIH)andareallowedundertheGermanEmbryoProtectionActaswellastheGermanStemCellLaw.Businessethics80DigitalethicsPeople,machines,data,andprocessesarebecomingincreasinglyinterlinked,withtechnologicaladvancestransformingoursocietyandposingnewethicalchallenges.Ourdigitalethicsactivitiesdescribehowweresponsiblyhandledataandalgorithms.OurapproachtocorporatedigitalresponsibilityAsitisouraimtodevelopandusenewdigitaltechnologiesresponsibly,wepromptlyidentifyanyethicalissuesthatmayarisefromalgorithm-drivenanddata-basedbusinessmodels.Since2021,theMerckDigitalEthicsAdvisoryPanel(DEAP)hasbeenfocusingoncomplexethicalissuessurroundingdigitaltechnologiesandsupportsthatourdigitalbusinessmodelfollowsaholistic,ethicalapproach.RolesandresponsibilitiesTheDEAPdiscussesethicalissuesarisingfromourdigitalapplicationsandbusinessactivities,especiallyinthehealthcaresector.Oneofitsmaintasksistohelpensurethatwedevelopdigitalinnovationsresponsiblywhileaddressingpotentialdigitalethicsquestionsthatcouldresultfromcollectingandprocessingdataaswellasfromtheuseofthesedigitaltechnologies.Thepanel,whichissuesrecommendationsonouractionsasacompany,consistsofexternalinternationalscienceandindustryexpertsfromthefieldsofdigitalethics,law,BigDatatechnologies,digitalhealth,medicine,anddatagovernance.Inaddition,weinvolvebioethicsexpertsaswellasrepresentativesfrompatientorganizationsasneeded.TheDEAPreceivesitsmandatefromtheExecutiveBoardandouremployeesmaysubmittopicsforthepaneltodiscuss.SummaryminutesofDEAPmeetingsandtherecommendationsmadewillbeavailableonourintranetfrom2023onwards,providedthattheydonotcontainanyconfidentialbusinessinformation.Thepanelheldfourmeetingsin2022,focusingonethicalchallengesthatcouldresultfromourbusinessmodelforbioelectronics.Ourcommitment:GuidelinesandstandardsAsacompany,wewanttopositionourselveswithrespecttodigitalethics.Wearethereforedevelopingclearethicalstandardsinthisnewfield,primarilyforcriticalareas,forinstancehandlinghealthdata,doingsoincollaborationwithvariousstakeholdersandexperts.TogetherwiththeDEAP,weapplyourCodeofDigitalEthics(CoDE),inordertoaddressissuespertainingtotheethicaluseofdataandalgorithms.TheCoDEservesasaguidelineforourdigitalbusinessmodels,atoolforanalyzingethicalchallengesandabasisforpracticalDEAPrecommendations.Itisbasedonfivecoreprinciples:justice,autonomy,beneficence,non-maleficence,andtransparency.Theseprinciplesinturnprovideaclearstructureforassessingethicalissues.Moreover,theysupportourbusinesssectorsandindividualemployeesindifficultsituationsforwhichlawsorothertypesofregulationsdonot(yet)exist.TheCoDEnotonlyhelpsustoassesstheethicalrisksposedbyexistingactivities,butalsoenablesustoevaluatetheethicalaspectsofnewlyemergingdigitalsolutions.Wehavealreadytestedthisininitialapplicationareas.Businessethics81Asoneofouroverarchinggovernancedocuments,theCoDEappliestoallemployeesandispubliclyaccessible.In2022,wedevelopedanemployeetrainingcourseontheCoDE,whichweplantorolloutin2023.TheCoDEwasdevelopedtogetherwithascientificpartneraspartofastructuredprocess.In2022,wepublishedarticlesonthescientificdevelopmentprocessandthelegalimplicationsoftheCoDEinthejournalsAI&SocietyandRDi-RechtDigital.StrategicpartnershipforinnovativetherapeuticsolutionsIn2022,theDEAPmainlyaddressedquestionsarisingfromSyntropy,adigitaljointventurebetweenourcompanyandPalantirTechnologies.Thispartnershipaimstoleveragepatientdatatoadvancethediscoveryofmedicinestotreatcancerandotherdiseases.Syntropymakesitpossibletocollectandprocessthesedatainasecureenvironmentinordertodevelopnewinsightsfromthem.ÂAtthesametime,Syntropyensuresthattheownershipofthedataremainswiththeinstitutionsfromwhichtheyoriginated.Thispartnershipallowsthescientificcommunitytocollaborateinnewwaysandachievesharedobjectivesincancerresearch.IdentifyingrisksSincetheendof2022,ourLifeScienceDataIntelligenceandAnalyticsunitACEhasbeenworkingtorecordthepotentialethicalriskofprojectsinastructuredway.ItanalyzesdatafromtheLifeSciencebusinesssectorinordertoobtaininsightsforourbusiness.Thetool,whichiscurrentlyunderdevelopment,isexpectedtoenabletheearlyidentificationofethicalrisks.Tothisend,ascoringsystemhasbeendevelopedtogenerateariskassessmentforeachproject.Theriskscorehasimplicationsforproductdevelopment.TheACEunitiscurrentlyworkingon700projects,reviewingthemforethicalrisksatalldecision-makingpointsthroughouttheproductlifecycle.Businessethics82PRODUCTS84Sustainableinnovation&technology88Products&packaging100Healthforall100GlobalHealth107Innovationsharing109Pricesofmedicines111Healthcapacity&awareness116Productsafety&quality116Chemicalproductsafety119Patientsafety124Product-relatedcrimeSustainableinnovation&technologyWearecommittedtocreatingsolutionsthatpositivelyimpactpeopleandtheenvironment.Tothisend,wearedeterminedtomakediscoveriesthatchangethelandscapeofentireindustriesanddrivetechnologicalaswellasscientificinnovationtosolvethemostcriticalissuesoftodayandtomorrow.Customers,investorsandregulatorsacrossourmarketsareincreasinglyseekingsustainableproductsolutions.OurapproachtocreatingsustainableinnovationandtechnologyThesustainableinnovationthatweenvisionordriveforwardmustalignwithandsupportthethreegoalsofoursustainabilitystrategy.Wedefinesustainableinnovationasneworimprovedproducts,services,technologies,orprocessesthatgenerateeconomicbenefitsandhavepositiveenvironmentalandsocialimpacts.Therefore,wedeveloplong-termsolutionsforourinnovationandresearchactivitiesthatconsidertheentirevaluechainandevaluateeachproduct’simpactoveritslifecycle.Today,ourproductsalreadyhaveapositiveimpactonhumanprogressandglobalhealth,namelyourmedicinesandourbiologicalandchemicalinnovationsthatutilizethelatesttechnologies.Wewanttocontinuouslyimprovethewaywemeasureourprogressbyadaptingandintegratingsustainabilitycriteriaintoourproductdevelopmentprocessesacrossthebusinesssectors.In2022,wecontinuedourpartnershipwiththewell-establishedpatentinformationplatformLexisNexis®PatentSight®.Inthiscontext,wecreatedaframeworktoevaluatethesustainabilityimpactofourintellectualproperty.For2022,weevaluatedthebaselineforthefirsttimeandidentifiedthat27%ofourpatentfamiliespublishedthatyearhaveapositivesustainabilityimpactbasedonLexisNexis®PatentSight®.Todeveloppioneeringsolutionsthathaveapositiveimpactonsocietyandsupportorganicgrowth,weareexploringtransformativetechnologiesbeyondourcoreproductsandmarkets.Atthesametime,wemaintainstrategicproximitytoourbusinesssectorstoleverageourexistingassetsandcapabilities.Businessmodelinnovation,includingdigitalbusinessmodels,isoneapproachweusetogeneratevalueforourbusinessandstakeholders.Wefueltransformativetechnologiesthroughinternalincubation,partnershipsorstrategicinvestmentsandcollaborationwithacademia.Inaddition,wecontinuallyseektofosterandencourageopeninnovation.RolesandresponsibilitiesTheorganizationalset-upofourR&Dactivitiesreflectstheoverallstructureofourcompany.AllthreeofourbusinesssectorsoperateindependentR&Dunitsthatpursuetheirowninnovationstrategies.GroupCorporateSustainabilitysupportsourbusinesssectorsandGroupfunctionstoadvanceandintegratesustainabilitywithintheR&Dandinnovationprocessesinlinewithoursharedgoals.WedevelopedamethodologyforcreatingaGroup-wideoverviewofthepotentialcontributionofourR&DportfoliotowardssustainablesolutionsthatwentliveinDecember2022.Products84OurGroupScience&TechnologyOfficeleadstheimplementationofourcombinedstrategyforinnovation,dataanddigital,enablinginnovationacrossourbusinesssectorswhileharnessingthepowerofadvanceddataanddigitalcapacities.Itaimstoidentifyandintegratetransformative,strategicallyrelevanttechnologytrendsintoourbusinesssectorswhilemaintainingaGroup-wideviewofourtechroadmapandinnovationportfolio.Fosteringdataanddigitalcapacitiesiskeytoacceleratingsustainableinnovationandenablingrapidactionandpersonalizedofferings.Innovationprojectsareincubatedeitherthroughourcorporateinnovationteamsorinthebusinesssectors.Ourventurecapitalfund,MVentures,prioritizessustainableinnovationsthroughequityinvestments.Thefund’smandateistoinvestininnovativetechnologiesandproductsthathavethepotentialtosignificantlyimpactourcorebusinessareas.Inaddition,thefundfocusesoninvestmentsintwoareasofhighstrategicrelevancetoourcompany:digitaltechnologyandsustainability.MVentures’sustainabilityinvestmentstrategyfollowstwofundamentalapproaches.First,itinvestsinsustainablesolutionsrelevanttoourthreebusinesssectors,suchasnovelsolutionsforreducingemissionsandwaste,greenlifesciencetechnologiesandgreenelectronicstechnologies.Thesesolutionsmaybemoreenergy-orresource-efficientormaycreateproductsdesignedforcircularityorwithalowercarbonfootprint.Asmanyofthesetechnologiesarestillintheirearlystages,MVenturesispartneringwithSEMI.orgalongwiththeleadingcorporateventurecapitalfundstohelpacceleratetheinnovationandadoptionofpotentialsustainablesemiconductorsolutions.Thesecondapproachinvolvesmakinginvestmentsthatleverageourcorecompetenciestodrivesustainabilityinothermarkets.Thesemayincludestart-upsaddressingsustainablefoods,bio-manufacturing,orcarboncaptureandutilization.Ourcommitment:AimingforcircularityWithinourR&Dprocesses,wearecommittedtocontinuouslyimprovingandintegratingsustainabilityandcirculareconomycriteriatoassessthesustainabilityperformanceofourproductsandportfolio.Forexample,ourLifeSciencebusinesssectordevelopedDesignforSustainability(DfS)andtheDOZN™tooltocreatemoresustainableproductsforourcustomers.In2022,wetailoredandrolledouttheDfSconcepttoourtwootherbusinesssectorsandintegratedanoverarchingcompanydashboard.In2023,weaimtogenerateanunderstandingofourR&DportfolioandusetheinsightstosteerfutureR&Dactivities.Therefore,wehavedevelopedanindicatortotrackourprogress.Furthermore,theElectronicsbusinesssectorlaunchedaweb-basedapplicationtoautomaticallyextractprocessandreactiondatafromresearch,developmentandmanufacturingdatabasestocalculateandevaluatecarbonfootprintofouroperations.ThisallowssustainabledecisionmakingtoreduceresourceconsumptionaswellasdirectandindirectCO2emissionsfromchemicalprocesses.TheapphasbeenlaunchedinSeptemberof2022.Inaddition,wehavededicatedcorporateresourcesforourcirculareconomystrategyandwearedrivingseveralcirculareconomypilotsandinitiativesthroughouttheorganization.MoreinformationonsustainableproductdesigncanbefoundintheSustainableproducts&packagingchapter.Products85Acceleratingthefutureoffood:CulturedmeatOurCulturedMeatInnovationFieldfocusesonthebiotechnologyrequiredtogrowrealmeatinvitro.Theseresearchandcommercialeffortsaimtoenableanimalproteinproductionthatishealthier,moreethicalandenvironmentallysustainable.Asatechnologyenabler,weareleveragingourvastlifescienceexpertisetorealizeourvisionofprovidingfit-for-purposebioprocessingproductsandservicesforculturedmeatproduction.Inadditiontobuildingstrongconnectionsandpartnershipswithstart-ups,academiaandleadingorganizations,weareworkingoninnovationprojectstoaddressspecifictechnologychallenges,suchascellculturemediaandbioreactordesignsthatarecost-effectiveandsuitableforthisemergingfield.Toachieveproductionatscale,thecellculturemediamustbecost-efficient,producedfromarobustfood-graderawmaterialsupplychain,suitableforeffectivegrowthanddifferentiationintospecificcelltypes,andfreeofanyanimal-derivedmaterialsuchasfetalbovineserum.OurflagshipprojectMeatDiaaimstobuildafood-graderawmaterialsupplychainviaperformancetestinginresearchlabsandqualificationinoneofourproductionfacilitiestomanufacturetherequiredmediaformulations.Inaddition,wehaveestablishedmultiplepartnershipswithleadingstart-upsthatarebuildingpilot-scalemanufacturingfacilities.Wearesupplyingdrypowderedcellculturemedia,tothesecustomers,whoarebringingthefirstculturedmeatproductstomarket.Anothertechnologicalchallengeistheneedforsuitablebioreactordesignstoefficientlyproducestructuredcutsofmeatratherthanlesser-valuegroundmeat.CraftRidgeisourflagshipbioreactorprojectfocusedondeliveringanediblehollowfiberbioreactorsystemthatcanproduceentirecutsofmeatcost-effectively.Inparallel,wearecollaboratingwithtwoleadingacademiclabs.TogetherwithateamatTuftsUniversityinMassachusetts,USA,weaimtoenabletheproductionofwhole-muscleculturedmeatthroughtextilebioengineering.Atthesametime,wewillapplyindustrialrapidprintingtechnologytocreatecomplexmeatstructuresincollaborationwithateamattheTechnicalUniversityofDarmstadt(TUDarmstadt)inGermany.OurMVenturesportfolioincludesMosaMeat,apioneerinculturedmeat,andFormo,acompanyfocusedonmakingculturedcheesesusingrecombinantproteinsynthesis.FruitfulstrategicpartnershipOurlong-termcommitmenttoacademicresearchpartnershipsreflectsourstrongambitiontofindsustainablesolutionstopressingproblems.IntheframeworkoftheSustainabilityHub,whichwasestablishedin2021,wecontinuedourstrategiccollaborationwiththeTUDarmstadtinmultidisciplinaryfundamentalresearchprojects.Theprojectscoverbasicchallengesoflifecyclemodelling,3Dlivertissuemodel,biodegradationofplasticsandthesimulationofneuromorphiccomputingarchitectures.Theongoingresearchcontinuestoincreaseourunderstandingofproductsustainabilityassessment,toxicologicaltestingofdrugs,circularmaterialflowsandenergyefficientcomputing,respectively.Products86PromotingvisionaryresearchThe2022FutureInsightPrizerecognizedachievementsinenergytechnologiesthathelpreversetheeffectsofclimatechange.The€1millionprizewasawardedtoProfessorTobiasErb,DirectorattheMaxPlanckInstituteforTerrestrialMicrobiologyinMarburg,Germany.HisresearchenablessolutionsthatmakeitpossibletoconvertCO2intovaluablechemicalproducts,whichcanthenbeusedasfeedstockforfuel.In2022,weagainofferedsustainabilityresearchgrantstothescientificcommunitytostimulateinnovativeresearchandsponsoredtworesearchgrants:SustainabilityinHealthcareR&DandInnovationwithinGreenChemistry.Intotal,wereceivedmorethan200researchproposalsfromaroundtheworld.Selectedprojectswillreceivefundingin2023.WealsoenteredintoacooperationagreementwithEsy-LabsGmbH,thewinnerofoneofourresearchgrantsin2021.Inadditiontofundingresearchactivitiesthroughthegrant,weinitiatedlong-termcollaborationbyhostingtheresearchactivitiesofthiscompanyattheemergingGreenTechParkFLUXUMinGernsheim,Germany.Products87Sustainableproducts&packagingWebelieveitisourdutytoconsiderthesustainabilityperformanceofourproductsthroughouttheirlifecycle,startingwiththedevelopmentstage.Thisalsoallowsustohelpourcustomerstoimprovethesustainabilityoftheirproducts.Tothisend,weareintheprocessofaligningourapproachesacrossourbusinesssectors.OurapproachtosustainableproductdesignLifeScienceInourLifeSciencebusinesssector,weworktoreducetheadverseimpactsofourproductsonhealthandtheenvironment.Thisappliestotheentirelifecycle,frommanufactureandusetoendoflife.Atthesametime,weseektomakeourproductsmoreefficientanduser-friendly,askingourselvesfromthestartofproductdevelopmenthowtobestreconciletheserequirements.ThroughourDesignforSustainability(DfS)framework,wefollowacomprehensiveapproachtoincreasingthesustainabilityofourLifeScienceproducts.TheDfS:Developmentpillarprovidesourproductdeveloperswithasystematicapproachthatenablesthemtoanalyzeproductimpactsintermsofmaterialsused,energyandemissions,water,packaging,usability,innovation,andcirculareconomyaswellassupplier-andmanufacturing-relatedissues.Wehavedevelopedsustainabilitycriteriathatcanbeusedtorankaproduct’sperformanceineachoftheseareas.Whendevelopinganewproduct,ouraimistoimproveonasmanyofthesecriteriascoresaspossible.Tounderstandthepotentialenvironmentalimpactsthroughouttheproductlifecycle,weconductstreamlinedproductlifecycleanalyses.Thefindingsfromtheseanalyseshelpustoimproveourproductsandareincorporatedintosubsequentdevelopmentstages.ExpertsfromResearchandDevelopment(R&D),ProductManagement,Quality,Procurement,andotherdepartmentscollaboratealongeverystepoftheprocess.In2022,weimplementedanewversionofourDfS:Developmentpillarwithinourenterpriseproductdevelopmentprocesses.Thenewframeworkintroducesdata-drivendeliverablesateachphaseofourproductdevelopmentprocesstoensureweconsidersustainabilityfactorsinallnewlydevelopedproducts.Italsocomprisesanewscorecardsystemthathelpsourdevelopmentteamsaddressandminimizenegativeproduct-andsupplychain-relatedfactorsandimprovesourcommunicationofproductsustainabilitycredentialstoourcustomers.HealthcareInourHealthcarebusinesssector,weaimtoreduceanyadverseimpactsourmedicinesmayhaveontheenvironmentduringtheirdevelopment,manufacture,transportation,use,anddisposal.Wearedevelopinganoverarchingstrategytomakeourmedicines,ourmedicaldevicesandtheirpackagingmoreecologicallysustainableanduser-friendly.Atthesametime,weareworkingonadvancingenvironmentalcompatibilityindifferentphasesofthehealthcarevaluechain.Intheareaofpharmaceuticaldevelopment,wehavedefinedanecotoxicologicaltestingstrategythatinvolvesidentifyingenvironmentalpropertiesofdrugcandidatesearlyindevelopment.Ideally,wewouldthenbeabletousethisknowledgetoavoidemissionsintotheairandwater.Products88In2022,westartedtoimplementtheDesignforSustainabilityframeworkinourHealthcareR&Dapproach.Wewillalsoestablishagovernanceframeworktointegratesustainabilityanddefinesustainabilitycriteriaforqualitativeandquantitativescorecardsthatcanbeusedtomeasuresustainabilityimpacts.OurnewlylaunchedGreenBiotechprogramhelpstointegratesustainableinnovationandstate-of-the-arttechnologyintoourdevelopmentprocessesandproductsalongtheclinicalmanufacturingvaluechain.ThisprogramisalignedwithourHealthcaresustainabilitystrategytodriveprogressformorethanonebillionpeoplethroughsustainablescienceandtechnologyandislinkedtoothersustainabilityprojectsaimedathelpingusachieveclimateneutralityby2040.ElectronicsInourElectronicsbusinesssector,weaimtoreduceanypotentialadverseenvironmentalimpactscausedbythemanufacture,packaging,transportation,use,anddisposalofourproducts.Weviewsustainabilityasacompetitiveadvantage,andweproactivelyengageinpartnershipswithourcustomerstocollectivelydrivemoresustainablevaluecreation.Accordingtoournewprinciple,highlyhazardousmaterialsaretobeavoidedinourproductdevelopmentprocesswhereverpossible.Therefore,wehavealsoprioritizednewgreenandinnovativematerialsthatdeliversustainablevaluetoourcustomers.Wearecommittedtoaholisticapproachcomprising:•Sourcedresponsibly:WeuseourmembershipintheResponsibleMineralsInitiativetosupporttheresponsiblesourcingofminerals,suchastantalum,tin,tungsten,gold,andcobalt,sothattheirsupplychainsmakepositivecontributionstoglobal,socialandeconomicdevelopment.•R&D:In2022,wedevelopedandlaunchedascorecardfocusingonsustainablecriteriainthedevelopmentofnewproductsandsolutions.ThescorecardisatoolforfosteringasustainabilitycultureinourR&Dbyidentifyingopportunitiesandrisksatearlystagesandactingaccordingly.ThetoolalsomakestheR&Dteam’scontributiontoourglobalsustainabilitygoalsmoretransparent.•Processdevelopment:Westartedaprojecttoautomaticallycalculatekeysustainabilityperformanceindicators,suchasprocessmassintensity,solventandwaterintensity,aswellasanestimateofthecarbonfootprinttoimprovethesustainabilityofchemicalsandrelatedmanufacturingprocesses.•Assessmentofthecurrentproductportfolio:In2022,westartedtoreviewourcurrentproductportfolioinordertounderstandthecurrentsustainabilityprofileanddeterminewhethergreenerandequallyeffectivechemistryalternativesareavailable.Amulti-functionalteamisworkingtoestablishaprocessthatputsgreateremphasisonthesustainabilityandgreenchemistryaspectsofourproductportfolios.Inaddition,aProductSustainabilityCommitteewasestablishedin2022tooverseetheportfoliosustainabilityassessmentprocessandresults.•Contributingtothesustainabilitygoalsofourcustomers:Weseektoestablishpartnershipswithourcustomerstooptimallyunderstandhowourproductsandactivitiescancontributetotheirsustainabilitygoals.In2022,weestablishedapartnershipwithoneofourcustomerstodevelopandeventuallyproducegassolutionswithalowglobalwarmingpotential;thesearecurrentlyinapracticaltestingphase.Products89OurapproachestosustainablepackagingWeworktodeliverourproductsinpackagingthatissafeandeasyforcustomerstohandle,whilealsoworkingtoimprovethesustainabilitycharacteristicsofourmaterialchoices.LifeScienceWithmorethan300,000productsinourLifeScienceportfolio–rangingfromantibodiesandlabchemicalstofiltrationmaterials,systemsandinstruments–wefaceavarietyofpackagingchallenges.Weworktoimprovethesustainabilitycharacteristicsofthispackagingtoreduceitsenvironmentalimpact.OurSMASHPackagingstrategyforLifeScienceisbuiltuponthreepillars:optimizingresources,usingmoresustainablematerialsanddesigningforacirculareconomy.Wehavesetfourgoalsthatsupportthesepillars:•Shrink:reducetheamountofpackaging•Secure:achievezerodeforestation•Switch:improveplasticsustainabilitycharacteristics•Save:maximizerecyclingInoureffortstoachieveour2022targets,wealsoworkedtodefinethefutureprioritiesandgoalsforourSMASHPackagingstrategyaswewanttocontinuetoimprovethesustainabilitycharacteristicsofournewproductpackagingaswellasourexistingproductanddistributionpackaging.Newproductpackagingiswherewecanachievethegreatestimpact.Ourapproachconsistsofimplementingnewstandardsandguidelinesthatdevelopmentteamscanapplytocreatemoresustainablepackaging.Goingforward,wewillassessthesustainabilitycharacteristicsofnewproductpackagingbasedonourupgradedDesignforSustainabilityscorecard.HealthcareIn2022,ourHealthcarebusinesssectorlaunchedasustainablepackaginginitiativecalledMPact,whichpursuesthesamefourpillarsastheLifeScienceSMASHprogram:Shrink,Secure,Switch,andSave.Thisinitiativeinvestigatesproductpackagingsolutionstoreducetheoverallenvironmentalimpact.Weareintheprocessofaligningthegoalsofallthreepillars.Meanwhile,wearecontinuingtoimplementingvariousinitiativestoreduceourproductpackaging,switchtomoresustainablematerialsandpromoterecyclingandcircularity.Wealsointendtoadjustpackagingrequirementsforintermediatematerialswherefeasible.ElectronicsOurprocessforintroducingnewpackagingincludesasafetyreviewthatevaluatespackagespecificationsandsizes,shipmentfrequency,route,carriers,emergencyresponsecapabilities,andelementsofsafetyinthesupplychain.Allproductcontainersundergoareviewforchemicalcompatibility,purity,leak-tightness,andregulatorycompliance.Thepresenceofspecifichazardsandspecificcontainersizescannecessitateamoredetailedriskassessment.Furthermore,inourspecialtygasandthinfilmsbusinesses,forexample,wefocusonproductpackagingthatperformswellintermsoftransportationandhandlingsafety.Products90RolesandresponsibilitiesLifeScienceTheLifeSciencebusinesssectorworksacrossitsbusinessunitstodriveholisticsustainabilityofoperations,productsandculture.Ourstructurehelpsustoimplementanambitiousandcoordinatedsustainabilitystrategytoformalizeourprocesses,governanceandgoals–helpingtoembedthestrategyintoourbusinessandbecomingasustainabilitymultiplierforourcustomers.Oursustainabilitygovernancestructuresareasfollows:TheSustainabilityandSocialBusinessInnovationteamwithinLifeSciencedrivesthesettingofKPIandtargetsaswellastheplanningandexecutionofourstrategyaswellasmonitoringandreportingactivities.HealthcareOurHealthcarebusinesssectorhasintegratedsustainabilityacrossitsR&Dandoperatingunits.TheimplementationofitssustainabilitystrategyissteeredbytheHealthcareExecutiveCommittee.Anydecisionsmaderegardingsustainabilityobjectivesarecascadedtothecorrespondingunits,whichareresponsibleforimplementingmeasurestoachievetheseobjectives.ElectronicsWehaveimplementedaprocesstostructurethesustainabilitygovernanceofourElectronicsbusinesssector.Thisstructurehelpsustoimplementacoordinatedsustainabilitystrategyacrossthebusinessunits,managegoalsandprocesses,strengthenourcustomerrelations,andensureoverallaccountabilitywithinourESGapproaches.Oursustainabilitygovernancestructuresareasfollows:In2022,aneworganizationalstructurewithinElectronicswasintroducedtoensurethatoursustainabilitystrategyisimplementedacrossallbusinessunits.TheElectronicsSustainabilityCouncilactsasacross-functionalexecutivecommitteethatoverseesandsignsoffonrelevantinitiativeswithinElectronicssustainabilityprograms.Inaddition,adedicatedteamcoordinatesbusiness-relatedsustainabilityactivities.In2022,weassessedthecoreresponsibilitiesanddefinedkeyactivitiestoimprovethestructureofoursustainabilitycommitments.Newresponsibilitiesincludeamonitoringroleaswellasdrivinginitiativesthatcontributetothescopeandtargetsofoursustainabilitystrategy.Furthermore,dedicatedworkinggroupswithinthebusinessunitsareresponsiblefordevelopingindividualtargetsfortheirbusinessunitsandimplementingcorrespondingprojects.Products91Ourcommitment:ChemicalsandproductpoliciesInordertomeettheproductsafetyregulationsrelevanttoourcompany,ourRegulatoryAffairsGroupPolicydetailsGroup-wideprocessesformanagingandimplementingproductsafety,includingthenecessarymanagementstructures.LifeScienceWithinourLifeSciencebusinesssector,ourstrategicplatformisfoundedonadata-drivenapproachtohelpourexpertsdrivesustainabilityimprovementduringthedevelopmentofproductsandpackaging.OurDesignforSustainability(DfS)frameworkisacomprehensiveapproachaimedatincreasingthesustainabilityofourproducts,focusingonthreeareas:OurDfS:DevelopmentpillarfocusesonembeddingsustainabilityatthebeginningoftheR&Dprocess.OurDfS:Consultingpillarfocusesonworkingwithourcustomerstosolvespecificsustainabilityand/orGreenChemistrychallengestheyface.OurDfS:Re-Engineeringpillarfocusesonourestablishedportfolioofproductsandevaluatinghowwecanquantifyandimprovetheenvironmentalfootprintoftheseproductsbyapplyingthe12PrinciplesofGreenChemistryinourprocess.AsofDecember2022,about1,860greeneralternativeproductshadbeenmadeavailableonourplatform.HealthcareWithinourHealthcarebusinesssector,chemicalproductsafetyisakeysustainabilityaspectwhendeveloping,producinganddistributingproducts.Westrivetocomplywithallrelevantlegalrequirementsregardingchemicalsregulations,hazardcommunicationandlocalandregionalchemicalregistrationactivities.OurGroup-widepolicyalsoincorporateslegalnormsconcerningthetransportofhazardouschemicals,biocides,cosmeticingredients,andproductsusedinfoodandanimalfeed.OurGroupLabelStandardprovidesaconsistentframeworkforlabelingproductsaccordingtoGHSrequirements.MoreinformationcanbefoundunderChemicalproductsafety.ElectronicsProductsafetyisoneofourhighestpriorities.Startingatthedevelopmentstage,weinvestigatethepotentialadverseimpactschemicalsubstancesmayhave.Weintendtomeetallstatutoryrequirementsalongtheentirevaluechainforourchemicals,withourRegulatoryAffairsorganizationensuringregulatorycompliance.WithinourSurfaceSolutionsbusinessunit,weaimtomeetthestrictstandardsoftheEUCosmeticsRegulationforallourrawmaterialsintendedforthecosmeticsindustry.Inaddition,theserawmaterialsshouldbeproducedinlinewithGoodManufacturingPracticesforCosmeticIngredients(EFfCIGMP).Products92AdheringtotheConventiononBiologicalDiversityWesupportthegeneralprincipleslaidoutintheConventiononBiologicalDiversity,especiallythethirdobjective:thefairandequitablesharingofbenefitsarisingfromtheuseofgeneticresourcesandtraditionalknowledgeinaccordancewiththetermsandconditionsoftheNagoyaProtocol.ThisisaninternationalsupplementaryagreementtotheCBD.Akeyelementofthisprincipleisaccessandbenefit-sharing,whichensuresthatcountriesprovidinggeneticresourcesandtraditionalknowledgealsobenefitfromtheiruse.WeapplyaGroup-widestandardentitled“AccesstoGeneticResources”,theobjectiveofwhichistodefinerequirements,rolesandresponsibilitiestoensurecompliancewiththeNagoyaProtocol,evenincountriesthatarenotpartytotheProtocol.Inaddition,eachbusinesssectordefinesspecificprocedurestohelpensuretheymeettherequirementsofourGroup-widestandard.Wehaveestablishedaninternalexchangeacrossourbusinesssectorsforaligningandsharinginformationoninitiativesrelatedtoaccessandbenefitsharing.In2022,wesuccessfullyfiledaduediligencedeclarationfortwoproductdevelopmentswithageneticresourcetotheGermanFederalAgencyforNatureConservation(BundesamtfürNaturschutz,BfN)inaccordancewithcurrentEUregulations.ThisachievementwasalsomentionedintheBfN’s“NewsletterzumNagoya-Protokoll”inFebruary2022.WiderangeofsolutionsLifeScience:GreenchemistryassessmenttoolOurproprietary,web-basedtool,DOZN™,enablesustoevaluatevariousproductsand/orprocessestoidentifyopportunitiesforsustainabilityimprovementsandprovidetransparencytoourcustomers.DOZN™industrializesthe12PrinciplesofGreenChemistry,apreviouslytheoreticalframework,andratesproductsinthreestewardshipcategoriesof“Improvedresourceuse”,“Increasedenergyefficiency”,and“Reducedhumanandenvironmentalhazards”.DOZN™2.0isthetool’sexternalinterface,allowingourcustomersandotherscientiststomakemoreecologicallysustainablechoicesintheirdevelopmentprocesses.In2022,wecountedapproximately1,500usersofDOZN™from60countries.In2022,weworkedtoestablishnewpartnershipswithuniversitiesintheUnitedKingdomandGermanyinadditiontoourexistingpartnershipswithuniversitiesinCanada,France,India,Switzerland,andtheUnitedStates.ThesepartnershipsapplytheDOZN™toolinbothvirtualandin-labchemistrycurricula.UsingDOZN™inanacademicsettingyieldsmanybenefits.Firstly,itincreasestheoverallaccessibilityandtangibilityofGreenChemistryanditsprinciples.Secondly,itprovidesapracticalopportunitytocalculatescoresforchemicalproductsandprocessesandreinforceslearningwhilehighlightingtheimportanceofsustainabilitytofuturescientists.LifeScience:GreenersolventsSwitchingtobio-basedsolvents,suchasouralternative,moreenvironmentallycompatiblesolventCyrene™,helpsourcustomersreducetheircarbonfootprint.WeareamemberoftheEUHorizon2020project,ReSolute,whichstartedtheconstructionofanewCyrene™productionfacilityin2021.LocatedinFrance,thesiteisscheduledtoopeninthesecondhalfof2023andwillproduce1,000metrictonsofCyreneperyeartohelpusmeetthegrowingdemandforgreenersolvents.In2022,wealsolaunchedCyrene™blends,agreenersolventsystemthatextendsapplicationsfororganicsynthesis.WepublishedourresultsinTheRoyalSocietyofChemistry’sGreenChemistryjournal.Products93In2022,weworkedtoexpandourselectionofbio-basedlaboratorychemicalsincludedintheBioPreferred®programoftheU.S.DepartmentofAgriculture(USDA)program.ThesechemicalsarecertifiedbytheUSDAtobederivedfromplantsandotherrenewableagricultural,marineandforestrymaterialsandprovideanalternativetoconventionalpetroleum-derivedproducts.Thesechemicalsincludesustainablesolventssuchasbio-renewableacetone.LifeScience:SustainablelaboratorywateruseOurmostrecentMilli-Q®IQandIXseriesultrapureandpurewaterpurificationsystemsuseinnovative,mercury-freeUVoxidationand/orbactericidallamps.Theiroptimizedcomponents,processesandhibernationmodesreduceelectricityconsumptionby18%to41%comparedwithprevioussystemswhilepreservingsystemwaterquality.Thesystemsalsoreducewaterconsumptionbybetween2%and13%.LifeScience:LessplasticincellculturecreationOurgreeneralternativetoourStericup®sterilefiltrationsystem,theStericup®E,allowsourcustomerstoconnectthebottlecontainingthesamplebeingfiltereddirectlytotheStericup®Efiltrationunit,thusavoidingtheuseofaplasticfunnel.Dependingontheproductversion,theStericup®Ecanreducetheamountofplasticusedbyupto48%andthevolumeandweightofpackagingbyupto69%.Theunitofsaleisthenlighterandsmaller,whichleadstoareductionofCO2emissionsduringtransportation.Italsotakeslessspacetostoretheproductatourdistributioncentersoratcustomers’facilities,whilefurtherreducingthevolumeandcostofwastedisposal(includingbiohazardouswaste)forourcustomers.Takingtheentirelifecycleintoconsideration,thisapproachcanreducetheglobalwarmingpotentialofthesterilefiltrationunitbyupto46%.Acrossallproductversionssincetheirlaunch,wehaveprevented3,2metrictonsofplasticandcorrugatedcardboardfromenteringourcustomers’laboratoriesacrossallproductversions.LifeScience:ExpandingproductrecyclingWehavecontinuedexpandingthebiopharmarecyclingprogramthatwekickedoffin2015,inwhichsingle-useplasticproductwasteiscollectedfrombiopharmaceuticalmanufacturingoperationsandrecycledintoplasticlumber.Thismaterialcanbeusedinmanyindustries,suchaslandscaping,transportationandmarineconstruction.Theprogramnowserves23majorbiopharmamanufacturingcustomers.Sinceitslaunchin2015,ithasrecycledmorethan8,700metrictonsofplasticwaste.ThisprogramcontinuestoexpandthroughouttheUnitedStatesaswesimultaneouslyexplorenewoptionsandrecyclingtechnologiesinotherregions,suchasEuropeandAsia.Byassessingadvancedrecyclingtechnologiesandcollaboratingacrossmultipleindustries,wewilldevelopinnovativecirculareconomyprograms.Electronics:SustainableproductdesignIn2021,westartedtosystematicallyincorporatesustainabilityintoourportfoliomanagementprocess.In2022,forexample,oneprojectdefinedandincorporatedsustainabilitycriteriafocusingonproductdesignintotheproductdevelopmentprocess.ThisinitiativeenablesustounderstandthesustainabilityimpactofournewproductsacrosstheentirevaluechainandcreateimprovementsearlyintheR&Dphase.Inaddition,weperformsustainabilityassessmentsforeveryR&DprogramwithinElectronics,givingusabaselinetocreateamoresustainableproductportfolioandsustainableinnovationsforourcustomers.Products94Electronics:ColloidalsilicaOverthepastdecade,oursemiconductormaterialscustomershaveincreasedtheireffortstousemoreenvironmentallysustainablematerialsintheirchipmanufacturingandimprovetheperformanceoftheircomputerchipswhileloweringcosts.Wehaverespondedtothischallengein2017bydevelopingnext-generationcolloidalsilicaproductsusingatleast30%lesscolloidalsilica.Thisadvancementreducesthevolumeofproductneeded,whichinturnshrinksourenvironmentalfootprint.Customerfeedbackontheproductsispromising.Together,weareworkingtoimproveproductionefficienciesandreducetheuseofcolloidalsilicaevenfurther.Electronics:NMP-freeremoversTheproductionprocessforsemiconductordevicesrequiresnumerouscleaningstepstoremovethephotoresistsusedtopatternthecircuitdesign.Thesecleaningmethodsrequirecomplexsolventchemistriesthatselectivelyremovethesephotoresistswithoutdamagingthesensitiveelectroniccomponents.However,themosteffectivesolventsposeasignificantenvironmentalhazard.Forexample,NMP,amainstreamsolventcommoninwafercleaningprocesses,ishighlytoxicandisclassifiedasanSVHC(SubstanceofVeryHighConcern)undertheEuropeanUnion’sREACHregulation.Therefore,wearecontinuouslyworkingtodevelopnewcleaningchemistries.In2022,webeganlaunchingaseriesofgreencleaningsolventsthatareTMAH-andDMSO-freewhilestillbeingeffectiveinremovingthickphotoresist(bothliquidanddry)film,forexampleAZ®Remover910andDynastrip5008,Dynastrip8889,andDynastrip8070T.Electronics:PFASreplacementprogramPFAS(per-andpolyfluoroalkylsubstances)haveuniquechemicalpropertiesandarewidelyusedinourdailylives.However,thereisstrongevidencethatexposuretoPFAScanleadtoadversehealthoutcomesinhumans.Therefore,overthelastdecade,internationalregulationshavestartedfocusingonPFASaschemicalsofconcern.Theyhavebecomeknownas“foreverchemicals”duetotheirextremelylonglifespans.ChemicalproductscontainingPFASareessentialintoday’selectronicsmanufacturingprocesses.Therefore,PFASposeaseriousdilemmafortheelectronicsindustryasemergingglobalregulationstrendtowardsrestrictingtheuseofPFASinthefuture.WearecommittedtointensifyingourR&DeffortstoactivelydriveaPFAS-relatedsubstancereplacementprogram.Asatrustedpartnerintheelectronicsindustry,weareworkingcloselywithourcustomersandprovidinginformationthroughoutthisprocess.Electronics:DynamicliquidcrystalglazingLiquidcrystaldynamicwindowglazingadjustsitstintlevelwithinsecondsaccordingtotheweatherconditions.Theself-darkeningglazingeffectivelyregulatesglareandsolarheatgainwithoutblockingtheview.Asaresult,itincreasestheoccupants’visualandthermalcomfortwhilesimultaneouslyloweringairconditioningandlightingenergyconsumptionbyupto10%comparedwithconventionalshading.Weoffertheseproductsundertheeyrise®brand.Manyrealestateinvestorsregardeyrise®asanimportantbuildingfeaturefordeliveringontheirESGtargets.Onecompanyinstalled3,000m2ofourproductinitsnewflagshipbuildinginZurich,Switzerland.Products95Electronics:ShiftingtomorenaturalcosmeticingredientsWeareworkingcloselywithourpartnersinthecosmeticsindustrytofindsolutionsformorenaturallybasedcosmeticingredients.Theresultingcosmeticformulationscomplywithstrictcriteria.Attheendof2022,84ofourcosmeticpigmentsandactiveingredientshadbeenconfirmedasbeingcompliantwithEcocert’sCOSMOSstandardfororganicandnaturalcosmetics.Wehavealsoobtainedhalalcertificatesforallourcosmeticingredients.Electronics:VegancosmeticproductsAgrowingnumberofconsumersviewtheuseofnon-animalandnon-animalderivedingredients,i.e.veganandplant-basedrawmaterials,asacriticalproductattribute.Therefore,themajorityofourcosmeticrawmaterials,includingourspecialeffectpigmentsandfunctionalfillers,containnocomponentsofanimalorigin,by-productsorderivativesandarethussuitableforvegancosmetics.Makingproductpackagingmoresustainable:LifeScienceWithinthescopeofourSMASHPackagingsustainablepackagingstrategy,wearepursuinganumberofprojectsfortheLifeSciencebusinesssector:Howproductdesignaffectspackaging:ZooMAb®Mosttraditionalantibodyproductsneedtobeshippedattemperaturesbetween2°Cand8°C,usingspecificinsulatedshippingcontainerswithweticebricks.Thisresultsinhighpackagingmaterialconsumptionandtransportemissions.OurZooMAb®antibodiesweredevelopedasafreeze-driedproduct,givingthemimprovedstoragestabilityandallowingthemtobeshippedatambienttemperatures.Thismakesitpossibletoeliminatetheuseofexpandedpolystyrene(EPS)coolersandicebricks,resultinginsignificantpackagingweightreductionsforproductshipments.In2022,itallowedustoavoidtheemissionsofaround12metrictonsofCO2eq.Shrink:HowweminimizetheamountofpackagingWeseekeco-friendlyalternativesforshippingourproductssafely,whichiswhywepartneredwithabiotechcompanyafewyearsagoandjointlydevelopedamoresustainablebulkpackagingdesignfortransportingourMillistak+®PodDisposableDepthFilters.WealsoexpandedthisapproachtoasubsetofourDurapore®andMilliporeExpress®filtercartridges.Theseproductsarededicatedtohigh-volumeclientsanddeliverbothenvironmentalandeconomicbenefitstoourcustomerscomparedwithtraditionalindividualormultipackpackaging.Forexample,changingfromathree-packtothenewbulkpackagingforourten-inchfiltercartridgesreducestheamountofcorrugatedcardboardrequiredby55%.Thiscorrespondstoa49%decreaseingreenhousegas(GHG)emissionsthroughoutthelifecycleofthesepackagingmaterials.Inaddition,ourcustomersspendapproximately50%lesstimeunpacking,reducinglaborcosts.In2022,thesebulkpackagingsolutionsallowedustosavearound19metrictonsofcorrugatedcardboardandwecontinuedworkingondevelopingsimilarsolutionsforadditionalproducts.Products96Shrink:PackagingforSmallsIn2022,wedevelopedandimplementednewpackagingsolutionsthatsignificantlyreducedtheairspaceandmaterialconsumptionassociatedwiththeshipmentofsmallproductsfromsomeofourU.S.andEuropeandistributioncenters.Throughthesemeasures,wewillbeabletoachievearound50%airspacereductionfor1,150+shipmentsdaily,leadingtoareductionof65metrictonsofpackagingmaterialsannually.Secure:HowwearemovingtowardszerodeforestationAlargeproportionofourpackagingconsistsoffiberderivedfromwood.AspartofourSMASHPackagingstrategy,wehavesetourselvestheobjectiveofensuringthatnoneofourwoodorfiber-basedpackagingmaterialscontributetodeforestation.Weassessthepracticesofoursuppliersandthecharacteristicsofourpackagingannuallyinordertomeasureourprogresstowardsourzerodeforestationambitions.Thisalsoenablesustoidentifyopportunitiestoincreasethevolumeofrecycledmaterialandthepercentageofpackagingweusewithsustainableforestrycertifications,whichareawardedinlinewithsustainabilitystandardsdevelopedbytheForestStewardshipCouncil(FSC),theProgramfortheEndorsementofForestCertificationSchemes(PEFC)andtheSustainableForestryInitiative(SFI).Switch:HowwesubstituteplasticsInthepast,weusedinsulatedcontainersmadeofexpandedpolystyrene(EPS)fortheshipmentofourchemicalsinglassbottlesandourtemperature-controlledproducts.WhileEPSoffersgoodinsulationandcushioningproperties,itisapetroleum-basedmaterialthattakeshundredsofyearstodecompose.AstheoptionsforrecyclingEPSarelimited,itisgenerallyincineratedorsenttolandfill.Whereverpossible,wearereplacingEPSwithmoldedcomponentsmadeofcelluloseandrecycledpaperpulp.Ourmoldedpulpcomponentscanbeeasilyrecycledwithotherpapermaterialsandcompactedtogetherforstorageandtransport.Weusemoldedpulpinsertstopackavarietyofliterbottleconfigurationsinshippingboxes,therebyreplacingaroundthreemillionEPSpartsperyear.In2022,wecompletedthevalidationandpilotimplementationofournewgreenercoolersatoneofourU.S.distributioncenterstoreplaceEPSinourcold-chainshipment.Thegreenercoolerismadefromrenewableresourcesandiscertifiedrecyclablewithcorrugatedmaterials.WewillrolloutthesegreenercoolersatourmajorU.S.distributioncentersinearly2023forweticeshipments.Atthesametime,wecontinuedinvestigatingsolutionstoexpandtheuseofgreenercoolersfordryiceshipments.WealsoinitiatedaprojecttodevelopagreenercoolersolutionthatmeetstherequirementsofourEuropeanmarket.Aqueoussolutionsareusuallysuppliedinplasticbottles.WeuseTitripac®becauseitoffersanecologicallysustainablealternative.Thecardboardcartonandplasticlinerwithanintegratedwithdrawaltaphavemadethepackaginglighterandmorerecyclable.Sincethewithdrawaltapprotectstheproductagainstcontamination,customerscannowusetheentirecontentsandreducechemicalwaste.In2022,ourproductssoldinTitripac®10Lpackagingconfigurationsavoidednon-renewablepackagingmaterialsby14metrictons,resultinginareductionof66metrictonsofCO2eqemissionsacrossthelifecycleofthepackagingcomparedwith1Lplasticbottles.Products97Save:ReusingwoodenpalletsAtoursiteinDarmstadt,Germany,weimplementedanewprocessforreusingwoodenpalletsemployedinthedeliveryofrawmaterials.Insteadofrecyclingthepalletsafteroneuse,wenowreusethemforanexpectedaverageofthreecyclesuntiltheyshowsignsofdamage.Thisinitiativeeliminatesaround1,000metrictonsofwoodpalletssourcedannually,leadingtoareductionofabout330metrictonsofCO2eq.Makingproductpackagingmoresustainable:HealthcareWelaunchedourMPactsustainablepackaginginitiativein2022.Oursolutionswillensurethesafeandsecuredeliveryofproductstoourcustomerswhiledecreasingtheenvironmentalfootprintofourpackaging.SlimpackagingsolutionsOurnewpackagingforPergoveris®,Gonal-f®andOvidrel®fertilitypensisdecreasingtheadverseimpactonsustainabilitybyreducingthepacksizeby40%andeliminatingplasticpollutionbyreplacingplasticinsertswithpaper-basedmaterials.Itisestimatedthatthenewpackwillalsoreduceourcarbonemissionsinthesupplychain,asitrequireslesscoldstoragespace,therebyallowingmoreproductstobetransportedineachshipment.Makingproductpackagingmoresustainable:ElectronicsOurElectronicsbusinesssectorusesavarietyofpackagingtypes,eachtailoredtothespecificneedsoftheindividualbusinessfieldsandwithitsownuniquesustainabilitycharacteristics.EfficientpackagingIn2022,welaunchedanewpackagingsolutionforcosmeticsandskincareproductsincollaborationwithfiveothercompanies.Thispackagingconsistsofnewlightweighttubesthatrequire37%lessmaterial.Itisproducedwithmono-materialsforeasyrecyclingandisdesignedforeasywasteseparation.WeprovideColorstream®effectpigmentsforpackaging,Iriotec®laser-sensitivepigmentsfordurablelasermarkingandRonastar®pigmentsthatveilshowergelinliquidshimmer.ReusablepackagingThepackagingforourspecialtygas,thinfilmsandsomepatterningproducts–manufacturedinsemiconductortechnology–isdesignedtobereused.Ourreusablepackagingtypesincludevarioussizesofcylindersandtubetrailersforbulkspecialtygases,smallerstainlesssteelandquartzcontainersforthinfilmsandtotesanddrumsmadeofhigh-densitypolyethyleneforpatterning.Onceourcustomershaveusedtheproductwithinthecontainer,theusedcontainersarereturnedtoourproductionfacilityforcleaning,refurbishmentandrefilling.ThiscyclegreatlyreducesthenumberofcontainersProducts98tobedisposedof.Itreducesthedemandforconstructionofnewcontainersandtheassociatedresourcerequirements,thusmovingusclosertoacirculareconomy.RecyclablepackagingForlargequantitiesofproductsinourpatterningandplanarizationbusiness,weusetotesforpackaging.Totesaretypicallymadeofhigh-densitypolyethylene.Oneofourmaintotesuppliershasarecyclingprograminplacethatourcustomerscanalsouse.Eachtotefromthissupplierhasareturnticketattachedtoitandthesupplierpicksuptheusedtotesothatitspartscanbereusedorrecycled.RedesignpackaginglabelingapproachPlasticpackaginggeneratesalmosthalfoftheworld’splasticwaste.WithIriotec®8000pigments,weenableinklessprintingwithcontact-freeanddurablelasermarkingtechnology,makingitpossibletolabelplastics,whichinturn,canbetracedandrecycledmoreeasilyafterwards,thusrestoringvaluetotheusedplasticpackaging.Thelasermarkingprovidesauniqueidentifierand,asadigitalproductpassport,servesasthelinkbetweentheproductandthedatabase.Itcanreplaceinkandlabels,thusfurtherincreasingrecyclability.Lasermarkingisaunique,sustainable,reliable,durable,andeconomicwaytoachieveanindividualmarkforanyplasticproductandcanbeusedforplasticpackaging,automotivecomponents,cables,andelectronicdevices.Products99HealthforallGlobalHealthHalfoftheworld’spopulationlacksaccesstoessentialhealthservices.Therefore,wearestrivingtoinnovate,makehealthsolutionsaffordableandaccessible,raiseawarenessaboutdiseases,andhelppeoplelearnhowtomanagethem.Weworkwithpartnerstotacklethesecomplexchallenges.OurapproachtoimprovinghealthforallOuroverarchingaimistocreateahealthierfutureforall.Wearecommittedtoadvancingglobalhealthandtousingourscientificandtechnologicalinnovationtoimprovethehealthofunderservedpopulationsinlow-andmiddle-incomecountries.OurGlobalHealthstrategyaimstodevelopandprovideaccesstohealthsolutionsinlow-andmiddle-incomecountriesbycreatingequitableandsustainableaccessmechanismsforpatientsandsociety.Besidesenablingaccesstoourhealthcareportfolio,ourstrategyfocusesondiseasesthatdisproportionallyimpactunderservedpopulations.Theseincludetheneglectedtropicaldisease(NTD)schistosomiasis,whichislargelyunknowninindustrializednationsandattractslittleattentionorfunding,andmalaria.Specifically,thegoalsofthisstrategyare:•Toexpandaccesstoourhealthcareportfolioofproductsandtechnologiestopatientsinlow-andmiddle-incomecountries.•Toeliminateschistosomiasisasapublichealthproblem.•Tocatalyzeinnovativesolutionsforglobalhealthchallenges,primarilytargetingschistosomiasisandmalaria.Westrivetoparticularlyreachthosewhoaremostvulnerable:womenandchildren.ThreecoreoperatingprinciplesdrivetheexecutionofourGlobalHealthstrategy:•Creatingsustainablebusinessmodelsandopportunities:Westrivetoincreaseourcompany’svalueandcompetitivenessbysolvingunmethealthneedsofunderservedpopulationswithourproductsandtechnologies.•Engagingwithcross-sectorpartners:Weparticipateinmulti-stakeholderglobalhealthplatformstohelpachieveourgoalsandsupporttheUnitedNations(UN)SustainableDevelopmentGoals.Weuseaccessalliancesandcreatepartnershipstoimplementtreatmentprogramsonthegroundandforresearchanddevelopmentprojects.•Developinginnovativesolutions:Wedevelopnewmedicines,diagnosticsandvectorcontrolsolutionsforschistosomiasisandmalariathroughourintegratedscienceandtechnologyapproach.Wealsoengageinbuildingcapacityandexpertiseacrossthevaluechaintostrengthenhealthsystemsandmakethemmoreresilienttohealthcrises.Products100OurAccesstoMedicineapproachOuraccessstrategyforlow-andmiddle-incomecountriesisacorepartofourbroadersustainabilitystrategy.Inthesecountries,weaimtoaccelerateandexpandaccesstoourportfolioofproducts,forexampleforcancerindicationsandneurologicalaswellasimmunologicaldisorders.Ourstrategyisalsodesignedtohelpreducelaunchdelaysbytakinglow-andmiddle-incomecountriesintospecialconsiderationinourintegrateddevelopmentplans.Withthisapproach,wealsoaim•toensurewideravailabilitybyregisteringourproductsacrossagreaternumberofcountries,particularlythosewithahighdiseaseburden;•toimproveaffordability(furtherdetailscanbefoundunderPricesofMedicines);•toextendfasteraccessibilityofourmedicinesthroughglobalhealthpartnershipsandsharedvalueinitiativesthataddresshealthsystembarrierstoaccess.EliminatingschistosomiasisasapublichealthproblemSchistosomiasis,alsoknownasbilharzia,isatropicaldiseasecausedbyparasiticworms.Thediseaseaffectsalmost240millionpeopleworldwideandkillsanestimated200,000peopleeveryyear.Morethan90%ofcasesareinsub-SaharanAfrica,significantlyburdeningpublichealthsystemsandlocaleconomies.Theultimateaimofourschistosomiasis-relatedworkistoeliminatethediseaseasapublichealthprobleminlinewiththeWorldHealthOrganization(WHO)NTDRoadmap2021-2030.WearecommittedtotheobjectivesoftheKigaliDeclarationonNTDs,inwhichparticipatingcompanies,governmentsandprivateorganizationscommittohelpingcontrolandultimatelyeliminatingthe20mostprevalentNTDs,includingschistosomiasis.Toachievetheeliminationofschistosomiasis,wehaveadoptedanintegratedstrategy,whichweareimplementinginclosecollaborationwithmultiplepartnersworldwide.Theapproachfocusesonfourpillars:•Treatment:Wedonateupto250milliontabletsofpraziquanteltoendemiccountrieseveryyearinpartnershipwithWHO.Nearly50yearsafteritsdevelopment,praziquantelremainsthestandardofcarefortheeffectivetreatmentofschistosomiasisaroundtheworld.•ResearchandDevelopment(R&D):WeadvanceR&Dtosupporttheglobalfightagainstschistosomiasis.Inparticular,wedrivecollaborativeprogramsforanextgenerationofdrugs,forthedevelopmentofarpraziquantel,apotentialnewtreatmentoptionforchildrenagedsixandunder,andfornewandmoresensitivediagnostics.Wearealsobuildingresearchexpertiseandcapacitythroughourcollaborationswithinstitutionsinendemiccountries.•Healtheducation&WASH(water,sanitationandhygiene):Webelievepreventionisthemosteffectivehealthintervention.Therefore,weinvestinbehaviorchangeinitiativestoraiseawarenessofthecausesanddangersofschistosomiasisandteachpeoplehowtopreventit.Sincethediseaseistransmittedthroughcontaminatedwater,wealsosupportWASHprojectsthataimtopreventtransmissionofthediseasebyprovidingsanitaryinfrastructuresandaccesstocleanwater.•Advocacyandpartnerships:Weareacceleratingtheprogresstowardsschistosomiasiseliminationthroughpartnershipsaswellasthroughthedialoguewiththewiderstakeholdercommunity,forexampleviatheGlobalSchistosomiasisAlliance(GSA).Products101PreventingandfightingmalariatosupporteliminationAccordingtoWHO’sestimates,nearlyhalfoftheworld’spopulationisatriskofcontractingmalaria.In2020,morethan200millioncasesofmalariaandover600,000relateddeathswererecorded,withabout80%occurringinchildrenundertheageoffive.95%ofcasesand96%ofdeathsoccurinAfrica.ThenumberscontinuetoincreaseasthefocusinmanyendemiccountrieshasshiftedtocontrollingtheCovid-19pandemic.Thereisaneedfornewproductstoovercometheproblemofincreasingdrugresistanceandtoachievethegoalofelimination.ThroughourAsOneAgainstMalariaprogram,wehelptodeliverintegratedandsustainablehealthsolutionsinvolvingtreatments,diagnosticsandpreventivemeasurestofightmalaria.RolesandresponsibilitiesOurGlobalHealthorganizationisresponsibleforGroup-wideinitiatives,programsandsponsorships.Itembedsinitiativestostrengthencapacityinlow-andmiddle-incomecountries.OurexpertscollaboratecloselywiththeLifeScience,HealthcareandElectronicsbusinesssectorstoleverageourcommonstrengthsandcompetencies.OurGlobalHealthorganizationalsofacilitatesaccesstohealthinunderservedpopulationsandleadstheimplementationofourstrategytoeliminateschistosomiasisaswellasthedevelopmentofinnovativesolutionsforinfectiousdiseasesincludingmalaria.OurAccesstoHealthunitenablesaccesstoourcompany’shealthcareportfolioinlow-andmiddle-incomecountriesthroughastrategicaccessapproachandsharedvalueinitiativesthatweimplementincollaborationwithourglobalandcountryteams.OurSchistosomiasisEliminationProgramimplementsoureffortstoeliminateschistosomiasisinclosecollaborationwithexternalpartners,suchasWHO.OurGlobalHealthInstitutecatalyzesinnovationsforglobalhealthchallengesbytranslatingscience,technologyanddigitalapproachesintotransformative,integratedhealthsolutions(treatments,diagnostics,technologies,preventivemeasures)tosupportcontrolandeliminationprogramsrelatedtoinfectiousdiseases–mainlyschistosomiasisandmalaria.Ourcommitment:ProvidingasolidbasisforaccesstohealthOurcommitmenttoexpandinghealthaccessissummarizedinourAccesstoHealthCharter.Itsetsoutthefollowingguidelineson:•Ourapproach•Pharmaceuticalproductdonationsandphilanthropicactivities•Falsifiedmedicines•R&Dforinfectiousdiseases•Equitablepricinginlow-andmiddle-incomecountries•Intellectualpropertyrights•SustainablesupplychainsEverytwoyears,theAccesstoMedicineFoundationpublishestheAccesstoMedicineIndex.TheIndexbenchmarks20oftheworld’slargestresearch-basedpharmaceuticalcompaniesonactivitiesandinitiativesthatexpertsconsidermostrelevantforaccesstomedicineinlow-andmiddle-incomecountries.TheseinitiativesProducts102rangefromresearch&developmentandintellectualpropertysharingtocapacitybuildinganddonations.Weusetheresultsofthisbenchmarkingtoinformandguideouraccesstohealthstrategy.ThelatestIndexwaspublishedinNovember2022.Werankedfifth,movingupfromtheeighthpositioninthe2020/2021ranking.Ourrankingismainlyattributabletoourstrongperformanceintheareasofresearchanddevelopment,intellectualpropertyandcapacitybuilding.Sustainableaccesstomedicinesinlow-andmiddle-incomecountriesWeapplyaccessmodelsinglobalhealth,whichincludedonations(e.g.praziquantel),andworkwithpartnerstoexplorenewmodelssuchasatcostprocurementmechanismsforupcominginnovationsforNTDs(e.g.arpraziquantel,rapiddiagnostictests).Topreventandcontrolhigh-burden,non-communicablediseases(NCDs),wesignificantlyinvestinaccessinitiativesthataddresshealthsystemgapsinlow-andmiddle-incomecountries.Weadoptapartnershipapproachtomaximizeourimpactinthiscomplexandchallengingenvironment.Thisincludesoursharedvalueprogram,whichsupportsourteamsinlow-andmiddle-incomecountriesinimplementinginitiativestoaddresshealthsystemsbarrierstopatientaccessthroughcapacitybuildingandtrainingforhealthcareprofessionals.Forexample,inthecontextofthesharedvalueprogram,theteaminArgentinacarriedoutaseriesofactivitiestoraiseawarenessabouttheimportanceofearlydetectionofheadandneckcancer,reaching4.6millionpeopleacrossthecountry.Todate,oursharedvalueinitiativeshavereached28millionpatientsviascreeningandawarenessandtrainedaround15,000healthcareprofessionals.OurcollaborationsinAfricatoestablishrobustandsustainablesupplychainsarealsocrucialforensuringsafe,effectiveandcontinuoushealthcaredelivery.OurAccessMentorshipprogram,whereexpertvolunteersfromourGlobalSupplyNetworkOrganizationshareknowledgewithlocalAfricandistributors,demonstratesourcommitmenttoimprovingsupplychainoperationsandincreasingaccesstohealthcare.In2022,wealsoinitiatedtheAccesstoHealthpitchcompetitiontoengagewithstart-upsinIndonesia,VietnamandthePhilippines.Thisinitiativeaimstoidentifyinnovativesolutionsthataddresshealthsystemgapsandmakeourproductsmoreaccessibletounderservedpopulations.Wehavealsodevelopedanevaluationtooltotracktheimpactofouraccessprogramsonpatients,healthcareprovidersandhealthsystems.ThistoolwillenableustomonitorourprogressovertimeandtocontinueintegratingrecommendationsfromtheAccesstoMedicineIndexintoourstrategy.Eliminatingschistosomiasis:FourpillarsTosupporttheeliminationofschistosomiasis,wehaveadoptedanintegratedapproachbasedonfourpillars:treatment,research&development,healtheducation&WASH,andadvocacy&partnerships.TreatmentAspartofourlong-standingpartnershipwithWHO,wearecommittedtoproducinganddonatingupto250millionpraziquanteltabletseveryyear.Thisinitiativeisamajorpartofourintegratedandcoordinatedapproachtotreatingandeliminatingschistosomiasisasapublichealthproblem.Since2007,wehavedonated1.7billiontabletstoWHOtocombatthisdisease.Theyhavebeendistributedin47endemicAfricancountries,primarilytotreatschool-agedchildren.In2022,wedonatedmorethan200milliontabletsfordistributionin27countries,24ofwhichareinsub-SaharanAfrica.DuetoCovid-19,demandandimplementationatcountrylevelwasseverelyimpacted.Products103CountriesthathavereceiveddonationsofpraziquanteltabletsAfricancountriesthathavebeenreceivingtabletdonationsfromussince2007.Africancountriestowhichwealsodonatedtabletsin2022.Countriesthathavereceivednodonatedtabletstodate.LaunchofourPraziquantelDonationProgram.Since2007,wehavedonatedover1.7billiontabletsofpraziquantel,whichisenoughtotreataround680millionschool-agedchildren.ToimprovetransparencyofthesupplychainforNTDmedicinedonations,includingpraziquantel,weuseNTDeliver,adigitaltool.Weworkwithmultiplepartnerstooptimizeefficienciesandtimelinesfromthemanufacturingsitetothenationalwarehouse,andfromtheretothedeliveryoftreatments.InKenya,atailoredtrackingsystemhasbeenimplementedtocapturereal-timedatauptothedistributionlevel,reportingthenumberoftabletsusedandanyremainingstock.In2022,thisdigitallast-miletrackingsystemwasrolledoutinsixKenyancounties.ResearchanddevelopmentInpartnershipwiththePediatricPraziquantelConsortium,wehavedevelopedapotentialnewtreatmentoption,arpraziquantel,forpreschoolchildrenagedsixandbelowwhoareinfectedwithschistosomiasis.TheclinicaldevelopmentprogramwascompletedwithpositiveresultsfromthepivotalPhaseIIItrialperformedinCôted’IvoireandKenya.InNovember2022,wesubmittedtheregulatoryapplicationtotheEuropeanMedicinesAgency(EMA),whichstarteditsreviewprocess.AscientificopinionfromEMAisexpectedinlate2023.ThiswillfacilitateWHOpre-qualificationandlocalregistrationsinAfricancountries.Weplantostartthelaunchphasein2024andtoprovidethedrugthroughanewprocurementmechanismcurrentlyunderdevelopmenttoensureequitableandaffordableaccesstothisnewtreatmentoption.Furthermore,theongoingADOPTimplementationresearchprogramiscollectingdataandbestpracticesthatwillpavethewayforfuturelarge-scaledeliveryinendemiccountries.In2022,wealsoprogressedwiththedevelopmentofnewdrugstopreventandcureschistosomiasis.Apromisingcandidateiscurrentlyinpre-clinicaldevelopment.Tosupportdrugdiscovery,wehaveintroducedinnovativeartificialintelligenceandepidemiologymodelingfortargetedtreatmentsandstartedtodevelopnewmedicaldevicetechnologiestodiagnoseschistosomiasis,includingfemalegenitalschistosomiasis.Products104Inthiscontext,thereisstillacriticalneedformoresensitivediagnosticstodetectcasesinlow-endemicitysettingsfortheeffectivemanagementandsurveillanceofschistosomiasisandastoolstoeliminatethedisease.Therefore,wecontinuedourcollaborationwiththeFoundationforInnovativeNewDiagnostics(FIND)andaconsortiumofpartnerstodevelopasensitiverapiddiagnostictesttoimproveschistosomiasismappingandcasedetection.Allourresearch&developmentprogramsintegrateandinvestinscientific,educationalandtraininginitiativestoenhanceexpertiseandcapacityinlow-andmiddle-incomecountries.MoreinformationcanbefoundunderBuildinghealthcapacityandawareness.HealtheducationandWASHOurhealtheducationprojectwiththeNALA(NeglectedTropicalDiseaseAdvocacy,Learning,Action)FoundationfocusesonsouthwesternEthiopia.ItincludesWASHactivitiesandaimstopromotelong-termsustainablebehavioralchangeviaacommunity-basedapproachtoeliminateschistosomiasisandotherneglectedtropicaldiseases.In2022,welaunchedtworesearchprojectstoserveasproofofconcept:community-basedschistosomiasissnailmapping,andoperationalresearch.Thisresearchcomparestwodistrictstoevaluatetheeffectivenessofbehavioralchangeincombinationwithmassdrugadministrationversusmassdrugadministrationalone.Resultsareexpectedin2023.Despitethechallenges,includingtheCovid-19pandemic,securityissuesandpoliticalinstability,theNALAFoundationwasabletocontinuetheimplementationofschool-,community-andWASH-basedinterventions.Animpactevaluationintwoofthetargetdistrictsshowedameaningfuldecreaseintheprevalenceofschistosomiasissincethestartoftheprogramin2017.InGhana,weimplementedourcollaborativeaccesstowaterprogramtoimproveWASHincommunities,includingschoolsandhealthcarefacilities,tocombatwaterborneinfectiousdiseasessuchasschistosomiasis.Wealsotrainedhealthworkersinschistosomiasiscasemanagement.PerformedinpartnershipwithWorldVision,theprogramincludesanimplementationresearchstudythatanalyzesWASHinhealthcarefacilitiesandwaterqualityinselecteddistricts.Theresultsshowthatonly17%ofthehealthcarefacilitieshaveaccesstoimprovedwatersupplywithinthepremises;toaddressthischallenge,wearepartneringtoprovideWASHto15institutionsbyJuly2023,withanestimatedoutreachofabout24,000people.MoreinformationcanbefoundunderBuildinghealthcapacityandawareness.AdvocacyandpartnershipsWeworkwithinternationalandlocalpartnerstoadvanceschistosomiasiscontrolandelimination.WecontinuetosupporttheGlobalSchistosomiasisAlliance(GSA),acoordinated,multi-sectoralefforttocombatthecomplexdisease.TheroleoftheGSAascentralplatforminallmattersconcerningschistosomiasishasbeenconsiderablystrengthenedoverthepastfewyears.In2022,theGSAdevelopedanewfour-yearstrategy,whichlaysouttheagendafortheglobalschistosomiasiscommunityontheroadtoelimination.Malaria:TreatmentandpreventionDevelopingnewtherapeuticsolutionsAspartofour“AsOneAgainstMalaria”program,wearedevelopinganewdrug(M5717)withthepotentialtobeapromisingtreatmentandpreventiveoptionformalariaduetoitsactivityinseveraldifferentstagesoftheparasite’slifecycle.ThedrughassuccessfullycompletedtwoclinicalPhaseIstudiesasasingleagentforcureandprevention,andwepublishedtheresultsinpeer-reviewedscientificjournals(e.g.TheLancetInfectiousDiseases).In2022,wejoinedthePAMAfricaConsortiumandarepreparingforthestartoftheProducts105clinicalPhaseIIstudyasacombinationtherapyforcurein2023.Inaddition,aclinicalPhaseIItrialforpreventionisbeingpreparedthroughanewpartnership.Preclinicalresearchandnewtechnologies,includinganew3Dculture-basedhepaticplatformusedtoinvestigatetheactivityofourdrugcandidate,havesupportedtheclinicaldevelopmentprogram.PreventingandcontrollingmalariatransmissionPreventivemethodssuchasinsectrepellentsarepartofthestrategictoolkittocombatmalaria.WearetestingourinsectrepellentIR3535®forpotentialuseinmalaria.IR3535@isalreadyusedforprotectionagainstinsectandtickbitesthatcantransmitdiseasessuchasLymedisease,Zika,denguefever,andchikungunya.ThelaboratorytestsconductedinGhanaevaluatedtheefficacyofanewformulationofIR3535®forlonger-lastingprotection.Basedonthepositiveresults,anadditionaltestisbeingcarriedoutincommunitiestodeterminehowIR3535®performsinreal-lifesettings.Thestudyaimstoconfirmthatthisinsectrepellentisasafeandefficacioussolutiontopreventmalariainallpopulations,includingpregnantwomenandbabies.InpartnershipwithlocalinstitutionsinAfrica,wehaveestablishedPAVON(Pan-AfricanVivaxandOvaleNetwork),anetworkofcentersofexcellencefortheepidemiologicalsurveillanceandscientificresearchonmalaria.AcrossmorethantenAfricancountries,PAVONsupportspolicymakingandofferstrainingtoAfricanscientists.EngagingstakeholdersPartnershipsanddialoguearecriticaltoaddressingglobalhealthchallengesandimprovingaccesstohealthcare.Ourpartnersincludemultinationalorganizations,governmentagenciesandNGOs,aswellasacademicinstitutions,healthindustryassociations,privatecompanies,andindependentglobalhealthexperts.In2022,wecontinuedtoengagewithourpartnersandkeystakeholders,includingWHO,toadvanceglobalhealthdiscussionsandaddresssharedchallenges,includingneglectedtropicaldiseases.WecollaboratewithpartnerssuchastheENDFund,WIPOandDNDi,aswellaswithacademiainAfricancountries.Weengageinconsortiaofpartners,suchasthePediatricPraziquantelConsortium,alliances,liketheSwissMalariaGroup,andadvocacygroups,includingtheUnitingtoCombatNTDsandGSA.Inaddition,weworkcloselywithfoundationsthatsupportscientificresearchandhealthaccess,includingtheBill&MelindaGatesFoundationandtheAccesstoMedicineFoundation.Wehavealsojoinedforceswithfunders,includingtheGlobalHealthInnovativeTechnologyFund(GHIT)andtheEuropeanandDevelopingCountriesClinicalTrialsPartnership(EDCTP).Wealsostrengthenourcollaborationswiththescientificcommunitythroughpublications,patentsharingandbytakingactiverolesatinternationalevents.Forexample,in2022,weorganizedapaneldiscussionwithexpertsonschistosomiasisattheGenevaHealthForum(GHF).In2022,ourCEOHealthcarerepresentedourcompanyattheGatesCEORoundtablethatdiscussedthestrategytoexpandaccesstomedicinesinlow-andmiddle-incomecountries.Onseveraloccasions,wepresentedtheprogressofthePediatricPraziquantelConsortiumprogramthatwelead,includingattheEuropeanCongressofClinicalMicrobiologyandInfectiousDiseases(ECCMID),theGlobalHealthEDCTP3LaunchEvent,andtheInternationalSymposiumonschistosomiasis.WealsoattendedtheAnnualNTDNGONetworkandtheCoalitionforOperationalResearchonNeglectedTropicalDiseases(COR-NTD)toaddressthespreadofmisinformationaboutNTDs.Products106OpeninnovationsharingWehavearesponsibilitytoimproveglobalaccesstohealththroughourtechnologicaladvances.Wesupportareliableandtransparentlegalframeworkforintellectualpropertythatenablessustainableinvestmentinresearchanddevelopment.OurapproachtosharingandprotectingintellectualpropertyTheresponsibletreatmentofintellectualpropertyisnotabarriertohealth,butratherensuresthesafetyandhighqualityofmedicinesforpatientsworldwide.Almostnoneofthemedicinesthataddressthehighestburdenofdiseaseinlow-andmiddle-incomecountriesareprotectedbypatents.Studiesindicatethatbetween90%and95%ofthepharmaceuticalproductsontheWHOModelListofEssentialMedicinesareoff-patent.Wesupportasustainableapproachtointellectualpropertythatdrivesinnovationandenablesaccesstohealth.Werefrainfromenforcingpatentsinamajorityoflow-andmiddle-incomecountries.Inmarketswherewedoregisterproductpatents,wearetransparentandcommittedtosharingdatatothegreatestpossibleextentandtoimprovingpublicaccesstoclinicalstudydata.WereportonthepatentstatusofourproductsviathepubliclyaccessibledatabasePat-INFORMED.Furthermore,wesupportvoluntarylicensingagreements,includingnon-exclusivevoluntarylicenses,legallybindingnon-assertioncovenantsandclausesthataimtowidenaccesstohealth.Wealsosupporttheconceptofpatentpoolsandbelievethattheseshouldbestructuredtoimproveaccesstomedicines,preventanti-competitivebehaviorandovercomegeographiclimitations.Weconsiderjoiningpatentpoolsthatarerelevanttoourportfolioandmeetallourefficacy,qualityandsafetyrequirements.Throughouropeninnovationresearchprojectsforglobalhealth,wegrantaccesstosmallsectionsofourchemicalcompoundlibraries.Indoingso,weaimtoacceleratecollaborativeresearchprogramsthatdevelopnovelR&Dplatformsinsearchofnewactiveingredientsforinfectiousdiseases.RolesandresponsibilitiesOurOpenInnovationinitiativesarecollaborativeandcross-functionaleffortsthatfacilitatetheexchangeofintellectualproperty.Weaimtoaccelerateearlydiscoveryindiseaseswithhighunmetneedsthroughintellectualpropertysharing.Wehopetofosterthediscoveryofnewgenerationsofhealthsolutionsthatwilladdresstheneedsofthemostvulnerablepopulations,withaprimaryfocusontheneglectedtropicaldiseaseschistosomiasisandonmalaria.Ourcommitment:supportingtransparentandreliableframeworksWesupportTRIPS,aninternationalagreementadministeredbytheWorldTradeOrganization(WTO),whichaddressestrade-relatedaspectsofintellectualpropertyrights,aswellasTRIPSaddenda,suchastheSpecialDeclarationontheTRIPSAgreementandPublicHealth.ThisagreementextendsthedeadlinefortheleastdevelopedcountriestoapplyTRIPSprovisionstopharmaceuticalpatentsuntil2033.Products107InitiativeimprovesaccesstopatentinformationWeareafoundingmemberofthePatentInformationInitiativeforMedicines(Pat-INFORMED),aglobalgatewaytomedicinepatentinformation.Pat-INFORMEDfeaturespatentinformationonsmall-moleculedrugsforcardiovasculardiseases,diabetes,hepatitisC,HIV,cancer,andrespiratorydisordersaswellasanyproductsontheWHOModelListofEssentialMedicinesthatarenotwithinthesetherapeuticareas.CreatingresearchopportunitiesOurOpenGlobalHealthLibrarypubliclyshares250compoundsfromourproprietarychemicallibrarythatmaybeusedforinfectiousdiseasesresearch.Sinceitslaunchin2020,thelibraryhasbeenaccessed28timesforscreeningin18indications.WewereamemberoftheWIPORe:SearchConsortiumuntiltheinitiativewasterminatedattheendof2022.Ourcontributionssupportedscreeninganddrugdiscoveryactivitiesatinstitutionsinlow-andmiddle-incomecountriestoidentifypotentialinvestigationalcandidatestotreatneglectedtropicaldiseases,suchasschistosomiasis.Thisinitiativealsoenabledthetransferofknowledgeandexpertiseforresearch,mainlyinandforAfrica.SchistosomiasisresearchgrantsWearededicatedtoacceleratinginnovationandadvancingscienceforthebenefitofthemostneglectedpopulations.Thatiswhywecatalyzeresearchinanopeninnovationspiritandwiththeintentionofreducingfinancialhurdles.Forexample,throughourSchistosomiasisResearchGrantInitiative,establishedin2021,weawarded15researchprojectswith€30,000each.In2022,allprojectswerelaunched,andinterimreportsontheirprogresshavebeenshared.DrugsforNeglectedDiseasesinitiativeWearecollaboratingwiththeDrugsforNeglectedDiseasesinitiative(DNDi)and,throughthememorandumofunderstandingwithDNDiandtheSwissTropicalandPublicHealthInstitute,wearecontinuingourdialogueforresearchinthefieldofschistosomiasis.In2022,DNDiheldseveralexpertmeetingsseekingtoestablishatargetproductprofileforantischistosomaldrugs.Moreinformationonourcollaborationsregardingopeninnovationforglobalhealthcanbefoundonourwebsite.Products108PricesofmedicinesIn2021,pharmaceuticalspendingaccountedforbetween6%and32%oftotalhealthspendingbyOECDcountries.Atthesametime,advancesintheresearchanddevelopmentofinnovativemedicinesaresignificantlytransformingthehealthcarelandscape,allowingchronicdiseases–thegreatestcostdrivers–tobetreatedmoreeffectivelyandaffordably.OurapproachtopricingmedicinesTohelpensurethatallpatientshaveaccesstothemosteffectivemedicinesfortheirneeds,weareworkingtopreventcostfrombecomingabarriertotreatment.Therefore,weadaptourmedicinepricesaccordingtopeople’sabilitytopayindifferentgeographicandsocioeconomicsegments.Wearecommittedtofair,flexibleandsustainablepricing–bothwithinandacrosscountries.Wethereforeadaptourpricesbasedonlocalmarketconsiderations,suchasunmetmedicalandtreatmentneeds,healthsystemcapacity,infrastructureandsocioeconomicstandards.Thisapproachinvolvesworkingcloselywithgovernmentsandotherstakeholders.Inaddition,wecontinuouslymonitordynamichealthcareenvironmentsandmarkets,pricingandreimbursementsystemsaswellaslegalandregulatoryguidelines,adjustingourpricesasnecessary.Weconductpriceanalysesannuallytovalidatepricethresholdsandprovideguidanceonlocalpricingtooursubsidiariesforthefollowingyear.Theaimistoensuretheymeetpatientaccessneeds,takingaconsistent,data-drivenapproach.Wealsomakeourproductsaffordabletopatientsinlow-andmiddle-incomecountrieswithanequitablevalueandaccessstrategythatincludesparticipatingingovernmenttenders,providingflexiblepricing,establishinghigh-qualityaffordablebrandsorbrandedgenericsandoperatingpatientaccessprograms.Furthermore,wesupportinnovativerisk-sharingagreementsandareworkingtoimprovedataefficiencyinhealthsystemsinordertoachieveanoptimaldistributionoffundsandresources.RolesandresponsibilitiesOurGlobalMarketAccessandPricing(GMAP)unitevaluatesmarketlaunchpricesincoordinationwiththerespectivefranchises.TheteamreportsdirectlytoamemberofourHealthcareExecutiveCommittee.TheGMAPunitsystematicallyevaluatesourmedicineportfoliosandappliesequalaccessinitiativestothem.Ourlocalaffiliatesareresponsibleformanagingpricesandadaptingthemtoevolvinglocalconditionsincompliancewithourpricinggovernanceandthedefinedpriceapprovalprocess.Ourcommitment:MedicinepriceguidelinesandprinciplesTheaffordabilityofourhealthsolutionsispartofourbroaderpatientvalueproposition.OurmedicinepricingadherestothestipulationsofouroverarchingAccesstoHealthCharterandisdefinedindetailinaninternalguideline.Additionally,ourPatientAccessProgramsPolicysetsoutstandardsforofferingmedicinesataffordableprices.Products109Value-basedcontractingmodelsWearecommittedtoadvancingvalue-basedhealthcarethroughpricingandcontractingmechanismsthatfullycomplywithallapplicablelocallawsandregulations.Incollaborationwithpayers,suchashealthinsurancecompanies,wehavedevelopedvariousproduct-andmarket-specificreimbursementandcontractingmodels.Thesehelptoprovidepatientswithpromptaccesstoourinnovations.InGermanyandIreland,wecontinuedin2022withinnovativerisk-sharingagreementsthatprovideimmediateaccesstoMavenclad®forpatientswithmultiplesclerosis.Inaddition,thevalue-basedcontractingmodelforMavenclad®hasalsobeenimplementedinfourmorecountriesinEurope,LatinAmerica,andtheMiddleEastwithmorecountriesunderassessmentforfurtherimplementation.Besidesthat,wefacilitatedaroundtablewithpayersinArgentina,Brazil,Colombia,Germany,Italy,andSpaintodiscussthecurrentandfuturelandscapeofthevalue-basedcontractingmodelforMavenclad®.Equitablevalueandaccessapproachestoservelow-andmiddle-incomepatientsWeworkinclosepartnershipwithgovernmentsandotherstakeholdersoninnovative,differentialmedicinepricingschemes.Inaddition,wesupplyproductsataffordablepricestocertaincountriesinAfrica,Asia,LatinAmerica,andtheMiddleEast.StrategictenderactivitiesOurpharmaceuticaltenderexcellenceinitiativeoffersastrategictenderframework.Thisincludesaweb-basedsystemthathelpscountryteamsincreasequalityandagilityintenderdecisions,whileimprovingperformancetrackingandcollaboration.Weregularlyparticipateingovernmenttendersforproductsusedinpublichospitalsservinglow-incomepatients.Manyofthesetenderstakeplaceinlow-tomiddle-incomecountries.High-quality,affordablesecondbrandsForsomeofourexistinghigh-qualityproducts,wehavecreatedsecondbrandsataffordableprices,particularlyincountrieswithalargepercentageofpatientswithverylowincomes.Forexample,secondbrandsforthebetablockerbisoprolol(Concor®)areavailableataffordablepricesinBrazil,Chile,Poland,andSouthAfrica.PatientaccessprogramsWeoperatepatientaccessprogramsthatenableustooffercertainproductsataffordablepricesinseveralcountries.InIndia,weofferaprogramforouroncologydrugErbitux®,forexample,toprovidefinancialassistancetoeligibleunderprivilegedpatients–inlinewithlocallawsandregulations.Sincetheinitiationoftheprogramin2017,ithasbeenmadeavailabletoover5,000patientsinthecountry.In2022alone,morethan1,500patientsbenefitedfromtheprogram.In2022,wecontinuedtocollaboratewithnationalpharmacychainsinMexicotoprovidepatientswithadherencesupport,discountsonbloodtestsandeducationonprediabetesanddiabetes,thyroid,cardiovascularandobesitydisorders.Toimproveadherence,inCentralAmerica(CostaRica,theDominicanRepublic,Guatemala,Honduras,Nicaragua,andPanama),weofferadigitalloyaltyprogramfortheaforementionedconditions.TostrengthenhealthsystemsandraisepatientawarenessinChina,wesponsoredtheHypertensionCenterProgramin2022,whichisorganizedbytheChinaCardiovascularAssociation.Theprogramaimstoelevateawarenessofstandarddiagnosisandtreatmentforpatientswithhypertensionandincreasebloodpressuretargetachievement.Products110Buildinghealthcapacity&awarenessWebelievethatinordertoachievehealthforall,itisimperativetohelphealthprofessionalsandpatientsmakeinformeddecisionsabouttreatmentpaths.Thissupportincludesbuildinghealthcapacityaswellasawareness.Asaprerequisite,healthsystemsneedtobestrongandbenefitfromsolidcollaborationstobuildresilienceagainstcrisesandemergencies.OurapproachtobuildinghealthcapacityandawarenessCapacity-buildingandawareness-buildingplaykeyrolesinourapproachtoimprovingaccesstohealth.Weempowerpatients,communities,scientists,andhealthcareprofessionalsbyprovidingappropriatetools,skillsandinformationsothattheycanmakeinformeddecisionsaboutprevention,diagnosis,treatment,care,anddiseasemanagement.Theprivatesectorisacrucialpartnerinrespondingtoglobalhealththreats.Beyonddevelopinginnovativehealthsolutionsandapplyingadaptedmechanismsforaccesstomedicines,wesupportcountriesinbuildingupinfrastructureandexpertiseforpreparednessoflocalhealthsystemstodelivercaretoallpatientsinneedandaddressemergencieseffectively.Thatiswhyweinvesttosustainablystrengthentheprevention,preparednessandresiliencecapabilitiesofhealthsystemsinlow-andmiddle-incomecountries.Oureffortsincludethefollowingaspects:•Increasingcountrypreparednessbyenhancingscientificandhealthcareworkforcecompetenciesandcapacitiesthroughanetworkofexperts.•Formingpartnershipstoextenddiseaseawarenessandaddressthechallengeofenablingconsistentaccesstomedicinesforallpatientsinneed.•Optimizingthemonitoringandevaluationofhealthinitiativesatcountrylevelthroughdataprocessinganddigitalization.Weoperationalizetheseelementsalongtheentirevaluechaininourcollaborativeprogramsandthroughourhealtheducationinitiativeswithourlocalpartners.Wealsocollaboratewithcommittedglobalpartnerstoconducteducationalcampaignsforprevention,earlydiagnosisandawareness.Wefocusprimarilyonthediseasesforwhichwehavethegreatestexpertise.Ouractivitiesincludespecificinitiativesthatpromoteawarenessforcarersaswellaswomen’shealthandeconomicempowermenttoexpandtheiraccesstohealth.RolesandresponsibilitiesOurGlobalHealthorganizationleadscollaborativecapacitystrengtheningandawarenessinitiativesinlow-andmiddle-incomecountriestosupportourmissionofimprovingthehealthofthemostvulnerablepopulations.OurawarenessinitiativesarealignedwithourGroupstrategicdirectionandplannedbythevariousbusinesses.Theyareimplementedeitheronglobaland/orlocallevels,withprojectsorganizedaccordingtothespecificneedsoftherelevantcommunity.Oursubsidiariesarealsoresponsibleformobilizingourglobalcampaignslocally.Products111Ourcommitment:accesstohealththroughawarenessandeducationOurstrategyforaddressingaccesstohealthincorporatesthetopicofawarenessandeducationasdetailedinourAccesstoHealthCharter.OurcampaignsandinitiativesarealsosubjecttotherespectivemarketingprinciplessetoutinguidelinessuchasourPharmaCodeforConductingPharmaceuticalBusinessandPharmaceuticalOperations.Inaddition,ourcampaignsaregovernedbyinternalpoliciesthatguideourinteractionswithhealthsystemsandbycommunicationmaterialreviewprocessesthatensurewecomplywithglobal,regionalandnationalrulesandregulations.WorkingwithpartnerstoachievemoreOurGlobalHealthportfolioconsistsofcollaborativeinitiativesthataimtostrengthenthecapacityandeffectivenessofhealthsystemsinlow-andmiddle-incomecountries.Wesupportworkinthesefourkeyareas:LocalresearchanddevelopmentWebuildscientificcapacitythroughourR&Dprogramsandfocusprimarilyonschistosomiasisandmalaria.Someexamplesinclude:•ClinicaltrialsinAfricanhealthcenterstoinvestigatearpraziquantelasapotentialnewtreatmentoptionforpre-schoolchildreninfectedwithschistosomiasis.ThesetrialshaveenabledlocalhealthcareprofessionalstoacquirevaluableexperienceinGoodClinicalPractice,whichtheycanapplyinfuturestudies.•OurpartnershipwiththeUniversityofCapeTownformalariadrugdiscoveryactivitiesthattransfersscientificexpertiseandsupportstheemploymentandtrainingoftalentedlocalyoungscientists.•PAVON(Pan-AfricanVivaxandOvaleNetwork),anetworkofcentersforexcellenceonmalariasurveillanceandpandemicpreparednessimplementedinmorethantenAfricancountries.TheprojectofferstrainingtoAfricanscientistsinacollectiveefforttostrengthenlocalhealthsystemstotreatallformsofmalaria.ManufacturingandsupplychainsWemanufacturesomeofourproductsdirectlyintheregionswheretheyareneeded.Wealsostrengthenlocalmanufacturingandsupplychaincapacitiesthroughtechnologyandbestpracticetransfers.Ouraimistoincreaseservicequalitywhileensuringsafe,effectiveandreliableaccesstoqualitymedicineswheretheyareneededmost.•Weproducepraziquantel,thestandard-of-caretreatmentforschistosomiasis,inourproductionfacilityinMexico,toenabletheprovisionofupto250milliontabletsperyeartotreatthedisease,mainlyinschool-agechildren.•WeapplyalocalproductionapproachinourworkwiththePediatricPraziquantelConsortiumtohelpcountriesbecomeself-sufficientandservelocalpopulationsinneed.Followingour2021manufacturingagreementwithUniversal,acontractmanufacturerinKenya,wearepreparingforthelarge-scaleproductionofarpraziquanteluponitsregistration,inadditiontoproductionbyFarmaguinhosinBrazil.•WepartnerwithBusinessforHealthSolutions(BHS)tobuildsustainablesupplychainsoflocaldistributorsinAfricathroughourAccessDeliveryMentorshipprogram.In2022,westartedthreecollaborationswithdistributors,thusatotalofsixdistributorsinfivedifferentcountries.Products112EducationandawarenessraisingWeinvestineducationandbehavioralchangeinitiativesthatraisediseaseawareness.Examplesofthoseinitiativesinclude:•InEthiopia,weoperateajointhealtheducationandWASHprojectinpartnershipwiththeNALAFoundationandtheEthiopianMinistryofHealth.Weareaimingtoreach50,000communitymembersin8,000householdsandmorethan170,000school-agechildrenindistrictswiththehighestprevalenceofschistosomiasis.•InpartnershipwiththeCardiologicalSocietyofIndia(CSI),thecountry’slargestprofessionalcardiologyassociation,weimplementedaninitiativethatraisesawarenessinpopulationswithahighriskofcardiovasculardiseases.•Tosupportbehavioralchangeforschistosomiasiselimination,wehaveintroducedtheBilharziaStorytellingLab.Thelabbringstogetherstorytellers,healthexpertsandcommunityleadersfromonecountrytodevelopcreativecommunicationproductsthatprovideaccessibleandtailoreddiseaseinformationtoriskgroups.Weawardthemostpromisingsolutionwitha€10,000prize.Weintendtoapplytheconceptinseveralendemiccountriesinsub-SaharanAfrica.ThefirstlabtookplaceinKenyain2021,thesecondinNovember2022inRwanda.HealthinfrastructureandtrainingWebuildinfrastructureandsupporttrainingwithastrongfocusonAfricancountries.In2022,we•supportedthemanagementofintegratedmobilehealthunitsinCameroontodiagnoseandtreatfemalegenitalschistosomiasis,HIV,HPV,andcervicalcancerforwomenaged14to30.Thisinitiativeincludestrainingtoenhancetheskillsandexperienceoflocalhealthprofessionals;•setupmicroscopystationsinGhana,BurkinaFasoandBotswanaandprovidedtrainingsessionstoimprovelocalhealthworkers’abilitytodetectmalariaandotherdiseasesthatcanbediagnosedviabloodsamples;•implementedourcollaborativeaccesstowaterprograminGhanatoimprovehealthcareinfrastructurethroughsafewaterservicesinhealthcentersaswellastrainingtohealthworkersonschistosomiasiscasemanagement;•partneredwiththeH3DFoundationattheUniversityofCapeTowntoco-createaMassiveOpenOnlineCourseonresearchanddevelopmentforyoungAfricanscientists.ParticipantsearnacertificationaftertakingthecourseandcanalsojoinaMentorshipProgramdeliveredbyR&Demployeesofourcompany.MoreinformationcanbefoundunderGlobalHealth.GlobalawarenesscampaignsWeregularlyconductcampaignstoraiseawarenessofvariousdiseasesacrosstheglobe,oftenincollaborationwithpatientadvocacyandcarergroups.Wefocusondiseasesthatarealignedwithourcorecompetencies,expertiseandexperiencealongthehealthvaluechain.Thesediseasesincludecancer(specificallycolorectalcancer,headandneckcancerandbladdercancer),thyroiddisorders,diabetes,infertility,andmultiplesclerosis.Throughouttheyear,wealsoconductawarenesscampaignsthatfocusontropicaldiseases,suchasschistosomiasisandmalaria.Products113Weactivelyparticipatedinseveralawarenessdays:January30:WorldNTDDayWorldNTDDaybringstogethercivilsocietyadvocates,communityleaders,globalhealthexperts,andpolicymakers,whocollaborateacrossdisciplinestocontrolandeliminateneglectedtropicaldiseases.February4:WorldCancerDayFebruary4marksWorldCancerDay,anannualinitiativeledbytheUnionforInternationalCancerControl(UICC).Itaimstoraisecancerawarenessandimproveitsprevention,detectionandtreatment.In2022,thethemewas“CloseTheCareGap”.March22:WorldWaterDayHeldon22Marcheveryyearsince1993,itcelebrateswaterandraisesawarenessofthe2billionpeoplelivingwithoutaccesstosafewater.April7:WorldHealthDayWorldHealthDayraisesawarenessaboutaspecifichealththemeeachyeartohighlightapriorityareaofconcernfortheWorldHealthOrganization.In2022,thethemewas“OurPlanet,OurHealth”.April25:WorldMalariaDayWorldMalariaDayhighlightstheneedforcontinuedinvestmentinandsustainedpoliticalcommitmenttomalariapreventionandcontrol.May25-31:ThyroidAwarenessWeekIncollaborationwiththeThyroidFederationInternational(TFI),theannualawarenesscampaign,whichusedtheslogan“DoYouSpeakThyroid?”in2022,focusedonpreventinginformationfrombeinglostintranslationbetweenthyroidpatientsandtheircaregiverteams.May30:WorldMultipleSclerosisDayWorldMultipleSclerosisDayisanannualawarenessdaybytheMSInternationalFederation(MSIF).ItbringstheglobalMScommunitytogethertosharestories,raiseawarenessandcampaignwitheveryoneaffectedbymultiplesclerosis.In2022,itfocusedonsupportingthecommunitytocreatemeaningfulconnections.July27:WorldHeadAndNeckCancerDayWorldHeadandNeckCancerDayisanopportunitytoinformthegeneralpublicaboutheadandneckcancerandrecognizetheimpactithasonthoseaffectedinthecommunity.August1:WorldLungCancerDayTheForumofInternationalRespiratorySocietieshasobservedWorldLungCancerDayeveryyearsince2012toraiseawarenessabouttheriskfactorsofthedisease.September29:WorldHeartDayWorldHeartDaywasestablishedbytheWorldHeartFederationandincreasesawarenessaboutcardiovasculardiseasesandhowtocontrolthemtonegatetheirglobalimpact.Products114November1-7:EuropeanFertilityWeekEuropeanFertilityWeekraisesawarenessaboutinfertilityandconveystheissuesfacedbypeoplewithinfertility.ItalsoaimstoremovethestigmaaroundinfertilityandamplifytheissueofunequalaccesstotreatmentinEurope.November10:WorldScienceDayWorldScienceDayforPeaceandDevelopmenthighlightsthevitalroleofscienceinsocietyandtheneedtoengagethebroaderpublicindebatesonemergingscientificissues.Bylinkingsciencemorecloselywithsociety,WorldScienceDayforPeaceandDevelopmentaimstoensurethatcitizensarekeptinformedaboutimportantscientificdevelopments.November14:WorldDiabetesDayWorldDiabetesDaywascreatedinresponsetogrowingconcernsabouttheescalatinghealththreatposedbydiabetes.The2022campaign,thethemeofwhichwas“EducationtoProtectTomorrow“,aimedtokeepdiabetesinboththepublicandpoliticalspotlight.Purpose-driveninitiativesHealthyWomen,HealthyEconomiesandEmbracingCarers®aretwoinitiativesweareusingtopromoteawarenessofpublichealthissuesextendingbeyondpatients.Theinterconnectednessofbothinitiativesisrootedinsharedthemesandgoals.Themajorityofunpaidandunderpaidcaregivinghoursgloballyareprovidedbywomenandgirls.Throughtheseinitiatives,weaimtobothpromoteandsupportwomen’shealthandeconomicempowermentandexpandaccesstohealth.HealthyWomen,HealthyEconomiesToempowerwomentoovercomethechallengesofcommunicableandnon-communicablediseasesandreachtheireconomicpotential,wearecommittedtotheHealthyWomen,HealthyEconomiesinitiative–apublic-privatepartnershipfoundedwithintheAsia-PacificEconomicCooperation(APEC).Since2019,theAPECHealthyWomen,HealthyEconomiesResearchPrize,whichwesupport,hashighlightedsex-disaggregatedresearchthatenablespolicymakers,businessleadersandotherstakeholderstoidentifyandimplementmeasuresthatimprovewomen’shealthinAPECeconomies.The2022prizeofUS$20,000wasawardedtoZhengRuimin,DirectoroftheWomen'sHealthCareDepartmentatChina’sNationalCenterforWomenandChildren'sHealth,foraninnovativestudythatdevelopedacomprehensive,accessibleandaffordablematernaldepressionscreeningstrategy.EmbracingCarersEmbracingCarers®isourglobalinitiativeledincollaborationwithprominentcaregivingorganizationsfromaroundtheworld.EmbracingCarers®isdesignedtoincreaseawareness,actionanddiscussionaroundthefrequentlyoverlookedneedsofunpaidcaregivers.Tofollowuponour2021survey,EmbracingCarers®workedwithglobalcareradvocacyorganizationstoconductfocusgroupswithcarerstobetterunderstandtheirproblemsandwhatcanbedonetoaddresstheirneeds.Thisinformationformsthebasisofplanningtoprovidegreatersupportforcaregivers,particularlywithrespecttotheirmentalandemotionalhealthneeds.Products115Productsafety&qualityChemicalproductsafetyManyofourchemicalproductshaveintrinsichazardousproperties.Therefore,weareworkingtominimizethepotentialriskstobothhumanhealthandtheenvironmentthatarisefromtheiruse.Wecontinuouslystrivetoimprovethesafetyofourproductsandreducetheenvironmentalimpactofourbusinessesthroughinnovativesolutionsanddigitalcommunicationtools.OurapproachtosafechemicalproductsProductsafetyisoneofourtoppriorities.Duringtheproductdevelopmentphase,weinvestigatethepotentialadverseimpactsofchemicalsubstances.Alongtheentirevaluechainofourproducts–fromrawmaterialstomanufactureandcommercialization–weproviderelevantinformationontheirhazardouspropertiesandhowtodealwiththem.Theseinstructionsfacilitatethesafehandlinganduseofourproductsinlinewithallregulatoryrequirements.Wepublishthisinformationprimarilyontherelevantdigitalchannels.Aspapersafetydatasheetsarestillcommoninsomecountries,wecanalsoprovidetheseuponrequestthroughourcustomerservice.WesupporttheimplementationoftheEuropeanGreenDealandarepreparingtointegratetherelevantchemicalssustainabilityaspectsintoourbusinessstrategies.WearecurrentlydevelopingaportfoliosustainabilityassessmentframeworkforourElectronicsandLifeSciencebusinesssectorsandarepreparingtotestitssuitabilityandpracticabilityinpilotprojects.RolesandresponsibilitiesOurLifeScience,HealthcareandElectronicsbusinesssectorshaveorganizationalstructurestoimplementourproductsafetystrategyinlinewiththeirrespectivebusinessrequirementsandcustomerneeds.Thisapproachincludesregisteringchemicals,classifyinghazardoussubstances,andhighlightingrisksusingsafetydatasheets,labelsanddigitalcommunicationtools.OurGroupstandardsprovideaframeworkforgoverningtheset-upofeffectiveoperationalprocessesforproductsafety,hazardcommunicationandchemicalsregulatorycompliancethroughoutourbusinesssectors.Inaddition,theGroupChemicalsRegulationsCouncilfosterscross-sectoralalignmentofstrategicregulatoryactivitiesrequiredforexistingandemergingchemicalsregulationsaswellassustainabilityandidentifiespotentialimpactsforourcompany.Thisapproachalsoappliestoinnovativefieldsofdevelopmentsuchasnanomaterials,whichweusewiththegreatestofcareinlinewiththeprecautionaryprinciple.Furthermore,ourGroup-widePolicyforUseandHandlingofNanomaterialsprovidesthenecessaryguidanceontheuseofthesematerials.Products116LegalrequirementsandinternalguidelinesOurinternalguidelinesdefinetheroles,responsibilitiesandbasicprocessesrequiredtocomplywithnationalandinternationalregulations.Inaddition,wehavealsoendorsedvoluntarycommitmentsofthechemicalindustrysuchastheResponsibleCare®GlobalCharter.Thelegalrequirementsrelevanttocompliancewithchemicalsregulationsaremainlyrelatedtohazardcommunicationaswellaslocalandregionalchemicalsregistrationactivities.Theserequirementsareexpandingglobally,withagrowingnumberofcountriesadaptingtheirlocalrulesinlinewithexistingregulatoryframeworkssuchasREACH.Wearewellplacedtocomplywithregulationsofthiskindinimportantmarkets,suchasChina,India,Japan,Korea,andTaiwan.UsingtheGloballyHarmonizedSystemforClassificationandLabellingofChemicals(GHS)forhazardcommunicationallowsustostreamlineourinternalprocessesandprovideconsistent,harmonizedandhigh-qualityinformationtoourcustomers.Ourworldwidenetworkofregulatoryexpertsinallthreebusinesssectorscontinuouslymonitorschangestolegalrequirementsandscientificdevelopmentstostayaheadoftrendsandbestpractices.In2022,therewerenoincidentsofnon-compliancewithregulationsspecificallyconcerningpotentialhealthandsafetyimpactsandthelabelingofourchemicalproducts.SafetyanalysisofourproductsSafeandsustainablebydesignimpliesthatproductsafetystartsduringdevelopment.Therefore,atanearlystageofourproductdevelopmentprocess,weanalyzeinnovationsintermsoftheirimpactsonhumanhealthandtheenvironment.Wecontinuouslyevaluatetheintrinsichazardsofbothourexistingandnewproductstocreaterelevantproductsafetyinformationinlinewithallapplicablerules.ProductsafetyinformationChemicalproductsafetyisallaboutprotectinghumanhealthandtheenvironmentfromadverseimpactsresultingfromtheuseofchemicalproductsthroughouttheirlifecycle.Toachievethis,weprovideallrelevantinformationtoourcustomersandthepublic,whichhelpstoraiseawarenessofthehazardsandbuildagreaterunderstandingofhowtomitigaterisksandusetheproductssafely.Toobtainalltherelevantinformationonhazardprofiles,weemployindustry-standarddigitaltoolsthatgatherallinformationavailableonthesubstancesweuse.Wethencross-referencethisdatawithlocalandregionalrulestoestablishtherelevanthazardclassifications.Wepublishthisinformationdigitallyoncountry-specificsafetydatasheetsinmultiplelanguagesandonthelabelsofourproducts.Thedatasheetsaremaintainedelectronicallyandupdatediftherearerelevantchanges.Wehaveautomatedandstandardizedmostofourhazardcommunicationprocesses.Forproductswithlittleavailableinformation,weareinvestigatingthefeasibilityofusingalternativepredictivenon-animaltestingmethods,suchasread-acrossand(Q)SAR.Forthird-partyproducts,weexpectrobustproductsafetydocumentationfromoursuppliers,whichwefeedintoourprocessesorsharedirectlywithourcustomers.Products117HelpingcustomersaccesssafetyinformationWeemploythelatestdigitaltoolsandcontinuouslyexplorenewtechnologiestoshareinformationwithourproductusers.OurLifeSciencecustomersandallinterestedstakeholderscanaccessproductsafetyinformationintheirrespectivelanguageandaccordingtocountry-specificregulationsthroughadedicatedmobileappcalledMyMSafety(AndroidandiOS).Customerscanretrievethisinformationbyscanningabarcodeontheproductlabelorenteringidentifierssuchasmaterialnumbers,namesorCASnumbers.ThroughourScIDeEx™webtool,anyonecancheckwhetherusingaparticularchemicalissafewithintheboundariesspecifiedintheEUREACHexposurescenarios.ScIDeEx™isbasedonafullimplementationoftheECETOCTRA3modelforhumanexposureassessmentsinindustrialandprofessionalsettings.Products118PatientsafetyThesafetyofpatientstreatedwithourmedicinesisourtoppriority.Ourpharmaceuticalproductsmustbeeffectiveintreatingtherespectivediseasewhileposingthelowestpossiblerisktopatients.Thatiswhyweaimatcontinuouslymonitoranyrisksoradverseeffectsthatmayariseandtakethenecessaryactionstominimizethem.OurapproachtoensuringpatientsafetyThrougharigorousbenefit-riskmanagementprocess,wehelptoensurethatthebenefitsofourmedicinalproductsalwaysoutweightherisksforpatients.Everynewmedicinegoesthroughaseriesofpreciselydefineddevelopmentstages.Beforeanymedicinalproductisadministeredtohumansubjects,weconductextensivepreclinicaltestingbothinvitroandinvivo.Throughtoxicologicaltesting,wedeterminewhetheranactivepharmaceuticalingredientistoxictolivingorganismsand,ifso,atwhichdosage.Thistestingalsohelpsusdeterminethedosethathumanscansafelytolerate.Onlywhenthisiscompletedoweperformhumanclinicalstudiestoinvestigatethesafetyandefficacyofthemedicinalproduct.Duringclinicaldevelopment,wediligentlyuseallthecollecteddatatocontinuouslyevaluatethemedicinalproduct’sbenefit-riskprofile.Ifweconsiderthemedicinalproduct’sbenefit-riskprofiletobepositive,wethensubmitanapplicationformarketingauthorizationtotherelevantregulatoryauthorities.ContinualmonitoringofproductsafetyriskprofilesOncewelaunchanewmedicinalproduct,thenumberofpatientsbeingtreatedwiththeproductincreasessignificantly.Inrarecircumstances,theremaybeadverseandpotentiallyseriouseffectsthatwerenotdetectedduringclinicaldevelopment,whichiswhywecontinuouslymonitorrisksandassessthebenefit-riskprofilesoftheproductsaftertheirmarketlaunch.Pharmacovigilanceincludestheprocessofmonitoringamedicinalproductonanongoingbasistodetectandassesssafetysignalsaspartofsignalmanagementactivities.Ourpharmacovigilancesystemandourpharmacovigilancebusinesscontinuitymanagementensurecontinuousmonitoringofadverseeffects,allowingustoproactivelyandtransparentlyminimizeandcommunicateanyrisks.Emergencyresponseproceduresforbusinesscontinuityaremanagedinaccordancewithglobalandlocalbusinesscontinuityplans,testedinregular,definedintervalsorwithmockscenarios.Inaddition,wealwaysprovidehealthcareprofessionalsandpatientswiththelatestinformationonthesafetyofallourmarketedmedicinalproducts.Thescopeofcontinuoussafetymonitoringincludestheentirelifecycleofaproduct,rangingfromdevelopment,marketlaunchandcommercializationtoexpirationofthemarketingauthorization.AspartofourR&DStrategy2023,weachievedourobjectiveofdevelopingandimplementingproactivebenefit-riskmanagement,processoptimization,automation,andpharmacovigilanceoversight.Furthermore,wecontinuemonitoringourserviceobjectivesthroughourpharmacovigilancequalitystrategyandannualqualityplan.Wealsoregularlymonitorourperformanceandcompliancethroughtheinternalandexternalreportingofkeyperformanceindicators(KPIs).Thecapabilitieswehavedevelopedandstrengthenedinthisareainclude:•Advancedbenefit-riskmanagement•Safetydataanalyticsinsupportofbenefit-riskstrategyimplementation(takingintoaccountandintegratingreal-worlddata)•Advancedsignaldetectionmethodology•User-friendlymethodsforcollectingadverseeffectsProducts119Basedonregulatoryapprovalconditionsfornewlyapprovedmedicinalproducts,wedevelopandupdateeducationalmaterialsforpatientsandhealthcareprovidersinaccordancewiththerequirementtocommunicateanyknownandpotentialrisksandwaystominimizethem.WeassesstheeffectivenessofthesematerialsinclosecollaborationwithourBenefit-RiskActionteam.Ifrequired,weadjustthecontentsofthematerialsandtheirdistributionanddescribetheresultsfromtheeffectivenessanalysisinourperiodicsafetyreportsandriskmanagementplans.Wethensubmitthesetotherelevanthealthauthoritiesforevaluation.RolesandresponsibilitiesOurGlobalPatientSafetyunitisresponsibleforpharmacovigilance.Itcontinuouslycollectscurrentsafetydatafromawidevarietyofsourcesacrosstheglobe,includingclinicalstudies,earlyaccessprograms,spontaneousreportsonadverseeffects,patientsupportprograms,andarticlespublishedinmedicalandscientificjournals.Ourvisionistoembedadeepknowledgeofsafetyintoearlydecision-makingasweevolvetopracticepredictivesafety.Ourexpertshelptoensurethatallinformationontherisksandadverseeffectsofourmedicalproductsisproperlydocumented,trackedandreportedtotherespectivehealthauthoritiesinaccordancewithregulatoryrequirements.OurGlobalPatientSafetyunitanalyzesalldataandreassessesthebenefit-riskprofilebasedonthesedata,whererequired.Wetheninformregulatoryauthorities,healthcareprofessionalsandpatientsaboutnewrisks,additionalriskmitigationmeasuresandpotentialchangesinthebenefit-riskprofile.OurHealthcareQualityunitprocessesqualitycomplaintsrelatedtoourproducts.Wheneverqualitydefectscouldhaveanimpactonpatientsafetyorleadtoadverseeffects,GlobalPatientSafetybecomesinvolved.OurGlobalPatientSafetyunithostsaPharmacovigilanceIntelligenceCouncilthatfocusesonchangesinpharmacovigilancelegislationanditsimpactsonourglobalandlocalpharmacovigilancesystems.Thisinitiativeenablesustomakestrategicdecisionsandgovernchangesinpharmacovigilancerequirements,whichfostersourtargettoensurecontinuouscompliancewithregulatoryrequirements.OurMedicalSafetyandEthicsBoardOurMedicalSafetyandEthicsBoard(MSEB)overseesthesafetyandbenefit-riskassessmentsofourmedicinalproductsthroughouttheirclinicaldevelopmentandcommercialization.ThisinternalboardischairedbyourChiefMedicalOfficerandcomprisesexperiencedphysicians,scientistsandexpertsfromourcompany.Throughoutamedicinalproduct’sentirelifecycle,theMSEBreviewsandassessesimportantmedicalsafetyrisksandbenefit-riskissuesandendorsesappropriatemeasurestominimizerisks,suchasupdatestoproductinformation.TheMSEBfurthermorereviewshuman-relatedethicalissuesasappropriate.Thecross-functionalBenefitRiskActionteamisresponsibleforsignalmanagement,benefit-riskassessment,riskmanagementandalltopicsrelatedtoproductsafetyandthebenefit-riskprofileofourmedicinalproducts.RecommendationsfromtheBenefitRiskActionteamareendorsedbythePharmacovigilanceAdvisoryBoard,chairedbytheGlobalPatientSafetyunit.ImportantissuesmaybesubmittedtotheMSEBforfinalassessment.Ourcommitment:GuidelinesandstatutoryrequirementsOuraimistofollowinternationalguidanceandstandardprocedures,suchastheInternationalCouncilforHarmonisation(ICH)guidelinesandtheGoodPharmacovigilancePractices(GVP)establishedbytheEuropeanMedicinesAgency(EMA)andnationalhealthauthorities.Furthermore,weaimatcomplyingwithallnewstatutorypharmacovigilanceregulationsinthecountrieswherewemarketourproducts.Products120InspectionsandauditsfordrugsafetymonitoringRegulatoryauthoritiesconductperiodicinspectionstoverifythatwecomplywithstatutoryrequirementsaswellasourowninternalpharmacovigilancestandards.Wefollowuponthefindingsofhealthauthorityinspectionsandtakenecessaryactionstoensuretheongoingcomplianceofourpharmacovigilancesystem.In2022,wehadfourpharmacovigilanceinspections.Furthermore,weperformauditstoensurethatallourunitsandsubsidiariesinvolvedinpharmacovigilanceconsistentlymeetallglobalrequirements.In2022,weconductedatotalof19pharmacovigilanceauditsandfoundnosignificantdeviationsinourpharmacovigilancesystemsfromtheserequirementsandstandards.Wealsoconducted16externalauditsatourvendorsandlicensingpartnersinvolvedinpharmacovigilance,helpingusimproveourpharmacovigilanceprocessesandcomplywithregulatoryrequirements.Applyingourproactivesafetystrategytobenefit-riskassessmentsWithregardtoproductsafetyriskassessments,wehaveimplementedanimprovedbenefit-riskmanagementstrategyinordertobecomeaproactiveandbenefit-risk-focusedorganization.Inthiscontext,wedevelopedin2021theconceptsandprinciplesforconductingbenefit-riskassessmentsateachstageofproductdevelopmentandpost-marketing.Alongwiththeimplementationoftheredesignedbenefit-riskstrategy,thenewBenefitRiskActionTeamco-leadershipmodelwasrolledoutin2022.Thisredesignedapproachwillenableustounderstandinevengreaterdetailthebenefit-riskprofilesofourproducts,enablingearlydecision-makingwithintheorganizationtoprotectpatientsafety.Ultimately,theaimistobeabletoprovidetherightmedicinetotherightpatientattherighttime.ProductsafetyassessmentandemergencyresponseproceduresAproductprioritizationtoolasameanstoobjectivelyscorethesafetyprofileofourproductshasbeenusedasabasistodefineourproductprioritizationstrategy.Thescorescategorizeourproductsasbeingeitherhigh-,medium-orlow-riskandsubsequentlydefiningourapproachforbenefit-riskactivitiesandproductsafetysurveillance.Theseincludeindividualcasesafetyreportmanagement,signalmanagementandmanagementofemergingsafetyissues,riskmanagement,safetycommunication,ournewbenefit-riskstrategyandaggregatesafetyreporting.Thisensurestheefficientmanagementofsafetyrisksofourmedicinalproductsthroughouttheirlifecycles.Ifoursafetyriskassessmentsidentifyanyemergingsafetyissues,safetyobservationsthatrequireurgentsafetymeasures,orothernewsafetyinformationthatpotentiallyimpactsthebenefit-riskbalanceoftheproduct,wepromptlynotifyhealthauthoritiesviatherespectiveemergencyresponseprocedures.Thesestepsincludeseekinghealthauthorityapprovalforfurtheractionsandcommunicatingtheinformationtorelevanthealthcareprofessionals.Inaddition,wepromptlysharethisinformationwithourbusinesspartnersandclinicaltrialinvestigators,enablingthemtotakeproperactionswherethemedicinalproductconcernedisused.InnovativesafetysignaldetectionThroughourtoolsforsafetysignaldetection,weanalyzeandmanagelargeamountsofglobaldata,suchasscientificstudiesandnewsaboutadverseevents.Thistoolhelpsuscomplywithregulatorytimelinesforsafetysignalsandothersafety-relatedfactorsandensuresthatallsignaldata,documentationanddecisionsarecapturedinoneplace.Italsoenableseasyaccesstoandanalysisofourdataaswellascross-functionalcollaborationbetweentheGlobalPatientSafetyunitandotherinternalandexternalstakeholders.Products121Up-to-datelabelingandproductinformationOurproductinformationexplainstohealthcareprofessionalsandpatientshowtocorrectlyusetherespectiveproductandmakeinformedtreatmentdecisions.Inaccordancewithstatutoryregulations,thepackageleafletcontainsallrelevantinformationsuchasindication(s)andingredientsaswellasdosage,storage,modeofaction,instructionsforuse,warnings,precautions,andpossibleadverseeffects.Inaddition,shouldthemedicinecontainingredientsthatcouldimpacttheenvironment,thepackageleafletmayalsocontaininformationabouthowtodisposeoftheproductcorrectly.Wereviewandupdateallproductinformationdocuments,suchaspackageleaflets,toensureourmedicinalproductscontainthelatestinformationonsafety,efficacyandpharmaceuticalformulation.Inaccordancewithregulatoryrequirements,wesubmitallmodificationstoourleafletstotherespectiveregulatoryauthoritiesforapproval.In2022,therewerenosignificantreportableincidentsofnon-compliancewithregulationsconcerningthelabelingofourmedicinalproducts.InternalandexternaltrainingOurpharmacovigilanceexpertsareregularlytrainedsothattheygainandmaintaintherequiredexperienceandknowledgetocarryouttheiractivities.Wemanageourtrainingviaagloballearningplatformandverifycompliancewithourtrainingrequirementsbyproducingtrainingcompletionreports.Ourapproximately24,000Healthcareemployeesreceivebasicpharmacovigilancetrainingonceayearthatcoverstheprocedureforreportingadverseeffectsorspecialcircumstancesassociatedwiththeuseofourproducts.Inaddition,othertrainingcourseskeepemployeesup-to-datewithrespecttotheirprofessionalexpertiseaswellasinternalstandardoperatingproceduresandotherrelevantrequirements.Thesecontinuingeducationandtrainingeffortshelpustoensureadherencetopharmacovigilancerequirements.EnhancingpatientsafetyandsharingexpertisewithothercountriesWeexchangeexperienceandshareourexpertisebycontributingtoinitiativeshostedbyvariousnon-profitorganizations,forexample,theTransCelerateBiopharma.AsanactivememberofTransCelerate,wehavedirectlycontributedtoinitiativessuchasintelligentautomationopportunitiesinpharmacovigilance,pharmacovigilanceagreementsoptimization,andtheinterpretationofguidancedocumentsandregulations.ReportingsideeffectsviaappInlinewithourgoaltoenhancepatientsafety,weimplementedauser-friendlymobileandwebapplicationin2017forusebyfieldforces,salesrepresentatives,healthcareprofessionals,pharmacistsandnon-medicallytraineduserstoreportanysuspectedsideeffectsoradverseeventsarisingfromtheuseofourmedicinalproducts.Inthereportingyear2022wecontinuedtofurtherrolled-outtheapplication,whichisnowavailablein14differentlanguages,usedinmorethan50countries.PharmacovigilanceinAccesstoHealthWestrivetocontinueexpandingpharmacovigilanceexpertiseworldwide,especiallyincountrieswherehealthcareworkersneedtobuildthisexpertise.WecontinueoureffortstoincreasethecontributionofpharmacovigilanceinourAccesstoHealthstrategy.Thekeyaspectsofthisstrategyincludefosteringpharmacovigilanceinitiativesinsafetydata-sharingwithhealthauthoritiesandsustainablybuildingpharmacovigilancecapacitywithreputablepartnersinunderservedcountries.Forexample,wehavemaintainedastablepartnershipwiththeTunisianhealthauthorityovermanyProducts122yearstoactivelyhelpestablishthenationalpharmacovigilancesystemviavariousinitiatives.TheseincludethegoodpharmacovigilancepracticeguidelinethatwaspublishedinAugust2022.In2022,wecontinuedtoraiseawarenessforPatientSafetyDayviaouraffiliatesinseveralcountries,includingAustralia,China,HongKong,India,Indonesia,Korea,Malaysia,thePhilippines,Singapore,Taiwan,Thailand,andVietnam.Inotherinitiatives,wecontributedtothereviewofdraftguidancedocumentsforclinicaltrialsandprovidedfeedbacktothehealthauthoritiesinChina.WealsoparticipatedinthereviewandfeedbackofdraftregulationsforgoodpharmacovigilancepracticebeforeitsrolloutbytheEurasianEconomicUnion.Inaddition,wecollaboratedwiththehealthauthorityinChiletotestandprovidefeedbackaboutthenewIntegratedVigilanceSystem.AccesstoapprovedmedicationforunapprovedusesWemayreceiveinquiriesaboutthetherapeuticuseofourproductsbeyondthemarketingauthorization,alsoreferredtoasoff-labeluse.Forexample,whileeachmedicineisauthorizedforuseinspecificindications,aphysician,basedonanindividualrisk-benefitassessment,maywishtoadministeraproducttoapatientsufferingfromadiseaseforwhichitisnotapproved.Wepromoteourmedicinesstrictlywithinthescopeoftheirspecificmarketingapproval.Anymedical-scientificinformationabouttheuseofourproductsbeyondtheirexistingmarketingauthorizationisprovidedbyqualifiedmedicalpersonnelinresponsetounsolicitedinquiries.Theinformationsharedmustbebackedbyscientificevidenceandbefactuallybalanced,clearlystatingthatitappliestounapproveduse.Inaddition,wedonotpermitouremployeestogiveanyrecommendationsregardingindividualpatientcareortreatment.Products123Product-relatedcrimeInlow-andmiddle-incomecountriesaswellasindustrializedcountries,illegal,counterfeitandsubstandardmedicinesposeasignificantrisktopublichealth.Inaddition,chemicalsmaybemisusedforcriminalpurposes,suchasthemanufactureofillicitdrugs.Wetakeresoluteactionagainstbothofthesecriminalactivities.Ourapproachtoproduct-relatedcrimeOurcompanydevelopsandmanufacturespharmaceuticalandchemicalproductsofthehighestquality.Wetakeresoluteactionagainstproduct-relatedcrimeinordertoprotectourpatientsandcustomersfromtheharmcausedbyillegalproducts.Forthispurpose,wehaveimplementedaGroup-widestrategy,whichfocusesonidentifyingandrespondingtotheavailabilityofcounterfeitmedicinesaswellasensuringtheintegrityofourproductsandsupplychains.Moreover,wearecommittedtocollaboratingwithgovernmentauthoritiesaswellasnationalandinternationalorganizations.Together,wewanttotackleproduct-relatedcrimeandraiseawarenessoftheissueamongstakeholdersandthewiderpublic.Howwedefineproduct-relatedcrime1.Counterfeitproducts:InlinewiththerelevantWHOstandard,wedefineacounterfeitproductas“aproductthatisdeliberatelyandfraudulentlyproducedand/ormislabeledwithrespecttoitsidentityand/orsourcetomakeitappeartobeagenuineproduct”.2.Illegaldiversionofproducts:Thistermreferstothediversionofeitherpharmaceuticalsorchemicalsubstancesfromwithinthelegitimatesupplychaineithertosellorexportthemthroughillegalchannelstoproducenarcotics,weaponsorexplosives,ortousethemforotherillegitimatepurposes.3.Misappropriationofproducts:Thisreferstotheftfromproductionsitesandwarehouses,orwhileintransit.RolesandresponsibilitiesTheCorporateSecurityunitcoordinatesourapproachtotacklingproduct-relatedcrimeonthestrategiclevel.Across-functionalteamsupportstheoperationalimplementationofthestrategy.Theteamcomprisesexpertsfromvariousunits,includingLegal/Trademarks,ProductSecurity,ExportControl,SupplyChain,PatientSafety,RegulatoryAffairs,andQualityAssurance.Furthermore,alloursiteshaveproductcrimeofficerswhoserveascentral,localpointsofcontactandactastheinterfacebetweenbothlocalandglobalstakeholders,internalandexternalalike.Ourcommitment:Group-wideguidelinesandstandardsGloballyapplicableregulationsareakeypartofourapproachtoeffectivelyandefficientlytacklingproduct-relatedcrime.TheGroup-wideguidelineentitled“IllicitTrade&ProductCrimePrevention”describesourgoalsandmeasuresforreducingproduct-relatedcrimeandminimizingitsimpact.OurGroup-wideProductCrimeIncidentManagementstandardsetsoutmandatoryrequirementsforeffectivelymanagingincidentsofproduct-relatedcrime.Products124Howwearetacklingproduct-relatedcrime1.DetectingcounterfeitmedicinesandtakingthemoutofcirculationAteamofexpertsexamines,evaluatesandprocesseseverynotificationwereceiveregardingsuspectedcounterfeitmedicines.Ourresponsealwayscomplieswithboththeregulatoryrequirementsandourownwiderobjectivesfortacklingcounterfeitproducts.Weproactivelyconductinvestigationsbothonlineandofflineinordertoidentifyanddisrupttheavailabilityofillicitproductsinlegitimateandillegitimatechannels.Wedocumentallincidentsusingacentral,Group-widereportingsystem.Moreover,wesupporttheprosecutionofcriminalsbyworkingcloselywiththeauthorities.AsamemberofthePharmaceuticalSecurityInstitute(PSI),weroutinelyshareintelligenceaboutproductcrimewithotherpharmaceuticalcompanies.In2022,ourinternalexpertsexaminedandpursuednumerousincidents,includingcounterfeitsidentifiedwithinthelegitimateandillegitimatesupplychainsaswellastheftandillegaldiversion.2.TrackingsystemforchemicalsubstancesWemonitorchemicalsthatcouldbemisusedtoproduceillegalweapons,explosivesornarcotics,trackingthemthroughaninternalsystemthatflagssuspiciousordersorordersofsensitiveproducts.Thesearereleasedonlyoncewehaveconfirmedtheexistenceofaverifiedend-userdeclaration.Inadditiontofulfillingthedutiesdefinedinthestatutoryprovisionsonexportcontrol,wealsoreportsuspiciousordersandinquiriestothecompetentauthorities.Throughtheseefforts,wearehonoringavoluntarycommitmentoftheGermanChemicalIndustryAssociation(VCI)andcomplyingwiththetermsoftheGuidelineforOperatorspublishedbytheEuropeanCommission.3.ProtectingtheintegrityofourproductsandsupplychainsWeintendtoensuretheintegrityofoursupplychainsontheonehandandreducethelikelihoodofillegalmedicinescirculatingontheotherhand.Forthisreason,wehavearobustsecuritymeasuresforproductsandsupplychains.Wedoourbesttofulfilltheregulatoryrequirementsonproductserializationandtheimplementationoftrack-and-tracetechnologiesasprescribedinmanycountriesandregions.Thisincludesclearbarcodingofindividualandcollectivelypackagedproductsfortransportsothattheycanbetracedinthesupplychain.Usingarisk-basedapproach,weapplyourownproductsecurityfeaturesoncertainproducts.Thisenablestherapidandreliableauthenticationofourproducts.WemonitoroursupplychaincloselyandweregularlyauditourdistributorsandcontractmanufacturerstoensurethattheycomplywithourGMPandGDPstandards(goodmanufacturingpractice/gooddistributionpractice).Moreover,wecarryoutspecialrisk-basedsafetytestsonsuppliersofpharmaceuticalpackagingandcontractmanufacturers.Thesecuritymeasuresatsomeofourmostimportantglobalsitesarecertifiedexternallyinaccordancewithinternationallyrecognizedstandards,includingrequirementsoftheU.S.customsauthority’sC-TPAT(Customs-TradePartnershipAgainstTerrorism)initiative,theAEO-C/S(AuthorizedEconomicOperator)certificateoftheEuropeanUnion,approvalasa“recognizedshipper”bytheLuftfahrt-Bundesamt(GermanFederalAviationOffice)aswellastheISOstandards28000and28001regardingsupplychainsecuritymanagement.Products125In2022,weintroducedaGroup-widesecurityauditmanagementprogram,whichwillhelptofurtherincreasetransparencyandthesecuritylevelperformancewithinourorganizationandmaintainourcompliancewithsecurityrequirements.Forthispurpose,wehavedevelopedkeyfigurestosupportthisprocess,whichwillbesupplementedbytheexistingauditmanagementtool.Furthermore,wesponsorglobalinitiativestoprotectpatients.Forinstance,wesupportthenon-profitGlobalPharmaHealthFund(GPHF),whichsuppliestheGPHF-Minilab®,acompactlaboratoryusedmainlyincountrieswithinadequateaccesstohealthsolutions,totestthequalityof107differentactiveingredientsquicklyandeffectively.In2022,fiveadditionalactiveingredientsforcardiaccarewereaddedtotheMinilab’smethodinventory.Currently,atotalof969Minilabsareinuse.In2022,42Minilabsweredelivered,ofwhich39wenttoelevencountriesinsub-SaharanAfrica.4.Raisingawarenessofproduct-relatedcrimeWeaimtocontinuouslyraiseawarenessofproduct-relatedcrimeamongourbusinesspartnersandemployees,educatingandtrainingourpeopleGroup-wideonthesubjecttostrengthentheircompetencies.Allemployeesinvolvedinsecurity,suchasproductcrimeofficers,participateinappropriatetrainingprograms.Wearecontinuouslyevolvingtheseprogramsandadaptingthemtonewtrends.Products126EMPLOYEES128Careerwithus134Corporateculture139Diversity,equity&inclusion147Health&safetyCareerwithusOuremployeesadvancehumanprogressbysolvingcomplexproblemsandpromotingourcultureofinnovationandinclusion.Weencouragethemalltopursuecareersthatalignwiththeirindividualaspirations,skillsandpassions.TomaximizeourpotentialthroughouttheGroup,weaimtocreateanenvironmentthatinspiresourcurrentemployees,attractsnewtalentandhelpsustocontinuetolearnandgrow.Ourapproach:AcareerwithpurposeToensureourongoingsuccess,wearefocusingonthefuturebycreatingmeaningfulimpactsandbuildingneededcapabilities.Atthesametime,wemustrespondtochangingdemographicsandadapttothebehaviorsandexpectationsofthehighlycompetitivetalentmarket.Therefore,in2022,weenhancedourtalentacquisitionstrategywithamorepersonal,employee-focusedapproach.Ourgoalsincludereinventingourtalentsourcingapproachtobuildtargetedandintegratedpipelinesandeffectivelyrecruitingdiversetalenttoourorganization.Ourtraineeprogramsaredesignedtoassessandhireearly-careertalentwhoshowexceptionalpotential.Webelievevocationaltrainingisaneffectivewaytomeetcurrentandfuturedemandforqualifiedprofessionals.Supportingouremployees’professionalandpersonaldevelopmenthelpsustomeetourstrategicobjectives,drivingoursuccessasacompany.Inafast-pacedenvironmentofcontinuousgrowthandinnovation,wewanttocultivateanddevelopthecapabilitiesofouremployees.Asaresult,ouremployeesbenefitfromadiverselearninganddevelopmentportfolio.Inaddition,ourdedicatedmanagementprogramshelpourleaderstopromoteaccountableandinclusivebehaviorsandeducatethemondrivingsustainablebusinessvalueandperformance.Wehavedesignedourcompensationstructuretoprovidevaluablebenefitstoouremployeesandtheirfamilies.Ourrewardsystemrecognizestheuniquenessofouremployeeswhileprovidingflexibilitywhereverpossible.Throughourcompetitivecompensationstructure,weaimtobeattractivetofutureemployeesinparticular.Additionally,ourinternationalemployeemobilityprogramscreateanenvironmentsuitedtotheneedsofarapidlyevolvingworkforce.Wehaverevisedourtalentretentionapproachbytailoringourretentioneffortsmorestronglytodifferenttargetgroupsandcountriesaswellasstrivingtocreateaninclusiveenvironmentthatsparksouremployees’creativityandgrowth.RolesandresponsibilitiesGroupHumanResources(HR)supportsandadvisesallbusinesssectorsandGroupfunctionswithinourorganizationregardingourhumancapital,especiallytopicsrelatedtorecruiting,vocationaltrainingandadvancedtraining.Acrossalloursites,HRemployeesworkwithleadersfromvariousfunctionsandbusinesssectorstoemploystrategiesthatengageourpeopleinlinewithGroup-wideHRguidelinesandrequirements,includingattractivecompensationmodelsandbenefits.Everytwotothreeyears,weconductinternalauditstoensurethatweimplementourguidelineseffectively.TheChairoftheExecutiveBoardandCEOisresponsibleforGroupHumanResources.OurChiefHROfficer,wholeadstheHRfunctionandoverseesallourHRactivities,reportsdirectlytoher.OurBusinessServicesunitEmployees128overseestheoperationaltasksofHRwork,suchasdraftingcontractsandpayrollaccounting.TheChiefFinancialOfficerisresponsibleforthisunit.AllemployeescanaccesstheirpersonaldataviaourHR4Youdigitalplatform,whichalignsourbasicHRprocessesglobally.Forinstance,theplatformenablesemployeestoparticipateinonlinetrainingcoursesorapplyinternallyforvacantpositions.Ourcommitment:StructureddevelopmentOurHigh-ImpactCulture,foundedonsixbehaviors,isintegratedintoallHRprocesses,fromrecruitmentandtrainingtofeedbackprocesses.Weregularlyinformexecutivesandemployeesaboutthesebehaviorsthroughglobalcampaigns.OurPeopleDevelopmentandLearningPolicyprovidesaGroup-wideframeworkthatguidesemployeesinmanagingtheirprofessionalgrowth.Itdefinesrequirementsforourdevelopmentopportunities,rolesandresponsibilities.TheassociatedprocessesaredescribedinourPeopleDevelopmentandLearningStandards.Ourflexibleworkguidelinedetailsourapproachtoevolvingworkenvironmentsandouraspirationtocreateamoreagileorganization.Forexample,employeescanchoosetheirdesiredworkinglocation(withtheagreementoflocalguidance,teams,andmanagers)provideditisappropriatefortheirworkactivity.Inaddition,weaimtobettersupportandrecognizethewell-beingofcarersaroundtheworldbycreatingacarer-friendlyworkplace.AttractingandinspiringkeytalentOuroverarchinggoalistoattractqualifiedemployeesandretainthemoverthelongterm.Therefore,wecontinuetofocusonmeasuresthatimprovethewayinwhichweintroducenewemployeestoourcompanyculture.Inthiscontext,welaunchedarecruitinginitiativeforourleaderstobecomebrandambassadorswithintheirprofessionalnetworks.Throughthisprogram,wesupportourleadersinengagingindialoguewiththeirpeersandcommunitiesaboutourcultureandtheopportunitiesforprofessionaldevelopmentofferedbyourcompany.Additionally,wearecontinuouslyreviewingourapplicationprocessandhiringmanagerenablementtomaintainafast,quality-drivenprocess.AcompetitivecompensationstructureWerewardtheperformanceofouremployeesinordertomaintainacompetitiveedgeinattractingqualifiedprofessionals.WithinourGroup,webasecompensationontherequirementsofeachpositionandeachemployee’srespectiveperformance.Wemakenodistinctionsbasedongenderoranyotherdiversitycriteria.Toensurewemaintainacompetitivecompensationstructure,weregularlyreviewourcompensationpolicybasedondataanalysesandindustrybenchmarks.Thisenablesustocompareinternalfactorsandmarketrequirementsinequalmeasure.Beforemakingchangestoourcompensationstructure,weconsultwithkeystakeholderssuchasemployeerepresentatives.Employees129In2022,weintroducedasustainabilityfactorintoourLong-TermIncentivePlan(LTIP).MoreinformationontheLTIPcanbefoundintheCompensationreport.Alongwithourcompetitivebenefitsandrewardsprogram,wealsointroducedanewglobalcarpolicyin2022,aimingtoreduceCO2emissionsbyencouragingtheuseofelectricvehiclesandsupportingchargingpoints.Inadditiontocompetitivepay,wealsoofferattractivebenefits.Forexample,ourbenefits4mepackagecontainsofferingsprimarilyfundedbythecompany,suchascompanypensionplans,U.S.healthcare,preventionandhealth-relatedbenefitsaswellasotherservices,forinstanceleasingoffersforbicyclesorIThardwaretomeetthemultifacetedneedsofourglobalworkforce.NurturingaglobalmindsetTobroadenthediversityofthoughtwithinourteams,weoffermultipleinternationalassignmentopportunitiestoenableouremployeestoexperiencedifferentcultures,mindsetsandwaysofworking.In2022,weintensifiedourfocusoninternationalassignmentsbylaunchinganewpolicytopromotetheopportunitytogaininternationalexperienceandincreaseflexibilityforemployeesandtheirmanagers.Furthermore,wehaveestablishedapolicythatallowsemployees–undercertainconditionsandinadherencetocompliancemeasures–toworkremotelyforpersonalreasonsoutsideoftheircountryofemploymentforupto60dayswithina12-monthperiod.MobilitysplitbyassignmenttypeLongtermassignment:Periodof13–60months60%Developmentalassignment:Periodof3–12months24%Shorttermassignment:Periodof3–12months16%Employees130UnlockingourpotentialwitheducationandprofessionaldevelopmentWehaveimplementedaholisticlearningandleadershipportfolio,whichwearecontinuouslyenhancinginaccordancewiththeprinciplesofourHigh-ImpactCultureandsetofbehaviorsinordertofostergreaterlevelsofaccountability,inclusivenessandengagement.Ourlearningportfolioalsohelpsouremployeestounderstandandembracetheprinciples,valuesandbehaviorsofourcorporateculture.Weendeavortosupportouremployees’personalandprofessionaldevelopmentinlinewiththeirstrengths,skillsandbehaviors.Therefore,weprovideampleopportunitiesforthefunctionalandtechnicalupskillingrequiredinthevariousareasofourorganization.Werecognizethatemployeesneedtodevelopcapabilitiesforthefutureandacquireskillstoadaptquicklytochangingmarketsandorganizationalneeds.Beyondculturalandsoftskilllearninganddevelopmentopportunities,functionaltraining,suchasdigitalupskillingorscientifictraining,providesadditionalopportunitiesfordevelopmentinspecificareas.Furthermore,ourDevelopmentAdvisortoolprovidesspecificlearninganddevelopmentresources.Forexample,employeescanfindeLearningcourses,formaltrainingofferings,self-facilitatortoolkits,andtextproposals,whichtheycanusetocompiletheirindividualdevelopmentplans.Differentfiltercriteriahelpemployeestofindlearningofferingsbasedontheirspecificneeds.Itisrecommendedthatemployeesshapetheirdevelopmentplanswithcomponentscoveringformaltraining(10%),opportunitiestointeractandlearnfromothers(20%)andlearningbydoing(70%).Ouremployeescanalsobooklearningofferings,suchase-learningcoursesorin-persontraining,viaourlearningmanagementsystem.In2022,about7milliontrainingcourseswerecompleted.Additionally,weencourageouremployeesandleaderstotakecoursesviatheLinkedInLearningplatform.Wehaveintegratedindividualandteamlearningprogramsintoourgloballearningandleadershipportfolio.TheEmpowerYourTeamprogramintroducesourleadershipcultureandthebasicsofleadership,suchasdecision-making,feedback,motivation,andemotionalintelligence.EmpowerYourOrganizationisaimedatmoreexperiencedleadersandfocusesonthecapabilitiesneededtoshapeourculture,coveringtopicssuchasinclusiveness,psychologicalsafetyandtransformation.About1,100ofourleadersparticipatedinthesecoursesin2022.MerckUniversityisourleadershipdevelopmentprogramforexecutivesandcollaborateswithbest-in-classbusinessschools,includingStanfordGSBintheUnitedStatesandINSEADinFrance.Establishedin1999,approximately590ofourexecutivesworldwidehaveparticipatedintheprogram,enhancingtheirskillsandprofessionaldevelopmentviastate-of-the-artleadershiplearningmethods,contentandtools.SeniorleaderstakingpartinMerckUniversityalsohaveseveraltouchpointswithearly-career,high-potentialindividualsinoursecondflagshipprogram,theInternationalManagementProgram(IMP).TheIMPidentifiesandnurturestalentedpeoplewhoshowpotentialtobecomeourseniorleadersofthefuture.Employees131SupportingthenextgenerationWebelieveinthevalueofinvestinginthenextgenerationoftalent,notjusttobuildadiversetalentcommunity,butalsotodeveloptheskillsneededtocontinuetodeliverourproducts.Aspartofthisaim,weusethestrengthofourbrandtocreatesustainabletalentpipelinesthroughadiversifiedseriesofsources.Careerevents,universityrelations,socialmedia,andotheronlineplatformssuchasCandidateRelationshipManagementaresomeofthechannelsweusetoattract,maintainandbuildrelationshipswithourdiversetalentcommunity.Wealsosupporttalentsinjoiningourorganizationthroughvariousinternshipsandrelationshipswithuniversitiesaroundtheworld.OneexampleofthisisourHealthcarebusinesssector’sCo-OpprogramwithNortheasternUniversity,Massachusetts,USA,wherestudentsgainfirst-handexperiencewithourmanufacturingandR&Dprocesses,readyingthemforasuccessfulcareer.Onthegloballevel,werunourGoGLobalandOLDP(OperationsLeadershipDevelopmentProgram)traineeships.Webuildrelationshipswithstudentsfrommultipledisciplinesandacademicresearcherswhoshowgreatpotentialandareinterestedinroleswithinourcompany.Eachyear,wetakeinapproximately20-25newtraineesacrossfunctionalareassuchasIn-houseConsulting,Marketing,Commercial,GlobalHealthcareOperations,QualityRegulatoryandCompliance,ResearchandDevelopment,Procurement,Finance,andHumanResources.Weofferourtraineesmentoring,traininganddevelopmentopportunities.GraduatehiringbygenderFemalegraduateshired73%Malegraduateshired27%Wehavebeensteadilyincreasingourfocusonvocationaltraining.Forexample,in2022,westartedtheconstructionofanewLearningCenteratourglobalheadquartersinDarmstadt.Withacapacityforaround600apprentices,itwillenableustohousealmostallourvocationaltrainingoccupationsunderoneroof.Weareinvesting€70millioninthisnewLearningCenter,whichissettoopenin2024.Employees132In2022,atotalof205youngpeopleinGermanystartedtheirvocationaltraining.Theoverallfocuswasonscientificandtechnicaloccupations.Duringthesameperiod,atotalof181youngpeoplesuccessfullycompletedtheirapprenticeshipsatourDarmstadtsite.Inaddition,weofferprogramsforrefugeesandyoungpeoplestrugglingtoenterthelabormarket,preparingthemforsubsequentvocationaltraining.Wealsocontinuedtoengageinthe“Afrikakommt!”programofferedbytheGermanSocietyforInternationalCooperation(GIZ),whichtrainsexpertsandleadersfromAfrica.Insupportingthisinitiative,wearehelpingtobuildapoolofregionalpartnersthatpromoteeconomiccooperationbetweenGermanyandAfrica.In2022,tenparticipantssuccessfullycompletedtheprogramandwehaveselectedthirteennewcandidatesfortheeleventhintake,startinginFebruary2023.BalancingworkandpersonallifeWerecognizetheimportanceofwork-lifebalanceandtheneedforflexibleworkingmodels.Accordingly,wehaveseizedtheopportunitytorethinkourworkinghabits–includingwhen,whereandhowwework–inordertocreatethemostengagingandproductiveworkingenvironment.Aspartofthisprocess,in2022,wecompletedtherolloutofourFlexibleWorkingpolicy,with38countriesnowusingarespectivemodeltailoredtotheirlocalrequirementsandlegislation.In2022,weimplementedseveralinitiativestoenhanceoursupportforcarersandparentsatourcompany.Inaddition,whetherouremployeesaretheprimaryorsecondarycaregiversofchildren,weofferthemvariousoptionstoplanthefirstyearswiththeirchild.Forexample,wehaveextendedpaidparentalleaveforbothprimaryandsecondarycaregiverstoeightweeksinMexicoandtosixweeksinSwitzerland.InIndia,wehavealsoimplementedaleavepolicyforsecondarycaregivers.Overall,weprovidesupportinlinewithlocallawsandregulationsaswellasourGlobalBenefitsguidelines.Employees133CorporatecultureFormorethan350years,wehaveworkedtoimproveandenhancepeople’slivesworldwide.OurHigh-ImpactCultureenablesustocontinuouslyre-examineourwayofworkingandchallengelong-heldassumptionstoadvancehumanprogress.Itdrivesustodoubledownonourpeopletorecruit,develop,retain,andpromotethebestandmostdiversetalent,whilecultivatingandrewardinganinclusiveenvironment.Ourapproach:UnlockingourcollectivepotentialWerecognizethatourdailyactionsultimatelyimpactourcustomers,patientsandpartners.ThisiswhywehaveidentifiedastandardsetofbehaviorsthatformthefoundationofourHigh-ImpactCulturesuchas‘raisingthebar’and‘actingastheowner’.Theyarefirmlyembeddedinourcompanyculturetoprovideguidancetoallouremployeesandleaders.Webelieveacknowledgingandrewardingindividualachievements,aswellasafeedback-drivenculture,enablecollectivesuccess.Accordingly,weareintroducinganewapproachtoperformance,providingourteamswithaframeworkthatvaluesemployeeexpectations,clarifiesgoals,providesfeedback,andrewardsperformanceaspartofourHigh-ImpactCulture.Aconstantshifttowardslearningfromothers,deliveringandreceivingfeedback,andacknowledgingtheperspectivesofothersinconstructivewaysarealsocrucialelementsofourculture.Bypromotinganopenmindset,weempowerouremployeesandstrengthenourorganization.Wealsoworktoincreaseemployeeengagementandpromoteindividualaccountabilitybycreatingregularopportunitiesfordialogueandparticipationwithinthecompany.Forexample,employeesurveyswithregularpulsefeedbackopportunitiesprovidevaluabledatapointsformanagers,employees,andHumanResources(HR)toconceivenewmeasuresandinitiativesthatpromoteacultureofdialogueandcollaborationintheworkplace.RolesandresponsibilitiesGlobalHumanResources(HR)isresponsibleforadvisingallbusinesssectorsandGroupfunctionsonmattersconcerninghumancapital.HRaddressestheneedsofouremployees,organizationaltopics,andcompanyculturefoundedonethicsandasharedsetofcompanyvalues.Weexpectourleaderstounderstandtheneedsoftheirdiverseteamsandprovidesupportintheformofresourcesanddata.Inaddition,theabilitytoaccesstransparentfeedbackthroughspeciallydevelopedtoolsallowsourleaderstogainfurtherinsightsintohowtheirbehaviorimpactstheirteams.Forthisreason,weworkwithexternalproviderstotrainourleadersinproven,science-basedapproachestoleadmoreeffectively.Employees134Ourcommitment:EmployeerepresentationAssetdowninourSocialandLaborStandardsPolicy,wewillrespectouremployees’legalrightstoformandjoinworkerorganizationsoftheirownchoosing,includinglabororganizationsandtradeunions,andwillnotdiscriminatebasedonanemployee'sdecisiontojoinornotjoinalabororganization.WithinEurope,41ofourlegalentitiesinninecountries(Austria,Finland,France,Germany,Italy,Spain,theNetherlands,Ireland,andSwitzerland)haveemployeerepresentatives.Ourrespectivesitemanagementteamscooperatewiththematthelocallevel.Inaddition,theMerckEuroforumrepresentsouremployeesfromaEuropeanperspectiveinallEUcountries,aswellasSwitzerland,Norwayand(post-Brexit)theUnitedKingdom.However,notallentitledcountriessenddelegatestotheEuroforum.TheEuroforumfocusesonthecurrentglobaleconomicsituation,employmentratesandsignificantchangeswithinourcompany,withregularexchangesduringtheyearandadditionalmeetingsasrequired.In2022,theregularmandateperiodendedinmostEuropeancountries.Awareness-raisingmeasuresdrivenbyourcountryspeakersandlocalHRunitssupportedtheelectionprocessfornewdelegates.WenowhaveMerckEuroforumdelegatesfrom14countries,whichisthreemorethaninthelastmandateperiod.Alldelegatesmeetonceayear.InGermany,oneofourlargestlocationsworldwide,99%ofthelocalworkforceisemployedbysubsidiariessubjecttotheGermanCo-DeterminationAct.Wehaveatotalof20subsidiariesinGermany.In16ofthem,ouremployeesarerepresentedbytheGroupWorksCouncil;innineofthembytheJointWorksCouncilinDarmstadt;theremainderarerepresentedbytheirlocalWorksCouncil.TheinterestsofourseniorexecutivesarerepresentedbytheSeniorExecutiveCommittee,whichnegotiatestopicssuchascompensation,workinghoursandorganizationalchanges.Inaddition,57%ofouremployeesarecoveredbycollectiveagreements(12%ofourglobalworkforce).Incountriesnotcoveredbycollectivebargainingagreementsduetodifferentadministrative,tradeandjudicialstructures,wecloselyworkwithunionstoimplementoperationaldecisionsandcoordinaterelationsbetweenmanagementandemployees.WorkingconditionsandtermsofemploymentofemployeesinthesecountriesaredeterminedbylegalrequirementsandourGlobalGuidelines.StrengtheningourHigh-ImpactCultureWeaimtocreateapositiveculturebasedonourstrategiccoreelementsofcaring,outperformingandpioneering.ByfosteringourHigh-ImpactCulture,weempowerourpeopletocreatepositiveoutcomesforourcustomers,patientsandsociety.Aspartofthisculture,wedefineacommonmindsetthatguideshowwedobusinessandinteractwithcolleaguesandstakeholders.Byembracingastandardsetofbehaviors,wecandeliveronourpurposeandcreateaworkenvironmentwhereeveryonecansucceed,developandgrow.Thesebehaviorsalsoembodyoursharedvaluesandhelptoensureourteamsreflectdifferentcultures,waysofthinkingandlifeexperiences.Employees135Thesebehaviorsare:ActastheownerObsessedwithcustomersandpatientsSimplifyandactwithurgencyBecuriousandinnovateboldlyDisagreeopenly,decide,anddeliver(3Ds)Wethinkindependentlyanddeliverasateam.Wemakeclearwhatmattersinanydecision,takingaccountabilityandavoidingdeferringdifficultdecisions.Andwhenadecisionistakenweallcommit.Weseebeautyinsimplification,wecutunnecessaryprocessesandfocusonwhatmattersmostfirst–andwechangecoursequicklywhennecessarybecausespeedmattersineverybusiness.Weareowners,wemakedecisionsandactonbehalfofthecompany’sbestinterest,notjustourown.RaisethebarWesetrelentlesslyhighstandardsforourselves–andforourteams.Wedrivetodeliverthebestqualityproducts,servicesandprocesses.Wechallengeourownthinkingandthestatusquo,pressforbetterapproaches,innovativeways,andweareexternallyaware.Wefocusontheimpactwegenerate,westartwiththeminmindandworkbackwards.In2023,welaunchanewapproachtohowperformanceissteered,managedandevaluatedinourcompany.MyImpactwillreplacetheexistingPerformanceManagementProcessandprovideaframeworkforourorganizationtoimproveitsperformanceandculturebyencouragingcontinuousfeedback.Employees136In2022,wepresentedthenewapproachtoseniorleadershipinallrelevantsectorsandfunctions.WealsoinformedtheWorkCouncilsandunions,whohavebeeninvolvedinthenecessarynegotiationspriortoimplementation.Themainfeaturesinclude:•Customizedelementsfittingthedifferentnatureofrolesandresponsibilitiesofouremployees•Simpleandflexibleyear-roundcommitmentsetting,adjustableatalltimes•Continuousandtransparentconversationsaboutperformance•Timelyandfrequentfeedbackcollectedtoprovideabasisforunbiaseddialoguebetweensupervisorsandemployees•Anewandsimplifiedwaytoevaluateemployeeimpact,reflectingourHigh-ImpactCulture•Flexibleperformance-relatedrecognitionandfinancialawardframeworkavailablethroughouttheyearStrengtheningoursustainabilitycultureInaddition,welaunchedtwoe-learningcoursesinordertostrengthenthesustainabilitycultureinourcompany.Thefirstoneisforemployeesandwasalreadyrolledoutattheendof2021.ThesecondonehasbeenavailablesinceSeptember2022andistargetedtomanagerswithpersonnelresponsibility.Thetwocoursesaremandatoryfortherelevantemployeesandareavailableinnineandsevenlanguages,respectively.Asoftheendof2022,83%ofallemployeeshadcompletedthetraining.EmbracingconversationanddialogueInourincreasinglyconnectedworld,weareconvincedthatfeedbackenhancesopendialogue,buildstrustandimprovescollaboration.Therefore,in2022,weintensifiedoureffortstopromotecontinuousfeedbackacrossourorganizationandhierarchies.Forexample,weanchoredthisapproachintoourlearninganddevelopmentportfolio.Ourfeedbackprogramsgiveemployeesandleadersinsightsfromvarioussourcestosupportindividualdevelopment.Furthermore,wehavedesignedanew,simplified360-degreefeedbacktooltoprovidevaluableinputtoemployeeswhileencouragingourorganizationtopromotecontinuousfeedbackbasedonintegrityandrespect.Thetoolalsoprovidesguidanceaboutintegratingfeedbackpracticesintodailyworkandstructuringfeedbackdiscussionsaccordingly.Overall,weaimtomakefeedbackaregularhabitratherthanaformalprocess.Inthiscontext,wearealsotakingactiontopromotepsychologicalsafetyinourteams.Thispracticehelpsemployeestoworkefficientlywhilefeelingsafe,respectedandaccepted.In2022,weintroducedworkshopstosupportteamsinbetterunderstandingtheircurrentpsychologicalsafetylevels.Asleadersplayacriticalroleincreatingtherightatmospherewithintheirteams,wealsoensuredthatpsychologicalsafetyisacoretopicofourleadershipdevelopmentprogramEmpower.Inaddition,weprovideadedicatedtoolkitwithpracticalguidanceandactionsthatleaderscanimplementtopromotepsychologicalsafety.Employees137EmpoweringouremployeesWearecommittedtoensuringouremployeesandleadersareinvolvedinourbusinessprocessesandcanengageindialoguethroughvariouschannels,suchasinternalcommunicationsplatforms,anonymoussurveys,androundtables.In2022,wedevelopedconcretemeasurestogaininsightsintoouremployees’experiencesthroughouttheiremployeelifecycle,fromonboardingtoleavingthecompany.Forexample,wenowevaluatefeedbackfromtheonboardingexperienceafter90daysandagainafterthreemonthstounderstandtheexperiencesofnewemployeesandidentifyareasforimprovement.Similarly,ourexitsurveyscollectinsightsintotheirreasonsforleavingthecompany.Inaddition,weevaluatetheprogressmadeinimplementingourHigh-ImpactCulturebyconductingpulsesurveysontheperceivedculturechangeandnewlyintroducedbehaviors.Othermainfeedbackformatsincludeayearlyglobalemployeeengagementsurveythatservesasthemainfeedbackchannelforallouremployees.Withastrongfocusondiversity,equityandinclusionin2022,weconductedanadditionalinclusionassessmenttoidentifyandunderstandareaswherewecanstrengthenourcultureofbelonging.Thisassessmenthelpsustocreateamoreinclusiveenvironmentformembersofunderrepresentedgroups,suchaspeoplewithdisabilities,peoplefromdifferentethnicgroups,orthoseidentifyingasmembersoftheLGBTQI+community.Employees138Diversity,equity&inclusionWebelievethatcreatingandmaintainingadiverseworkforcehelpsusdriveinnovation,exceedcustomerexpectationsandremaineconomicallyandsociallysustainable.Diversity,Equity&Inclusion(DE&I)alsosupportsourgoalsofattractingandretainingtalentwhoenrichourcultureandhelpuscreatenewsolutionstotomorrow’schallenges.OurapproachtocreatingacultureofinclusionandbelongingWearecommittedtopromotingastrongsenseofinclusionamongouremployees.Therefore,weapproachDiversity,Equity&Inclusion(DE&I)withthesamepurposeasourotherglobalbusinessobjectivesandaspirations.Whilewehavealwaysbeenadiverseorganization–wecurrentlyspan66countriesandhaveover64,000employeesfrom139nationalities–werecognizethatoursuccessdependsonourabilitytofosteranenvironmentthatchampionsequityandinclusion.Inaddition,ourDE&Iapproachfuelsoureffortstomakepositiveimpactsinthecommunitieswhereweliveandwork.Weexpectourleadersandmanagerstobemindfulandconsiderateinhowtheyattract,hire,retain,andpromotetheirpeople.Weaimtohelpeveryemployeemaximizetheirpotential,regardlessoftheirgenderidentity,culture,ethnicity,race,religionorcreed,sexualorientation,nationality,socioeconomicandfamilystatus,language,disabilitystatus,age,mindset,faiths,militaryservice,orpoliticalconviction.Westrivetocreateequitableoutcomesandidentifyandeliminateanybarriersthatmayhinderouremployees’contributionsortheiraccesstoopportunitiesorcareeradvancement.Ultimately,webelievediversityinspiresprogressandstrengthensourabilitytoinnovateinallareasofourbusiness.Theuniquenessofourpeoplethatbringsscience,curiosityandourHigh-ImpactCulturetolife.Therefore,wenurtureanenvironmentwithacollectivesenseofbelongingsothatallteammembersfeelvaluedandappreciated.Thisinclusiveapproachimprovesouroverallperformanceandleadstomorepositiveoutcomesforourcustomers,patientsandpartners.Employees139RolesandresponsibilitiesTheChiefDiversity,EquityandInclusionOfficerisresponsibleforourglobalDE&Istrategyandsteeringitsrelatedactivities.Inthisrole,shereportsdirectlytotheChairoftheExecutiveBoard,whoseBoardresponsibilitiesincludeGroupHumanResources.Inaddition,wehaveestablishedacentralizedDiversityCouncilconsistingofhigh-rankingexecutivesfromallourbusinesssectorsandselectedGroupfunctions.TheDiversityCouncil’sresponsibilitiesinclude:•Supportingequityandinclusionacrossourorganizationanditsactivities.•ServingasambassadorsandadvisorstotheExecutiveBoardandmanagingdirectorsincountryorganizations.•Proposingstrategicgoals,initiatingmeasuresandensuringmanagersmeettheirresponsibilitiesintheirrespectiveunits.•Exchanginginformation,sharingbestpracticesandaligningonnextsteps.•Workingacrossbusinesses,functionsandcountriestointegrateDE&Iwithinourdailyworktobenefitouremployeesandcustomers.Ourcommitment:InternationalpoliciesandprinciplesOurSocialandLaborStandardsPolicycategoricallystatesthatourcompanydoesnottolerateanyformofdiscrimination,physicalorverbalharassment,orintolerance.Tounderscoreourcommitmenttoequality,fairness,inclusion,andtoleranceintheworkplace,wealsoparticipateinindustry-wideinitiatives:•TheWomen’sEmpowermentPrinciples,aninitiativeofUNWomenandtheUNGlobalCompactnetwork,helptopromotegenderequalityandwomen’sempowermentintheworkplace.Inaddition,wealsoparticipatedintheUNTargetGenderEqualityProgrammein2021/22,whichsupportscompaniesinachievinggenderbalanceinbusiness.•TheInclusionActionPlanoftheGermanMining,ChemicalandEnergyIndustrialUnion(IGBCE)definesconcretemeasurestocreateamoreinclusiveworkforceforemployeeswithdisabilities.Inendorsingthisplan,wemeetthestandardsoftheUnitedNationsConventionontheRightsofPersonswithDisabilities.•TheEqualOpportunityCharter,throughwhichwepledgetodoeverythinginourpowertoachievegenderequalitywithinourcompany.•Weareoneofover4,500signatoriesoftheGermanDiversityCharter,ChartaderVielfalte.V.,acorporateinitiativethatpromotesdiversityincompaniesandinstitutions.Inaddition,weareasignatorytotheBusinessCoalitionfortheEqualityAct,anallianceofleadingcompaniesintheUnitedStates.Wearealsoactiveinanumberofexternalassociationsandpublic-privatepartnershipssupportingequality,suchasHealthyWomen,HealthyEconomies,ClosinGap(Spain),WomenEmpowermentCouncil(China),SEMIindustryassociation(dedicatedDE&Iinitiative),EmbracingCarers™,andDisability:INpromotingthecompleteinclusionofpeoplewithdisabilities.MeetingstatutoryrequirementsTheGermanLawfortheEqualParticipationofWomenandMeninLeadershipPositionsinthePublicandPrivateSectorhasbeenineffectinGermanysince2015.DuetoourlegalstatusasaKGaA(acorporationwithgeneralpartners),thislawalsopartlyappliestous.Employees140Witha37.5%shareofwomen(6outof16members),ourSupervisoryBoardalreadymeetstherequirementsofGermangenderquotalegislation.AsaKGaA,wearenotrequiredtosettargetsforourExecutiveBoard,whichcurrentlyhasa20%shareofwomen(1outof5).DetailedinformationcanbefoundintheStatementonCorporateGovernanceinourAnnualReport.StrategyrolloutandnewstructureintroductionIn2022,werolledoutourDE&Istrategyglobally.Wecreatedanetworkcomprisingour18majorcountries,nominateddedicatedrepresentativesanddevelopedtailoredroadmapsforeachcountry.WealsostreamlinedthecouncilsandworkinggroupsinthebusinesssectorsandmajorGroupfunctions,renamingthemDiversity,Inclusion,Community&EquityCouncils.Progressonour2030aspirationsIn2021,wepledgedtoourpeople,partners,patients,andindustrytointensifyourDE&Ieffortsandsetrobustaspirationstoholdourselvesaccountable.In2022,wecontinuedthisstrongfocusanddemonstratedthatweareontracktoadvancetowardour2030goals.Genderequity:Wedevelopedmeasurestoachieveamorebalancedgenderstructureatvarioushierarchicallevelsofourbusiness.Wearesteadilymakingprogressandhaveincreasedtheshareofwomeninleadership(roles4+)to38%(2021:36%)whilemaintainingastable43%proportionofwomeninourglobalworkforce.Buildingonthiseffort,weareaimingforgenderparityinleadershippositionsby2030.Moreover,wearecommittedtofairandequitablepayforallemployees.WomeninleadershiprolesCultureandethnicity:With24%ofouremployeesbasedintheUnitedStates,itiscrucialthatwebecomeanemployerofchoiceamongunderrepresentedracialandethnicgroupsinthismarket.Therefore,weplantoincreasetheshareofemployeesinU.S.leadership(roles4+)whoaremembersofunderrepresentedracialandethnicgroupsfrom21%to30%by2030.ShareofunderrepresentedracialandethnicalgroupsinUSleadershipEmployees141Additionally,duetoourcurrentperformanceandfuturegrowthinAsia,LatinAmericaandtheMiddleEastandAfrica(MEA),accountingfor40%ofourGroupsales,weaimtoincreasetheglobalshareofnationalsfromAsia,LatinAmerica,andMEAinleadershippositions(roles4+)from16%to30%by2030.GlobalshareofnationalsfromAsia,LatinAmerica,MiddleEast&AfricainleadershipInclusion:Beyondouraspirationtofosterspecifictypesofdiversityandequity,weareacceleratingoureffortstocreateagenuinelyinclusivecultureforallemployees.Toachievethis,werolledouttrainingcoursestohelpleadersreflectonhowtheycanleadmoreinclusively.Allleaderswillbeencouragedtocompletethesecoursesoverthecomingyears.Attheendof2022,64%(2021:37%)ofourleadershadparticipatedinthistrainingprogram.ParticipantsinInclusiveLeadershipWorkshopDiversityfiguresarepartofourcompensation-relatedcorporategoals.Weuseapredictionalgorithmdevelopedin-housetosupportthemodelingandtrackingofourkeyperformanceindicatorsforDE&I.CommittedtofairandequitablepayOurcommitmenttopayequityisacriticalaspectofourDE&Istrategy.Tocreatetransparencyaroundunexplainedpaygapsandidentifytheirunderlyingrootcauses,weconductedapayequityanalysisin2021withafocusongender-baseddiscrepancies.Inthisfirststep,weanalyzedtenofourlargestcountries,coveringapproximately80%ofourtotalemployees.Basedonthisanalysis,wecontinuedtoimproveourtransparencybyreleasingpaydatapubliclyforthefirsttime:Theidentifiedadjusted(unexplained)genderpaygapislessthan1.5%infavorofmen.Whilethisisagoodstartingpointandbelowtheexistingbenchmark,wewillcontinuetomonitorpaydataandtakemeasuredactionsasneeded.Theseincludeenablingourleaderstoensurewecontinuemakingequitableandunbiasedpaydecisions.Employees142CultivatinginclusioneverydayWeprovideaframeworkforeducationintheareasofdiversity,equityandinclusion,combinedwithempowermenttosupportinclusiveleadershipstrategies.Tomaximizeourleaders’effectivenessinbuildingdiverseandinclusiveteams,werolledouttheInclusiveLeadershipWorkshopaspartofourglobalinclusionkeyperformanceindicators.ItcorrespondstotheLeadershipProgramof2021andwasrenamed.Theworkshopcombinesgloballeadershipinteractions,peercoaching,continuousself-reflection,andleadershipaccountability.Itismandatoryforallourleaders.Wealsoprovidemanylearningopportunitieswithtrainingandlisteningsessionsonhowtobeamoreinclusivecolleaguesuchasourunconsciousbiastrainingsessions.Withtheintroductionofthepsychologicalsafetymodule,wehelpemployeesunderstandhowimportantitistocreateasafeenvironmentinteamsandensureeveryone’svoiceisheard.Inaddition,weconductedaglobalinclusionassessmenttobetterunderstandspecificareasofopportunityandgainemployeeinsightsinordertocreateamoreinclusiveworkplace.MoreinformationonhowweapproachemployeeengagementcanbefoundunderCorporateculture.Sinceweworkinaninternationalenvironment,wesupportouremployeeswithinterculturaltraininganddigitaltoolssuchasourCulturalNavigator.Furthermore,weofferlanguagetrainingandinternationalnetworkstoassistemployeesininternationalassignmentsandprojects.Forexample,morethan1,000expatriateemployeesaremembersoftheInternationalCommunity,whichmeetsregularlyatourglobalheadquartersinDarmstadt.HelpingdiversetalentflourishTobroadendiversitywithinourorganization,wehavecontinuedtocreateastronginternalfemaletalentpipeline,promotemorewomenintoleadershippositions,andactivelysourceexternalfemaletalent.Additionally,wefocusoninternaldevelopmentandexternalsourcingofinternationalandunderrepresentedethnictalent.Wehavealsoidentifiedopportunitiesineachbusinesssectortoprovideextrarecruitingsupportandleverageexistingandnewtalenttoreachmorediverseaudiences.Inaddition,wehavepilotedsoftwaretoevaluatetheinclusivityofourjobdescriptionsandproviderecommendationstomakethemmoreinclusive.In2022,wealsoconductedself-identificationcampaignsinspecificregionsinordertobetterunderstandourinternaldemographics.Thesecampaignsencouragedemployeestovoluntarilyprovideinformationabouttheirethnicity,disabilitystatus,sexualorientation,genderidentity,orveteranstatus.Topromotediversityinourhiringforinternalroles,wecontinuedourvariousmentoring,sponsorshipandtalentprograms.WearealsoexploringnewpartnershipopportunitiestoreachmorediverseSTEMcandidates.TheseincludeHerHackathon(womeninIT),GEM(underrepresentedethnicalcandidatesinscience,engineeringandtechnology),andLOCMScholars(underrepresentedethniccandidatetuitionsupportforfamilymembersofexistingemployees).Furthermore,wehaveaddedinformationaboutourEmployeeResourceGroupcommunitytoournewemployeeonboardingprocess,whichraisesawarenessaboutouremployeegroupsandnetworksworldwidetonewemployeesintheearlystagesoftheirroles.Employees143Asenseofbelonging:ouremployeenetworksInourinternalDE&Iemployeegroupsandnetworksthereareover7,500members(sinceapersoncanbeactiveinmorethanonegroup,thenumberofpeoplemaydifferfromthenumberofmembers).Thesemembershavecreatedastrongbasethatfostersasenseofbelongingforcommunitymembersandtheirallies.Ourmorethan60groupsandnetworksincludeWomeninLeadership,ourBlackLeadersNetwork,Rainbow,andI’MAble.Wearealsostronglyrepresentedatourlocalsitesinanumberofwomen-orientedorganizationsoperatingglobally.OurnetworksdriveinclusionWomenNetworksWell-BeingCommunitiesGenerationalNetworksDisabilityCommunitiesInternationalCommunityAcommunityofopen-mindedindividualswhoconnectandexchangeresources&informationtosupportasoftlandingatourlocalsitesinDarmstadt,Germany,andSwitzerland.Raiseawareness,drivedevelopment,andencourageaculturewhereeveryonehasthesamecareeropportunitiesregardlessoftheirageandstageoflife.Createaninclusiveworkplacethatrecognizes,develops,andadvocatesforthepromotionofqualifiedwomentoachievegenderbalanceandthuslong-termbusinesssuccess.RainbowNetworksVeteransNetworksInclusionNetworksFlexibilityandResponsibilitywiththeCommunityareERGsthatfocusonlocalspecificneedsfortherespectivetargetgroups.Tosupportstrategicdiversityandinclusioneffortstoattract,retainanddevelopmilitaryveterans.PromoteasafeandinclusiveenvironmentandfosteracommunitywhereLGBTQI+employeesandtheiralliesarerecognizedandvalued.Culture&EthnicityNetworksHelpproposesolutionstosupporttheattraction,retention,anddevelopmentofouremployeesofcoloraswellasotherculturalandethnicminorities.Acommunityforpeoplewithdisabilities,andtheiralliesandhelpbreakthestigmasurroundingdisabilitiestopicsandinstead,provideresourcesandsupport.Focusonimprovingcarers'healthandwellbeing,whileincreasingawarenessandsupportforthemwithinhealthcaresystemsaroundtheglobe.Employees144SupportingDE&IinthecommunitiesaroundusIn2022,weannouncedapartnershipwithCNote,awomen-ledimpactinvestmentplatform,toimproveeconomicgrowthandopportunitiesinU.S.communitiesinwhichweoperate.WewillprovideUS$20million,whichcanbeusedtofundBIPOC-ownedsmallbusinessesinthosecommunitiesviamicrofinanceloans.CNoteprovidesadiversifiedandscalablewaytosupportjobcreation,smallbusinessgrowth,affordablehousingdevelopment,andsustainableeconomicgrowthinunderservedcommunities.ThisnovelapproachutilizescashonhandthatisheldinourtraditionalbankaccountsandinsteaddeploysthecashtoCommunityDevelopmentFinancialInstitutions.InourHealthcarebusinesssectorintheUnitedStates,wehaveenactedasupplierdiversityprogramtocomplywithlocallegislation.WearefocusingourU.S.effortsonenhancingourcurrentsupplierlocatortoolbybroadeningtherolloutamongsourcingmanagerssoastoimproveourabilitytoconnectwithandpotentiallyawardbusinesstoabroadrangeofvendors.Additionally,wearecontinuingtoexpandtheprogramtootherbusinesssectorsintheUnitedStatesthathavepilotplanninginplace.I’MINisourexternal-facingDE&Iinitiativetoamplifythevoicesofunderrepresentedpopulationsandimprovethehealthcareecosystem.Since2019,wehavepartneredwithhealthcarepractitionersthrougheducationalevents,allowingthemtoexploreuntappedtopicsofhealthinequityinmultiplesclerosis(MS)careandlearnhowinclusionpositivelyimpactsthepatientexperience.WearethefirstcompanytofundfellowshipsdedicatedtoreducingdisparitiesinneurologicalcareforMSpatients.Additionally,wehaveestablishedadiversityinclinicaltrialsproject,asweunderstandtheneedforadiversepatientpopulationinclinicaltrialsandthroughoutthedrugdevelopmentlifecycle.Tomaintaininclusivity,wefocusonfourkeypillarsthatidentifykeytacticalandtargetedefforts.WehavecollatedtheseandotherexamplesinaninternalDE&Iinthebusinessplaybook,encouragingourteamstoconsiderinclusiveapproachesinR&D,productdevelopment,procurement,marketing,sales,andpartnerships.EnsuringfairtreatmentforallWedonottolerateanyformofdiscriminationinourcompany,asstipulatedwithbindingeffectinourCodeofConductandSocialandLaborStandardsPolicy.In2022,wepublishedtwonewpositionpapersonnon-discriminationandnon-harassment,complementingourpositionpaperonDE&I.Inaddition,wehaveestablishedvariousreportingchannelstoensureemployeeshaveaclearpointofcontactshouldtheyexperienceharassmentordiscriminationintheworkplace,oranyotherviolationsofourstandards.Theirfirstpointsofcontactaretheirsupervisors,HRorcomplianceteams.Alternatively,employeescanalsomakeanonymouscallstoourcompliancehotline.In2022,20allegedcasesofdiscriminationwerereportedviathecompliancehotlineandotherchannels,sevenincidentswereconfirmed.Employees145Solidrankingindiversity,equityandinclusionindicesWecontinuetomakeprogressonintegratingdiversity,equityandinclusionwithinourbusiness:•WerankedninthintheWorld’sTopFemaleFriendlyCompanies22listbyForbes,whichidentifiesthecompaniesleadingthewayinsupportingwomeninsideandoutsidetheirworkforces.•IntheFinancialTimesranking,wewereselectedasoneoftheleading100(outofover15,000)companiesondiversity.•WescoredeighthintheGermanDiversityIndexpublishedbyBeyondGenderAgenda.TheindexreflectsthetransparencyofthediversitycommitmentsoftheDAX40Germanblue-chipcompaniesintheirannualandsustainabilityreportsfor2021.•OurCEOBelénGarijowaspresentedwiththeBeyondGenderAgenda2022HonoraryAward“Business”forherandthecompany’soutstandingcommitmenttodiversityandinclusion.•Wewereselectedasoneofthetop11largecompaniesintheLGBTIQ+DiversityPerformanceIndexbyUhlalaGroup•Werankedseventeenthoutof100inthe2022BCGGenderDiversityStudybytheBostonConsultingGroupandtheTechnicalUniversityofMunich.ThisstudyratedmanagementboardandsupervisoryboardgenderdiversityamongGermany’slargestpubliclylistedcompanies.Employees146Health&safetyWetakeresponsibilityforthehealthandsafetyofouremployeeseverysingledayanddoeverythingwecantoprotectthemagainstaccidentsandwork-relatedillnesses.Tothisend,wetakemeasurestopreventhealthissuesfromarisinginthefirstplace.OurapproachtopreventingaccidentsandpromotinghealthWeseektopromotethehealthandwell-beingofouremployeesandsustaintheirlong-termperformanceability,whichinturnnecessitatesasafeworkplace.Wearethereforeconstantlyworkingtofurtherstrengthenourhealthandsafetyculture.Thelosttimeinjuryrate(LTIR)istheindicatorusedtogaugethesuccessofouroccupationalsafetyefforts.Itisaglobalmeasureofthenumberofaccidentsresultinginatleastonedayofmissedworkperonemillionhoursworked.WedeterminetheGroup-wideLTIRbothforouremployeesandsupervisedtemporarystaff.OurobjectiveistolowerLTIRtobelow1.0by2025.Generally,beforestartinganactivityanywhereintheworld,weperformahazardassessmenttoidentifyrisksanddoeverythingpossibletoeliminatethembeforecommencingtheactivityorcommissioningaplant.Ifthisisnotfeasible,weputmeasuresinplacetominimizethelikelihoodofrisksandtheirpotentialimpacts.Hazardassessmentsaretheresponsibilityofourindividualsitesandarethereforeconductedbythem.Sincethestartof2022,wehavebeendevelopingaGroup-widehealthstrategyforouremployeestoenablethemtomaintainandpromotetheirhealth.ThroughtheeffortsofourHealthManagementunit,wearebolsteringourcompanyandhealthcultureatourglobalheadquartersinDarmstadt,Germany.WeexaminetheeffectivenessofHealthManagementusingaperformanceindicatorsystem,basedontheemployees’health-relatedresponsesinourannualanonymousEmployeeEngagementSurvey.WeusethissurveytocalculateourHealthinessIndex,whichaimstoreflectthegeneralstateofhealthofouremployeesGroup-wide.Theindexenablesustoassessthedataatteamlevel(groupsofatleastten),aminimumthresholdthatenablesustoprotecttheanonymityofindividuals.Moreover,HealthManagementatourDarmstadtsitealsomakesuseofthefindingsfromourcompanyinsurancefund’shealthreport,alongwithevaluationsfromourSiteMedicalCenter.Weuseallofthisinputbothtocreatetargetgroup-specificorunit-specificpreventionprogramsaswellastoadvisethelocalmanagement.Whenspecificindicatorssuchasworkplacestressstartrising,additionalconsultationmeetingstakeplacebetweenHealthManagementandtherespectiveunits.RolesandresponsibilitiesOurEHS(Environment,HealthandSafety)managementsystemistheresponsibilityofCorporateSustainability,QualityandTradeCompliance,whichinturnreportstotheChairoftheExecutiveBoard.ThisGroupfunctionsetsobjectives,overseestherespectiveinitiativesgloballyandconductsinternalEHSaudits.LocalEHSmanagersandtheirteamsensurethatourindividualsitescomplywithalloccupationalhealthandsafetylawsandregulations.Theyarealsoresponsibleforlocalprojects,campaignsandprograms.Employees147Employeesconcernedabouttheirhealthorsafetyarepermittedtotemporarilystepbackfromtheirworkuntiltheissuehasbeenresolved.Globally,acrosstheGroup,theyareencouragedtoreportsuchconcernsviaourcompliancehotline.AtourDarmstadtsite,wealsohavesafetycouncilsandcommitteesthatconvenetoaddresshealthandsafetyissues,coordinatingstrategiesandfocusareaswithsiteseniorleaders,healthandsafetyexperts,andemployees.Moreover,HealthManagementattheDarmstadtsitecontributestoembeddingthetopicofhealthintoourcompanyculture.Afterimplementingeachmeasure,theHealthManagementteamasksallparticipantsfortheiranonymousfeedbackontheirexperienceandsuggestionsforimprovement,whichhelpshapethedevelopmentoffurtherinitiatives.AttheDarmstadtsite,ourinterdisciplinaryMentalHealthTeamisworkingtotacklethegrowingchallengessurroundingmentalhealthinanefforttoprotectourworkforceagainstpsychologicalstress.Theteamprovidesouremployeeswithsupportfromasinglesource.Inadditiontothisservice,weofferatelephonehotlineinall66countriesinwhichweoperate,givingouremployeesandtheirrelativesaccesstoconfidentialmentalhealthandsocialcounselingservicesaroundtheclock.SafetydelegatesandhealthpartnersAtoursitesglobally,wehavesafetydelegateswho,inadditiontotheirusualduties,helptheirsupervisorsensurecompliancewithsafetyregulationsandrequirements.Atthesametime,theyactaspointsofcontactfortheircolleaguesregardingsafety-relatedmatters.AtourDarmstadtsiteaswellasotherGermansites,healthpartnersalsoactastheinterfacebetweenouremployeesandHealthManagement.Theyfunctionasahealth-relatedliaisonforcolleagueswhilealsoinformingtheirteamsaboutthehealthprogramsandservicesonoffer.Atthesametime,theymakerecommendationstoHealthManagementregardingemployeeneeds.Ouremployeesundergotrainingbeforetakinguptheirroleasasafetydelegateorhealthpartner.Ourcommitment:PoliciesandcompanyagreementsOurCorporateEHSPolicy(CorporateEnvironment,HealthandSafetyPolicy)describesourfundamentalapproachtooccupationalhealthandsafety.ItisanintegralpartofourEHSmanagementsystemandundergoesanexternalISO45001auditeveryyear.OurGroup-wideHealthPolicyspecifiesourapproachtoensuringworkplacesafetyforouremployeeswhilealsopromotingtheirhealthandwell-being.Inthispolicy,wesetoutourGroup-wideapproachtohealthandsafetymanagement,whichisaimedatpreventingworkplaceaccidentsandoccupationalillnesses.Itisouraimtoensurethatenvironmental,healthandsafetyaspectsarealsorespectedinourpartnershipswithcontractorsthroughouttheentirerelationship,fromstartingajobtocompletion.ThisobjectiveisreflectedinourContractorEHSManagementStandard.AtoursitesinGermany,weabidebycompanyagreementsonoccupationalhealthandsafetythathavebeendrawnupinpartnershipwithemployeerepresentatives.Forinstance,ourOccupationalIntegrationManagementcompanyagreement,whichappliestoalloursitesinGermany,governstheprocedureforemployeeswhohavebeenonextendedsickleave.Theaimistoretainanemployee’spositionwhilealsohelpingtopreventadversehealthimpactsaftertherespectiveemployeereturnstowork.Employees148Wealsohaveoccupationalhealthandsafetycompanyagreementsinplaceat13othersitesinEurope.Thesecoverallactivitiesrequiredtocomplywithnationaloccupationalsafetyregulations,suchasworkplacehazardassessmentsandregularoccupationalsafetyanalyses.Thesecompanyagreementsalsoincludeon-sitehealthoffersforouremployees.SafetycertificationatoursitesAspartofaGroupcertificate,ouroccupationalhealthandsafetymanagementsystemwasISO45001-certifiedat61sitesattheendof2022.Thesitesdefineindividuallythescopeoftheircertification.Forinstance,atourglobalheadquartersinDarmstadt,ISO45001coversaround70%oftheworkforce;weensureoccupationalhealthandsafetyfortheremaining30%ofemployeeswhodonotworkinoperatingunitsaswellasthoseworkingatnon-certifiedsitesthroughourgloballyintegratedmanagementsystem.ThisalsocoversEHSconcerns.Thecertificationprocesshelpsustoidentifyweakareasaswellasopportunitiesforimprovement.Thisenablesustotakeappropriatemeasuresinatimelymannerinordertoensurethehealthandsafetyofouremployeesinthefuture.Othersitesarealsourgedtoapplythisstandard.AccidentratesOuremployeesarerequiredtoimmediatelyreportanyrelevantoccupationalaccidentstoCorporateSustainability,QualityandTradeCompliance,wheretheincidentsareassessed.Ifnecessary,wethenimplementadditionalsafetymeasuresatoursites.Thisprocedureisnowpracticedacrossallofourproductionfacilitiesaroundtheworld.Wetrackthefollowingoccupationalsafetydataacrossoursitesworldwide:•TheLTIRmeasurestheaccidentsresultinginatleastonedayofmissedworkperonemillionhoursworked.In2022,ourLTIRof1.2remainedunchangedincomparisonwiththepreviousyear.Themajorityofincidentsresultinginlosttimewereslips,tripsandfalls,alongwithcontusionsandlacerationsfromtheoperationofmachineryandequipment.Oncemore,in2022,werecordednofatalaccidents.•WeuseourEnvironment,HealthandSafetyIncidentRate(EHSIR)totrackincidents.•Alongsidethisindicator,intheUnitedStateswealsousetheOccupationalIllnessRatetomonitorwork-relatedillnessesandtheirlong-termeffects.ClearrulesofconductExperienceshowsthatmostworkplaceaccidentscanbepreventedbyproperconduct.Forouroccupationalhealthandsafety,itisthereforeessentialthatouremployeeshavetherelevantEHStrainingandcertification.Wenotonlyeducateouremployeesonoccupationalhealthandsafety,butactivelyinvolvetheminourefforts.Forinstance,weaskthemtoparticipateinwalkaboutsandintheselectionofpersonalprotectivegear.Thisinvolvementiscrucialbecauseouremployeesbestunderstandwhattheyneedinspecificworksituations.Thisenablesustocontinuouslyimproveouroccupationalhealthandsafetypracticesandperformance.Group-wide,allnewEHSmanagersmustcompleteathree-dayEHSonboardingthatcoverstopicssuchasoccupationalhealthandsafetyaswellasourBeSafe!safetycultureprogram.Throughthisinitiative,weraiseEmployees149employeeawarenessofoccupationalhazardsandteachthemrulesforsafebehavior.Inaddition,weregularlyprovideoccupationalsafetytrainingatoursitescoveringbothlegalrequirementsaswellasthespecificlocalrisks.PromotingemployeehealthForemployeesatourDarmstadtsite,ourHealthManagementunitoffersspecifichealthservicessuchasmindfulnesscoursesandergonomicsconsultation.Moreover,wecontinuouslyassesstheworkingconditionsandtherespectiveworkingenvironment,makingimprovementsinaccordancewiththelatestscientificfindings.Weuseastandardizedprocessforthis.WepublishahealthcataloginGermanandEnglishthatsummarizesalltheservicesofferedbyourHealthManagementunit.Itcoversvarioustopicsincludingergonomics,nutrition,stress,andmentalhealthissues.In2022,theBKKumbrellaassociation(oftheGermancompanyhealthinsurancefunds)presentedHealthManagementattheDarmstadtsitewiththe“DeutschesSiegelUnternehmensgesundheit”.Itsqualityandeffectivenessinvariouscategorieswereexaminedaspartofanexternalauditingprocessinwhichexpertstookourstrategies,keyfiguresandoffersaswellasanalyzedresultsofemployeesurveysintoaccount.Withthesupportofourcompanyhealthinsurancefund(BKK)andadditionalin-houseinterfaces,HealthManagementwasawardedagoldseal–thehighestpossiblerecognition,receivedbyonlyfiveofthe40auditedcompanies.ProtectivemeasuresandvaccinationcampaignsOurmeasurestoprotectourworkforceagainstCovid-19atoursitesinDarmstadtandGernsheimarebasedontwopillars:•Testing:BytheendofDecember2022,wehadperformedapproximately73,650antigenrapidtestsatourin-housecompanytestingcentersatthetwoaforementionedGermansites.•Vaccinating:InFebruary2021,ourSiteMedicalCenterinitiatedaCovid-19vaccinationcampaignatthetwoaforementionedGermansites.ByDecember2022,wehadadministeredmorethan21,850vaccinedosestoouremployeesinDarmstadtandGernsheimaswellastheirfamilymembers.InadditiontoourCovid-19vaccinationcampaign,wealsoofferedflushotstoemployeesatourDarmstadtandGernsheimsitesinautumn2022,vaccinatingmorethan2,400employees.FitnessinitiativesAcrossGermany,ouremployeescantakeadvantageofofferingssuchasourcompanyfitnessprogramFit@Merck,whichencompassesarangeofdiseasepreventioncoursesthataresubsidizedbyourcompany.Additionally,inDarmstadtandGernsheim,wehaveacompanysportsprogramwith32differentathleticactivities.In2022,wewereonlyabletooffer21differentathleticactivitiesasaresultofCovid-19restrictions.PhysicalsandsupportforouremployeesOurPhysicalAbilityTestandHealthPreservationprocessallowsustoensurethatallemployeesmeetthehealthrequirementsfortheirparticulartasksandduties.Dependingonthejobprofile,someofouremployeesundergopre-hiringphysicalsandphysicalaptitudetests.OurTravelHealth&MedicalAdvisoryServiceassistsemployeeswhotravelabroad,providingthemwithrecommendationsonnecessaryvaccinationsandadviceonhygienerisks.Employees150ENVIRONMENT152Environmentalprotection156Climateaction163Resourceefficiency163Watermanagement167Waste&recycling170Plant,process&transportsafetyEnvironmentalprotectionOurbusinessactivitiesreleaseemissionsintotheairandwaterandgeneratewastewaterandwaste.Inaddition,weusematerialsthatcanadverselyaffecttheenvironmentifnothandledproperly.Weaimtominimizeourimpactontheenvironmentandhavedevelopedstrategiestoimproveourenvironmentalperformance.Thisincludesmakingthemostefficientuseofincreasinglyscarceresources.OurapproachtoenvironmentalprotectionMinimizingnegativeenvironmentalimpactsandtakingmeaningfulclimateactionrequiresaholisticapproachwhilealsoconstantlymonitoringpracticesandperformance.Ourgoalistodecouplebusinessgrowthfromnegativeenvironmentalimpactswhereverpossible.Ourproductionsitesarelocatedinestablishedindustrialandcommercialzones.Beforeacquiringacompany–andthusitsfacilities–wefirstconductanenvironmentalriskassessment,takingintoconsiderationinformationfrompubliclyaccessiblesourcessuchaslocalresidentsandnon-governmentalorganizations(NGOs).RolesandresponsibilitiesTheChairoftheExecutiveBoardandCEOofourcompanyisresponsibleforenvironmentalprotection,whichalsocoversclimateaction,watermanagement,wasteandrecycling,biodiversity,andplantandprocesssafety.HerdutiesincludetheapprovalofoverarchingGroup-wideguidelinessuchasourEHSPolicy.Furthermore,theMerckSustainabilityBoard(MSB)monitorstheGroup-wideimplementationofenvironmentalprotectiongoals.TheGroupfunctionCorporateSustainability,QualityandTradeCompliance(SQ)isresponsibleforsteeringalltherelatedmeasuresglobally.SQseniorleadershipapprovesoperationalstandardsandregularlyreportsonenvironmentalprotectiontotheExecutiveBoard.Everyyear,SQpreparesacomprehensiveenvironment,healthandsafetyreportthatcoverstopicssuchasclimateaction,watermanagement,wasteandrecycling,andplantandprocesssafety.TheExecutiveBoardusesthisreporttosteerthestrategicdirectionandasverificationforourISO14001certifications.Additionally,theExecutiveBoardreceivesamonthlyupdatesothatmeasurescanbeadjustedinatimelymanner.Atourindividualsites,eachsitedirectorisresponsibleforenvironmentalcomplianceaswellasoccupationalhealthandsafetyattheoperationallevel.Atlargerfacilities,thesitedirectorsreceivesupportandadvicefromEHSmanagers,withEHScoordinatorsperformingthisroleatsmallersites.TheselocalEHSunitsreporttothecorrespondingbusinesssectors,workinginclosecollaborationwiththem.AsofDecember31,2022,weemployed149EHSmanagers,supportedatthelocallevelbyadditionalstaffmembers.Withinourbusinesssectors,theOperationsLeadershipCommittee(OLC)makesstrategicdecisionsonissuespertainingtoemissions,energy,water,andwastetopics.ThisbodyconsistsofrepresentativesfromLifeScience,HealthcareandElectronicsaswellasfromSQ.DecisionsmadebytheOLCandanyresultingactionsareimplementedbytherespectivebusinesssector.Onceperquarter,theOLCmembersupdatetheirleadersonmattersrelatingtoenvironmentalprotection,andthisinformation,ifrelevant,isthensharedwiththeMSB.Wheneverdesigningnewsitesorplants,wealwaysinvolveSQ,whichisresponsibleforreviewingtheecologicalaspectsofaprojectandadvisingoursites.Additionally,SQperformsdetailedenvironmentalimpactassessmentsforlarge-scaleprojects.Environment152Ourcommitment:StandardsandstandardoperatingproceduresOurapproachtoenvironmentalmanagementisfoundedonourGroupEHS(Environment,HealthandSafety)Policy,whichhasbeenapprovedbyourExecutiveBoard.Alignedwiththerequirementsofthechemicalindustry’sResponsibleCare®GlobalCharterandtheISO14001environmentalmanagementstandard,thispolicyunderscoresourleaders’responsibilityforenvironmentalprotectionandhealthandsafety.Itisalsoaimedatoursuppliers,callingonthemtolikewiseadopthigherenvironmentalsustainabilityandsafetystandards.OurEHSpolicythuscomplementstheSupplierCodeofConduct(formerlyResponsibleSourcingPrinciples)ofourGroupProcurementfunction.ThroughourContractorEHSManagementStandardweaimtoensurethatourcontractpartnersalsotakeenvironment,healthandsafetyaspectsintoaccount.Internalguidelines,standardsandstandardoperatingproceduresdefinehowweputtheprinciplesofourEHSPolicyintopractice,structureourenvironmentalprotectioneffortsandimplementoccupationalsafetyGroup-wide.Inaddition,wealsohaveinplaceanumberofotherinternalenvironmentalprotectionstandardssuchasourAirEmissionsStandard,WasteManagementStandard,SustainableWaterManagementStandards,andEnergyManagementStandard.PotentialEHSrisksposedbyacquisitions,divestmentsorsiteclosuresareassessedwithinthescopeofduediligence,aprocessdefinedinourEHSDueDiligenceandPostMergerTransactionStandard.Weprioritizenewsiteswhenperformingaudits.MaterialinvestmentsinenvironmentalimpactmitigationEffortstopreventandmonitorair,waterandsoilemissionsentailsignificantexpenseonourpart,asdoesproperwastedisposal.Moreover,wesetupprovisionsforgroundwaterandsoilremediationtoensurethatwecanexecuteallthenecessarymeasures.AsofDecember31,2022,ourprovisionsforenvironmentalprotectiontotaled€148million,94%ofwhichwasattributabletoMerckKGaA,Darmstadt,Germany.AssessingenvironmentalimpactsAsamatterofprinciple,weconductrisk-basedassessmentsalongwithauditsofallourproductionfacilitieseverythreeyearswiththegoalofanalyzingandminimizingourenvironmentalfootprint.ConductedbyCorporateSustainability,QualityandTradeCompliance(SQ),theseassessmentsservetoensurethatourrequirementsarebeingmet,withappropriatecorrectivemeasuresbeingimplementedasneeded.InourGroupEHSaudits,weassessoursites’performanceonafive-tierscale(“excellent”,“good”,“satisfactory”,“poor”and“critical”),whichinturndetermineshowfrequentlyauditsareconducted.Ifthefindingsaredeemedtobegood,weauditthefacilitylessoften,whilesignificantviolationscanincreasethefrequency.In2022,wecommissionedatotalof41audits,whichwereconductedeithervirtuallyoronsite.Almostallauditedsitesreceivedeithera“good”,“satisfactory”rating,onesitewasrated“poor”andnositeswereratedas“critical".Environment153ReportingincidentsandviolationsToreviewcriticalsituations,nearmissesandenvironmentalincidentsasquicklyaspossibleandtakecountermeasures,wehaveasetofreportingproceduresinplacethatallowustotracktherespectiveincident,itsdegreeofseverityandallriskmitigationefforts.WerecordallincidentsGroup-wideandreportthemtotheExecutiveBoardonanannualbasis.Intheeventofamajoroccurrence,ourdigitalRapidIncidentReportSystem(RIRS)promptlynotifiesSQandGroupCommunicationsfunctions,who,ifnecessary,informtheExecutiveBoard.Majorincidentscouldincludefatalities,accidentswithmultiplecasualties,incidentsthatimpactneighboringcommunitiesornaturaldisasterssuchasearthquakesandflooding.ThroughtheRIRS,wecanquicklycoordinatewithallthoseinvolvedandinformtheothersitesimmediatelyoftherespectiveevent.Inaddition,employeesaswellasexternalstakeholderscanreportanyviolationsofourstandardstoGroupCompliance.In2022,werecordedtwosignificantincident-relatedspills.OnetookplaceataproductionsiteinGermany,theotheroneintheUSA.Inneithercasewerepeopleinjurednorwerenegativeenvironmentalimpactsexpected,whichiswhyitwasnotnecessarytocommunicatetheseincidentstothepublic.EnvironmentaltrainingandcontinuingeducationAllnewEHSmanagersarerequiredtocompleteathree-dayorientationcourseatourglobalheadquartersinDarmstadt.Theseminarcoversenergyefficiencyandclimateaction,watermanagement,occupationalsafety,andprocessandplantsafetyalongwithourRapidIncidentReportSystem(RIRS).In2022,weconductedEHSonboardingonline.ISO14001:2015GroupcertificateSince2009,ourcompanyhasheldanISO14001Groupcertificatethatrequiresallproductionsiteswithmorethan50employeestoimplementanenvironmentalmanagementsystemwithpredefinedindicatorssuchasgreenhousegasemissionsandwaterconsumption.Otherfacilitiesarenotobligatedtoundergocertification.TheannualinternalauditreportsandmanagementreviewscarriedoutundertheGroupcertificategiveusabetteroverviewofhowalloursitesareperforming.In2022,95ofoursitesworldwidewerecoveredbytheISO14001certificate.Annualexternalauditsareusedtomonitorourcertifications.AspartofadefinedsampleprocedurefortheGroupcertificate,atotalof12siteswereexternallyauditedin2022,withallauditedfacilitiespassing.Inadditiontoexternalinspections,internalauditsservetoensureGroup-widecompliancewithourrequirements.Environment154BiodiversityatoursitesUnsealedsurfacesrepresentanimportanthabitatforplantsandanimals.Atourfacilities,however,wearerequiredtosealcertainsurfacestominimizetheriskofchemicalsenteringtheecosystem.Whensafetyrequirementspermit,weincreasethenumberofsurfacesthatareunsealed.Basedonanassessmentin2021,severalmeasuresweretakentoincreasebiodiversityatourheadquartersinDarmstadt.Forinstance,severalspeciesprotectionmeadowshavebeencreatedandnestingboxesforcavity-nestingbirdsaswellasbeehiveshavebeeninstalled.Olderbuildingsarealsogreenedwherepossible.In2022,onegreenroofwasadded.Environment155ClimateactionClimatechangeisoneofthemajorchallengesfacingsocietyinthe21stcentury.In2015,theUnitedNationscollectivelyagreedtotakeactiontosignificantlylimittheriseinglobaltemperatures.Sinceclimateactionandenergyefficiencywillpayoffinthelongrun–bothfortheenvironmentandourbusiness–wehavealsomadeitourmissiontohelpstemthetideofclimatechange.HowwearetakingclimateactionWewanttodoourparttopreservetheclimateandcomplywiththeParisAgreementonclimatechange.Therefore,wehavesetourownobjectives:By2030,weintendtolowerourdirect(Scope1)andindirect(Scope2)greenhousegasemissionsby50%comparedwith2020.Weaimtoachievethismainlybyreducingprocess-relatedemissions,implementingenergyefficiencymeasuresandpurchasingmoreelectricityfromrenewablesources.InMay2022,thisnear-termgoalfor2030wasapprovedbytheScienceBasedTargetsinitiative(SBTi),whichindependentlyassessesandapprovescompanytargetsbasedonitsstrictclimatesciencecriteria.Withthisconfirmation,wearecontributingtolimitingglobalwarmingto1.5°C,thuscomplyingwiththerequirementsoftheParisAgreement.Wealsoaimtocover80%ofourpurchasedelectricitywithrenewablesby2030.Moreover,weaimtoreduceourScope3emissionsacrosstheentirevaluechainby52%(pereuroofgrossprofit)by2030.ThistargetwasalsoapprovedbySBTi.By2040,weintendtohaveachievedclimate-neutraloperationsthroughoutourentirevaluechain;thistargetcoversourScope1,2and3emissions.RolesandresponsibilitiesCorporateSustainability,QualityandTradeCompliance(SQ)isresponsibleforoverseeingallclimateactioneffortsthroughouttheGroup,withourindividualsitesandbusinesssectorsworldwideimplementingthenecessarymeasuresatthelocallevel.YoucanfindmoreinformationunderEnvironmentalProtection.Ourcommitment:StandardsandlegalframeworksWehavethreeEHSstandardsinplacetomanageenergyandprocess-relatedemissionsconsistentlyacrosstheGroup,specifically“EnergyManagement”,“Emissions”and“EmissionsofRefrigerants”.WeutilizeaninternalauditprocesstorandomlycheckcompliancewithallEHSstandards.Inadditiontoourownstandards,wearesubjecttoawidearrayofnationalandinternationalenergyandclimateregulations.AtEuropeanlevel,forinstance,wearerequiredtocomplywiththeEUEnergyEfficiencyDirective(2012/27/EU),whichstipulatesthatcompaniesmustconductregularenergyauditsorimplementanISO50001-certifiedenergymanagementsystem.Thesitessubjecttotheserequirementsareresponsiblefortakingtherequisiteactionsandfurthermoreundergoauditsconductedbyinternalandexternalexperts.Intotal,13siteshavebeencertifiedinaccordancewithISO50001todate.Environment156Ourco-generationplantinDarmstadtandheatingplantinGernsheim(bothinGermany)havemadeitnecessaryforustoparticipateinEUemissionstradingsince2005.TheEU2030ClimateandEnergyFrameworkisdesignedtoachievetheobjectivesoftheParisAgreement,withEUemissionstradingplayingakeyroleinthis.TheamendedEUEmissionsTradingDirective(2003/87/EC)tookeffectinApril2018,therebyupdatingthelegalframeworkforthefourthphaseoftheEUemissionstradingprogram(2021-2030)andtighteningtherulesforfreeCO2allowances.Goingforward,wewillthereforeincreasinglyhavetopurchaseCO2emissionallowances.EmissionsreducedfurtherIn2022,wereducedourgreenhousegasemissionsbynearly10%,emittingatotalofapproximately1,667,000metrictonsofCO2equivalents(CO2eq)(2021:1,843,000metrictons).Ourdirectemissions(Scope1)totaled1,425,000metrictonsofCO2eq,withprocess-relatedemissionsaccountingfor1,167,000metrictonsofCO2eqandfueluseaccountingfortheremainder.Indirectemissions(Scope2)totaledroughly242,000metrictonscalculatedaccordingtothemarket-basedmethod(approximately377,000metrictonsaccordingtothelocation-basedmethod).Greenhousegasemissionintensity(Scope1and2)amountedto0.07KgofCO2eqper€ofnetsalesinthisperiod(2021:0.09).In2022,wefocusedoncreatingmoretransparencyonourScope3emissions.TheGreenhouseGasProtocoldefines15categoriesforScope3emissionsfromupstreamanddownstreamactivities.In2022,theseemissionstotaledaround6,616,000metrictonsofCO2eq.Categories1and2(PurchasedGoodsandServicesandCapitalGoods)accountedfor69%ofourtotalScope3emissionsinthisperiod.YoucanfindmoreinformationontheSupplierDecarbonizationProgramunderSustainablesupplychain.Environment157GreenhousegasemissionsinmetrickilotonsofCO2equivalents,Scope1and21xx20192020202120222,028²1,8431,6676211)InlinewiththeGreenhouseGasProtocol,forallpreviousyearsgreenhousegasemissionswerecalculatedbasedonthecurrentcorporatestructureasofDec.31ofthereportingyearandretroactivelyadjustedforacquisitionsordivestmentsof(partsof)companies,orforchangesinemissionfactors(portfolio-adjusted).2)Theincreaseingreenhousegasemissionsasof2020isattributabletotheacquisitionofVersumin2019.Greenhousegasemissions2022inmetrickilotonsofCO2equivalents,Scope3Cat.3:Fuel-andenergy-relatedemissions121ktCat.4:Upstreamtrans-portation&distribution319ktCat.2:Capitalgoods388ktOther298ktCat.1:Purchasedgoods&services4,200ktCat.11:Useofsoldproducts1,290ktEnvironment158Reducingprocess-relatedemissionsWiththeintegrationofVersumMaterials,acquiredin2019,intotheElectronicsbusinesssector,ourprocess-relatedemissionsincreasedsharply–mainlyintheproductionofspecialchemicalsfortheelectronicsindustry.In2022,ourpilotexhaustgasabatementunitinHometown(Pennsylvania,USA)reachedoperationalreadiness,achievingahighefficiencyofalmost99%.Basedonthistechnologywewillinvestinadditionalunitsin2023toreduceprocess-relatedNF3emissionsinsubsequentyears.InourLifeSciencebusinesssector,wearetrackingprocess-relatedemissionsprimarilyfromthereleaseofperfluorinatedhydrocarbons(PFCs).Consequently,wealreadyreplacedseveralemission-intensiveproductionlineswithequipmentthatdoesnotemitPFCs,resultinginareductionofCO2eqby40,000metrictonsbetween2021and2022.In2022,wealsofocusedondevelopingthemethodstoeliminatetheremainingPCFemissionsfromtheseprocesses,whichweplantoimplementandcompletebefore2030.Reducingproduct-relatedemissionsAcrossallthreeofourbusinesssectors,weaimtoreducethecarbonfootprintofourproducts.Toachievethis,wehavestartedapilotprojectforanITtoolthatwillhelpuscalculatethecarbonfootprintofourproductportfolios.Toensureweworkbasedonindustrystandardsandcanrelyoncomparabledataanalyticsandexpertanalysis,wecollaboratewithourpeercompaniesinindustryinitiativessuchasTogetherforSustainability(TfS).ReducingemissionswithinoursupplychainYoucanfindmoreinformationontheSupplierDecarbonizationProgramunderSustainablesupplychain.ShiftingtooceanfreightIn2019,ourHealthcarebusinesssectorinitiatedamajortransformationofitsmeansoftransport,significantlyreducingnotonlyourCO2emissionsbutalsoourlogisticsexpenses.Ourambitionwastoreducegreenhousegasemissionsbyswitchingfromairtoseashipmentwhereverpossible.Weinitiatedtwomodelprojectsontheuseofbiofuelsforroadtransport–onein2021andanotherin2022.Theaimistolearnmoreaboutthesustainabilityofalternativefuels(biofuels)andtheactualCO2reduction.Duringthepilotphasein2021,wereducedCO2emissionsby70%(well-to-wheelanalysis)forshipmentstotheAsia-Pacificregion(excludingChina).GreenbusinesscaseIn2022,weintroducedasustainabilityevaluationforallinvestmentprojectsgreaterthan€10million.Theshadowpricethatmustbeconsideredfortheseinvestmentprojectsis€100permetrictonofCO2eq.Withthesemeasures,weaimtoestablishaclearfocusonreducingCO2emissionsinallourlargecapitalexpenditureprojects.Environment159TransparencyonCO2emissionsandenergyconsumptionWereporttotheCarbonDisclosureProject(CDP)onanannualbasis.Thisorganizationassessesthewaysinwhichcompaniesareworkingtolowergreenhousegasemissionsandminimizetherisksandconsequencesofclimatechange,alongwiththeirstrategyfordoingso.CompaniesareratedfromAtoD-,withAbeingthetopscore.In2022,wescoredB(2021:B)forclimatechangeandB(2021:A-)forwatersecurity.GreenmobilityWeaimtotransitionourcarfleetprimarilytoloweremissionenginesby2025andareworkingtoreducetheaverageemissionsofourvehiclesbyapproximately50%relativeto2020levels.ThroughourGreenFleetpilot,wehelpemployeesatourGermansitesmakethechangetoelectricvehicles.In2022,weincreasedthenumberofchargingstationswhereemployeescanrechargetheircompanyorpersonalcarsto88.Wealsoprovideouremployeesaccesstochargingfacilitiesinothercountries,suchasFrance,Switzerland,theUnitedKingdom,andtheUnitedStates.Forthoseontheroad,weofferthe“Laden@road”program,whichallowsouremployeestochargetheircompanycarsorpersonalvehiclesatroughly160,000stationsacrossEurope.Climate-relatedrisksandopportunitiesInordertocomplywithalldisclosurerequirementsoftheTaskForceonClimate-RelatedFinancialDisclosure(TCFD),westartedwithadetailedassessmentofclimate-relatedrisksandopportunities.In2022,weconductedaqualitativescenarioanalysis,whichwillbefollowedbyaquantitativestudyin2023.ScenarioanalysesareamongthekeyrecommendationsoftheTCFDandarecloselyrelatedtoEUtaxonomy.TheyarenowalegalrequirementintheUnitedKingdom.Thisendeavorisaimedatunderstandingtherisksandopportunitiesourorganizationmayfaceduetoclimatechange.Inourqualitativeanalysis,wehaveidentifiedboththetransitionrisksassociatedwithaworldmovingtowardsnetzeroaswellasthephysicalclimaterisksrelatedtoasocietythatdoesnotcommittodecarbonization.MoreinformationcanbefoundintheTCFDindex.EnergyefficiencyIn2022,avarietyofenergyefficiencyinitiativeshelpedussavearound3,000metrictonsofCO2eqatourglobalheadquartersinDarmstadt(1,700metrictonsofCO2eqin2021).Forinstance,weimprovedheating,ventilationandairconditioningsystemsandreducedbaseloadsforcompressedairsystems.AspartoftheenergyandwaterefficiencyprogramofourLifeSciencebusinesssector,werolledoutnewtoolsandgovernancestructuresin2022tohelpusassessprojectstosaveenergyandwater.Theenergyandwaterefficiencyprogramhadacapitalexpenditurebudgetof€4.6millionin2022,whichwewillincreaseto€9.3millionin2023.In2022,weformallytrained18Facility,PlantEngineering,andEHSManagersfromsitesgloballyonenergymanagement.Aspartofourongoingefforttoexpandrenewableenergy,ourLifeSciencebusinesssectorinitiatedtheinstallationofa700kWsolarphotovoltaic(PV)systematourDarmstadtsiteandanadditional100kWsolarPVEnvironment160systematoursiteinBangalore,India.Wealsoenteredintoa30-yearlandleaseagreementwiththelocalelectriccompanythatservesourSheboygan,Wisconsin(USA)sitetoinstalla2,250kWsolarPVsystemonourland.Wewillreceiveandretaintherenewableenergycertificatesgeneratedbytheseprojects.In2022,severalofourenergyefficiencyinvestmentprojectsatourHealthcaresitesachieveddouble-digitpercentagepointscope1emissionsreductions.InVevey,Switzerland,weinvestedinreplacingthenaturalgas-fueledwhitesteamgeneratorwithanelectricalmodel,achievingareductionof15%,andinAubonne,Switzerland,weupgradedcoolersandinstalledheatpumps,achievingareductionof25%.WealsoputinplaceheatpumptechnologyinoneofourcoredevelopmentsitesinIvrea,Italy,whichcounterbalancestheGHGemissionsassociatedwithamajorexpansion.SlightdeclineinenergyconsumptionWeconsumed2,432gigawatthoursofenergyin2022,comparedwith2,454gigawatthoursin2021.Ourenergyintensityrelativetosalestotaled0.11kWh/€in2022(2021:0.12kWh/€).PurchasingelectricityfromrenewablesourcesIn2022,wefurtherstrengthenedourfocusonpurchasingelectricityfromrenewablesources.Inthisperiod,wesourced47%ofourpurchasedelectricityfromrenewableenergies,meaningdirectsupplycontractsandenergyattributecertificates(2021:30%).Theshareofourtotalenergyconsumptionbyrenewableenergiesincreasedto20%in2022(2021:13%).Aftersigninga12-yearVirtualPowerPurchaseAgreement(VPPA)withtheAzureSkyWindandStorageproject,theprojectwentintocommercialoperationinMay2022.Furthermore,in2022,weexpandedourrenewableenergycommitmentthroughanotherVPPAwitha16-yearterm.Withthesetwodeals,wecover90%ofthecompany’selectricityconsumptionintheUnitedStatesand55%globally.WearecoveringthepowerneedsofmultipleSouthAmericansites(forexampleArgentina,Chile,Guatemala)throughrenewableenergycertificates.ThesameappliestoseveralofoursitesinChina.Inlinewithourrenewableenergystrategy,wecompletedanassessmentoftheEuropeanrenewableelectricitymarketstodetermineourbestpathforward.Thisassessmentwillguideourrenewableelectricitypurchasingstrategyinthecomingyears.Wearecurrentlyintheprocessofselectingprojectdeveloperstoachieveourgreenelectricitysourcingobjective.Environment161EmployeeincentivesWeencourageourpeopletodotheirparttopreservetheclimatethroughhelpfulinformationandtipsonourintranet.Inournewsletterweregularlyreportongroup-wideclimateprotectionmeasures.Moreover,wesupportmembersofourworkforcewhoareseekinggreenermodesoftransportation:•AtourGermansubsidiaries,weofferasubsidyof€150towardsmonthlyleasepaymentstoemployeeswhooptforanelectriccompanycar.•AtourGermansites,wealsoencourageworkerstouseclimate-friendlyformsoftransportationthrough“bike4me”,aprogramenablingthemtoleaseabikeatdiscountedrateswithpaymentscomingoutoftheirpre-taxincome.•IntheUnitedStates,ourLifeScienceemployeescanchoosefromseveralsubsidiesincludinguptoUS$3,500towardsthepurchaseorleaseofqualifyinghybridorelectricvehicles,US$1,000towardstheinstallationofsolarphotovoltaicsystemsorsolarthermalcollectorsattheirhomes,andUS$100towardsthecostofahomeenergyassessment.Environment162ResourceefficiencyWatermanagementWaterisbecomingincreasinglyscarceglobally.Sinceourcompanyalsodependsontheavailabilityofwater,sustainablewatermanagementisanimportantpartofourenvironmentalprotectionefforts.Ourwastewatermayalsocontaintracesubstances,suchaspharmaceuticalactiveingredientresidues.Wecontinuouslyaimtoimproveourwaterprotectionactivities.Thisincludesadaptingourpracticestoincreasinglystrictlegalrequirements.OurapproachtosustainablewatermanagementTous,sustainablewatermanagementmeansobtainingfreshwaterordischargingtreatedwastewaterwithoutnegativelyimpactingaquaticecosystems.Wearealsoconcernedwithaddressingwaterscarcity.Todeterminewhetherasiteislocatedinawater-stressedarea,weapplyariskfactoroftheAqueductWaterRiskAtlasoftheWorldResourcesInstitute(WRI).Wewanttoreducetheenvironmentalimpactofourwastewaterandmakeourprocessesmorewater-efficient.Inthemediumterm,wewillalsotakeintoaccountwater-relatedrisksthatexistinoursupplychainwhenpurchasingimportantrawmaterials.Inthelongterm,weintendtotransparentlymapwateruseandenvironmentalimpactsthroughouttheentirelifecycleofourproducts.Tothisend,wehavedefinedtwotargets:First,by2025,weaimtolowerourMerckWaterIntensityScoreby10%comparedto2020.Second,by2030,wewanttoreducepotentiallyharmfulresiduesinourwastewaterbelowtheno-effectthreshold.OurregularEHSauditsatourproductionanddevelopmentfacilitiesalsoreviewsite-specificwatermanagementpractices.Ourwatermanagementeffortsfocusmoreheavilyonourmanufacturingsitesthanonouradministrativefacilitiesbecauseproductiongenerallyposesahigherrisktoaquaticecosystems.RolesandresponsibilitiesTheGroupfunctionCorporateSustainability,QualityandTradeCompliance(SQ)isresponsibleforwatermanagement.Atoursites,engineersworkinclosecollaborationwithourEHSmanagerstolowerwaterconsumptionandtreatwastewater.FurtherinformationcanbefoundunderEnvironmentalprotection.Ourcommitment:StandardsandproceduresOurGroup-wideSustainableWaterManagementPart1–Wastewater,SustainableWaterManagementPart2–WaterUseandSustainableManagementPart3–WaterRiskManagementstandardsdetailhowweintegratemechanismsofsustainablewatermanagementintoourmanagementsystem.AllthreestandardsarebasedonthecommitmentswemadeundertheResponsibleCare®initiative.Atthesametime,ourSustainablewatermanagementprinciplessettheframeworkforthethreeaforementionedstandards.OurWastewaterStandarddefinescriteriaforassessingourwastewaterdischargesintotheecosystem.Italsohelpsustoachieveourtargetasregardstracesubstancesinwastewaterfromouroperations.TheWaterUseStandardsetsoutmandatoryGroup-widerequirementsfortheresponsibleconsumptionofwater.TheWaterRiskManagementstandardestablishesawayforustomanagetherisksthatarisefromdirectorindirectwaterEnvironment163extractionandalsocoversriskssuchascontaminatedrainwaterandflooding.WeperforminternalEHSauditstoverifythatoursitescomplywithourthreestandards.Theyareallrequiredtomeasureandassesstherisksandimpactsofthehazardoussubstancesintheirwastewater.Moreover,theymustalsoanalyzewithdrawalandwastewaterrisksandcomplywiththerespectiverequirementsofthelocalauthorities.WaterwithdrawnfromourownsourcesForthemostpart,wedrawwaterusedforourproductionprocessesfromourownwellsandsourcedrinkingwaterfromlocalsuppliers.Indoingso,wedonotwantwaterextractiontoimpairanyprotectedareas,sensitiveecosystemsorhabitats.Ouraimistoextractlesswaterfromourownwellsthantheamountsapprovedinourpermits.Atthesametime,wekeepaneyeontrendsthatcouldpotentiallyleadtosourcesbeingreclassifiedinthefuture.Waterwithdrawals(millionsofcubicmeters)–2022GroundwaterDrinkingwater(fromlocalsuppliers)Surfacewater(rivers,lakes)RainwaterThecoolingwaterusedforourproductionprocessesgenerallyrunsinacircularsystem.Dependingonregulatorystandardsandtheenergyfootprint,wesometimesusefreshwaterforcoolinginaonce-throughsystem.However,thisisonlydoneinregionswithhighfreshwateravailability.Forcertainapplications,wetreatproductionwastewaterandreuseit.In2022,werecycledatotalof20.7millioncubicmetersofwater(2021:23.5millioncubicmeters).Environment164UsingwatermoreefficientlyWeseektominimizeourimpactonwateravailabilityinthevicinityofoursites.In2022,wewithdrew13.2millioncubicmetersofwaterintotal(2021:13.5millioncubicmeters).Localconditionsdeterminewhetherasufficientwatersupplyisavailable.Inourwaterconservationefforts,wepayparticularattentiontositesinwater-scarceareas.Toimproveourwaterefficiency,wehavethereforedefinedanintensityscore–theMerckWaterIntensityScore.Thescorerelatestotheamountofwatereitherpurchasedorwithdrawnfromourownwellsatasitetothenumberofhoursworked,whiletakingthelocalavailabilityofwaterintoaccount.TheGernsheimsite(Germany)isexcludedfromboththescoreandourwaterconservationeffortsbecausewemustextractaminimumwaterquantityfromourownwellsinordertocomplywithregulatoryrequirements.In2022,weloweredtheMerckWaterIntensityScoreby8.6%incomparisonwiththebaselineyear2020(2025target:10%reduction).OursiteinRiodeJaneiroconductedaprojecttoreducewaterconsumptionbyupgradingtheon-sitewastewatertreatmentplantandreusingtreatedwastewaterinthecoolingtowers.Aftertwoyearsofimplementation,theaverageannualvolumeofwaterthatisreusedisapproximately20,000cubicmeters/year,whichcontributestogetherwithotherwatersavingmeasurestoareductionof33%oftotalwaterintakecomparedto2020.AnotherexamplecanbefoundatoursiteinMollet(Spain),wherethereplacementofwaterscrubbersfordrytechnologydedustersin2021and2022ledtoestimatedwatersavingsof12,400cubicmeters/year.OurwastewaterIn2022,wegeneratedatotalof12.4millioncubicmetersofwastewater(2021:13.3millioncubicmeters).Thisconsistedofaround8.6millioncubicmetersoffreshwater,whichwedischargedintosurfacewaters.3.8millioncubicmeterswasclassifiedas“otherwater”andwastreatedatexternaltreatmentplantsordisposedofinanecologicallysustainablemanner.Wetakeextensivemeasuresdesignedtoensurethatourcompanycomplieswiththerespectivelegalrequirementswhendirectlydischargingwastewaterintoaquaticecosystems.Beforeweobtainadischargepermit,thelocalauthoritiesreviewtheprofileofthelocalaquaticecosystemsonsitetoensurethattheywillnotbecompromisedbyouractivities.54%ofourtotalwastewaterwasdischargedbythreeofoursites.OurGernsheimsite(Germany)dischargesitstreatedwastewaterintotheRhineRiverandourOnahamasite(Japan)intothePacificOcean.ThewastewatergeneratedatoursiteinDarmstadt(Germany)istreatedinourowntreatmentplantsbeforebeingreleasedintotheSchwarzbach/RiedCreek,atributaryoftheRhineRiver.Thevolumeoftreatedwastewaterwedischargerepresentsapproximately2,7%oftheaverageannualwatervolumeoftheSchwarzbach/RiedCreek,withthestatutoryregulationscurrentlyinforceservingasorientation.Wearepreparingforapotentialtighteningofthestatutoryrequirementsondischargingtreatedwastewater.WehavebeenexpandingourcentralwastewatertreatmentplantinDarmstadtbyaddingafourthpurificationstage.Itscurrenttreatmentperformanceofupto98%(2021:98%)istobefurtherincreasedinthefuturethankstoactivatedcarbonfilters.Weareplanningtocommissiontheimprovedplantattheendof2023.ResiduesinwastewaterWecontinuouslyworktooptimizeourproductionstreamsandpurificationprocessesinordertoconservewaterandminimizeresidues.Anexperthasbeenappointedforeachofourbusinesssectorstoprovideguidanceforoursites.Apartfromaimingtoreducetheamountofpharmaceuticalactiveingredientresiduesinwastewater,weexpandedourmeasurestoincludeallsubstanceswithwater-hazardouspropertiesin2022.Alltherelevantsiteshavetheirownwastewatertreatmentplantsandregularlyanalyzetheirwastewatertocheckforharmfulsubstances.Environment165Wealsoprocessantibioticactiveingredientsonasmallscale.Topreventadverseeffectsonpeopleandtheenvironment,thewastewatergeneratedfromtheseactivitiesundergoesanadditionalpurificationprocess.Onlythendowedischargeitintotheecosystem,therebyminimizingremainingantibioticresidues.Whenitcomestodischargingwastewater,westrictlyadheretogovernmentregulations.However,eventhoughwemeetallapplicablerequirements,slightamountsoftracesubstancesstillendupintheecosystem.Ourtargetthereforegoesbeyondthestipulationsoflegalrequirements:By2030,weplantoreducepotentiallyharmfulresiduesinourwastewatertobelowtheno-effectthreshold.Tothisend,weareundertakingmultipleprojectsteps.Wecompletedthefirststep–identifyingtherelevantsites–in2022.Thenextstepswillbeconductingariskassessmentfortherelevantsubstances,assessinghowhighthedeviationfromtheno-effectthresholdis,andimplementingimprovementactions.AssessingourwatermanagementpracticesInadditiontoreportingonourclimateactionefforts,wealsoreportwater-relateddatatotheCDP,whichcollectsenvironmentaldatafromcompaniesonceayear,evaluatingtheirprocessesandperformanceonascalefromAtoD-.In2022,wewereawardeda“B”forourwatermanagementpractices(2021:A-).Environment166Waste&recyclingAlthoughwastemaycontainvaluablerawmaterialsthatcanbereusedintheproductionstream,itcanalsoposeawiderangeofriskstotheenvironment.Wethereforeconsideritessentialtoeitherpreventorrecycleasmuchofourwasteaspossible.OurapproachtowasteandrecyclingWeaimtolimitthelossofrawmaterialsandreducetheimpactofourwastedisposalpracticesonecosystems.Tothisend,weareworkingtolowerourWasteScore,ourkeywastemanagementindicator,by5%by2025(2016baseline).Westrivetopreventthegenerationofwasteby,forinstance,developingnewproductionprocessesoroptimizingexistingones.Whenpreventionisnotfeasible,wedoourbesttorecovermaterialsorenergyfromthewastewegenerate.Ourwastescoringsystemhelpsussupportacirculareconomy.Wasteseparationmakesitpossibletorecoverandrecyclerawmaterials,whileunrecyclablewasteisdisposedofinanenvironmentallysustainablemannerinlinewiththestrictestwastedisposalstandards.Indoingso,wetakelocallegalregulationsaswellastheavailabledisposaloptionsintoaccount.ResponsibilityforthewastedisposalprocessAsageneratorofwaste,weareresponsiblefortheultimatedisposalofourwasteandthereforechooseourserviceproviderswiththeutmostcare,contractuallystipulatingdisposalrequirements.Weconductrandomauditstoverifytheircompliancewithourdisposalstandards,especiallywhenitcomestohazardouswaste.RolesandresponsibilitiesOurCorporateSustainability,QualityandTradeCompliance(SQ)functionbearsoverallresponsibilityforourwastemanagementandrecyclingpractices.Additionally,oursiteEHSmanagersareresponsibleforimplementingourrequirementsatthesitesandformaintaininglegalcompliancewiththeapplicableregulations.WehaveaGroup-widecommitteeconsistingofexpertsfromSQandourbusinesssectorstocoordinateourapproachtowastemanagement.WastemanagementformspartofourGroup-wideenvironmentalmanagementsystem,with95sites(2021:90)certifiedtoISO14001.Inadditiontoundergoingexternalcertification,wealsoconductinternalEHSauditstoreviewourwastemanagementpractices.Moreover,weregularlyhostactivitiessuchasEHSforumsandconferencestokeepourlocalEHSmanagersandsitedirectorsuptodateonthetopicandtoraiseawareness.FurtherinformationcanbefoundunderEnvironmentalprotection.Ourcommitment:InternationalguidelinesandrequirementsOurGroup-wideEHSWasteManagementStandardprovidesaconsistentframeworkforwastemanagementacrossallofoursites,definingorganizationalstructuresandminimumrequirements.ThisstandardalsostipulatesthatallfacilitiesdocumenttheirwastebytypeandquantityandreportthesedatatoourSQfunction.Environment167SystematicwastereductionWeuseavarietyofmethodsforrecycling,recoveringanddisposingofthewastewegenerate,eachofwhichhasadifferentimpactontheenvironment.Tosystematicallyaccountfortheseeffects,wehaveputinplaceawastescoringsystemthatallowsustocomparetheamountofwasteourindividualsitesgenerateandtrackourvariouswastestreams.Inthissystem,ourwastestreamsarebrokendownintofivecategoriesbypercentage:landfilling,thermaldisposal,waste-to-energy,recycling,andprevention.Thispercentageisthenmultipliedbyafactorthatincreasesbasedonthedisposalmethod’senvironmentalimpact.ThetotalfromeachcategoryisaddedtogethertoyieldourtotalWasteScore.Preventedwasteismultipliedbyafactorofzero,thusloweringtheoverallscore.2016443120224042025421ThermalDisposalWaste-to-EnergyRecyclingThermalDisposalWaste-to-EnergyRecyclingLandfillingLandfilling5%x1015%x817%x458%x3-8.8%ReductionGoalMostfavoredoptionQualityLevelLeastfavoredoptionMerckWasteScore1)Thebasewasretroactivelyadjustedowingtosubsequentdatacorrections.ReducingtheenvironmentalimpactsofwasteWeareaimingtoreduceourWasteScoreby5%by2025comparedwith2016.Toachievethisgoal,wecontinuouslyexamineourproductionprocessesanddisposalmethodstoidentifypotentialareasforimprovement,anendeavorsupportedbytheEHSunitsofthebusinesssectorsateachsite.Theyregularlydiscussbestpractices,sharelessonslearnedacrossoursitesanddrivethetransitiontogreenerdisposalmethods.In2022,wesucceededinreducingourtotalWasteScoreby8.8%relativeto2016.Theamountofwastewegeneratedin2022increased,totaling371metrickilotons(2021:214metrickilotons).Soil,constructionanddemolitionwasteaccountedfor53%ofourtotalwastein2022(2021:20%).OurWasteScoredoesnotfactorinthistypeofwaste,whichcanrarelybeavoidedandmustbediscardedinaccordancewithclearlyprescribedmethods.Environment168PromotingthecirculareconomyThroughourProMec(ProgressiveMaterialEconomy)initiativeattheDarmstadtsite,wearepromotingasustainable,resource-efficientcirculareconomy.Wearerefiningoursolventrecyclingpractices,therebyminimizingtheadverseenvironmentalimpactsfromthedisposalofourproductionwaste.TogetherwiththeTechnicalUniversityofDarmstadt(TUDarmstadt),wecontinuetodevelopadigitalplatformfortheoptimumuseofwasteanditsavoidance.Theprojectaimstobringtogetherwastegeneratorsandspecializedwasterecyclers.Furthermore,itwillbeaplatformforasecondarymarket.Additionally,ourHealthcareGreenTeamscommunitysharescirculareconomybestpractices.In2022,wefosteredabestpracticesharingcommunity,whichledtotheestablishmentofcircularhubsatfivemanufacturingsites(VeveyandAubonneinSwitzerland,GuidoniaandIvreainItalyandDarmstadt)topromotetheexchangeofunusedmaterialsandgivethemasecondlife.Shiftingfromlandfiltowaste-to-energyAtoursiteinSt.Louis,Missouri(USA)weemploywaste-to-energyrecoveryforvastportionsofourwasteinsteadoflandfillingit.Asoftheendof2022,thisappliedto1,310metrictons(2021:781).Furthermore,thesiteisplanningtoshiftfurtherwastestreamsfromlandfilltowaste-to-energyrecovery.Environment169Plant,process&transportsafetyPreventingharmtohumanhealthandtheenvironmentisoneofourtoppriorities.Wehavemanagementsystemsinplacetohelpensurethesafetyofourplantsandprocessesandtoprotectouremployeesandtheenvironment.Inaddition,wedoeverythinginourpowertoensurethatourchemicalandpharmaceuticalcompoundsaretransportedandstoredproperly.Ourapproachtoplant,processandtransportsafetyWeseektominimizemanufacturingprocesshazardswhereverpossibleinordertopreventworkplaceaccidents,productionoutagesandchemicalspills,whichiswhyweregularlyreviewourapproachtoplantandprocesssafetyandcontinuouslygaugeitusingourEHSperformanceindicators.Moreover,allourshipmentsaretoreachourcustomersandsitessafely,undamagedandwiththerequiredsafetyinformation.Severalofthematerialswestoreandtransportareclassifiedashazardous.Thestorageofsuchdangerousgoodsandthetransportthereof–whetherbyroad,rail,air,orwater–aregovernedbyglobalregulations.Tominimizeriskstopeopleandtheenvironment,weapplystrictsafetyrequirementsacrosstheGroupthatalsocomplywithapplicablelaws.Weconductregularreviewstoensureourownwarehousesaswellasthoseofthirdpartiescomplywiththeseregulations.In2022,nothird-partyauditswereconductedduetoCovid-19.Wetrainouremployeesregularlyinanefforttopreventhumanerrorandalsotodetecttechnicaldefectsbeforetheycancauseharm.RolesandresponsibilitiesOverridingresponsibilityforplant,processandtransportsafetylieswiththeGroupfunctionCorporateSustainability,QualityandTradeCompliance(SQ),whichcoordinatesplantandprocesssafetyforthecompanyanddefinesGroup-wideEHSstandardsandregulations.Inaddition,ourindividualsitesaresubjecttonationalandinternationalregulationsgoverningenvironmentalstewardshipandpublicsafety.Atthelocallevel,therespectivesitedirectorsareresponsibleforensuringcompliancewithallsafetyrequirements.Ifrequired,wehaveappointedanEHSmanagerforoursitesaswellasadangerousgoodsmanagerforsiteswithlogisticsactivitieswithrelevantamountsofhazardousmaterials.ThisrolecorrespondstotheEUregulationspertainingtothe“DangerousGoodsSafetyAdvisor”.Bothindividualsadvisethesitemanageronplant,processandtransportsafetyandregularlymonitorcompliancewithsafetyrequirements.Ourcommitment:InternalstandardsandinternationalrulesToensuresafeoperationthroughoutthelifetimeofaplant,ourGroup-wideEHSstandardscontainspecificrulesforproductionplantsandprocesses.Theseincludespecificationsthatdeterminehowspecialriskanalysesandhazardassessmentsaretobecarriedout.Wehavealsodefinedmeasuresfortheeventofaccidentalreleaseofchemicalsubstancesandforfireprotection.Environment170OurGroup-wideEHSstandardsstipulatethesafetylevelsforthestorageofhazardousmaterialsatoursites.Alongwithsupplementarystandardoperatingproceduresandbestpracticedocuments,theseEHSstandardsdescribethetechnology,equipmentandorganizationalinfrastructureneededtoachievetheappropriatesafetylevels.Contractwarehousesmustalsoadheretoourstrictsafetyrequirements.Beforewesignacontractwithanoperator,theymustsubmitastatementdetailinghowtheymeetourprerequisites.OurGroup-wideEHSstandardsalsodefinethetechnicalandorganizationalrequirementsforsuchwarehouses.OurGroupTransportSafetyStandardisbasedontheUnitedNationsRecommendationsontheTransportofDangerousGoods.Thisguidelineisespeciallyimportantforsitesincountrieswithinadequatelocalregulationscoveringtheconveyanceofhazardousmaterials.AssessingpotentialrisksBeforecommissioningaplant,wedraftasafetyconcept,whichissubjecttocontinuousreviewthroughouttheentirelifetimeofthefacility.Itisupdatedasneededuntilthefacilityisdecommissioned.Thissafetyconceptcontainsanoverviewofpotentialrisksandspecifiescorrespondingprotectivemeasures.Intheeventthatalterationsaremadetoaplant,wereassessthehazardandrisksituation.OurRiskManagementProcessguidesalloursitesinidentifyingandassessingrisksandservestodevisefurthermeasurestominimizethem.WeuseinternalEHSauditstocomplementtheinspectionsconductedbyourEHSanddangerousgoodsmanagersinordertoensurethatoursitescomplywithprocess,plant,transport,andstoragesafetyregulations.Normally,theseauditsareconductedeverythreeyearsatproductionsitesandeveryfouryearsatwarehouseanddistributionsites.Ifmajorshortcomingsareidentified,were-audittherespectivesitethefollowingyear.Conversely,wemaydecidetoextendtheperiodbetweenauditsatfacilitieswhere,basedonthefindingsfrompreviousaudits,wedeemthepotentialrisktobelow.Oursitesarerequiredtorectifyanydeficienciesdiscoveredduringtheaudit,withtheauditorsubsequentlycheckingwhetherthespecifiedcorrectiveactionshavebeentaken.In2022,weconducted41EHSauditsinaccordancewithourGroup-wideEHSstandards.WereporttransportationincidentsandaccidentsinaccordancewiththerecommendationsontheTransportofDangerousGoods–ModelRegulations(UNOrangeBook,7.1.9)inconjunctionwiththecriteriaoftheEuropeanAgreementconcerningtheInternationalCarriageofDangerousGoodsbyRoad(ADR,1.8.5.).Therewasnoreportableeventinthereportingperiod.Environment171KeepingacloseeyeonsafetyWetrackEHSperformanceindicatorsatallproductionandwarehousefacilities,aswellasatmajorresearchsites,includingbothaccidentsandnearmisses.Weinvestigateeachindividualincidentandthendeviseappropriatecountermeasuresinanefforttoreducethelikelihoodofsucheventsreoccurringinthefuture.EHSperformanceindicatordataarereportedonceamonthwithineachbusinesssector,withtheExecutiveBoardreceivingreportsonthetopiconceperyear.Fourindicatorsareparticularlyimportanttous:•UnderourEHSIncidentRate(EHSIR),wetrackandevaluateallmajorandminoraccidentsandincidentsaswellasfurtherEHS-relevantincidents.TheEHSIRcoversbothourownemployeesaswellasthoseofcontractors.Tocalculateit,westatethenumberofincidentsandtheseverityoftheeventinrelationtothenumberofhoursworked.ThelowertheEHSIncidentRate,thesaferthesiteis.In2022,theratiowas2.8(2021:3.9).Thesignificantlylowerrateisattributabletothefactthatwehavenowfullyincludedallofficesitesintheassessment.•TheEHSIRalsoincludesourLossofPrimaryContainment(LoPC)indicator.In2022,werecordedtwosignificantincident-relatedspills.OnetookplaceataproductionsiteinGermany,theotheroneatasiteintheUnitedStates.Inneithercasewerepeopleinjurednorwerenegativeenvironmentalimpactsexpected,whichiswhyitwasnotnecessarytocommunicatetheseincidentstothepublic.•TheEHSLeadingRate(EHSLR)reflectsthenumberandtheresultsoftheanalysesofnearmissesandcriticalsituations.•FortheLostTimeInjuryRate(LTIR)wesetourselvesthegoalofbringingourGroup-wideLTIRbelow1.0by2025(numberofaccidentsGroup-wideresultinginatleastonemisseddayofworkpermillionhoursworked).In2022,ourLTIRof1.2remainedunchangedincomparisonwiththepreviousyear.InJanuary2022,weharmonizedourapproachtoauditsandreportingbyintroducingstandardizedthird-partywarehouseauditsbyEHSmanagers.Thisapproachwillhelpustomoreeffectivelyidentifyareasforimprovementatthird-partywarehousesandourinterfaces,andbettercomparethethird-partywarehouseswitheachotherandwithourownwarehouses.Employeetrainingandbest-practicesharingInlinewiththeirspecifictasksandresponsibilities,ouremployeesundergoregulartrainingthatisconductedbyeithertheirrespectivesupervisororourEHSmanagers.TheypresentGroup-wideEHSstandardsaswellassite-specificstandardsandprocesses,addresschangestointernationalrequirementsandexplaintheproperproceduresfordealingwithincidents.Inaddition,allnewlyhiredEHSmanagerscompleteintroductorycoursesonplantandprocesssafetyduringtheirEHStart-up!onboarding.Intheinterestofimprovingsafety,weconsideritextremelyimportanttocontinuouslysharebestpracticesandlessonslearned.Onceamonth,forinstance,sitedirectorsandEHSmanagersparticipateinsafetyleadershipcallstolearnfromincidentsatotherfacilitiesandimplementpreventivemeasures.Additionally,theEHSmanagersoftheindividualsitesregularlyholdlessons-learnedsessions.Environment172COMMUNITY174CommunityengagementCommunityengagementWeseeourselvesaspartofsociety–bothatourindividualsitesaswellasworldwide.Ouraspirationistohelpshapesociety–throughourproducts,technologiesandcommunityengagement.Thatiswhyweworkwithouremployeestopromoteadiverserangeofsocialinitiativesthathelptacklechallengesatthelocallevel.OurapproachtocommunityengagementWorldwide,wearedeeplycommittedtosupportingthecommunitiesinwhichourvarioussitesarelocated.Inthiscontext,wefocusonhealth,educationandcultureaswellasenvironmentalprotection.Moreover,weprovidedisasterreliefandoffersupporttopeopleinneedinthevicinityofoursites.Inparticular,weadvocateforimprovingaccesstohealthforpeopleworldwide.Wedothisbygettinginvolvedinnumeroushealthcareprojectsandpurposefullycontributingourexperienceinhealthcare.Wealsopromotecultureandscienceeducation.Thishasalongtraditioninourcompany.Asascienceandtechnologycompany,wechampioncreativity,thejoyofdiscoveryandcuriosityaswellasthecouragetopushboundaries.Protectingtheenvironmentandusingnaturalresourcesresponsiblyisataskforusall.Therefore,wesupportvariousinitiativesaroundtheworldthathelpraiseenvironmentalawareness.Weregularlyevaluatetheachievementofobjectivesandtheimpactofourprojects.Ouranalysisisbasedontheso-callediooimethod(input–output–outcome–impact)developedbytheBertelsmannFoundation.Inthefirststep,wemeasureourinputbasedontheproductormonetarydonationsmadeandthetimeouremployeesinvestinvolunteerprojects,forinstance.Inthesecondstep,werecordtheimmediateoutput,forexamplethenumberoforganizedtrainingprogramsthatweremadepossiblethankstoourfinancialdonations.Wearealsointerestedintheimpactachievedforthespecifictargetgroup.Ourgoalistoensurethatourcommunityengagementcontinuestohaveapositiveimpactonsociety.Forthisreason,weareconstantlyworkingtomakethesustainableimpactofourprojects(outcomeandimpact)measurablefortherespectivetargetgroups.Theimpactofourprojectsisparticularlyimportanttous,whichiswhywemainlyinitiateprojectsthataimtoimprovespecificsocialsituationsorsolvesocietalproblems.86%ofourprojectspendinggoestowardsthis.Wealsosupportshort-termandone-timecharitableactivitiesaswellasinitiativesthatarebeneficialtoourbusiness(e.g.inrecruitingstaff)ontheonehandandcanalsohelpthecommunityontheotherhand.Togetherwithpartnerorganizations,wesupportmanylong-termprojectsandformstrategicpartnerships.Thisenablesustostrengthenourrelationshipwithvariousstakeholdersandhelpsreinforceoursociallicensetooperate.Community174RolesandresponsibilitiesTheGroupfunctionCorporateSustainability,QualityandTradeCompliancesetstheframeworkandrecordsdataonourGroup-widecommunityengagement.ThecoordinationoftheDeutschePhilharmonieMerckisalsoamongitsresponsibilities.TheGlobalHealthunitwithintheHealthcarebusinesssectorsteerstheMerckSchistosomiasisEliminationProgramandtheGlobalPharmaHealthFund(GPHF).Furthermore,theGlobalStrategicPartnershipunit,whichisalsopartofHealthcare,coordinatesEmbracingCarers.Inaddition,ourbusinesssectorsarelaunchingtheirownprojects,suchastheeducationalprogramSPARK™.Oursubsidiariesabroadareindependentlyresponsiblefordecidingonlocalactivitiesinadecentralizedmanner.Someofourhealthinitiativesinlow-andmiddle-incomecountriesareincludedwithinthescopeoftheMerckFoundation.TheMerckfamilyofentrepreneursalsohasalonghistoryofsupportingcharitablecauses.TheiractivitiesareorganizedviatheMerckFamilyFoundationandtheMerck’scheGesellschaftfürKunstundWissenschafte.V.(MerckSocietyforArtandScience).Ourcommitment:TheprinciplesofourcommunityengagementIndesigningourprojects,weareguidedbyourGroupStandardonCommunityEngagement,whichdefineswhatcommunityengagementmeansfortheentireGroupandwhatobjectiveswearepursuing.Thisstandardgivesourbusinesssectorsandsubsidiariesabroadaframeworkforstructuringtheirrespectiveactivitiesthemselvesandalsostipulatesrolesandresponsibilities.HealthinitiativesarealsogovernedbyguidelinesfromourHealthcarebusinesssectorandourAccesstoHealthCharter.WecalculatethevalueofourpharmaceuticaldonationsinaccordancewiththeGuidelinesforMedicineDonationsissuedbytheWorldHealthOrganization(WHO).WithourCorporateVolunteeringGuideline,wewanttostrengthenandencouragevolunteeringinitiativesbyouremployees.Theymaytakeuptotwodaysofpaidleaveperyeartoparticipateinvolunteeringactivitiesthatareeitherrunorsupportedbyourcompany.Community175OurGoodDeedsOurcommunityengagementactivitiesarecollectivelyreferredtoasOurGoodDeeds.In2022,wesupported182projectsin99countriesinthefieldsofhealth,educationandculture.Inaddition,wesupportedpeopleinneedinourlocalcommunitiesandprovideddisasterrelief.Ourcommunityengagementactivities–2022Health33%Education&culture32%Environment5%Other21%Disasterrelief8%Ouremployeeswereengagedinaround35%oftheprojects.Ourprojectsincludevolunteeringinitiativesaswellasmonetaryandproductdonations.In2022,wespentatotalofaround48MillionEurosoncommunityengagement.Productandin-kinddonationsaccountedfor47%andcashdonationsfor50%ofthisamount.Ouremployeesactivelyparticipatedin35%oftheprojects,eitherthroughmonetarydonationsorvolunteerwork.Aspartofthevolunteeringinitiatives,morearound3,100employeesvolunteeredaround2,200hoursduringtheirworkinghours.TheamountcontributedbytheMerckFoundationisnotincludedinthisfigure.Norareinitiativesthatprimarilyservetomarketourproducts.Community176SpendingoncommunityengagementbytargetregionNorthAmerica11%€5.3millionEurope27%€13.1millionAsia-Pacific(APAC)12%€5.9millionMiddleEastandAfrica(MEA)47%€22.5millionLatinAmerica3%€1.3millionSupportforhealthprojectsWeuseourexpertisetosupporthealthinitiativesaroundtheworld.Inparticular,wefocusonprovidingbasicandadvancedtrainingforhealthworkers,promotinglocalhealthcareinfrastructureandeducatingpeopleonhealthissues.Wearededicatedtoimprovingmedicalcarearoundtheworld.ThroughourGlobalMedicalEducationandAcademicOrganizationRelationsunits,weorganizeeducationprograms,whichaimtobroadentheknowledgeandcompetenceofscientistsandhealthcareprofessionalsand,ultimately,improvepatientoutcomes.In2022,themajorityofourmedicaleducationprogramsacrossselectedtherapeuticareastookplacedigitally.Additionalprogramswereconductedinahybridformat(i.e.bothinpersonandwithlivebroadcastoron-demandmaterial)inordertoenablemorein-personinteractionduringthemilderphaseofthepandemic.Inparticular,wesupported324Independent/ContinuingMedicalEducation(IME/CME)programsanddesigned141newcompany-ledmedicaleducationprograms.Wearecommittedtothepreventionandtreatmentoftheneglectedtropicaldiseaseschistosomiasisinschoolchildreninsub-SaharanAfrica.AspartofourSchistosomiasisEliminationProgram(MSEP)andinpartnershipwithWHO,wedonatepraziquantelforthepreventionandtreatmentoftheneglectedtropicaldiseaseschistosomiasisinschool-agedchildreninsub-SaharanAfrica.In2022,wesupplied200Millionenpraziquanteltablets.FurtherdetailsaboutourMSEPprogramcanbefoundunderGlobalHealth.MoreinformationonourhealthprojectscanbefoundontheOurGoodDeedswebsite.Community177PromotingculturalandeducationalprojectsOurprojectsinthefieldofeducationhelptoimproveschoolanduniversityeducation.Inordertosparkyoungpeople’sinterestinscience,weorganizecompetitions,recognizespecialachievementsandofferopportunitiesforhands-onlearning.InGermany,wesupportandholdvariousSTEMcompetitions.Forexample,wehavebeensupportingthe“Jugendforscht”competitionformorethan35yearsasthehostofthecompetitionintheGermanfederalstateofHesse.Theeventtookplaceinhybridformatin2022.Inaddition,wesupporttheone-week“Erfinderlabor”(Inventors’Lab)foruppersecondaryschoolstudentsaswellastheGermany-wide“TagderMathematik”(MathematicsDay).In2022,aspartofourschoolpartnerships,wehonoredthe65beststudentsinadvancedSTEMcoursesinDarmstadtandthesurroundingareafortheiroutstandinghighschoolgraduationachievements.TogetherwiththeGermanjournal“ChemieinunsererZeit”,weawardtheJuliusAdolphStöckhardtprizetoteachers.Thisaward,whichincludesprizemoneyof€2,000,wasgrantedtoateacherinBolandenintheGermanfederalstateofRhineland-Palatinate.Theawardwasgrantedinrecognitionofateachingconceptforthequantitativeconcentrationanalysisofadyewiththeaidofsmartphones.Moreover,weactivelypromoteknowledgetransferthroughnewdigitaleducationalformats.Inanewlydeveloped,virtualandextracurricularformatcalled“100MinutesforSustainability”–uppersecondaryschoolstudentsdiscusssustainabilitytopicsinascientificcontext.In2022,westartedthe“Kindergartenbox”withtheaimofgettingchildreninterestedinscienceearlyonandsparkingtheircuriosity.Ouremployeescangetinvolvedinthisexperimentationprogramaspartofourvolunteerproject.Ourstudentlaboratories,whichweoperatedtogetherwithTUDarmstadt,onceagaintookplaceinpersonasofApril2022.In2022,atotalof3,661participantscametogetherat198events.Furtherinformationontheprogramsofourschoolpartnershipscanbefoundonourwebsite.AspartofourSPARK™globalvolunteerprogram,employeesfromourLifeSciencebusinesssectorsharetheirskillsandexperiencewithstudentsinordertosparktheircuriosityinscienceandinspirethemtoconsideraSTEMcareer.Twokeyprograms,theCuriosityCube®andCuriosityLabs™,helpusdothis.TheCuriosityCube®isashippingcontainerthathasbeenretrofittedandconvertedintoamobilesciencelab.Itisequippedforhands-onscienceexperimentsdesignedtosparkcuriosityinthenextgenerationofscientists.Afteratwo-yearhiatusduringthepandemic,werelaunchedthelabinNorthAmericaandfurthermorehelditsfirstEuropeantourin2022.Throughoutthetour,weorganizedatotalof190eventsin122communitiesacross12countries,reachingmorethan31,400students.Inaddition,theCuriosityLabs™programengagesstudentsthroughhands-on,inquiry-basedlearning.Italsoappliesscientificconceptsto“realworld”scenariosandconnectsstudentswithprofessionalscientists–allowingthemtolearnfirst-handaboutSTEMconceptsandcareersintheirveryowncommunities.In2022,weintroducedtwonewCuriosityLabs™lessonstoourlessonlibrary,focusingongrapheneandthesoilmicrobiome.In2022,about1,700employeesvolunteeredintheCuriosityCube®andCuriosityLabs™programsforaround15,400hoursacross28countriesandreachedaround43,700students.Apartfromoureducationalprojects,wepromotemusicandliterature.Weareconvincedthatcultureinspirespeople–andthatinspirationcanleadtoprogress.Community178WesupporttheDeutschePhilharmonieMerck,aprofessionalsymphonyorchestraestablishedin1966.ItisanintegralpartofculturallifeinDarmstadtandthesurroundingregionandregularlytoursinternationally.In2022,theorchestragave21concertsbeforeliveaudiences,fourofwhichwereguestperformances.ThemusicalAdventcalendar,adigitalvideoproject,wasalsocontinued.Likemusic,literatureisanimportantmediatorbetweencultures.Wethereforeawardfiveliteraryprizesworldwide:inGermany,India,Italy,Japan,andRussia.Theseawardsmainlyrecognizeauthorswhoseworkbuildsbridgesbetweenculturesaswellasbetweenliteratureandscience.MoreinformationaboutourculturalandeducationalprojectscanbefoundonourwebsiteOurGoodDeeds.SupportingenvironmentalinitiativesWeareinvolvedinvariousenvironmentalinitiativesandpromoteenvironmentalawarenessamongouremployeesthroughgroupactivities.Ourengagementrangesfromjointlittercollectionandtreeplantingcampaignstosupportingorganizationsthatimproveaccesstocleanwaterinremoteareas.MoreinformationabouttheenvironmentalinitiativesthatwesupportcanbefoundonourwebsiteOurGoodDeeds.DisasterreliefInMarch2022,weinitiatedadonationcampaignforthoseaffectedbythewarinUkraine.Around4,000employeesparticipatedanddonatedaround€570,000viaadedicateddonationplatformrunbytheGermanRedCross.Thecompanymatchedthesedonations.Wethuscontributedtoimmediateaid,supportandreconstructionprograms.Inaddition,twotruckstookmorethan40metrictonsofsuppliesandfoodfromourDarmstadtsitetorefugeesinWroclaw,Poland.Wealsocollectedmoneyandsupplies,includingvariousmedicines,worthover€1Million.Community179FACTS&FIGURES181Reportprofile184Indicators184Economics185Businessethics188Employees202Environment209Community211GRIcontentindex211Generaldisclosures214EconomicStandards217EnvironmentalStandards221SocialStandards227Additionalmaterialtopics228SASBindex237TCFDindex242AssurancereportReportprofileOurcompanyhasalonghistoryofcorporateresponsibility.Thisisalsoreflectedinourreportingpractices.Wehavebeenpublishingreportsonoureffortstoliveuptoourcorporateresponsibilitysince1993,focusinginitiallyonenvironmentaltopics.In2003,webeganreportingonsustainabilitytopicseverytwoyears.Since2016,wehavebeenpublishingareportannually.InthisSustainabilityReport,wedescribethestrategicdirectionofoursustainableentrepreneurshipaswellasfocusareasinwhichweintendtoachieveoursustainabilitygoals.Wewanttoinformourstakeholderstransparentlyandcomprehensivelyaboutouractivitiesandsuccessesaswellasthechallengesweface.Thisalsoincludesclassifyingactualandpotentialpositiveandnegativeimpactsofourbusinessactivities.Effectiveimmediately,wereportourprogresstowardsimplementingtheprinciplesoftheUnitedNationsGlobalCompactviatheportaldedicatedtothispurpose.Forthisreason,ourSustainabilityReportnolongerincludesCommunicationonProgress.ReportingframeworkThisreportcoversfiscal2022andpertainstoourentireGroup,includingits224fullyconsolidatedcompanieswithpersonnelin66countries.Anydeviationsfromthisreportingframeworkareindicatedonacase-by-casebasis.DeterminingreportcontentWealignthecontentofourreportwiththeinternationallyrecognizedsustainabilityreportingstandardsoftheGlobalReportingInitiative(GRI).Indoingso,weobserveprescribedreportingprinciples,suchasaccuracy,balance,topicality,andverifiability.ThereporthasbeenpreparedinaccordancewiththecurrentGRIstandards2021.Moreover,weareintegratingourdisclosurespursuanttotheSASBstandards(SustainabilityAccountingStandardsBoard)andtherequirementsoftheTaskForceonClimate-RelatedFinancialDisclosures(TCFD)intotheSustainabilityReport.Indoingso,weintendtomeettheincreasingtransparencyexpectationsofvariousinvestorgroupsandotherstakeholders.Everyyear,wecarryoutamaterialityanalysistodeterminethesustainabilitytopicsofrelevancetoourGroup.WehavederivedthecontentofthisSustainabilityReportfromtheresultsofthematerialityanalysis,whichcanbefoundtogetherwiththematerialitymatrixunderMaterialityanalysis.OurExecutiveBoardhasreviewedandapprovedtheSustainabilityReportfor2022.Facts&figures181DatacollectionandconsolidationsystemsThe2022SustainabilityReportgenerallyprovidesnon-financialindicatorsfortheentireGroup.ThemajorityofthefigureswepublishreflectthestatusasofDecember31,2022.Weexplicitlystatewhen,inindividualcases,theinformationprovideddeviatesfromtheseparameters.WeuseaGroup-wideelectronicdatacollectionsystemtocollectenvironmentalandoccupationalhealthandsafetydata.Thedataarerecordedatsitelevelandaresubjecttoapprovalinaccordancewiththedual-controlprinciple.Toimprovethequalityofthesedata,wesupportthesitesbothinoptimizingtheircollectionprocessesandtheircorrespondingqualityassurancemeasures.Moreover,ourCorporateSustainability,QualityandTradeCompliancefunctiontakesmeasures,suchasinternalEHSaudits,toreviewboththeprocessesandthedataprovided.Wecollectenvironmentalperformanceindicatorsacrossallourproductionsites.Wealsorecordtheseindicatorsforthewarehouse,researchandofficelocationsthatarerelevantintermsoftheirenvironmentalimpact.Thisreport’sscopeofconsolidationthereforecoversallGroupsitesthathaverelevantimpactsontheenvironment.AllemployeemasterdataiscontinuallyupdatedinanSAPdatabase.Someemployeedataareonlydisclosedforselectsitesorcountries,whichareindicatedaccordinglyintherespectivetextpassages.Weusecommunitydatamanagementsoftwaretotrackdatapertainingtoourcommunityengagementactivities.Non-financialstatementpursuanttotheGermanCommercialCodeThecombinedmanagementreportofMerckKGaAandtheMerckGroupforfiscal2022includesacombinednon-financialstatementinaccordancewithsections315band315cinconjunctionwith289bto289eoftheGermanCommercialCode(HGB)intheformofaseparatechapter.Thenon-financialstatementisalignedwiththerequirementsoftheGlobalReportingInitiative(GRI)standard.ItalsoincludesreportinginaccordancewiththeEUTaxonomyRegulation.Thecontentofthisnon-financialdeclarationhasalsobeenreviewedbytheSupervisoryBoardinaccordancewithsection111(2)oftheGermanStockCorporationAct(AktG).Facts&figures182ExternalauditKPMGAGWirtschaftsprüfungsgesellschafthasauditedtheconsolidatedfinancialstatementsandcombinedmanagementreportofourcompanyforthefiscalyearspanningJanuary1toDecember31,2022andhasissuedanunqualifiedopinion.Thecombinednon-financialstatementcontainedinthemanagementreportunderwentanauditwithlimitedassurancebyKPMGAGWirtschaftsprüfungsgesellschaft.Furthermore,ourcompanyalsoreceivedanindependentauditcertificatewithlimitedassuranceforthisSustainabilityReportfor2022.Theadditionalcontentprovidedonboththecompany’swebsitesaswellasexternalwebpagesthatarelinkedinthisreportarenotpartoftheinformationassuredbyKPMG.ThisalsoappliestothevoluntaryinformationintheSASBandTCFDindexes.Contacts:Wewelcomeyourfeedbackandwouldbehappytoansweranyquestions.MerckKGaACorporateSustainability,QualityandTradeComplianceGroupCorporateSustainabilityMariaSchaadFrankfurterStr.25064293DarmstadtGermanyTel.:+49615172-0E-mail:corporate-sustainability@merckgroup.comThecurrentreportwaspublishedonApril13,2023.WepublishedthepreviousSustainabilityReportinApril2022.OurnextSustainabilityReportisscheduledforpublicationinApril2024.Gender-neutrallanguage:Itisouraimtoensurethatourcommunicationisinclusiveandsowestrivetouselanguagethatisbothnon-discriminatoryandeasytoread.Thisreportattemptstousegender-neutrallanguage,whichmaynotyetbeconsistentinallinstances.Facts&figures183IndicatorsEconomicsNetsalesNetsales,operatingr,operatingresult(EBIT)andresult(EBIT)andresearchanddeesearchanddevvelopmentcostelopmentcostss,b,bybusinesssectorybusinesssector11€millionLifeScienceHealthcareElectronicsGroup2021Netsales28,9927,0893,60619,68719,687Operatingresult(EBIT)22,4801,8235084,1794,179R&Dcosts33511,7122782,4262,4262022Netsales10,3807,8394,01322,232Operatingresult(EBIT)2,8081,8955724,474R&Dcosts33991,6943082,5211Asanon-operatingsegment,CorporateandOtherisnotshownhereasaseparateitem,butratherunderSegmentReportinginour2022AnnualR2022AnnualReporeportt(p.247-251).22021figureshavebeenadjustedduetoproductreallocationsbetweentheLifeScienceandElectronicsbusinesssectors.3Notpresentedareresearchanddevelopmentcostsof€119million(2021:€85million)allocatedtoCorporateandOther.The2021figurehasbeenadjustedduetoachangeinfunctionalallocationbetweenadministrationexpenses,researchanddevelopmentcostsaswellasotheroperatingexpenses.Facts&figures184BusinessethicsCompliancetrainingCompliancetraining201912020220212022MerckGroup2022thereofMerckKGaATTototalnumberofperalnumberofpersonstrainedonsonstrainedonanti-corruptionguidelinesanti-corruptionguidelines3336,10936,10928,82728,8275,7905,7905,0825,082431431TTototalnumberofemploalnumberofemployyeestrainedonanti-eestrainedonanti-corruptionguidelinescorruptionguidelines35,67335,67328,80528,8055,7725,7725,0715,071431431%ofemployeestrainedonanti-corruption63501085bbyemployemployyeecategoreecategoryy44NumberofRole2+employeestrainedonanti-corruption26,89027,1235,2844,658430%ofRole2+employeestrainedonanti-corruption969017149%ofemployeesbelowRole2trainedonanti-corruption306210bbyryregion(%)egion(%)Europe7151875NorthAmerica5945118notapplicableAsia-Pacific(APAC)4744129notapplicableLatinAmerica624487notapplicableMiddleEastandAfrica(MEA)8066129notapplicable1Asof2019,wechangedourreportingmethod.Previously,ourreportscoveredtheactiveworkforcewhohasbeentrainedonaspecificsubjectduringaparticularyear.In2019,wereportontheactive,trainedworkforceinthecompany,regardlessofwhethertheirtraininghasalreadytakenplacepriortothereportingyear.Thepossibilityoftrendforecastsforyear-to-yearcomparisonsisthereforelimited.2In2020,webeganusingourowngloballearningmanagementtoolandthereforenowhaveadifferentreportingstructure.Asof2020,wereportontheactiveworkforcethatispartofthetargetgroupandhascompletedthetraininginthereportingyear.Thepossibilityoftrendforecastsforyear-to-yearcomparisonsisthereforelimited.3Includescontractors,externalsupervisedworkers(e.g.temps)andcontractpartnersworkingon-sitewhoweretrainedonanti-corruptionguidelines(2022:MerckGroup:11;MerckKGaA:0).4EmployeeswhoserolelevelhadnotyetbeenrecordedinourdatabasebyDecember31oftherespectivereportingyearhavebeenallocatedto"employeesbelowRole2".The(employee)targetaudienceforaspecifictrainingisrelatedtotherisklevelassociatedwithemployeepositionsandRolelevels.TargetaudiencesthereforemaynotincludeallGroupemployeesandalsomayvaryfromtrainingtotraining.Inordertoaddressthespecialresponsibilityheldbymanagementpersonnel,andstaffwithHRresponsibility,trainingsonanti-corruptionguidelinesfortheseemployeesareinfocus.ThisappliestoallemployeesratedRole2+.OurnewAnti-CorruptionE-learningwasrolledoutin2020.Themajorityofemployeeswithinthedefinedtargetgroupalreadycompletedthetrainingin2020.Therefore,the2021completionnumberislowerasthetrainingwasonlyassignedtonewjoiners,internaltransfersoremployeeswhodidnotcompletetheE-learningin2020.Facts&figures185InternalauditInternalauditsoncorruptionsoncorruption2019202020212022MerckGroup2022thereofMerckKGaA1Numberofauditsrelatingtocorruption5052565519%ofauditsrelatingtocorruption65666770241IncludesglobalauditswhichareconductedattheheadquartersinDarmstadtand/orthemanagementoftheauditedfunctionisreportingintoKGaA.HumanrightHumanrightsviolationssviolations1120192202020212022NumberofreportedviolationsofSocialandLaborStandardsPolicy-108121136NumberofconfirmedviolationsofSocialandLaborStandardsPolicy-294168thereofnumberofincidentsofdiscrimination-2671In2020,wemodifiedourreportingstructureforhumanrightsviolations.Previously,wereportedonsuchviolationsinthe“Reportedcomplianceviolations”table.Since2020,wereportonviolationsofourSocialandLaborStSocialandLaborStandardsPandardsPolicyolicy,whichwasimplementedacrosstheentireGroupin2019.2Duetoourrevisedreportingpractices,wehavedecidednottoreportthedatafrompreviousyears.RReporeportedcomplianceviolationstedcomplianceviolations2019202020212022MerckGroup2022thereofMerckKGaATTototalnumberofralnumberofreporeportedcompliancetedcomplianceviolationsviolationsNumberofreportedcomplianceincidents758179793Numberofconfirmedcases304142280ConfirmedcasesbConfirmedcasesbycategorycategoryyBriberyandcorruption96120Violationofcartellawsandfaircompetitionrules00010FraudulentactionsagainstMerck8116110OtherviolationsoftheMerckCompliancePrinciplesfortherelationswithbusinesspartners40020OtherviolationsofMerckvalues,internalguidelinesorlegalrequirements92435120Facts&figures186DatDataPrivaPrivacyacy2019202020212022MerckGroup2022thereofMerckKGaAReportedviolationsofDataPrivacyGuidelines13341CustomerPrivCustomerPrivacyacy11Totalnumberofsubstantiatedcomplaintsreceivedfromoutsideparties00000Totalnumberofcomplaintsfromregulatorybodies10000Totalnumberofidentifiedleaks,thefts,orlossesofcustomerdata100001Thesedataonlyreflectincidentsclassifiedassignificant.LegalactionsLegalactions2019202020212022MerckGroup2022thereofMerckKGaATTototalnumberalnumber11oflegalactionspendingoroflegalactionspendingorcompleted(foranti-competitivcompleted(foranti-competitivebehaebehaviorvior,,violationsofanti-trustorviolationsofviolationsofanti-trustorviolationsofmonopolylegislation)monopolylegislation)3344443322pending34321completed001111Aspublishedintheannualreports,thehereinlistedtotalnumberoflegalactionsreferstothesignificantlegalrisksasperthecompany’sdefinition.Thesignificanceoflegalrisksisbasedonpotentialnegativeeffectsonprojectedfinancialobjectivesaswellasontheprobabilityofoccurrence.Forfurtherinformationpleaseseeourannualreports:AnnualReport2019,pages120-122andpages243-245,No.26AnnualReport2020,pages125-127andpages252-256,No.27AnnualReport2021,pages100-101andpages280-284,No.27AnnualReport2022,pages97-98andpages282-285,No.27Facts&figures187EmployeesTTototalnumberofemploalnumberofemployyeeseesAsofDec.312019202020212022MerckGroup2022thereofMerckKGaATTototalnumberofemploalnumberofemployyeesees57,07157,07158,12758,12760,34860,34864,24364,2438,4858,485Men32,53133,20434,27436,4525,510Women24,54024,92326,07427,7912,975Facts&figures188NumberofemploNumberofemployyeesbeesbyhierarchicalleyhierarchicallevvelelAsofDec.3120191202020212022MerckGroup2022thereofMerckKGaATTototalemploalemployyeesees57,07157,07158,12758,12760,34860,34864,24364,2438,4858,485Seniormanagement(Role6+)19019319419166Middlemanagement(Role4&5)3,3523,6373,8314,018886Lowmanagement(Role3)9,49910,28610,88011,8772,277Otheremployees(belowRole3)44,03044,01145,44348,1575,256%ofwomen(tot%ofwomen(total)al)43434343434343433535thereofinseniormanagement(Role6+)3942495118thereofinmiddlemanagement(Role4&5)1,1461,2841,4131,550281thereofinlowmanagement(Role3)4,0294,3524,6695,123879thereofotheremployees(belowRole3)19,32619,24519,94321,0671,797%ofmen(tot%ofmen(total)al)57575757575757576565thereofinseniormanagement(Role6+)15115114514048thereofinmiddlemanagement(Role4&5)2,2062,3532,4182,468605thereofinlowmanagement(Role3)5,4705,9346,2116,7541,398thereofotheremployees(belowRole3)24,70424,76625,50027,0903,459bbyagegroupyagegroupUpto29yUpto29yearearsold(%)sold(%)15151515151515151414thereofinseniormanagement(Role6+)00000thereofinmiddlemanagement(Role4&5)868125thereofinlowmanagement(Role3)19019924126361thereofotheremployees(belowRole3)8,3628,3658,8809,6511,11530to49y30to49yearearsold(%)sold(%)60606060606060605454thereofinseniormanagement(Role6+)6968635824thereofinmiddlemanagement(Role4&5)1,9332,0322,1722,235525thereofinlowmanagement(Role3)6,5166,9267,2988,0071,495thereofotheremployees(belowRole3)25,85925,94826,62428,1242,50550y50yearearsorolder(%)sorolder(%)25252525252525253232thereofinseniormanagement(Role6+)12112513113342thereofinmiddlemanagement(Role4&5)1,4111,5991,6511,771356thereofinlowmanagement(Role3)2,7933,1613,3413,607721thereofotheremployees(belowRole3)9,8099,6989,93910,3821,6361In2019,thepositionassessmenthadnotyetbeencarriedoutforemployeesofVersumMaterialsaswellasofAllergopharma.Inthefigures,employeeswhosepositionshavenotbeenassessedhavebeenallocatedto“otheremployees(belowRole3)”.Facts&figures189AAvveragenumberofemploeragenumberofemployyeesbeesbyfunctionalaryfunctionalareaea11201922020320212022GroupGroup53,64553,64557,61257,61258,73158,73162,56562,565therthereofwomeneofwomen23,50323,50324,74624,74625,29525,29527,12327,123Production16,45517,62419,78222,086thereofwomen5,5296,0436,5417,510Logistics/SupplyChain4,1094,2984,5574,850thereofwomen1,6261,7341,8381,928MarketingandSales/Commercials13,97014,12714,31815,095thereofwomen6,6086,7876,9067,349Administration10,34211,34211,82411,889thereofwomen5,1945,4995,7185,868ResearchandDevelopment7,5617,5047,1687,335thereofwomen4,0533,9963,6943,740InfrastructureandOther1,2082,7171,0831,309thereofwomen4936875987271Theaverageemployeeheadcountiscalculatedbyaddingupallemployeesattheendofeachofthelast13months,anddividingthistotalby13.2Tocalculatetheaveragenumberofemployeesinfiscal2019,theemployeeheadcountofVersumMaterialshasbeenincludedonaproratabasisasofOctober2019owingtotheacquisition.Theyareallocatedtothefunctionalarea“InfrastructureandOther”.3Theaverageemployeeheadcountforfiscal2020incorporatestheAllergopharmaemployeesonaproratabasisupuntiltheendofMarch2020duetothedivestmentoftheAllergopharmabusinessasofMarch31,2020.Facts&figures190NumberofemploNumberofemployyeesbeesbyryregionegionAsofDec.312019202020212022MerckGroup2022thereofMerckKGaATTototalal57,07157,07158,12758,12760,34860,34864,24364,2438,4858,485EuropeEurope26,71526,71526,58726,58727,21727,21728,24428,2448,4858,485Women11,90911,74312,09812,6202,975Women(%)4544444535Numberofemployeeswithtemporarycontracts1,1371,105988882219%ofemployeeswithtemporarycontracts44433NorNorththAmericaAmerica12,82912,82913,31213,31214,07014,07015,84715,84700Women5,2855,5275,8006,501notapplicableWomen(%)41424141notapplicableNumberofemployeeswithtemporarycontracts158113911531notapplicable%ofemployeeswithtemporarycontracts11110notapplicableAsia-PAsia-Pacific(APacific(APAAC)C)12,72812,72813,51813,51814,28514,28515,41215,41200Women5,0495,4255,8746,351notapplicableWomen(%)40404141notapplicableNumberofemployeeswithtemporarycontracts3,26313,3623,6603,726notapplicable%ofemployeeswithtemporarycontracts261252624notapplicableLatinAmericaLatinAmerica3,4333,4333,3873,3873,5293,5293,4903,49000Women1,6901,6301,7211,715notapplicableWomen(%)49484949notapplicableNumberofemployeeswithtemporarycontracts5567128notapplicable%ofemployeeswithtemporarycontracts2200notapplicableMidMiddleEastandAfrica(MEA)dleEastandAfrica(MEA)1,3661,3661,3231,3231,2471,2471,2501,25000Women607598581604notapplicableWomen(%)44454748notapplicableNumberofemployeeswithtemporarycontracts182420599notapplicable%ofemployeeswithtemporarycontracts133251notapplicable1EmployeeswhosecontracttypehadnotyetbeenrecordedinourdatabasebyDecember31,2019weredividedupproportionallybetweenthecategories“employeeswithpermanentcontracts”and“employeeswithtemporarycontracts”.Facts&figures191EmploEmployyeesbeesbybusinesssectorybusinesssectorAsofDec.312019202020212022LifLifeScienceemploeScienceemployyeesees21,93421,93423,19623,19625,32325,32328,01328,013thereofwomen9,48710,17511,25512,473thereofwomen(%)43444445HealthcarHealthcareemploeemployyeesees18,13618,13617,46317,46317,26917,26917,33917,339thereofwomen9,2328,7888,7178,805thereofwomen(%)51505051ElectronicsemploElectronicsemployyeesees7,3297,3297,2287,2287,4327,4328,2628,262thereofwomen1,7121,6661,7041,870thereofwomen(%)23232323EmploEmployyeesbeesbycontracttycontracttypeypeAsofDec.312019202020212022TTototalemploalemployyeesees57,07157,07158,12758,12760,34860,34864,24364,243Numberofemployeeswithpermanentcontracts52,276153,03455,51459,587%ofemployeeswithpermanentcontracts921919293thereofwomen22,237122,50023,64025,418thereofwomen(%)431424343Numberofemployeeswithtemporarycontracts4,79515,0934,8344,656%ofemployeeswithtemporarycontracts81987thereofwomen2,30312,4232,4342,373thereofwomen(%)481485051full-timeemployees54,26555,22057,09160,12760,127%full-time95959594thereofwomen22,20822,57223,58524,872thereofwomen(%)41414141part-timeemployees2,8062,9073,2574,1164,116%part-time5556thereofwomen2,3322,3512,4892,919thereofwomen(%)838176711EmployeeswhosecontracttypehadnotyetbeenrecordedinourdatabasebyDecember31,2019weredividedupproportionallybetweenthecategories“employeeswithpermanentcontracts”and“employeeswithtemporarycontracts”.Facts&figures192NewemploNewemployyeeseesAsofDec.3120191202020212022MerckGroup2022thereofMerckKGaATTototalnumberofnewemploalnumberofnewemployyeehireehireses7,9247,9246,6696,6698,9608,96010,68210,682647647bbyagegroupyagegroupupto29yearsold3,4322,8893,6794,31431830to49yearsold4,0553,3474,6105,39730250orolder43743367197127bbygenderygenderWomen3,6223,0164,1014,569252Men4,3023,6534,8596,113395bbyryregionegionEurope2,5292,1602,5673,015647NorthAmerica1,7331,7892,8553,971notapplicableAsia-Pacific(APAC)2,7292,2062,8033,071notapplicableLatinAmerica578396579460notapplicableMiddleEastandAfrica(MEA)355118156165notapplicableRateofnewemploRateofnewemployyeehireehireses22(%)(%)141411111515171788bbyagegroupyagegroup33upto29yearsold434341404930to49yearsold515051514750orolder67894bbygenderygender33Women4645464339Men5455545761bbyryregionegion33Europe32322928100NorthAmerica22273237notapplicableAsia-Pacific(APAC)34333129notapplicableLatinAmerica7664notapplicableMiddleEastandAfrica(MEA)5222notapplicable1Thesefiguresexcludetheapproximately2,400VersumMaterialsandIntermolecularemployeeswhoarenotclassifiedasnewhiresbecausetheyjoinedourcompanyaspartoftheacquisitions.2Formulaforcalculatingtherateofnewemployeehires:Totalnumberofnewemployeehiresdividedbynumberofemployeesattheendofthefiscalyear.3Formulaforcalculatingtherateofnewemployeehiresbyage/gender/region:Newemployeehiresofthefocusgroupdividedbythetotalnumberofnewemployeehires.Facts&figures193StStaffturnoaffturnovverer1,21,220192020320212022MerckGroup2022thereofMerckKGaATTototalturnoalturnovverrateerrate9.079.078.228.2210.8210.8210.1610.162.582.58TTurnournovverrateberratebygenderygenderMen8.698.2210.6910.402.66Women9.548.2211.009.932.44TTurnournovverrateberratebyageyagegroupgroupUpto29yearsold13.1311.3016.6415.912.9930to49yearsold8.907.7410.059.552.2650orolder7.037.529.228.052.94TTurnournovverrateberratebyryregionegionEurope5.725.646.005.912.58NorthAmerica11.029.7915.4414.33notapplicableAsia-Pacific(APAC)13.1810.6014.6612.84notapplicableLatinAmerica13.4711.4012.9513.38notapplicableMiddleEastandAfrica(MEA)12.1411.8016.5713.04notapplicableTTototalnumberofleaalnumberofleavvererss4,8634,8634,7214,7216,3546,3546,3586,358215215bbygenderygenderMen2,6212,6973,5753,673144Women2,2422,0242,7792,68571bbyageyagegroupgroupUpto29yearsold1,0429741,4511,5423530to49yearsold2,8982,6773,5453,56910050orolder9231,0701,3581,24780bbyryregionegionEurope1,5001,4901,6011,640215NorthAmerica1,2641,2812,0782,182notapplicableAsia-Pacific(APAC)1,4841,3942,0151,905notapplicableLatinAmerica459398449467notapplicableMiddleEastandAfrica(MEA)156158211164notapplicable1Thetablecontainsunadjustedturnoverrates.Therateexcludesemployeeswhopauseduetoparentalleaveoralong-termillness,aswellasemployeeswhoaretransitioningtothenon-workingphaseofpartialretirement.2Theemployeeturnoverrateiscalculatedasfollows:Totalnumberofleaversfromthepast12monthsdividedbytheaverageemployeeheadcountmultipliedby100.3Thefiguresdonotreflecttheapproximately500Allergopharmaemployees,whowerenotincludedintheemployeeturnoverrateduetothedivestmentofthebusiness.Facts&figures194In2022,theaveragelengthofserviceforemployeesGroup-widewas9.2years(2021:9.5years),with15.4years(2021:15.7years)forMerckKGaAemployees.WWorkork-r-relatedaccidentelatedaccidentss112019202020212022MerckGroup2022thereofMerckKGaALostTimeInjurLostTimeInjuryRate(LyRate(LTIR=workplaceTIR=workplaceaccidentaccidentsrsresultinginmisseddaesultinginmisseddayysofworksofworkperonemillionhourperonemillionhoursworksworked)ed)1.61.61.31.31.21.21.21.22.02.0bbyryregionegionEurope2.62.42.11.72.0NorthAmerica1.00.81.21.7notapplicableAsia-Pacific(APAC)0.20.10.10.3notapplicableLatinAmerica1.70.80.40.6notapplicableMiddleEastandAfrica(MEA)0.00.40.01.1notapplicableNumberofdeathsNumberofdeaths0000000000bbyryregionegionEurope00000NorthAmerica0000notapplicableAsia-Pacific(APAC)0000notapplicableLatinAmerica0000notapplicableMiddleEastandAfrica(MEA)0000notapplicablebbygenderygenderWomen00000Men000001IncludingsupervisedtemporarystaffThroughtheLTIR,werecordwork-relatedaccidentsthatinvolveatleastonedayofmissedwork.Awork-relatedaccidentisaninjurythatresultsfromthetypeofwork,inthecourseofdoingsaidwork,andthathasnointernalcause.Work-relatedaccidentsareconsideredrelevantiftheyoccuronthepremises,onbusinesstrips,duringgoodstransport,asaresultofexternalinfluences(e.g.naturaldisasters),orduetocriminalactsinvolvingpersonalinjury.Commutingaccidentsandaccidentsduringcompanysportingactivitiesarenotincluded.First-aidincidentsaregenerallynotincludedintheLTIRsincetheseusuallydonotresultinmorethanonedayofmissedwork.WeaimtosustainablylowerourLTIRto1.0by2025.TheLTIRisthekeyoccupationalsafetyindicatorfortheMerckGroupasawhole.Therefore,wedonotpublishanyotherindicatorssuchasworkplaceaccidents,lostdaysordaysofabsence.TheLTIRisnotbrokendownbygenderasthisdifferentiationisnotrelevanttoourstrategicplanning.Facts&figures195ForMerckKGaA(about13%oftheemployeesoftheMerckGroup),weonlyreportwork-relatedillnessesifthesehavebeencertifiedasanoccupationalillnessbytheemployers'liabilityinsuranceassociation.In2022period,twocasesofwork-inducedillnesswereverified.EmploEmployyeeswhoreeswhoregularlyregularlyreceiveceiveapereaperformanceanddeformanceanddevvelopmenteelopmentevvaluationaluation112019202020212022MerckGroup2022thereofMerckKGaA%ofemplo%ofemployyeeswhoreeswhoreceiveceiveapereaperformanceformanceanddeanddevvelopmenteelopmentevvaluationaluation9898989898989898100100bbygenderygenderWomen98989899100Men98989898100bbyemployemployyeecategoreecategoryySeniormanagement(Role6+)100100100100100Middlemanagement(Role4&5)100100100100100Lowmanagement(Role3)100100100100100Otheremployees(belowRole3)989898981001EmployeeswhoserolelevelhadnotyetbeenrecordedinourdatabasebyDecember31ofthereportingyearareincludedunder“otheremployees(belowRole3)”.RegularfeedbackandemployeeperformanceevaluationsareessentialtofairlyrankingindividualperformanceandtohelpingallemployeesfollowtheirowncareerpathatMerck.OurgloballyuniformPerformanceManagementProcessrequiresannualfeedbackmeetingsandperformanceassessments.Apartfromevaluatingemployeeperformance,thishelpsustoidentifyindividualdevelopmentopportunities.InGermany,allpermanentemployeeshavebeenparticipatinginthePerformanceManagementProcesssince2013.In2022,atotalof63,043employeesworldwidewereinvolvedintheprocess.ThePerformanceManagementProcessiscoordinatedviaouronlineplatformHR4You.InternationalitInternationalityofemployofemployyeeseesAsofDec.3120191202020212022MerckGroup2022thereofMerckKGaANumberofnationalities13914114213983Numberofnationalitiesinmanagementpositions(Role4orabove)7375797834%ofnon-Germansinmanagementpositions(Role4orabove)64666666131In2019,thepositionassessmenthadnotyetbeencarriedoutforemployeesofVersumMaterialsaswellasofAllergopharma.Facts&figures196EmploEmployyeeagebeeagebyryregionegionAsofDec.31NumberofemployeesWorldwideNorthAmericaEuropeMerckKGaAAsia-Pacific(APAC)LatinAmericaMiddleEastandAfrica(MEA)2021Upto29yearsold9,1292,2193,3411,1252,912482175thereofwomen4,3599611,5984151,4372659830to49yearsold36,1576,93915,6534,28810,2602,404901thereofwomen15,8882,9587,2241,5504,0811,22540050orolder15,0624,9128,2232,6681,113643171thereofwomen5,8271,8813,27682435623183AAvverageageerageage41.641.643.943.943.143.143.143.137.137.140.840.839.739.7TTototalemploalemployyeesees60,34860,34814,07014,07027,21727,2178,0818,08114,28514,2853,5293,5291,2471,2472022Upto29yearsold9,9262,7533,5301,1812,999476168thereofwomen4,6371,1781,6554411,4412649930to49yearsold38,4237,81116,2164,54911,1742,333890thereofwomen16,9093,2787,5281,6644,4981,19640950orolder15,8945,2838,4982,7551,239681192thereofwomen6,2452,0453,43787041225596AAvverageageerageage41.641.643.343.343.143.143.143.137.337.341.141.140.340.3TTototalemploalemployyeesees64,24364,24315,84715,84728,24428,2448,4858,48515,41215,4123,4903,4901,2501,250AgeofyAgeofyoungestemplooungestemployyeeeeAsofDec.312019202020212022Ageofyoungestemployee,excludingapprentices18181818Facts&figures197VVoluntoluntararyinsurancebenefityinsurancebenefitss(voluntarilyintroducedand(co-)financed)AsofDec.31201912020120212022MerckGroup2022thereofMerckKGaA%ofemployeeswithhealthcarebenefits2686364620%ofemployeeswithGroupaccidentinsurance3364141376%ofemployeeswithlifeinsurance4585659590%ofemployeeswithdisabilityinsurance(short-termandlong-term)53939394301ThefiguresexcludeVersumMaterialsandIntermolecularsincetheintegrationprocesswasstillunderwayatthispointoftime.2Anyspendonvoluntarilyintroducedand(co-)financedhealthcarebenefitsforemployeesandpossiblytheirdependents.Nottakingintoconsiderationanymandatorysocialsecuritycover(mostlycoveredbyaninsurancepolicy).3Anyspendonvoluntarilyintroducedand(co-)financedaccidentinsurancethatpaysadefinedamountincaseofdeathordisabilitycausedbyawork-relatedaccident(nottakingintoconsiderationanymandatorysocialsecuritycover,e.g.workman'scompensation).4Anyspendonvoluntarilyintroducedand(co-)financedlifeinsurancecoverthatpaysadefinedamountofmoneyincaseofnaturaldeath(notaccidental).5Anyspendonvoluntarilyintroducedand(co-)financedinsurancecoverthatdisabilitypaysforsalarycontinuationincaseofinabilitytoworkcausedbyaninsuredincident.Allouremployeesarewherepossiblecoveredbyeitherstatutoryorvoluntaryaccidentinsuranceandhealthbenefits.EmployeesofMerckKGaAarecoveredbystatutoryinsuranceasstipulatedbytheregulationsinforceinGermany.Weofferacompanypensioninnumerouscountriesalongwithvariousprogramsforsupplementalcompanypensionsandsurvivor'sbenefits.Theglobalbenefitslistedinthetableabovearedesignedtoprovideadditionalsecuritytoourworkforceandtheirfamiliesandtoimprovetheirqualityoflife.Benefitsrepresentvoluntarilyemployer-initiatedaswellasemployer-financedassistancetoourworkforceinadditiontotheregularcompensationpackage.Ourbenefitsoffermeaningfulchoices,wherepossible,tosupportadiverseworkforceandaresensitivetotheneedsandcustomsoftheemployeeswhousethem,regardlessofcountry,age,familystatus,interests,orvalues.Long-termpensionobligationsandpostLong-termpensionobligationsandpost-emplo-employmentbenefitymentbenefitss€million2019202020212022PresentvalueofalldefinedbenefitobligationsasofDec.315,6446,3525,9954,287Pensionexpenses357408461460Dependingonthelegal,economicandfiscalcircumstancesprevailingineachcountry,differentretirementbenefitsystemsareprovidedfortheemployees.Generally,thesesystemsarebasedontheyearsofserviceandsalariesoftheemployees.Pensionobligationsincludebothdefinedbenefitanddefinedcontributionplansandcomprisebothobligationsfromcurrentpensionsandaccruedbenefitsforpensionspayableinthefuture.FurtherinformationcanbefoundinthenoteonProvisionsforemployeebenefits(p.289-295,No.33)ofourAnnualReport2022.Facts&figures198FlexibleworkinghourFlexibleworkinghoursinGermansinGermanyyAsofDec.312019202020212022%ofemployeesutilizingthe“mywork@Merck”workingmodel43485155Incoordinationwiththeirteamsandsupervisors,employeestakingadvantageof“mywork@merck”canchoosewhenandwheretheywork.Facts&figures199PPararententalleaalleavvee11AsofDec.312019202020212022Numberofemployeeswitharighttoparentalleave375351414423thereofwomen(recordedviamaternityleaveintherespectiveyear)239225255287thereofmen(recordedviaspecialpaternityleaveintherespectiveyear)136126159136Numberofemployeeswhotookparentalleave2542538617564thereofwomen248265278237thereofmen294273339327Numberofemployeesonparentalleavewhoworkedparttimeduringtheirleave164104198164thereofwomen14073172137thereofmen24312627Numberofemployeeswhoreturnedfromparentalleave2536529597581thereofwomen243252273235thereofmen293277324346Returntoworkrate(%)98.998.396.8103.01thereofwomen98.095.198.299.2thereofmen99.7101.595.6105.81NumberofemployeesstillworkingforMerckoneyearaftertheirreturnfromparentalleave496490556-3thereofwomen218220250-3thereofmen278270306-3Retentionrate(%)92.592.693.1-3thereofwomen89.787.391.6-3thereofmen94.997.594.4-31FigurespertainonlytoMerckKGaA(whichaccountedforaround13%in2022).Figuresarecalculatedonthebasisofthedatafromoneentireyear,whichalsoincludesthoseemployeeswhotookparentalleaveduringthecalendaryearbutwhohadnotyetreturnedbyDec.31.2Sinceparentalleavecanbetakenforaperiodrangingfromonemonthtothreeyears,itispossibleforemployeestoberecordedacrossaperiodofuptofourcalendaryears.Thisexplainswhythenumberofemployeesonparentalleaveexceedsthenumberofemployeeswhohavearighttoit.Italsoexplainswhythe“Numberofemployeeswhoreturnedfromparentalleave”mightexceedthe“Numberofemployeeswhotookparentalleave”.3FigurewillbeavailableonDecember31,2023.Facts&figures200EmploEmployyeeswithdisabilitieseeswithdisabilities11(%)(%)2019202020212022Employeeswithdisabilities4.44.74.84.91OnlypertainstoMerckKGaA(whichaccountedforaround13%ofMerckGroupemployeesin2022,calculationsbasedontheGermanSocialCodeIX-SGBIX).ApprApprenticesinGermanenticesinGermanyyAsofDec.312019202020212022Numberofapprentices589607602595%ofapprentices4.34.64.14.0Facts&figures201EnvironmentTTototalgralgreenhousegasemissions(Scope1and2oftheGHGProtocol)eenhousegasemissions(Scope1and2oftheGHGProtocol)1,21,2metrickilotons20192020320212022MerckGroup2022thereofMerckKGaATTototalCOalCO22eqeq44emissionsemissions6216212,0282,0281,8431,8431,6671,667148148ThereofdirectCO2eqemissions(Scope1)3411,7061,5221,425108indirectCO2eqemissions5(Scope2)28032232124240BiogenicCOBiogenicCO22emissionsemissions1313131315151313001InlinewiththeGreenhouseGasProtocol,forallpreviousyearsgreenhousegasemissionswerecalculatedbasedonthecurrentcorporatestructureasofDec.31ofthereportingyearandretroactivelyadjustedforacquisitionsordivestmentsof(partsof)companies,orforchangesinemissionfactors(portfolio-adjusted).2Baselineforouremissiontargetsis2020.3IncludesVersumMaterialsasof2020.4eq=equivalent5Thefigurespresentedherehavebeencalculatedinaccordancewiththemarket-basedmethod.OurresponsetotheCDPClimatechangecontainsadetaileddescriptionofourcalculationmethods.WehaveincludedthefollowinggasesinourcalculationofdirectandindirectCO2eqemissions:DirectCO2emissions:CO2,HFCs,PFCs,CH4,N2O,NF3,SF6.IndirectCO2emissions:CO2.In2022,weemitted0.07kgofCO2eqpereuroofnetsales.Facts&figures202OtherrOtherreleelevvantindirantindirectgrectgreenhousegasemissions(Scope3oftheGHGProtocol)eenhousegasemissions(Scope3oftheGHGProtocol)11inmetrickilotonsofCO2eq22019202020212022TTototalgrossotherindiralgrossotherindirectemissionsectemissions3393395,0305,0305,7165,7166,6166,616Purchasedgoods&services(category1)3n/a3,0403,5724,200Capitalgoods(Category2)3n/a293291388Fuel-andenergy-relatedemissions,notincludedinScope1or2(category3)127102143121Upstreamtransportation&distribution(category4)4n/a26426453196Wastegeneratedinoperations(category5)50857985Businesstravel(category6)87322678Employeecommuting(category7)75909499Upstreamleasedassets(category8)70000Downstreamtransportation&distribution(category9)4n/a88566Processingofsoldproducts(category10)80000Useofsoldproducts(category11)4n/a1,0911,2131,2909End-of-lifetreatmentofsoldproducts(category12)4n/a23235269Downstreamleasedassets(category13)0222Franchises(category14)100000Investments(category15)n/a0121InlinewiththeGreenhouseGasProtocol,forallpreviousyearsgreenhousegasemissionswerecalculatedbasedonthecurrentcorporatestructureasofDec.31ofthereportingyearandretroactivelyadjustedforacquisitionsordivestmentsof(partsof)companies,orforchangesinemissionfactors(portfolio-adjusted).2eq=equivalent3Thereportedfigurescontain95-97%ofourtotalspend.ThedifferencestemsfromsmallersitesthatarenotintegratedinourGroup-widepurchasevolumedata.2020dataareslightlyover-reported(approx.3%)asthecurrencyconversionfactor(USDtoEUR)from2021wasused.Non-categorizedspendsaredistributedproratetocategory1and2.4ComparedtootherScope3categories,thescreeningoftheemissionsinthiscategorycontainsmoreuncertainties.Theirimpactcannotbeestimatedmorepreciselyatthistime.Weareworkingonimprovingtheaccuracyofthesedata.5Duetohigheffortsfordatapreparation,wereference2020datafor2021.6Since2022,wehaveappliedanewcalculationapproach–amixofprimarydata,distance-baseddataandasmallshareofspend-baseddata.Thepreviousyears'figureshavenotbeenrecalculatedretrospectively.7AlreadycoveredunderScope1and2emissions8Ourcompanyproducesahugevarietyofintermediateproductsforvariouspurposes.Duetotheirmanyapplicationsandourcustomerstructure,theassociatedgreenhousegasemissionscannotbetrackedinareasonablefashion.9Duetohigheffortsfordatapreparation,wepartlyuse2020datafor2022.10Thiscategoryisnotrelevantforusaswedonotoperatefranchises,i.e.businessesoperatingunderalicensetosellordistributeanothercompany’sgoodsorservices.Out-licensinginthepharmaceuticalsectorisnotregardedasfranchising.Detailsonthecalculation(methodology,assumptions,uncertainties)oftheScope3categoriescanbefoundintheScope3document.Biogenicemissions(Scope3),ifpresent,arenotbeingrecorded.Facts&figures203EmissionsofoEmissionsofozzone-depletingsubstone-depletingsubstancesancesmetrictons2019202020212022Totalemissionsofozone-depletingsubstances1.02.21.51.1CFC-11eq10.10.10.10.11CFC-11eqisaunitofmeasureusedtocomparethepotentialofvarioussubstancestodepletetheozone.Referencevalue1indicatesthepotentialofCFC-11tocausethedepletionoftheozonelayer.Substancesincluded:R-12,R-22,R-123,R-141b,R-401a,R-402a,R408a,R-409a,R-502,R-503.Sourcefortheemissionfactors:MontrealProtocol.OtherairemissionsOtherairemissionsmetrickilotons2019202020212022Volatileorganiccompounds(VOC)0.30.30.30.3Nitrogenoxide0.30.20.30.2Sulfurdioxide0.0100.0040.0040.005Dust0.0100.0100.0200.020TheVOC,nitrogenoxide,sulfurdioxide,anddustemissionsreportedhereareattributabletoproductionactivitiesaswellasenergygeneration.Thesefiguresdonotincludeemissionsfromvehicles.Emissionsaredeterminedpartiallybasedonmeasurementsandpartiallybasedoncalculationsorestimates.Onlysomesitesarerequiredtomeasureindividualparameters.TTransporransportoffinishedgoodstoffinishedgoods,b,bymeansoftransporymeansoftransporttationation2019202020212022%truck70707173%boat19222119%airplane11888%rail0000.03ThefigurescontainthevolumesofthebiggestglobaldistributioncentersofourLifeScience,HealthcareandElectronicsbusinesssectors.Thesefigurespertaintothetotalweightoftransportedproductsandindicatetheprimarymeansoftransport.Inshippingfinishedgoodsfromourproductionsitestothelocalwarehousesofoursubsidiaries,wehavebeenworkingtoreducetheuseofairshippinginfavorofseafreight.Thischangeaimstobothreducecostsaswellaslowertransport-relatedCO2emissions.In2023,weusedrailtransportationforthefirsttime.Facts&figures204EnergyconsumptionEnergyconsumption11InGWh2019202020212022MerckGroup2022thereofMerckKGaATTototalenergyconsumptionalenergyconsumption2,1782,1782,3742,3742,4542,4542,4322,432586586DirDirectenergyconsumptionectenergyconsumption1,2881,2881,2661,2661,3181,3181,2941,294521521Naturalgas1,2221,1791,2321,188492Liquidfossilfuels23352487029Biomassandself-generatedrenewableenergy333538360IndirIndirectenergyconsumptionectenergyconsumption8908901,1081,1081,1361,1361,1381,1386565Electricity74594595898465Steam,heat,cold1451631781540TTototalenergysoldalenergysold0.10.10.20.20.10.10.010.010.00.0Electricity0.10.20.10.010.0Steam,heat,cold0.00.00.00.00.0InTJTTototalenergyconsumptionalenergyconsumption7,8397,8398,5468,5468,8348,8348,7558,7552,1102,110DirDirectenergyconsumptionectenergyconsumption4,6374,6374,5584,5584,7454,7454,6584,6581,8761,876Naturalgas4,3994,2444,4354,2771,771Liquidfossilfuels2119187173252104Biomassandself-generatedrenewableenergy1191261371300IndirIndirectenergyconsumptionectenergyconsumption3,2023,2023,9893,9894,0904,0904,0974,097234234Electricity2,6823,4023,4493,542234Steam,heat,cold5205876415540TTototalenergysoldalenergysold0.50.50.70.70.40.40.040.040.00.0Electricity0.50.70.40.040.0Steam,heat,cold0.00.00.00.00.01InlinewiththeGreenhouseGasProtocol,forallpreviousyearsenergyconsumptionhasbeencalculatedbasedonthecurrentcorporatestructureasofDec.31ofthereportingyearandretroactivelyadjustedforacquisitionsordivestmentsof(partsof)companies,orforchangesinemissionfactors(portfolio-adjusted).2Lightandheavyfueloil,liquefiedpetroleumgas(LPG),diesel,biodiesel,gasolineandkeroseneWeusephotovoltaicstoproducepoweratmultiplesites.Wecurrentlyonlyrecordpurchasedsecondaryenergy–thisisprimarilyelectricityand,toalesserextent,heat/steam/cold.Detailsonthelocalenergymix,includingtherespectivepercentageofprimaryenergy,renewableenergy,etc.arenotavailable.Dataonlocalenergyefficiencyinelectricityorheatgenerationarenotavailableeither.Ourproductionsitesarelocatedincountrieswithawidelyvaryingenergymix.Facts&figures205OurDarmstadtandGernsheimsitesinGermanyconsumethemostenergy,representing24%ofourGroup-widetotal.Here,fossilenergy(coal,gas,etc.)accountsforapprox.42%,nuclearenergyapprox.13%andrenewableenergiesapprox.45%oftheenergymix.RenewableenergiesaccountforahighershareofelectricitygenerationatproductionsitesinSwitzerland,withnuclearenergytakingtheleadinFrance.Basedonanestimatedglobalenergyefficiencyof37%fortheconversionanddistributionofgeneratedelectricity,thisresultsinaprimaryenergyconsumptionof2,659GWhfor2022.Basedonanestimatedglobalenergyefficiencyof85%forheat/steam/cold,thisresultsinaprimaryenergyconsumptionof181GWhfor2022.Thisyieldsatotalprimaryenergyconsumptionof2,840GWhfor2022.(Thecalculationisbasedonfactorsstatedinthe“Manualforenergymanagementinpractice-Systematicallyreducingenergycosts”publishedbyDENA,12/2012).In2022,ourenergyintensityrelativetonetsalestotaled0.11kWh/€.WWaterwithdrawalaterwithdrawalmillionsofm32019202020212022MerckGroup2022WaterstressareasTTototalwaterwithdrawalalwaterwithdrawal14.014.014.014.013.513.513.213.20.170.17Surfacewater(rivers,lakes)1.91.81.91.80.004Groundwater6.86.76.36.30.003Drinkingwater(fromlocalsuppliers)5.25.45.25.00.16Rainwaterandothersources0.050.060.060.060.004ThesefiguresdonotincludethegroundwaterthatweuseforsafetymeasuresatourGernsheimsiteinGermany.Here,thewaterisfedbackdirectlyintonaturalcirculation.Thevolumeofseawaterandproducedwaterwithdrawnisnotsignificantandisthereforenotreportedseparately.WWaterraterreusedeusedmillionsofm32019202020212022Waterreused23.322.023.520.7TherecirculatingcoolingsystematourDarmstadt,Germanyfacilityaccountsforthemajorityofreusedwaterasitallowsthewatertobere-utilizedmultipletimes.Thevolumeofreusedwateristhusgreaterthanthetotalvolumeofconsumedwater.Facts&figures206WWastewatervastewatervolumeolume2019202020212022MerckGroup2022WaterstressareasTTototalwastewatervalwastewatervolume(millionsofolume(millionsofmm33))13.213.213.413.413.313.312.412.40.1300.130Wastewaterdischargeddirectly9.39.29.58.60.000Wastewaterdischargedtothirdparties3.84.13.83.80.110Thevolumeofseawaterandgroundwaterdischargedisnotsignificantandisthereforenotreportedseparately.Discrepanciesbetweentotalwastewatervolumeandthesumofdirectlydischargedwastewaterandwastewatersenttothirdpartiesarisefromotherdisposalmethods,which,however,onlyresultinminoramountsofwastewater.Directdischargescorrespondtothe“freshwater”classificationoftheGRI.Indirectdischargescorrespondtotheir“otherwater”classification.WWastewaterqualitastewaterqualityy112019202020212022Chemicaloxygendemand(metrictonsofO2)1,5681,4821,4261,013Phosphorous(metrictons)12151110Nitrogen(metrictons)481291392363Nickel(kg)32303746Lead(kg)34371516Cadmium(kg)6635Mercury(kg)00101InalignmentwithICCAreportingrequirementsspecifiedbyCefic,wetrackheavymetalemissionsfromlead,cadmium,nickel,andmercury.ThewastewatertreatmentplantatoursiteinGernsheim,Germanyalsotreatswastewaterfromaneighboringmunicipality.Thecommunalwastewaterfromthismunicipalityisincludedintheemissionsstatedinthetable.Emissionsaredeterminedpartiallybasedonmeasurementsandpartiallybasedoncalculationsorestimates.Onlysomesitesarerequiredtomeasureindividualparameters.Thesefiguresreflectthewastewaterasitiswhenitleavesourfacilities.Someofthesubstancesinthewaterarethenlaterremovedbythird-partypurificationplantsbeforethewaterisultimatelydischargedintotheecosystem.Facts&figures207Hazardousandnon-hazardouswasteHazardousandnon-hazardouswastemetrickilotons2019202020212022TTototalwastealwaste244244229229214214371371Hazardouswastedisposed144383436Non-hazardouswastedisposed141343331Hazardouswasterecycled278908484Non-hazardouswasterecycled28167632201Disposed=incineration(withoutenergyrecovery)andlandfill2Recycled=incineration(withenergyrecovery)andmaterialrecyclingExporExported/Imported/Importedhazardouswastetedhazardouswastemetrickilotons2019202020212022Exported14.34.04.63.7Imported0.0000.0000.0000.0001DisposalprimarilywithintheEUandtheUnitedStates.In2022,approx.3%ofhazardouswastewasshippedinternationally.WWastebastebydisposalmethodydisposalmethod2019202020212022TTototalwaste(metricalwaste(metrickilotons)kilotons)244244229229214214371371DisposedwasteDisposedwaste8585727266666767Landfilledwaste26171820Incineratedwaste59554847RRecyecycledwastecledwaste159159157157148148304304Materialrecycling132133124274Waste-to-energy27242430RRecyecyclingrate(%)clingrate(%)6565696969698282Asinpreviousyears,thetotalwastegeneratedcontinuestobeheavilyinfluencedbythewastefromconstructionandremodelingactivities.Construction,excavationanddemolitionwasteaccountedfor53%ofourwastein2022.Around181metrickilotonsofconstruction,excavationanddemolitionwastewasrecycled.SignificantspillsSignificantspills2019202020212022Totalnumberofsignificantspills0002Facts&figures208CommunitySpendingoncommunitSpendingoncommunityengagementyengagement€million2019202020212022Totalspending46.253.643.348.1WecalculatethevalueofpharmaceuticalproductdonationsaccordingtotheWHOGuidelinesforMedicineDonations;forotherproductdonations,weapplytheirfairvalue.Themainreasonsforthedeclineintotalspendingin2021werelowerCovid-19-relateddonationsaswellasadropindemandforpraziquanteltabletsintheaffectedcountriesduetoCovid-19.CommunitCommunityengagementspendingbyengagementspendingbyryregionegion11EuropeEuropeNorNorththAmericaAmericaAsia-PAsia-Pacificacific(AP(APAAC)C)LatinLatinAmericaAmericaMidMiddleEastdleEastandAfricaandAfrica(MEA)(MEA)2021€million10.85.07.20.619.7%2512171452022€million€million13.113.15.35.35.95.91.31.322.522.5%%2727111112123347471Thistablepresentstheregionsacrosstheglobeinwhichwesupportinitiatives.Forprojectsthatbenefitmultipleregions,wehavecalculatedtheamountperregionbydividingtheprojectspendingevenlypercountry.FFocusofourlocalcommunitocusofourlocalcommunityengagementyengagement11%2019202020212022Health33363333Educationandculture38434532Environment3125Disasterrelief2128Other241918221BasedonnumberofprojectsFacts&figures209MotivMotivationsforourcommunitationsforourcommunityengagementyengagement11%2019202020212022Charitableactivities6232112Communityinvestment91727686Commercialinitiativesinthecommunity35321BasedontotalspendingonallprojectsWecategorizethemotivationsforouractivitiesbasedontheLondonBenchmarkingGroupmodelaswellastheguidelinesoftheBertelsmannFoundationforcorporatesocialresponsibility.Projectsthatprimarilyaimtomakeimprovementswithinthecommunityareclassifiedascommunityinvestment.Initiativesthatarepredominantlyaimedatcompany-relevantfactorssuchasimageorpersonnelrecruitmentareclassifiedascommercialinitiativesinthecommunity.Charitableactivitiescoveranyotherprojectsthatbenefitacharitableorganization,butcannotbelistedundereitheroftheothertwomotivationcategoriesduetomissingdataortheirnarrowscope.Facts&figures210GRIcontentindexGeneraldisclosuresGRIStGRIStandardanddisclosurandardanddisclosureeRRefefererenceenceOmissionrOmissionreasonandCommenteasonandComment2-1OrganizationaldetailsCompanCompanyprofileyprofileListofsharListofshareholdingseholdings2-2Entitiesincludedintheorganization’ssustainabilityreportingRReporeportprofiletprofileListofsharListofshareholdingseholdings2-3Reportingperiod,frequencyandcontactpointRReporeportprofiletprofile2-4RestatementsofinformationRReporeportprofiletprofile2-5ExternalassuranceAssurancerAssurancereporeportt2-6Activities,valuechainandotherbusinessrelationshipsCompanCompanyprofileyprofileSupplychainmanagementSupplychainmanagementMicasupplychainMicasupplychainRReporeportprofiletprofileFFundamentundamentalinformationaboutalinformationabouttheGrouptheGroupMacroeconomicandsectorMacroeconomicandsector--specificenspecificenvironmentvironment2-7EmployeesRReporeportprofiletprofileIndicatorIndicators:emplos:employyeeseesCommentComment:Wereportemployeefiguresinlinewithinternalmanagementcategories,possiblyindependentoftheregion.Theemploymentformat“non-guaranteedhoursemployees”stipulatedbytheGRIdoesnotrepresentarelevantemploymentcategoryforusandisthereforenotreported.2-8WorkerswhoarenotemployeesCCarareerwithuseerwithusOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Workerswhoarenotemployees(e.g.supervisedtemporarystaff)arenotloggedinouremployeedatabase.2-9GovernancestructureandcompositionSustSustainabilitainabilitystrategy&goalsystrategy&goalsManagementManagementStStatementoncorporateatementoncorporategogovvernanceernanceProcedurProceduresoftheBoardsesoftheBoardsObjectivObjectivesoftheSuperesoftheSupervisorvisoryyBoardBoardFacts&figures2112-10NominationandselectionofthehighestgovernancebodyProcedurProceduresoftheBoardsesoftheBoardsObjectivObjectivesoftheSuperesoftheSupervisorvisoryyBoardBoardPromotewomeninPromotewomeninmanagementpositionsmanagementpositionsDivDiverersitsitypolicyypolicy2-11ChairofthehighestgovernancebodyStStatementoncorporateatementoncorporategogovvernanceernance2-12RoleofthehighestgovernancebodyinoverseeingthemanagementofimpactsSustSustainabilitainabilitystrategy&goalsystrategy&goalsRReporeportofthesupertofthesupervisorvisoryboardyboardRisk&opporRisk&opportunitiestunities2-13DelegationofresponsibilityformanagingimpactsSustSustainabilitainabilitystrategy&goalsystrategy&goals2-14RoleofthehighestgovernancebodyinsustainabilityreportingRReporeportprofiletprofile2-15ConflictsofinterestInformationoncorporateInformationoncorporategogovvernancepracticesernancepractices2-16CommunicationofcriticalconcernsSustSustainabilitainabilitystrategy&goalsystrategy&goalsCompliancemanagementCompliancemanagementIndicatorIndicators:businessethicss:businessethicsInformationoncorporateInformationoncorporategogovvernancepracticesernancepracticesOmissionrOmissionreasoneason:ConfidentialityconstraintsCommentComment:Duetothesensitivenatureofcriticalconcerns,thesefiguresareonlyforinternaluse(exceptwhereexternalreportingislegallyrequired).SignificantadditionstoorchangesintheriskregisteraredisclosedinduecoursetotheExecutiveBoardonanadhocbasis,asperstipulationsintheriskpolicy.2-17CollectiveknowledgeofthehighestgovernancebodySustSustainabilitainabilitystrategy&goalsystrategy&goalsInformationoncorporateInformationoncorporategogovvernancepracticesernancepractices2-18EvaluationoftheperformanceofthehighestgovernancebodyProcedurProceduresoftheboardsesoftheboardsArArticlesofassociationticlesofassociationCompensationrCompensationreporeportt2-19RemunerationpoliciesCompensationrCompensationreporeportt2-20ProcesstodetermineremunerationCompensationrCompensationreporeporttVVotingrotingresultesultsAnnualGeneralsAnnualGeneralMeeting2022Meeting20222-21AnnualtotalcompensationratioCCarareerwithuseerwithusOmissionrOmissionreasoneason:NotapplicableCommentComment:Competitivesalariesandadditionalbenefitsnotonlyincreaseourattractivenessasanemployer;theyalsomotivateourpeopleandbuildloyaltytothecompany.Thecompensationweofferisbasedonmarketanalysesintherelevantfield,thevalueoftherespectiveposition,andtheemployee'sskillsetandperformance.Facts&figures212CompensationandbenefitsacrosstheentireGrouparedefinedbyourglobalHRpoliciesandframeworks.Asfaraspossible,westrivetoofferallouremployeescomparablecompensationstructures.Furthermore,wemonitorourcompliancewithminimumstandards.WedonotconsidertheinformationrequiredunderGRI2-21toberelevanttoassessingthefairnessofourcompensationstructures.2-22StatementonsustainabledevelopmentstrategyLetLetterfromtheCEOterfromtheCEO2-23PolicycommitmentsGoGovvernanceernanceCompliancemanagementCompliancemanagementHumanrightHumanrightss2-24EmbeddingpolicycommitmentsGoGovvernanceernanceCompliancemanagementCompliancemanagementHumanrightHumanrightssInformationoncorporateInformationoncorporategogovvernancepracticesernancepractices2-25ProcessestoremediatenegativeimpactsSustSustainabilitainabilitystrategy&goalsystrategy&goalsMaterialitMaterialityanalyyanalysissisCompliancemanagementCompliancemanagementHumanrightHumanrightssIndicatorIndicators:businessethicss:businessethicsRReporeportonRisksandtonRisksandOpporOpportunitiestunities2-26MechanismsforseekingadviceandraisingconcernsSustSustainabilitainabilitystrategy&goalsystrategy&goalsStStakakeholderdialogueeholderdialogueCompliancemanagementCompliancemanagement2-27CompliancewithlawsandregulationsOtherproOtherprovisionsvisionsCompliancemanagementCompliancemanagementInteractionswithhealthInteractionswithhealthssyystemsstemsIndicatorIndicators:businessethicss:businessethics2-28MembershipassociationsStStakakeholderdialogueeholderdialogue2-29ApproachtostakeholderengagementStStakakeholderdialogueeholderdialogue2-30CollectivebargainingagreementsCorporateculturCorporatecultureeGRIStGRIStandardanddisclosurandardanddisclosureeRRefefererenceenceOmissionrOmissionreasonandCommenteasonandComment3-1ProcesstodeterminematerialtopicsMaterialitMaterialityanalyyanalysissis3-2ListofmaterialtopicsMaterialitMaterialityanalyyanalysissisFacts&figures213EconomicStandardsGRIStGRIStandardanddisclosurandardanddisclosureeRRefefererenceenceOmissionrOmissionreasonandCommenteasonandCommentGRI201:EconomicPGRI201:EconomicPererformance2016formance20163-3ManagementofmaterialtopicsCompanCompanyprofileyprofileStStatementonCorporateatementonCorporateGoGovvernanceernanceEconomicperEconomicperformanceformancePPensionschemesensionschemesRReporeportonRisksandtonRisksandOpporOpportunitiestunities201-1DirecteconomicvaluegeneratedanddistributedIndicatorIndicators:emplos:employyeeseesIndicatorIndicators:economicss:economicsIndicatorIndicators:communits:communityyConsolidatedincomestConsolidatedincomestatementatementConsolidatedcashflowConsolidatedcashflowststatementatementOperatingactivitiesOperatingactivitiesPPerersonnelexpensessonnelexpenses201-2FinancialimplicationsandotherrisksandopportunitiesduetoclimatechangeClimateactionClimateactionWWatermanagementatermanagementTTCFDindexCFDindexCDPClimatechangeCDPClimatechangeCDPWCDPWatersecuritatersecurityyRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesCommentComment:WereportindetailonvariousaspectsofclimatechangeaspartofourparticipationintheCDP(formerlyknownastheCarbonDisclosureProject).201-3DefinedbenefitplanobligationsandotherretirementplansIndicatorIndicators:emplos:employyeeseesPPensionschemesensionschemes201-4FinancialassistancereceivedfromgovernmentAccounting:ProperAccounting:Properttyy,plantand,plantandequipmentequipmentRResearchanddeesearchanddevvelopmentelopmentcostcostssGRI202:MarkGRI202:MarketPretPresence2016esence20163-3ManagementofmaterialtopicsCCarareerwithuseerwithusCorporateculturCorporateculturee202-1RatiosofstandardentrylevelwagebygendercomparedtolocalminimumwageCCarareerwithuseerwithusDivDiverersitsityy,equit,equity&inclusiony&inclusionOmissionrOmissionreasoneason:NotapplicableCommentComment:Thisindicatorisnotrelevanttous,whichiswhywedonotcollectdataontheratioofthestandardentry-levelwagecomparedtothelocalminimumwage.OurGlobalRewardsPoliciesapplytoalloursubsidiariesworldwideandguaranteeasystematiccompensationstructure.Bothbasepayandshort-termvariablecompensationareorientedtothemedianFacts&figures214basepayoftherelevantreferencemarket.Ourpayrangesarereviewedonanannualbasisandreflectmarketconditions.Weadheretolocalminimumwagelevels.202-2ProportionofseniormanagementhiredfromthelocalcommunityCCarareerwithuseerwithusDivDiverersitsityy,equit,equity&inclusiony&inclusionOmissionrOmissionreasoneason:NotapplicableCommentComment:Wepromoteboththerecruitmentoflocalemployeesandtheirinternationaldeploymentatallhierarchicallevels.However,wedonotrecordtheproportionoflocalmanagers,asthisisnotrelevantforthestrategicpersonnelmanagementofourcompany.GRI203:IndirGRI203:IndirectEconomicImpactectEconomicImpacts2016s20163-3ManagementofmaterialtopicsGlobalhealthGlobalhealthPricesofmedicinesPricesofmedicinesHealthcapacitHealthcapacity&awary&awarenesseness203-1InfrastructureinvestmentsandservicessupportedGlobalhealthGlobalhealthHealthcapacitHealthcapacity&awary&awarenessenessMicasupplychainMicasupplychainCommunitCommunityengagementyengagement203-2SignificantindirecteconomicimpactsPricesofmedicinesPricesofmedicinesHealthcapacitHealthcapacity&awary&awarenessenessCommunitCommunityengagementyengagementMaterialitMaterialityanalyyanalysissisGRI204:ProcurGRI204:ProcurementPractices2016ementPractices20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainHumanrightHumanrightss204-1ProportionofspendingonlocalsuppliersSustSustainablesupplychainainablesupplychainmanagementmanagementOmissionrOmissionreasoneason:NotapplicableCommentComment:Wehavenointernalguidelinesstipulatingthatpreferencebegiventolocalvendorsinallocatingcontractsandthereforedonotcollectthistypeofdata.Insomecountries,locallawsrequirecontractstobeawardedtoregionalsuppliers.GRI205:Anti-corruption2016GRI205:Anti-corruption20163-3ManagementofmaterialtopicsCompliancemanagementCompliancemanagementRResponsibleinteractionswithesponsibleinteractionswithhealthshealthsyystemsstems205-1OperationsassessedforrisksrelatedtocorruptionCompliancemanagementCompliancemanagementIndicatorIndicators:businessethicss:businessethicsRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesFacts&figures215205-2Communicationandtrainingaboutanti-corruptionpoliciesandproceduresCompliancemanagementCompliancemanagementIndicatorIndicators:businessethicss:businessethics205-3ConfirmedincidentsofcorruptionandactionstakenCompliancemanagementCompliancemanagementIndicatorIndicators:businessethicss:businessethicsRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesCommentComment:Asapplicable,wereportonrisksfromlitigationandlegalproceedingsinourReportonRisksandOpportunities.GRI206:Anti-competitivGRI206:Anti-competitiveBehaeBehavior2016vior20163-3ManagementofmaterialtopicsCompliancemanagementCompliancemanagementRResponsibleinteractionswithesponsibleinteractionswithhealthshealthsyystemsstems206-1Legalactionsforanti-competitivebehavior,anti-trust,andmonopolypracticesIndicatorIndicators:businessethicss:businessethicsRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesFacts&figures216EnvironmentalStandardsGRIStGRIStandardanddisclosurandardanddisclosureeRRefefererenceenceOmissionrOmissionreasonandCommenteasonandCommentGRI301:Materials2016GRI301:Materials20163-3ManagementofmaterialtopicsSustSustainableproductainableproducts&packs&packagingaging301-1MaterialsusedbyweightorvolumeSustSustainableproductainableproducts&packs&packagingagingOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Weonlyrecordtheweightoftherawmaterialsthataredirectlyusedinourpharmaceuticalsandchemicals,whichcameto416metrickilotonsin2022(2021:400metrickilotons).Additionally,weutilizeoperatingsuppliesandpackagingmaterials,suchasfoldingboxes,glassbottlesandampules.301-2RecycledinputmaterialsusedSustSustainableproductainableproducts&packs&packagingagingOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Inallourendeavors,weattempttoefficientlyutilizematerialsandrecycleasmuchaspossible.Wherefeasible,weuserecycledmaterials(inpackaging,forinstance.)Overall,ourcompanyconsidersmaterialconsumptiontobeamajorconcern.Therearefewopportunitiestouserecycledmaterialinourproductionprocessesbecauseourbusinessmodelputsusatthestartofthevaluechain.WethereforedonotcollectsuchdataatGrouplevel.Individualdataandmeasuresarereportedintherespectivechapters.301-3ReclaimedproductsandtheirpackagingmaterialsSustSustainableproductainableproducts&packs&packagingagingOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Owingtothemultitudeofproductswesupplyandtheminimalcomparabilityofourvariousinitiatives,wedonotcollectquantitativedataattheGrouplevel.Theindividualmeasurestakenbyourvariousbusinessesarereportedintherespectivechapters.GRI302:Energy2016GRI302:Energy20163-3ManagementofmaterialtopicsClimateactionClimateactionEnEnvironmentvironmentalprotectionalprotectionSustSustainableproductainableproducts&packs&packagingaging302-1EnergyconsumptionwithintheorganizationClimateactionClimateactionIndicatorIndicators:ens:environmentvironmentFacts&figures217302-2EnergyconsumptionoutsideoftheorganizationClimateactionClimateactionIndicatorIndicators:ens:environmentvironmentOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Todate,wehavenotbeentrackingenergyconsumptionoutsideourorganization,butweareworkingtocreatemoretransparencyonourScope3emissions.Goingforward,wewillalsomakeeffortstotrackenergyconsumptionoutsideofourorganization.302-3EnergyintensityClimateactionClimateactionIndicatorIndicators:ens:environmentvironment302-4ReductionofenergyconsumptionClimateactionClimateactionIndicatorIndicators:ens:environmentvironment302-5ReductionsinenergyrequirementsofproductsandservicesClimateactionClimateactionIndicatorIndicators:ens:environmentvironmentGRI303:WGRI303:WaterandEffluentaterandEffluents2018s20183-3ManagementofmaterialtopicsWWatermanagementatermanagementEnEnvironmentvironmentalprotectionalprotection303-1InteractionswithwaterasasharedresourceWWatermanagementatermanagement303-2Managementofwaterdischarge-relatedimpactsWWatermanagementatermanagement303-3WaterwithdrawalWWatermanagementatermanagementIndicatorIndicators:ens:environmentvironmentOmissionrOmissionreasoneason:NotapplicableCommentComment:Theamountofseawaterandproducedwaterwithdrawnisnotsignificantandisthereforenotreportedseparately.ThebreakdownofthewaterwithdrawalsourcesinaccordancewiththeGRIcategories“freshwater”and“otherwater”isnotrelevantforusowingtothehighwaterqualityrequiredandisthereforenotreported.303-4WaterdischargeWWatermanagementatermanagementIndicatorIndicators:ens:environmentvironmentOmissionrOmissionreasoneason:NotapplicableCommentComment:Thevolumeofseawaterandgroundwaterdischargedisnotsignificantandisthereforenotreportedseparately.303-5WaterconsumptionWWatermanagementatermanagementIndicatorIndicators:ens:environmentvironmentOmissionrOmissionreasoneason:NotapplicableCommentComment:Mostofthewaterweuseinourproductionstreamsisreleasedbackintoaquaticecosystemsthroughdirectorindirectdischarges.Evaporationprocessesarenotamaterialpartofourmanufacturingoperations.Atindividualmanufacturingsites,weincorporatesmallamountsofwaterintoourproducts.WedonotoperateprocessesthatwithdrawwaterinrelevantvolumesfromFacts&figures218theaquaticenvironmentlikeincorporationinproductsorevaporationintotheatmosphere.Neitherdoweoperatetechnicalinstallationslikewaterreservoirswiththepurposeofwaterwithdrawal.Thus,waterconsumptionisnotmaterialtoourcompany.GRI304:BiodivGRI304:Biodiverersitsity2016y20163-3ManagementofmaterialtopicsEnEnvironmentvironmentalprotectionalprotectionSustSustainableproductainableproducts&packs&packagingaging304-1Operationalsitesowned,leased,managedin,oradjacentto,protectedareasandareasofhighbiodiversityvalueoutsideprotectedareasEnEnvironmentvironmentalprotectionalprotectionOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Ourlanduseplanningtakesbiodiversityimpactsintoaccount,withappropriateprotectivemeasuresbeingtakenonacase-by-casebasis.304-2Significantimpactsofactivities,productsandservicesonbiodiversityEnEnvironmentvironmentalprotectionalprotectionMaterialitMaterialityanalyyanalysissis304-3HabitatsprotectedorrestoredEnEnvironmentvironmentalprotectionalprotection304-4IUCNRedListspeciesandnationalconservationlistspecieswithhabitatsinareasaffectedbyoperationsEnEnvironmentvironmentalprotectionalprotectionOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Ourlanduseplanningtakesbiodiversityimpactsintoaccount,withappropriateprotectivemeasuresbeingtakenonacase-by-casebasis.GRI305:Emissions2016GRI305:Emissions20163-3ManagementofmaterialtopicsClimateactionClimateactionEnEnvironmentvironmentalprotectionalprotection305-1Direct(Scope1)GHGemissionsClimateactionClimateactionIndicatorIndicators:ens:environmentvironment305-2Energyindirect(Scope2)GHGemissionsClimateactionClimateactionIndicatorIndicators:ens:environmentvironment305-3Otherindirect(Scope3)GHGemissionsClimateactionClimateactionIndicatorIndicators:ens:environmentvironmentCDPClimatechangeCDPClimatechange305-4GHGemissionsintensityClimateactionClimateactionIndicatorIndicators:ens:environmentvironment305-5ReductionofGHGemissionsClimateactionClimateactionSustSustainableproductainableproducts&packs&packagingagingIndicatorIndicators:ens:environmentvironmentCDPClimatechangeCDPClimatechange305-6Emissionsofozone-depletingsubstances(ODS)IndicatorIndicators:ens:environmentvironmentFacts&figures219305-7Nitrogenoxides(NOX),sulfuroxides(SOX),andothersignificantairemissionsIndicatorIndicators:ens:environmentvironmentGRI306:WGRI306:Waste2020aste20203-3ManagementofmaterialtopicsWWaste&raste&recyecyclingclingEnEnvironmentvironmentalprotectionalprotection306-1Wastegenerationandsignificantwaste-relatedimpactsWWaste&raste&recyecyclingcling306-2Managementofsignificantwaste-relatedimpactsWWaste&raste&recyecyclingcling306-3WastegeneratedWWaste&raste&recyecyclingcling306-4WastedivertedfromdisposalIndicatorIndicators:ens:environmentvironment306-5WastedirectedtodisposalWWaste&raste&recyecyclingclingIndicatorIndicators:ens:environmentvironmentGRI306:EffluentGRI306:EffluentsandWsandWaste2016aste2016306-3SignificantspillsWWaste&raste&recyecyclingclingGRI308:SupplierEnGRI308:SupplierEnvironmentvironmentalAssessment2016alAssessment20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychain308-1NewsuppliersthatwerescreenedusingenvironmentalcriteriaSustSustainablesupplychainainablesupplychainmanagementmanagementOmissionrOmissionreasoneason:NotapplicableCommentComment:Wedonotreportthe“percentageofnewsuppliersthatwerescreenedusingenvironmentalcriteria”sincethisinformationisnotrelevantformanagingoursustainablesuppliermanagementactivities.308-2NegativeenvironmentalimpactsinthesupplychainandactionstakenSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Weworkcloselywithourstrategicsuppliersandmonitorvariousriskdomainsviaoursupplierriskassessments.Inthiscontext,wehelpoursupplierstoachieveimprovementsandtosetupriskmitigationmeasures.TheGRIdisclosures308-2-dand308-2-earenotreportedsincetheyarenotrelevantforus.Facts&figures220SocialStandardsGRIStGRIStandardanddisclosurandardanddisclosureeRRefefererenceenceOmissionrOmissionreasonandCommenteasonandCommentGRI401:EmploGRI401:Employment2016yment20163-3ManagementofmaterialtopicsCCarareerwithuseerwithusCorporateculturCorporatecultureeHumanrightHumanrightss401-1NewemployeehiresandemployeeturnoverIndicatorIndicators:emplos:employyeesees401-2Benefitsprovidedtofull-timeemployeesthatarenotprovidedtotemporaryorpart-timeemployeesCCarareerwithuseerwithusOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:Part-timeemployeesreceivethesameeligibilityforemployeebenefitsasfull-timeworkers.Employeeswithtemporarycontracts,however,maynotbeentitledtoallcompanybenefits,suchasacompanypension.401-3ParentalleaveCCarareerwithuseerwithusIndicatorIndicators:emplos:employyeeseesGRI402:LaborGRI402:Labor//ManagementRManagementRelations2016elations20163-3ManagementofmaterialtopicsCorporateculturCorporateculturee402-1MinimumnoticeperiodsregardingoperationalchangesCorporateculturCorporatecultureeOmissionrOmissionreasoneason:NotapplicableCommentComment:Theregulationsonperiodsofnoticevaryworldwide.Weapplytherulesthatareinforcelocally.ThereisnoneedforustotrackperiodsofnoticeatGrouplevel.GRI403:OccupationalHealthandSafGRI403:OccupationalHealthandSafetety2018y20183-3ManagementofmaterialtopicsHealth&safHealth&safetetyyPlant,process&transporPlant,process&transporttsafsafetetyyCommentComment:ThedisclosuresunderGRI403pertaintoouremployeesaswellassupervisedtemporarystaff.Theydonotincludeemployeesofcontractors.Consequently,notalltheemployeegroupsspecifiedbyGRIarereflected.403-1OccupationalhealthandsafetymanagementsystemHealth&safHealth&safetetyy403-2Hazardidentification,riskassessment,andincidentinvestigationHealth&safHealth&safetetyyPlant,process&transporPlant,process&transporttsafsafetetyy403-3OccupationalhealthservicesHealth&safHealth&safetetyyFacts&figures221403-4Workerparticipation,consultation,andcommunicationonoccupationalhealthandsafetyHealth&safHealth&safetetyyCommentComment:OccupationalhealthandsafetycommitteesarerequiredbylawinGermany.AllemployeesofMerckKGaAarethereforerepresentedbysuchcommittees,whichoperateatsitelevel.Theseemployeesrepresentaround13%ofourglobalworkforce.ThemajorityofsitesoutsideGermanyalsohavehealthandsafetycommitteestorepresenttheiremployees.Theorganizationofthesecommitteesistheresponsibilityofourindividualsites.HealthandsafetyissuesaregovernedGroup-widebyourEHSPolicy.Theorganizationalimplementationofthispolicyistheresponsibilityofourindividualsitesandissubjecttolocallawsandregulations.MerckKGaA,whichaccountsforapproximately13%ofourglobalworkforce,hascompanyagreementsinplaceonoccupationalhealthandsafety.403-5WorkertrainingonoccupationalhealthandsafetyHealth&safHealth&safetetyyPlant,process&transporPlant,process&transporttsafsafetetyy403-6PromotionofworkerhealthHealth&safHealth&safetetyy403-7PreventionandmitigationofoccupationalhealthandsafetyimpactsdirectlylinkedbybusinessrelationshipsHealth&safHealth&safetetyyHumanrightHumanrightssPlant,process&transporPlant,process&transporttsafsafetetyy403-8WorkerscoveredbyanoccupationalhealthandsafetymanagementsystemHealth&safHealth&safetetyy403-9Work-relatedinjuriesHealth&safHealth&safetetyyPlant,process&transporPlant,process&transporttsafsafetetyyIndicatorIndicators:emplos:employyeeseesCommentComment:Wehaveidentifiedthelosttimeinjuryrate(LTIR)asakeyperformanceindicatorforourcompany.403-10Work-relatedillhealthHealth&safHealth&safetetyyPlant,process&transporPlant,process&transporttsafsafetetyyIndicatorIndicators:emplos:employyeeseesOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:AtGrouplevel,wedonotcollectdataregardingthetypesofpotentialwork-relatedillnessesorfatalities.Oursitesmaycollectdataontheincidenceofoccupationalillnessasneeded.Facts&figures222GRI404:TGRI404:TrainingandEducation2016rainingandEducation20163-3ManagementofmaterialtopicsCCarareerwithuseerwithusDivDiverersitsityy,equit,equity&inclusiony&inclusionCorporateculturCorporateculturee404-1AveragehoursoftrainingperyearperemployeeCCarareerwithuseerwithusOmissionrOmissionreasoneason:NotapplicableCommentComment:Wedonotkeeptrackoftheaveragehoursouremployeesspendonvocationaltrainingandcontinuingeducationbecausethisindicatordoesnothaveanybearingonthequalityorsuccessofourefforts.404-2ProgramsforupgradingemployeeskillsandtransitionassistanceprogramsSustSustainablesupplychainainablesupplychainmanagementmanagementHumanrightHumanrightssProductProduct-r-relatedcrimeelatedcrimePlant,process&transporPlant,process&transporttsafsafetetyyCCarareerwithuseerwithusCorporateculturCorporatecultureeDivDiverersitsityy,equit,equity&inclusiony&inclusionEnEnvironmentvironmentalprotectionalprotection404-3PercentageofemployeesreceivingregularperformanceandcareerdevelopmentreviewsCCarareerwithuseerwithusIndicatorIndicators:emplos:employyeeseesGRI405:DivGRI405:DiverersitsityandEqualOpporyandEqualOpportunittunity2016y20163-3ManagementofmaterialtopicsDivDiverersitsityy,equit,equity&inclusiony&inclusionCCarareerwithuseerwithusCorporateculturCorporatecultureeObjectivObjectivesoftheSuperesoftheSupervisorvisoryyBoardwithrBoardwithrespecttoitespecttoitsscompositioncomposition405-1DiversityofgovernancebodiesandemployeesDivDiverersitsityy,equit,equity&inclusiony&inclusionIndicatorIndicators:emplos:employyeeseesTheExTheExecutivecutiveBoardeBoardTheSuperTheSupervisorvisoryBoardyBoardObjectivObjectivesoftheSuperesoftheSupervisorvisoryyBoardwithrBoardwithrespecttoitespecttoitsscompositioncompositionDivDiverersitsitypolicyypolicyFacts&figures223405-2RatioofbasicsalaryandremunerationofwomentomenCCarareerwithuseerwithusDivDiverersitsityy,equit,equity&inclusiony&inclusionOmissionrOmissionreasoneason:NotapplicableCommentComment:Asacoreprinciple,ourcompensationsystemsandprocessesdonotdistinguishbetweenwomenandmen.ThesalariesweofferarepredicatedontherespectivejobdescriptionandarebasedonourGlobalJobCatalog,whichhasfixedsalarybandsthatareidenticalformenandwomen.Variablesalarycomponentsthatfallunderperformance-basedcompensationarepaidbasedonwhethermutuallyagreedtargetshavebeenachieved.Aperformancemanagementsystemgovernsthisprocess.GRI406:Non-discrimination2016GRI406:Non-discrimination20163-3ManagementofmaterialtopicsDivDiverersitsityy,equit,equity&inclusiony&inclusionCorporateculturCorporateculturee406-1IncidentsofdiscriminationandcorrectiveactionstakenDivDiverersitsityy,equit,equity&inclusiony&inclusionIndicatorIndicators:businessethicss:businessethicsGRI407:FGRI407:FrreedomofAssociationandCollectiveedomofAssociationandCollectiveBargaining2016eBargaining20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementHumanrightHumanrightssCorporateculturCorporateculturee407-1OperationsandsuppliersinwhichtherighttofreedomofassociationandcollectivebargainingmaybeatriskSustSustainablesupplychainainablesupplychainmanagementmanagementHumanrightHumanrightssGRI408:ChildLabor2016GRI408:ChildLabor20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainHumanrightHumanrightss408-1OperationsandsuppliersatsignificantriskforincidentsofchildlaborSustSustainablesupplychainainablesupplychainmanagementmanagementHumanrightHumanrightssMicasupplychainMicasupplychainGRI409:FGRI409:ForcedorCompulsororcedorCompulsoryLabor2016yLabor20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainHumanrightHumanrightss409-1OperationsandsuppliersatsignificantriskforincidentsofforcedorcompulsorylaborSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainHumanrightHumanrightssFacts&figures224GRI410:SecuritGRI410:SecurityPractices2016yPractices20163-3ManagementofmaterialtopicsHumanrightHumanrightssSustSustainablesupplychainainablesupplychainmanagementmanagement410-1SecuritypersonneltrainedinhumanrightspoliciesorproceduresHumanrightHumanrightssOmissionrOmissionreasoneason:Informationunavailable/incompleteCommentComment:AspartofourSecurityGovernanceFramework,weplantointegratehumanrightsaspectsevenmorestronglyintosecurity-relevantprocesses,forinstanceintrainingcoursesforsecuritypersonnel.Tothisend,wewillofferwebinarsonthetopicofhumanrightsontheestablishedSecurityAcademyplatforminregularintervals,amongotherthings.GRI414:SupplierSocialAssessment2016GRI414:SupplierSocialAssessment20163-3ManagementofmaterialtopicsSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainHumanrightHumanrightss414-1NewsuppliersthatwerescreenedusingsocialcriteriaSustSustainablesupplychainainablesupplychainmanagementmanagementOmissionrOmissionreasoneason:NotapplicableCommentComment:Wedonotreportthe“percentageofnewsuppliersthatwerescreenedusingsocialcriteria”sincethisinformationisnotrelevantformanagingoursustainablesuppliermanagementactivities.414-2NegativesocialimpactsinthesupplychainandactionstakenSustSustainablesupplychainainablesupplychainmanagementmanagementMicasupplychainMicasupplychainGRI415:PublicPGRI415:PublicPolicy2016olicy20163-3ManagementofmaterialtopicsStStakakeholderdialogueeholderdialogue415-1PoliticalcontributionsStStakakeholderdialogueeholderdialogueGRI416:CustomerHealthandSafGRI416:CustomerHealthandSafetety2016y20163-3ManagementofmaterialtopicsClinicalstudiesClinicalstudiesPPatientsafatientsafetetyyProductProduct-r-relatedcrimeelatedcrimeChemicalproductsafChemicalproductsafetetyySustSustainableproductainableproducts&s&packpackagingagingRReporeportonRisksandtonRisksandOpporOpportunitiestunities416-1AssessmentofthehealthandsafetyimpactsofproductandservicecategoriesChemicalproductsafChemicalproductsafetetyyFacts&figures225416-2Incidentsofnon-complianceconcerningthehealthandsafetyimpactsofproductsandservicesClinicalstudiesClinicalstudiesChemicalproductsafChemicalproductsafetetyyRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesCommentComment:Asapplicable,wereportonrisksfromlitigationandlegalproceedingsinourReportonRisksandOpportunities.GRI417:MarkGRI417:MarketingandLabeling2016etingandLabeling20163-3ManagementofmaterialtopicsCompliancemanagementCompliancemanagementRResponsibleinteractionswithesponsibleinteractionswithhealthshealthsyystemsstemsPPatientsafatientsafetetyyChemicalproductsafChemicalproductsafetetyy417-1RequirementsforproductandserviceinformationandlabelingPPatientsafatientsafetetyyChemicalproductsafChemicalproductsafetetyyCommentComment:Allpharmaceuticalsaresubjecttoreportingandnotificationrequirements,whichwefulfill.Inlinewiththestatutoryrequirements,weprovideourcustomerswitheasilyaccessibleandrelevantinformationonthesafehandlinganduseofourchemicalproducts.Wereportontheindividualrequirementsintherespectivechapters.417-2Incidentsofnon-complianceconcerningproductandserviceinformationandlabelingPPatientsafatientsafetetyyChemicalproductsafChemicalproductsafetetyyRReporeportonRisksandtonRisksandOpporOpportunitiestunities417-3Incidentsofnon-complianceconcerningmarketingcommunicationsRReporeportonRisksandtonRisksandOpporOpportunitiestunitiesCommentComment:Asapplicable,wereportonrisksfromlitigationandlegalproceedingsinourReportonRisksandOpportunities.GRI418:CustomerPrivGRI418:CustomerPrivacy2016acy20163-3ManagementofmaterialtopicsDatDataprotection&cybersecuritaprotection&cybersecurityyClinicalstudiesClinicalstudies418-1SubstantiatedcomplaintsconcerningbreachesofcustomerprivacyandlossesofcustomerdataDatDataprotection&cybersecuritaprotection&cybersecurityyClinicalstudiesClinicalstudiesIndicatorIndicators:businessethicss:businessethicsFacts&figures226AdditionalmaterialtopicsAdAdditionalmaterialtopicsditionalmaterialtopicsClinicalstudiesClinicalstudies3-3ManagementofmaterialtopicsClinicalstudiesClinicalstudiesAnimalwelfarAnimalwelfaree3-3ManagementofmaterialtopicsAnimalwelfarAnimalwelfareeBioethicsBioethics3-3ManagementofmaterialtopicsBioethicsBioethicsDigitDigitalethicsalethics3-3ManagementofmaterialtopicsDigitDigitalethicsalethicsHealthforall(incl.pricesofmedicinesHealthforall(incl.pricesofmedicines,acceesstohealth,healthawar,acceesstohealth,healthawareness)eness)3-3ManagementofmaterialtopicsGlobalhealthGlobalhealthOpeninnoOpeninnovvationsharingationsharingPricesofmedicinesPricesofmedicinesHealthcapacitHealthcapacity&awary&awarenessenessProductProduct-r-relatedcrimeelatedcrime3-3ManagementofmaterialtopicsProductProduct-r-relatedcrimeelatedcrimeFacts&figures227SASBindexSASBdisclosure2022WeintegratedourSustainabilityAccountingStandardsBoard(SASB)disclosuresintoour2022SustainabilityReport.InadditiontoourdisclosurespursuanttotheSASBstandard“Biotechnology&Pharmaceuticals”,wevoluntarilyreportinformationforthe“MedicalEquipment&Supplies”and“Semiconductors”industries.Wethuscoverourthreebusinesssectors.WithourvoluntarySASBdisclosures,wewanttomeettheincreasingdemandsofourinvestorsandotherstakeholders.Thereporteddataprovidetransparent,financiallymaterialandmeaningfulinformationonsustainability.Tomeettheevolvinginterestsandrequirementsofourstakeholdersinthefutureaswell,wewillcontinuouslydevelopandexpandourSASBreporting.TheSASBdisclosureswerenotpartofthelimitedassuranceengagementconductedbyanindependentauditorforour2022SustainabilityReport.Biotechnology&PharmaceuticalsSafSafetetyofClinicalTyofClinicalTrialPrialPararticipantticipantssHC-BP-210a.1Discussion,byworldregion,ofmanagementprocessforensuringqualityandpatientsafetyduringclinicaltrialsClinicalstudiesClinicalstudiesPPatientsafatientsafetetyyR&D:PR&D:Positions&Positions&Policies(Healthcarolicies(Healthcare)e)HC-BP-210a.2NumberofFDASponsorInspectionsrelatedtoclinicaltrialmanagementandpharmacovigilancethatresultedin:(1)VoluntaryActionIndicated(VAI)and(2)OfficialActionIndicated(OAI)TherewerenoFDAGoodClinicalPractice(GCP)sponsorinspectionsrelatedtoclinicaltrialsin2022.HC-BP-210a.3TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithclinicaltrialsindevelopingcountriesNotreportedAccesstoMedicinesAccesstoMedicinesHC-BP-240a.1DescriptionofactionsandinitiativestopromoteaccesstohealthcareproductsforprioritydiseasesandinprioritycountriesasdefinedbytheAccesstoMedicineIndexGlobalHealthGlobalHealthOpeninnoOpeninnovvationsharingationsharingPricesofmedicinesPricesofmedicinesHealthcapacitHealthcapacity&awary&awarenessenessHC-BP-240a.2ListofproductsontheWHOListofPrequalifiedMedicinalProductsaspartofitsPrequalificationofMedicinesProgramme(PQP)Currentlythereisnoproductonthelist.AffordabilitAffordability&Pricingy&PricingHC-BP-240b.1NumberofsettlementsofAbbreviatedNewDrugApplication(ANDA)litigationthatinvolvedpaymentsand/orprovisionstodelaybringinganauthorizedgenericproducttomarketforadefinedtimeperiodNotreportedFacts&figures228HC-BP-240b.2Percentagechangein:(1)averagelistpriceand(2)averagenetpriceacrossU.S.productportfoliocomparedtopreviousyearThefollowingoverviewshowsthepercentagechangeintheaveragelistprice(WAC)ofourHealthcareUSproductportfoliocomparedtothepreviousyear:Seealso:PricesofmedicinesPricesofmedicinesHC-BP-240b.3Percentagechangein:(1)listpriceand(2)netpriceofproductwithlargestincreasecomparedtopreviousyearWeonlyreportthepercentagechangeinaveragelistpriceacrossourU.S.productportfolio.Thelargestincreasecomparedwiththepreviousyearamountedto6.4%(Gonal-f®,andOvidrel®).DrugSafDrugSafetetyyHC-BP-250a.1ListofproductslistedintheFoodandDrugAdministration’s(FDA)MedWatchSafetyAlertsforHumanMedicalProductsdatabaseSeeFDAwebsite:HC-BP-250a.2NumberoffatalitiesassociatedwithproductsasreportedintheFDAAdverseEventReportingSystemSeeFDAwebsite:AdvAdvererseeseevventrentreporeportingstingsyystem(Fstem(FAERS)publicAERS)publicdashboarddashboardHC-BP-250a.3Numberofrecallsissued,totalunitsrecalledIn2022,wehadthreedrugproductrecallsintotal.Noneoftheserecallswasglobal;theyaffectedindividualcountriesonly.NoneoftherecallswasrelatedtotheUSA.Noneoftherecallswasrelatedtoseriousinjuryorfatality,allwereeitherClassIIorIII.Accordingtoourinternalpolicies,anyrecalltypeisreportedanddiscussedwiththerelevantnationalregulatoryauthority,includingtheU.S.FDA.AllrecallprocessesaremanagedunderaGlobalStandardProcedure“ProductRecallandWithdrawalManagement”whichisappliedworldwideformedicinalproducts(pharmaceuticalprescription,biological)anddevices.HC-BP-250a.4Totalamountofproductacceptedfortake-back,reuse,ordisposalWedonottakebackproductsforreuse.Inlinewithlegalrequirementsineachcountrywetakebackproductsfordisposal.HC-BP-250a.5NumberofFDAenforcementactionstakeninresponsetoviolationsofcurrentGoodManufacturingPractices(cGMP),bytypeWehadnosuchFDAenforcementactionsin2022.Rebif®:4.0%Mavenclad®:4.7%Bavencio®:3.3%Gonal-f®:6.4%Cetrotide®:6.4%Ovidrel®:6.4%Serostim®:6.1%Saizen®:4.9%SafSafetetyinformationandadvyinformationandadvererseeseevventrentreporeportingtingprogramprogramAdvAdvererseeseevventrentreporeportingstingsyystem(Fstem(FAERS)publicAERS)publicdashboarddashboardFacts&figures229CounterCounterffeitDrugseitDrugsHC-BP-260a.1DescriptionofmethodsandtechnologiesusedtomaintaintraceabilityofproductsthroughoutthesupplychainandpreventcounterfeitingProductProduct-r-relatedcrimeelatedcrimeHC-BP-260a.2DiscussionofprocessforalertingcustomersandbusinesspartnersofpotentialorknownrisksassociatedwithcounterfeitproductsWehaveimplementedprocessesandprocedurestoensurethatallsuspectedcounterfeitmedicinesareassessedbyateamofexperts.Thescopeofanynotificationthatweprovideistheoutcomeofstrategicalignmentbetweenrelevantfunctions(e.g.Medical,Procurement,Legal,Quality,CorporateSecurity,RegulatoryAffairs,Communications).Levelsofdetailsandformatofanynotification,includingtheHAinformationandcollaboration,dedicatedpatientcommunication,information/awarenesscommunicationtodistributors,pharmacies,physiciansetc.aboutthepresenceofcounterfeitordivertedproductsinthemarket,isdecidedonacase-by-casebasisinaccordancewiththeidentifiedrisksandtakingintoaccountcorporate,legalandregulatoryresponsibilities.Seealso:ProductProduct-r-relatedcrimeelatedcrimeHC-BP-260a.3Numberofactionsthatledtoraids,seizure,arrests,and/orfilingofcriminalchargesrelatedtocounterfeitproductsProductProduct-r-relatedcrimeelatedcrimeEthicalMarkEthicalMarketingetingHC-BP-270a.1TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithfalsemarketingclaimsNotreportedHC-BP-270a.2Descriptionofcodeofethicsgoverningpromotionofoff-labeluseofproductsRResponsibleinteractionswithhealthsesponsibleinteractionswithhealthsyystemsstemsEmploEmployyeeReeRecruitment,Deecruitment,Devvelopment&Relopment&RetentionetentionHC-BP-330a.1DiscussionoftalentrecruitmentandretentioneffortsforscientistsandresearchanddevelopmentpersonnelCCarareerwithuseerwithusDivDiverersitsityy,equit,equityandinclusionyandinclusionHC-BP-330a.2(1)Voluntaryand(2)involuntaryturnoverratefor:(a)executives/seniormanagers,(b)mid-levelmanagers,(c)professionals,and(d)allothersIndicatorIndicators:emplos:employyeeseesFacts&figures230SupplyChainManagementSupplyChainManagementHC-BP-430a.1Percentageof(1)entity'sfacilitiesand(2)TierIsuppliers'facilitiesparticipatingintheRx-360InternationalPharmaceuticalSupplyChainConsortiumauditprogramorequivalentthird-partyauditprogramsforintegrityofsupplychainandingredientsOurHealthcarebusinesssectordoesnotparticipateintheRx-360InternationalPharmaceuticalSupplyChainConsortium.However,ourfacilitiesarefrequentlyauditedbytherespectivehealthauthoritiesofthecountriesinwhichwedistributeourhealthcareproducts.Asamajorsuppliertothepharmaceuticalindustry,ourLifeSciencebusinesssectorparticipatesintheRxRx-360auditprogram-360auditprogram.Regardingoursupplierbase,wehaveaccesstosustainabilityauditsandassessmentsofoursuppliersthroughourmembershipintheindustryinitiatives“TogetherforSustainability”(TTfSfS)and“PharmaceuticalSupplyChainInitiative”(PSCIPSCI).Seealso:SupplychainmanagementSupplychainmanagementBusinessEthicsBusinessEthicsHC-BP-510a.1TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithcorruptionandbriberyNotreportedHC-BP-510a.2DescriptionofcodeofethicsgoverninginteractionswithhealthcareprofessionalsRResponsibleinteractionswithhealthsesponsibleinteractionswithhealthsyystemsstemsCompliancemanagementCompliancemanagementActivitActivitymetricsymetricsHC-BP-000.ANumberofpatientstreatedIn2022,ourHealthcaremedicineswereusedtotreataround94millionpatients.Additionally,wedonatedmorethan200millionpraziquanteltablets,enoughtotreatschistosomiasisinmorethan80millionschool-agedchildrenin2022.Seealso:GlobalHealthGlobalHealthHC-BP-000.BNumberofdrugs(1)inportfolioand(2)inresearchanddevelopment(Phases1-3)OurHealthcarHealthcareporeportfoliotfolioRResearch&Deesearch&Devvelopment(Healthcarelopment(Healthcare)e)OurHealthcarHealthcarepipelineepipelineFacts&figures231MedicalEquipment&SuppliesAffordabilitAffordability&Pricingy&PricingHC-MS-240a.1Ratioofweightedaveragerateofnetpriceincreases(forallproducts)totheannualincreaseintheU.S.ConsumerPriceIndexNotreportedHC-MS-240a.2DescriptionofhowpriceinformationforeachproductisdisclosedtocustomersortotheiragentsOurLifLifeScienceporeScienceportfoliotfolioProductSafProductSafetetyyHC-MS-250a.1Numberofrecallsissued,totalunitsrecalledWeconductmonthlyreviewsofkeyperformancequalityindicatorswhichincludeareviewofmultiplequalitymetricsincludingnumberofrecalls.Quarterlytrendsareevaluatedandreportedthroughmanagementreviews.In2022,therewerenorecallsforourLifeSciencebusiness.HC-MS-250a.2ListofproductslistedintheFDA’sMedWatchSafetyAlertsforHumanMedicalProductsdatabaseIn2022,therewerenoLifeScienceproductslistedintheFDFDAA’’sMedWsMedWatchSafatchSafetetyAleryAlerttsforHumansforHumanMedicalProductMedicalProductsdatsdatabaseabase.HC-MS-250a.3NumberoffatalitiesrelatedtoproductsasreportedintheFDAManufacturerandUserFacilityDeviceExperiencedatabaseIn2022,therewerenofatalitiesrelatedtoourLifeScienceproductsreportedtotheFDFDAA’’sMedWsMedWatchatchSafSafetetyAleryAlerttsforHumanMedicalProductsforHumanMedicalProductsdatsdatabaseabase.HC-MS-250a.4NumberofFDAenforcementactionstakeninresponsetoviolationsofcurrentGoodManufacturingPractices(cGMP),bytypeLifeSciencereceivedoneU.S.FDA483formsin2022.EthicalMarkEthicalMarketingetingHC-MS-270a.1TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithfalsemarketingclaimsNotreportedHC-MS-270a.2Descriptionofcodeofethicsgoverningpromotionofoff-labeluseofproductsBeforeanyproductscanbepurchasedfromourLifeScienceplatform,weuseacustomerscreeningprocesstoguardagainstthepurchaseofourproductsforillegalpurposes.Corestepsofthisprocesscoverdatasourcing,hazardassessment,safe-use/riskassessmentandlabels/safetydatasheets.Besidesourownprocess,wecooperatewithresponsibleauthoritiesintheU.S.(FBIandtheBureauofAlcohol,Tobacco,FirearmsandExplosives,ATF),aswellasinternationalauthorities(Interpol).IfwebecomeawarethatanyofourLifeScienceproductsisusedbeyondourmarketedintention,weevaluatethesituationtodeterminewhethertocontinuesalesornot.ProperuseofourproductsisincludedinourTermsandConditionsunderUseofUseofproductproductss.Facts&figures232Seealso:ChemicalproductsafChemicalproductsafetetyyProductDesign&LifProductDesign&LifecyecycleManagementcleManagementHC-MS-410a.1Discussionofprocesstoassessandmanageenvironmentalandhumanhealthconsiderationsassociatedwithchemicalsinproducts,andmeetdemandforsustainableproductsWeassessenvironmental,humanhealth,andfurthersustainabilityaspectsofchemicalproductsthatwearesourcingand/orproducingandselling.Furthermore,wescreenourentireLifeScienceportfolioagainstgrowingdemandsarisingfromexternalstakeholders.Forexample,inalignmentwiththeEuropeanChemicalsStrategyforSustainability(CSS)weworktowardsamoresustainableproductportfolio.OurProductStewardshipCouncildrivesthetransformationofexistingproductsbyconsideringappropriatemeasureslikethesubstitutionofchemicalsubstances.Regardingfutureproducts,theselectionofbenignsubstancealternativesisdoneduringideationandearlyR&DthroughourDesignforSustainabilityprogram.Insupportofthis,wehavedevelopedatoolwhichmonitorslatestchemicalregulations.Besidesflaggingbannedsubstances,italsoflagssubstancesthatarealreadyconsideredcriticalbutnotyetregulated.Inadditiontothis,expertsoftheChemicalsRegulationsteamsaredirectlyconsultedforfurtherinsightsandadvice.Seealso:ChemicalproductsafChemicalproductsafetetyySustSustainableproductainableproducts&packs&packagingagingHC-MS-410a.2Totalamountofproductsacceptedfortake-backandreused,recycled,ordonated,brokendownby:(1)devicesandequipmentand(2)suppliesSince2013,wehavebeenpartneringwithSeedingLabs,anon-profitorganizationdedicatedtoequippingscientistsinresource-limitedcountrieswithscientificequipmentandsupport.In2022,wedonated434itemsofscientificequipmentvaluedatmorethan$699,148.Seealso:SustSustainableproductainableproducts&packs&packagingagingSustSustainabilitainabilityandSocialBusinessInnoyandSocialBusinessInnovvationationFacts&figures233SupplyChainManagementSupplyChainManagementHC-MS-430a.1Percentageof(1)entity'sfacilitiesand(2)TierIsuppliers'facilitiesparticipatinginthird-partyauditprogramsformanufacturingandproductqualityAsamajorsuppliertothepharmaceuticalindustry,ourLifeSciencebusinessparticipatesintheRx-360auditprogram.TheLifeSciencefacilitiesareregularlyauditedbycustomersandrespectivehealthauthoritiesforregulatedproducts.(1)Rx-360auditprogramsareconductedacrosstheLifeSciencebusinessonamulti-yearcyclewithapproximately15%ofourmanufacturingfacilitiesauditedannually.(2)Approximately5%ofourtier1supplierfacilitiesparticipatedinthirdpartyauditprogramssuchasRx-360.HC-MS-430a.2DescriptionofeffortstomaintaintraceabilitywithinthedistributionchainProductsafProductsafetety(Lify(LifeScience)eScience)QualitQuality&ry&regulatoregulatorymanagement(Lifymanagement(LifeScience)eScience)HC-MS-430a.3DescriptionofthemanagementofrisksassociatedwiththeuseofcriticalmaterialsSustSustainablesupplychainmanagementainablesupplychainmanagementBusinessEthicsBusinessEthicsHC-MS-510a.1TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithbriberyorcorruptionNotreportedHC-MS-510a.2DescriptionofcodeofethicsgoverninginteractionswithhealthcareprofessionalsRResponsibleinteractionswithhealthcaresponsibleinteractionswithhealthcaresesyystemsstemsCompliancemanagementCompliancemanagementActivitActivitymetricsymetricsHC-MS-000.ANumberofunitssoldbyproductcategoryNotreportedFacts&figures234SemiconductorsGrGreenhouseGasEmissionseenhouseGasEmissionsTC-SC-110a.1(1)GrossglobalScope1emissionsIndicatorIndicators:ens:environmentvironment(2)amountoftotalemissionsfromperfluorinatedcompoundsCDPClimatechangeCDPClimatechangeTC-SC-110a.2Discussionoflong-termandshort-termstrategyorplantomanageScope1emissions,emissionsreductiontargets,andananalysisofperformanceagainstthosetargetsClimateactionClimateactionEnergyManagementinManufacturingEnergyManagementinManufacturingTC-SC-130a.1(1)TotalenergyconsumedIndicatorIndicators:ens:environmentvironment(2)percentagegridelectricity40%Seealso:IndicatorIndicators:ens:environmentvironment(3)percentagerenewableIndicatorIndicators:ens:environmentvironmentWWaterManagementaterManagementTC-SC-140a.1(1)TotalwaterwithdrawnIndicatorIndicators:ens:environmentvironment(2)totalwaterconsumed,percentageofeachinregionswithHighorExtremelyHighBaselineWaterStressWWatermanagementatermanagementCDPWCDPWaterSecuritaterSecurityyWWasteManagementasteManagementTC-SC-150a.1Amountofhazardouswastefrommanufacturing,percentagerecycledIndicatorIndicators:ens:environmentvironmentEmploEmployyeeHealth&SafeeHealth&SafetetyyTC-SC-320a.1Descriptionofeffortstoassess,monitor,andreduceexposureofemployeestohumanhealthhazardsHealthandsafHealthandsafetetyyTC-SC-320a.2TotalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithemployeehealthandsafetyviolationsNotreportedRRecruiting&ManagingaGlobal&SkilledWecruiting&ManagingaGlobal&SkilledWorkforceorkforceTC-SC-330a.1Percentageofemployeesthatare(1)foreignnationalsandIndicatorIndicators:emplos:employyeesees(2)locatedoffshoreIndicatorIndicators:emplos:employyeeseesFacts&figures235ProductLifProductLifecyecycleManagementcleManagementTC-SC-410a.1PercentageofproductsbyrevenuethatcontainIEC62474declarablesubstancesNotreportedTC-SC-410a.2Processorenergyefficiencyatasystem-levelfor:(1)servers,Notapplicable(2)desktops,Notapplicable(3)laptopsNotapplicableMaterialsSourcingMaterialsSourcingTC-SC-440a.1DescriptionofthemanagementofrisksassociatedwiththeuseofcriticalmaterialsRResearch&Deesearch&Devvelopment(Electronics)elopment(Electronics)RReporeportonrisksandopportonrisksandopportunitiestunitiesIntellectualProperIntellectualProperttyProtection&CompetitivyProtection&CompetitiveBehaeBehaviorviorTC-SC-520a.1Totalamountofmonetarylossesasaresultoflegalproceedingsassociatedwithanti-competitivebehaviorregulationsNotreportedActivitActivitymetricsymetricsTC-SC-000.ATotalproductionNotreportedTC-SC-000.BPercentageofproductionfromownedfacilitiesNotreportedFacts&figures236TCFDindexTCFDdisclosure2022TheTaskForceonClimate-relatedFinancialDisclosures(TCFD)aimstodevelopconsistent,comparableandaccurateclimate-relatedfinancialdisclosures.Companiescanusethisdatatoprovideinformationtoinvestors,lenders,insurers,andotherstakeholders,allowingthemtoassessandanalyzeclimate-relatedrisksandopportunities.TCFDreportingwasnotpartofthelimitedassuranceengagementconductedbyanindependentauditorforour2022SustainabilityReport.OurTCFDdisclosureisbasedonourresponsestotheCDPClimateChangeanswersaswellasaqualitativeclimatescenarioswhichweconductedthisyearforthefirsttime.Goingforward,weplantocontinueexpandingourquantitativedisclosuresonclimate-relatedtopicsasweincreasinglyintegratetheTCFDrecommendationsintoourbusinesses.GovernanceTTCFDcorCFDcoreelementeelementssRRequirequiredinformationedinformationCDPclimatechangeCDPclimatechangequestionnairquestionnairee20222022rrefefererenceenceDisclosetheorganization’sgovernancearoundclimate-relatedrisksandopportunities.A.ExecutiveBoard’soversightofclimate-relatedrisksandopportunitiesC1.1a(pC1.1a(p.4).4)C1.1b(pC1.1b(p.5).5)C2.2(pC2.2(p.11).11)B.Management’sroleinassessingandmanagingclimaterelatedrisksandopportunitiesC1.2a(pC1.2a(p.7).7)RRelatedChapterelatedChapterssSustSustainabilitainabilitystrategyystrategyClimateactionClimateactionStrategyTTCFDcorCFDcoreelementeelementssRRequirequiredinformationedinformationCDPclimatechangeCDPclimatechangequestionnairquestionnairee20222022rrefefererenceenceDisclosetheactualandpotentialimpactsofclimaterelatedrisksandopportunitiesontheorganization’sbusinesses,strategy,andfinancialplanningwheresuchinformationismaterial.A.Descriptionofclimate-relatedopportunitiesandriskstheorganizationhasidentifiedovertheshort,mediumandlongtermC2.1a(pC2.1a(p.9).9)C2.2(pC2.2(p.11).11)C2.3a(pC2.3a(p.16).16)B.Impactofclimate-relatedrisksontheorganization’sbusinesses,strategy,andfinancialplanningC3.3(pC3.3(p.29).29)C3.4a(pC3.4a(p.32).32)C.Resilienceoftheorganization’sstrategy,takingintoconsiderationdifferentclimate-relatedscenariosC3.2b(pC3.2b(p.28).28)RRelatedChapterelatedChapterssSustSustainabilitainabilitystrategyystrategyClimateactionClimateactionFacts&figures237RiskmanagementTTCFDcorCFDcoreelementeelementssRRequirequiredinformationedinformationCDPclimatechangeCDPclimatechangequestionnairquestionnairee20222022rrefefererenceenceDisclosehowtheorganizationidentifies,assesses,andmanagesclimate-relatedrisks.A.Organization’sprocessesforidentifyingandassessingclimate-relatedrisksC2.2(pC2.2(p.11).11)C2.2a(pC2.2a(p.13).13)B.Organization’sprocessesformanagingclimate-relatedrisksC2.2(pC2.2(p.11).11)C.Integrationofprocessesforidentifying,assessing,andmanagingclimate-relatedrisksareintegratedintotheorganization’soverallriskmanagementC2.2(pC2.2(p.11).11)RRelatedChapterelatedChapterssCompliancemanagementCompliancemanagementClimateactionClimateactionMetricsandtargetsTTCFDcorCFDcoreelementeelementssRRequirequiredinformationedinformationCDPclimatechangeCDPclimatechangequestionnairquestionnairee20222022rrefefererenceenceDisclosethemetricsandtargetsusedtoassessandmanagerelevantclimate-relatedrisksandopportunitieswheresuchinformationismaterial.A.Metricsusedbytheorganizationtoassessclimate-relatedrisksandopportunitiesinlinewithitsstrategyandriskmanagementprocessC4.1(pC4.1(p.32).32)C4.2(pC4.2(p.39).39)C5(pC5(p.44).44)C7(pC7(p.63).63)C8(pC8(p.66).66)B.DisclosureofScope1,Scope2,andScope3greenhousegas(GHG)emissionsandtherelatedrisksC6.1(pC6.1(p.49).49)C6.3(pC6.3(p.49).49)C6.5(pC6.5(p.51).51)C7(pC7(p.63).63)C.Targetsusedbytheorganizationtomanageclimate-relatedrisksandopportunitiesandperformanceagainsttargetsC4.1(pC4.1(p.32).32)C4.1a(pC4.1a(p.33).33)C4.2(pC4.2(p.39).39)RRelatedChapterelatedChapterssClimateactionClimateactionEnEnvironmentvironmentalprotectionalprotectionWWatermanagementatermanagementWWaste&raste&recyecyclingclingFacts&figures238ClimateScenariosIn2022,wedevelopedclimatescenariosinaccordancewiththerecommendationoftheTaskForceonClimate-RelatedFinancialDisclosure(TCFD).Climatescenariosallowustoidentify,assessandmanageclimate-relatedrisksandopportunitieswecouldfaceunderdifferenthypotheticalfutures.RisksandopportunitiesweredevelopedincollaborationwithourthreebusinesssectorsLifeScience,HealthcareandElectronics,aswellasotherfunctionslikeFinance,EnvironmentalHealthandSafety,andGroupCorporateSustainability.TheoutcomeoftheexercisewassharedwiththeMerckSustainabilityBoardandthebusinesssectors.Resultscanbetakenintoconsiderationinrelevantprocesses,projectsanddecisionsinthefuture.Additionally,weplantoquantifytheeffectsoftheseclimate-relatedrisksandopportunitiesonourbusinesssectorsin2023toassesstheirfinancialimpact.Wedevelopedtwoqualitativescenarios,notconsideringmitigatingmeasures,byaskingourselvesthefollowingquestions:Whataretherelevantriskandopportunitydriversinthescenarionarratives?Whatarethemostrelevantbusinessactivitiesalongourvaluechain?Andwhatrisksandopportunitiesaremostrelevantforusalongthevaluechainin2030and2050?Forbothscenarios,werelyontheclimateimpactpathways,developedbyanexternalconsultancy,whichdescribethetranslationofrisktypesintomaterialbusinessimpacts.PhysicalandtransitionalrisksandopportunitiesIfwedonotcontainclimatechange,morephysicalriskswillmaterialize.Cyclones&hurricanesAcuteChronicFloodsDroughtFireHeatwavesResilienceSealevelriseIfweembarkonatransitionpath,moretransitionriskswillmaterialize.PolicyandlegalTechnologyMarketsReputationAtthesametime,thetransitioncanalsoopenopportunities.ResourceefficiencyEnergysourceProductsandservicesMarketsPhysicalrisksTransitionrisks...butalsotransitionopportunitiesSource:PWCFacts&figures239Thephysicalriskandopportunitiesanalysis(4°C)Thephysicalriskandopportunitiesanalysisfocusesonvariousphysicalhazardsthatcouldoccurduetocontinuousandincreasedproductionofgreenhousegasemissionsandaglobaltemperatureincreaseof4°C.Inthisscenario,theaggravationofphysicalrisksisexpectedtobethemostextreme.Physicalrisksareanalyzedatcountrylevelalongthevaluechainandatsitelevelforselectedproductionsites.Tenproductionsiteswereselectedbasedontheirfinancialimpact,regulatoryrequirementsandgeographicdistribution.Withinthevaluechain,ownoperationscouldbemostaffectedbyphysicalrisks,includingflooding,sealevelrisesandtropicalcyclones.Evenifsuppliercountriesareaffectedbyclimate-relatedphysicalrisks,theimpactforourcompanycouldbelimitedbecauseofadiversifiedsupplychain.Asanopportunity,Merckcouldalsobenefitbyhelpingtocontainthespreadofinfectiousdiseasesthatincreaseinlinewithchangingclimaticconditions.Thetransitionriskandopportunitiesanalysis(1.5°C)Climate-relatedtransitionriskswereanalyzedalongthewholevaluechainforsuppliers,customers,transportaswellasourownoperations.RiskswereassessedonabusinesssectorbasisforLifeScience,HealthcareandElectronics,takingintoconsiderationregionalandproduct-specificdifferences.ThescenariorepresentstheambitioustargetoftheParisAgreementtoreachnetzeroemissionsby2050.SupplyChainIntheappliedtransitionscenario,thephasingoutoffossilfuelsandtheincreaseduseofrenewableenergiescouldleadtodecreasingenergycosts.Thesedecreasingenergycostsmayleadtoopportunitiesalongthesupplychainwithlowerpricesfortransportandpackaging,aswellasforchemicalsandpharmaceuticalrawmaterials.However,organicchemicalsareanexception,astheirproductionconsumeslargeamountsofenergy,andtheyarepartiallyreliantonfossilfuels.ThisrelianceonfossilfuelscouldresultinCO2costsandthus,indirectly,influenceprocurementprices.Atthesametime,theuseofrenewableenergiesandmoreefficientproductionprocessesinthechemicalsectorcouldlimittheimpactofincreasingCO2costs.Asthedemandforelectronicproductsisexpectedtoincreaseduetocontinueddigitalizationandautomation,thepricesforspecialequipmentinthissectorcouldincrease,affectingsupplycostsforourElectronicsbusinesssector.ProductionprocessIntheproductionprocess,electricitycostshaveahighcostshare.Aselectricitycostsaredecreasinginthetransitionriskscenario,thiscouldrepresentanopportunity.Alsogasisusedinproduction;however,pricesareexpectedtoremainrelativelyconstant.Themainriskisthereforeexpectedtobeincreasingpricesforgreenhousegasemissionsifgasusageremainsatthesamelevel.Inthisscenario,thedisposalofhazardouswastewillshowasignificantpriceincreaseafter2030.Facts&figures240DemandDemandinLifeScienceforsolutionsandequipmentaswellasdemandintheHealthcaresectorcouldbepositivelyimpactedbyhighergrossdomesticproductandpopulationgrowth,enablingbroadersectionsofthepopulationtogainaccesstomedicalsolutions,medicalequipmentandpharmaceuticals.IntheElectronicsbusinesssector,demandforthewholeproductrangecouldfurtherincrease.Growingdemandforsemiconductorsandotherelectronicproductsislinkedtoagenerallyincreasingtrendtowardsdigitalizationandautomationacrosssectors.SemiconductorsarealreadythemaingrowthdriverfortheElectronicsbusinesssector.Inaddition,growthintherealestateandautomotivesectorsdrivenbyeconomicandpopulationgrowthcouldpositivelyimpacttheDisplaySolutionsandSurfaceSolutionsbusinessunits.Facts&figures241AssurancereportLimitedAssuranceReportoftheIndependentAuditorregardingSustainabilityInformation1TotheExecutiveBoardofMerckKGaA,DarmstadtWehaveperformedanindependentlimitedassuranceengagementonthequalitativeandquantitativedisclosuresonsustainabilityinthe“SustainabilityReport2022”(further“SustainabilityReport”),publishedathttps://www.merckgroup.com/en/sustainability-report/2022/,ofMerckKGaA,Darmstadt,(further“Company”or“Merck”)fortheperiodfromJanuary1toDecember31,2022.Itwasnotpartofourengagementtoreviewproduct-orservice-relatedinformation,referencestoexternalinformationsources,expertopinions,future-relatedstatementsandinformationcontainedintheSASBandTCFDindicesintheSustainabilityReport.AsdescribedintheSustainabilityReport,Merckengagedexternalproviderstoperformassessmentsandaudits.Theevaluationoftheadequacyandaccuracyoftheconclusionsfromtheseexternalassessmentswasnotpartofourlimitedassuranceengagement.Management’sResponsibilityThelegalrepresentativesoftheCompanyareresponsibleforthepreparationoftheSustainabilityReportinaccordancewiththeReportingCriteria.MerckappliestheprinciplesandstandarddisclosuresoftheStandardsoftheGlobalReportingInitiative(GRI)incombinationwiththeCorporateAccountingandReportingStandard(Scope1andScope2)andtheCorporateValueChainStandard(Scope3)oftheGreenhouseGasProtocolinitiativebytheWorldResourcesInstituteandtheWorldBusinessCouncilforSustainableDevelopment(WBCSD)asReportingCriteria(further“ReportingCriteria”).TheresponsibilityofthelegalrepresentativesincludestheselectionandapplicationofappropriatemethodstopreparetheSustainabilityReportandtheuseofassumptionsandestimatesforindividualqualitativeandquantitativesustainabilitydisclosureswhicharereasonableunderthecircumstances.Furthermore,thelegalrepresentativesareresponsiblefortheinternalcontrolstheydeemnecessaryforthepreparationoftheSustainabilityReportthatisfreeof–intendedorunintended–materialmisstatements.IndependenceandQualityAssuranceonthePartoftheAuditingFirmInperformingthisengagement,weappliedthelegalprovisionsandprofessionalpronouncementsregardingindependenceandqualityassurance,inparticulartheProfessionalCodeforGermanPublicAuditorsandCharteredAccountants(inGermany)andthequalityassurancestandardoftheGermanInstituteofPublicAuditors(InstitutderWirtschaftsprüfer,IDW)regardingqualityassurancerequirementsinauditpractice(IDWQS1).Facts&figures242Practitioner’sResponsibilityItisourresponsibilitytoexpressaconclusionontheSustainabilityReportbasedonourworkperformedwithinalimitedassuranceengagement.WeconductedourworkintheformofalimitedassuranceengagementinaccordancewiththeInternationalStandardonAssuranceEngagements(ISAE)3000(Revised):“AssuranceEngagementsotherthanAuditsorReviewsofHistoricalFinancialInformation”andtheInternationalStandardonAssuranceEngagements(ISAE)3410:“AssuranceEngagementsonGreenhouseGasStatements”,publishedbyIAASB.Accordingly,wehavetoplanandperformtheassuranceengagementinsuchawaythatweobtainlimitedassuranceastowhetheranymattershavecometoourattentionthatcauseustobelievethattheSustainabilityReportoftheCompanyfortheperiodfromJanuary1toDecember31,2022hasnotbeenprepared,inallmaterialrespects,inaccordancewiththeReportingCriteria.Wedonot,however,issueaseparateconclusionforeachdisclosure.Astheassuranceproceduresinalimitedassuranceengagementarelesscomprehensivethaninareasonableassuranceengagement,thelevelofassuranceobtainedissubstantiallylower.Thechoiceofassuranceproceduresissubjecttotheauditor’sownjudgement.Withinthescopeofourengagement,weperformed,amongstothers,thefollowingprocedures:•Inquiriesofgroup-levelpersonnelresponsibleforthematerialityanalysisinordertounderstandtheprocessesfordeterminingmaterialtopicsandrespectivereportingboundariesofMerck•Ariskanalysis,includingmediaresearch,toidentifyrelevantinformationonMerck’ssustainabilityperformanceinthereportingperiod•Evaluationofthedesignandimplementationofsystemsandprocessesforthecollection,processingandmonitoringofthesustainabilitydisclosuresincludedinthescopeofthisengagement,includingtheconsolidationofdata•Inquiriesofgroup-levelpersonnelwhoareresponsiblefordeterminingandconsolidatingdisclosuresandforperforminginternalcontrols,includingtheexplanatorynotes•Inspectionofselectedinternalandexternaldocuments•Analyticalevaluationofdataandofthetrendsofquantitativedisclosuresasreportedatgrouplevelbyallsites•Evaluationoflocaldatacollection,validationandreportingprocessesaswellasofthereliabilityofreporteddatabasedonasampleofthesitesinNankeinTaiwan,Milwaukee&SheboyganinUSAandinDarmstadtinGermanyintheformofvirtualmeetings•Useoftheinsightsandrelevantworkregardingauditproceduresperformedforthegroupandstatutoryauditofthe(consolidated)financialstatementsforthefiscalyear2022ofMerckKGaAfortheinformationandindicatorsthatwerederivedfromthoseconsolidatedfinancialstatements•EvaluationoftheconsistencyofGRIStandardsinaccordancewithoption“InaccordancewithGRI”asreportedbyMerckwiththequalitativeandquantitativedisclosuresintheSustainabilityReport•AssessmentoftheoverallpresentationofthedisclosuresInouropinion,weobtainedsufficientandappropriateevidenceforreachingaconclusionfortheassuranceengagement.Facts&figures243ConclusionBasedontheproceduresperformedandtheevidenceobtained,nothinghascometoourattentionthatcausesustobelievethatthequalitativeandquantitativedisclosuresonsustainabilityfortheperiodfromJanuary1toDecember31,2022,publishedintheSustainabilityReport,havenotbeenprepared,inallmaterialrespects,inaccordancewiththeReportingCriteria.Restrictionofuse/GeneralEngagementTermsThisassurancereportisissuedforpurposesoftheExecutiveBoardofMerckKGaA,Darmstadt,only.Weassumenoresponsibilitywithregardtoanythirdparties.OurassignmentfortheExecutiveBoardofMerckKGaA,Darmstadt,andprofessionalliabilityasdescribedabovewasgovernedbytheGeneralEngagementTermsforWirtschaftsprüferandWirtschaftsprüfungsgesellschaften(AllgemeineAuftragsbedingungenfürWirtschaftsprüferundWirtschaftsprüfungsgesellschaften)intheversiondatedJanuary1,2017(https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf).Byreadingandusingtheinformationcontainedinthisassurancereport,eachrecipientconfirmsnoticeoftheprovisionscontainedtherein,includingthelimitationofourliabilityasstipulatedinNo.9,andacceptsthevalidityoftheGeneralEngagementTermswithrespecttous.Mannheim,March20,2023KPMGAGWirtschaftsprüfungsgesellschaft[OriginalGermanversionsignedby:]BeyerWirtschaftsprüfer[GermanPublicAuditor]BrokofWirtschaftsprüferin[GermanPublicAuditor]1OurengagementappliedtotheGermanversionoftheSustainabilityInformationcontainedintheSustainabilityReport2022.ThistextisatranslationoftheIndependentAssuranceReportissuedinGerman,whereastheGermantextisauthoritative.Facts&figures244Glossary(Q)SARStructure-activityrelationship(SAR)andquantitativestructure-activityrelationship(QSAR)models–collectivelyreferredtoas(Q)SARs–aremathematicalmodelsthatcanbeusedtopredictthephysicochemical,biologicalandenvironmentalfatepropertiesofcompoundsfromtheknowledgeoftheirchemicalstructures.Thesemodelsareavailableforfreeorascommercialsoftware.ArpraziquantelArpraziquantelisapotentialpediatrictreatmentoptionforschistosomiasis.Itaimstoclosethetreatmentgapofpreschool-agechildrenaffectedbythisdisease.Itcontainsthepharmacologicallyactiveenantiomerofpraziquantel.Thenewtabletissmall,orallydispersible–itdissolvesinthemouthorinwater–,hastastepropertiesthatareacceptableforchildren,andwithstandsthechallengespresentedbyatropicalclimate.BIPOCThisabbreviationstandsforBlack,Indigenous,andpeopleofcolor.Pronounced“bye-pock,”thisisatermspecifictotheUnitedStates,intendedtocentertheexperiencesofBlackandIndigenousgroupsanddemonstratesolidaritybetweencommunitiesofcolor.BigDataLargedatasetsthatmaybeanalyzedcomputationallytorevealpatterns,trendsandassociations,especiallyrelatingtohumanbehaviorandinteractions.BiodiversityThediversityofecosystems,habitatsandlandscapesonearth,thediversityofspecies,andthegeneticdiversitywithinabiologicalspeciesorpopulationCAPAThequalitymanagementprocessCAPA(CorrectiveandPreventiveAction)isusedtosystematicallyanalyzedeviationsorerrorsaswellastotakecorrectiveandpreventiveaction.CO2equivalentsCO2equivalents(CO2eq)indicatehowmuchaspecifiedquantityofaspecificgreenhousegascontributestothegreenhouseeffectusingtheglobalwarmingpotentialofcarbondioxideasareference.CRISPR/CasAbiomolecularmethodfortargeting,cuttingandeditingtheDNAofanorganism(geneediting).Expertsthinkthistechniquehasgreatpotentialforcuringdiseasesorgeneratingplantsandanimalswithnewtraits.CybersecurityriskPotentiallossorharmresultingfromacyberattackordatabreachrelatedtotechnicalinfrastructure,useoftechnology.CyberattackAnyintentionalunauthorizedattempttoaccessaninformationandcommunicationtechnologyoroperationaltechnologysystemsformaliciouspurposessuchasdatatheftormodification,malwareinjection,ortheinitiationofadditionalattacks.DatabreachDatabreachesaredefinedasunintentionalloss,destructionorunauthorizedorunlawfulprocessingofpersonaldataDimethylsulfoxide(DMSO)Anon-toxicorganosulfurcompoundwiththeformula(CH3)2SO.Thiscolorlessliquidisanimportantpolaraproticsolventthatdissolvesbothpolarandnonpolarcompoundsandismiscibleinawiderangeoforganicsolventsaswellaswater.Itisusedinvariousmedicinalapplicationsandinresearch.DuediligenceDuediligencemeansariskanalysisexercisedwithparticularcarethatisdoneinpreparationforabusinesstransaction,e.g.anacquisition.Glossary245EHSShortfor“Environment,HealthandSafety”,thisreferstoenvironmentalmanagement,healthprotectionandoccupationalsafetythroughoutacompany.End-userdeclarationAnend-userdeclarationisabindingcustomerdeclarationregardingtheintendeduseofaproduct.EndemiccountriesCountriesinwhichacertaindisease,inmanycasesaninfectiousdisease,isprevalent.Environmental,Social,andCorporateGovernance(ESG)'ESGrepresentsanevaluationofacompany’scollectiveconscientiousnessforenvironmental,socialandgovernancefactors.AnESGscoreiscompiledfromdatacollectedsurroundingspecificmetricsrelatedtointangibleassetswithintheenterprise.EqualityActApendingUnitedStateslawwithaspecialfocusonLGBTQI+people(lesbian,gay,bisexual,transgender,queerorquestioning,intersex,andadditionalself-identifyingmembersofthecommunity).Itprohibitsdiscriminationonthebasisofgender,sexualorientationandgenderidentity.ExposureassessmentExposureassessmentaimstomakeaquantitativeorqualitativeestimateofthedose/concentrationofthesubstancetowhichhumansandtheenvironmentareormaybeexposed.ExposureassessmentunderREACHconsistsoftwosteps:1)developmentofexposurescenariosand2)exposureestimation.Thesestepsmustbeiterateduntilitcanbeconcludedthattheresultingexposurescenarioswouldensureadequatecontrolofrisksuponimplementation.FreshwaterWatercontaining1,000mgorlessofdissolvedsolidsperliter.GEMThisabbreviationstandsfortheNationalConsortiumforGraduateDegreesforMinoritiesinEngineeringandScience,Inc.ThisinitiativeoffersMS(MasterofScience)andPh.D.(DoctorofPhilosophy)levelstudentsanaccesstoEngineeringandSciencefirmsandUniversitiesintheUS.GHSShortfor“GloballyHarmonizedSystemofClassificationandLabellingofChemicals”.Thisreferstoaninternationalstandardsystemtoclassifychemicals.Itcoverslabelingaswellassafetydatasheets.GermlineThecellsequencefromwhichthegermcells(oocytesandsperm)arisewithintheindividualdevelopmentofmulticellularanimalsandhumans.Thesomaticcelllinesbranchingofffromthegermlineformthebody(thesoma).Goodclinicalpractice(GCP)Aninternationalqualitystandardissuedbythe“InternationalCouncilforHarmonisationofTechnicalRequirementsforPharmaceuticalsforHumanUse”(ICH)thatdescribestheresponsibilitiesandexpectationsofallinvolvedparticipants(e.g.sponsors,investigators,andethicscommittees)intheconductofclinicalstudies.Thestandardcoversaspectsofthedesign,implementation,oversight,recording,andreportingofclinicalstudies.Gooddistributionpractice(GDP)AnEUguidelinethatregulatestheproperdistributionofmedicinalproductsforhumanuse.Goodmanufacturingpractice(GMP)Asystemforensuringthatproductsareconsistentlymanufacturedandcontrolledaccordingtoqualitystandards.Theseguidelinesareusedintheproductionofmedicines,activepharmaceuticalingredientsandcosmetics,aswellasfoodandanimalfeed.GreenhousegasesGasesintheatmospherethatcontributetoglobalwarming.Theycanbeeithernaturallyoccurringorcausedbyhumans(suchasCO2emissionsgeneratedbyburningfossilfuels).ISO14001ThisinternationalenvironmentalmanagementGlossary246standardsetsgloballyrecognizedrequirementsforanenvironmentalmanagementsystem.ISO45001Thisinternationalstandarddefinesgloballyrecognizedrequirementsforanoccupationalhealthandsafetymanagementsystem.ISO50001Thisinternationalstandarddefinesgloballyrecognizedrequirementsforenergymanagementsystems.ISO9001Thisinternationalstandarddefinesgloballyrecognizedrequirementsforaqualitymanagementsystem.InvitroInvitro(latinforinglass,orintheglass)studiesareperformedoutsideofalivingorganismwithmicroorganisms,cells,orbiologicalmolecules.In-vivostudiesincontrastareperformedinalivingorganism.InvivoLatinfor“withintheliving”,thistermdescribesprocessesthattakeplacewithinalivingorganism.InvestigationalproductApharmaceuticalformofanactiveingredientorplacebobeingtestedorusedasareferenceinaclinicaltrial,includingapprovedaswellasunapprovedproductswhenusedorassembled(formulatedorpackaged)inawaydifferentfromtheapprovedform,whenusedforanunapprovedindication,orwhenusedtogainfurtherinformationaboutanapproveduse.LGBTQI+ThisabbreviationstandsforLesbian,Gay,Bisexual,Transgender,QueerorQuestioning,Intersex,andadditionalself-identifyingmembersofthecommunity.LOCThisabbreviationstandsforLeadersofColor.LTIRThelosttimeinjuryratemeasuresthenumberofaccidentsresultinginmisseddaysofwork(oneormoredays)peronemillionworkinghours.Liquidcrystals(LC)Ahybridofacrystallineandliquidstate.Ingeneral,moleculesareperfectlyarrangedonlywheninasolidcrystalstate,incontrasttotheliquidstate,whentheymovearoundchaotically.However,liquidcrystalsareahybridofthetwostates:Althoughtheyareliquid,theyexhibitacertaincrystallinearrangement.Theirrod-shapedmoleculesalignthemselveslikeashoaloffish.Inaddition,theyrespondtotheelectromagneticwavesoflightliketinyantennae.Therefore,suchswarmsofmoleculescaneitherallowspeciallyprepared“polarized”lighttopassthrough,ortheycanblockit.Thistakesplaceinthepixelsofliquidcrystaldisplays.Asimilarphenomenonoccursinliquidcrystalwindows,whichcanprovideshadeagainstsunlight.Location-basedapproachLocation-basedfiguresarecalculatedonthebasisoftheaverageemissionfactorsoftheareainwhichtheelectricityconsumptiontakesplace.Inmostcases,thismethodutilizesthenationalaverage.ManagingdirectorThisindividualisresponsibleforensuringthatoursubsidiaries,includingR&Dandmanufacturingcenters,complywithallapplicablelawsandregulations,includingapplicableinternalguidelines.Market-basedapproachMarked-basedfiguresarecalculatedonthebasisofemissionfactorsprovidedbyelectricitysuppliersspecificallyfortheelectricitytheysell.NMPN-Methyl-2-pyrrolidoneisapolaraproticcompoundthatismisciblewithwaterandhasgoodsolvencyproperties.NMPisusedinthemanufactureofpolymers,semiconductors,batteries,andpharmaceuticals.TheECHA(EuropeanChemicalsAgency)hasdesignatedNMPasasubstanceofveryhighconcern(SVHC)andincludeditinthecandidatelistforauthorization.Neglectedtropicaldisease(NTD)Neglectedtropicaldiseasesaffectmorethan1billionpeopleinprimarilypoorpopulationslivingintropicalandsubtropicalclimatesinlow-andmiddle-incomecountries.NTDsincludeschistosomiasis,intestinalworms,trachoma,lymphaticfilariasis,andGlossary247onchocerciasis.Thisgroupof20diseasesiscalledneglectedbecause,despitethelargenumberofpeopleaffected,theyhavehistoricallyreceivedlessattentionandresearchfundingthanotherdiseases.NeuromorphiccomputingNeuromorphiccomputingaimsatprocessinginformationsimilartothehumanbrain.Likeinthehumanbrainneuromorphiccomputingsystemsuseanarchitecturewherethememoryandtheprocessingunitsareco-locatedwithinthesamehardwareelementandinterlinkedinanetwork.Theseelementsarecalledmemristorsandcanbothstoreandprocessinformation.No-effectthresholdTheno-effectthresholdisdefinedastheconcentrationofagivensubstancebelowwhichnoadverseeffectstospeciesinwatercanbeexpected.Therespectivevaluesarederivedfromeco-toxicologicalstudiesaccordingtorecognizedscientificstandards.Non-communicabledisease(NCD)Non-communicablediseasestendtobeoflongdurationandaretheresultofacombinationofgenetic,physiological,environmental,andbehavioralfactors.ThemaintypesofNCDarecardiovasculardiseases,cancers,chronicrespiratorydiseases,anddiabetes.NCDsdisproportionatelyaffectpeopleinlow-andmiddle-incomecountrieswheremorethanthreequartersofglobalNCD-relateddeathsoccur.NucleasesAgroupofenzymeswhoseprimaryfunctionistopartiallyorfullydegradenucleicacids.OtherwaterWaterwithmorethan1,000mgofdissolvedsolidsperliter.PatentpoolAconsortiumofatleasttwocompetingcompaniesthatallowspartnerstosharetheuseofpatentsrelatingtoaparticulartechnology.PatientaccessprogramsThisreferstocommercialprogramsthataretypicallyself-sustainingandprovidemedicinesforunderservedpopulations,forexamplebyofferingareducedtreatmentfee.PatientsupportprogramsAnyorganizedsystemprovidingservicesanddirectpatientorpatient-caregiverinteractionsthatareintendedanddesignedtoeducatepatientsaboutcertaindiseases,andhelppatientswithaccesstoand/orthemanagementofprescribedmedicinesand/ordiseaseoutcomesand/orofferdoctorssupportfortheirpatients.PharmacovigilanceThescienceandactivitiesrelatedtothedetection,evaluation,understanding,andpreventionofadversereactionsorotherdrug-relatedproblems.PhaseIclinicaltrialPhaseIclinicaltrialstestanewtherapeuticcandidateinasmallgroupofsubjects(forexample,20-80)forthefirsttime(‘firstinmanstudy’)toevaluatesafety(forinstance,todetermineasafedosagerangeandtoidentifysideeffects).PhaseIIclinicaltrialPhaseIIclinicaltrialsstudythemedicalorbehavioralinterventioninalargergroupofsubjects(severalhundred)todetermineefficacy(biologicalactivity)andtofurtherevaluateitssafety.PhaseIIIclinicaltrialPhaseIIIclinicaltrialsinvestigatetheefficacyofthemedicalorbehavioralinterventioninlargegroupsofsubjects(fromseveralhundredtoseveralthousand)bycomparingtheinterventiontootherstandardorexperimentalinterventionsaswellastomonitoradverseeffectsandcollectinformationthatwillallowtheinterventiontobeusedsafely.PotentiallossorharmApossibleadverseimpacttoorganizationaloperations(i.efinancialloss,functionlimitationorloss),asset(i.edamage,mis-operation),orindividuals(i.e.personnelinjury,lossoflife).PrediabetesAconditionregardedasindicativethatapersonisatriskofprogressingtoType2diabetes.Glossary248PrimaryorsecondarycaregiversPrimarycaregiveristhebirthmotherofanewborn,thebiologicalfatherincaseofhomo-parentalfamilyortheinitialprimarycaregiverofanewlyadoptedchild.Onlyonepersoncanbethechild’sprimarycaregiver.Secondarycaregivermeansapersonwhohasparentalresponsibilityforthechildbutisnottheprimarycaregiver.Process-relatedemissionsGreenhousegasesreleasedintotheatmosphereduringmanufacturingoperations.ProductserializationDuringserialization,everyproductwithinaproductionlinereceivesaclear,usuallyrandomandencryptednumber,whichisstoredinadatabase.Themanufacturerofeachindividualproductcanlaterbetracedsecurely.PulsesurveyApulsesurveyisashortemployeesurveythatfocusesonaspecifictopictogaugethecurrentsentimentoftheworkforce.Thiscan,forexample,relatetoasinglebusinessunitinthecaseofchangeprocessesorbetargetedtotheentireworkforce.RelevantsuppliersRelevantsupplierseitherindicateaspecificcountryandindustryriskorcontributetoasignificantpercentageofoursupplierspend(atleast50%)Risk-sharingagreementAnagreementbetweentheproducerormanufacturerandthepayerorproviderthatallowsaccesstoahealthtechnologythroughcoverageorreimbursementundercertainconditions.RoleOurcompanyusesamarket-orientedsystemtoratepositionswithinthecompany.Tofacilitateconsistencyacrosstheorganization,eachpositionisassignedaspecificrole,withanoverarchingjobarchitectureclassifyingeachroleasoneof11levels,15functionsandanarrayofcareertypes(CoreOperations,Services&SupportGroups;Experts;Managers;ProjectManagers).SQTheabbreviationforourCorporateSustainability,QualityandTradeCompliancefunction.STEMThisabbreviationstandsforScience,Technology,Engineering,andMathematics.SchistosomiasisSchistosomiasisisachronicconditionandoneofthemostcommonandmostdevastatingparasiticdiseasesintropicalcountries.Flatwormstransmitthedisease.Itiswidespreadinregionswherelargesectionsofthepopulationhavenoaccesstocleanwaterorsanitaryinstallations.Peopleareinfectedbytheparasitewhenexposedtoinfestedwaterduringroutineagricultural,domestic,occupational,andrecreationalactivities.Theminusculelarvaepenetratehumanskin,enterthebloodvesselsandattackinternalorgans.Theinfectionrateisparticularlyhighamongchildren.Untreatedschistosomiasiscancausepotentiallyfatalchronicinflammationofvitalorgansaswellasanemia,stuntedgrowthandimpairedlearningability,allofwhichhavedevastatingconsequencesforthelivesofchildren.Scope1Thisincludesemissionsthatoccurinourcompany,forinstancebygeneratingenergyfromfossilfuelsorbyreleasingprocess-relatedemissions.Scope2Thisincludesemissionsfrompurchasedenergysuchaselectricity,heat,steam,orcold.Scope3Scope3includesindirectgreenhousegasemissions,suchastheextractionandproductionofpurchasedmaterials,transport-relatedactivities,wastedisposal,andemployeetravel.ScorecardAnevaluationtoolformeasuring,documentingandcontrollingactivitiesusingmetrics.SecurityThisrelatestoallnecessarymeasuresandgovernanceactivitiestodetect,analyze,handle,andmitigateGlossary249security-andcrime-basedthreatstothecompany.Itisintegraltoprotectingbothouremployeesandthetangibleandintangibleassetsofthecompany.ShadowpriceAshadowpriceisahypotheticalcostofcarbonattachedtoeachtonofCO2eq.Itcanbeusedtorevealhiddenrisksandopportunitiesthroughoutoperationsandsupplychainsandtosupportstrategicdecision-makingrelatedtofuturecapitalinvestments.SignalmanagementAsetofactivitiesperformedtodeterminewhether,basedonanexaminationofindividualcasesafetyreports,aggregateddatafromactivesurveillancesystemsorstudies,scientificliteratureinformation,andotherdatasources,newrisksareassociatedwithanactiveingredientoramedicinalproductorwhetherknownriskshavechanged.Theseactivitiesalsoprovideanyrelatedrecommendations,decisions,communications,andtracking.Small-moleculedrugsSubstanceswithalowmolecularweight("small"-molecule)substancesconsistofonlyafewhundredatoms.Comparedtolargerbiologicaltreatments,theparticularlysmallsizeofthesedrugsmakesitmorelikelythattheywillreachtheirtargetinthebody.Today,thevastmajorityofpharmaceuticalsareofthesmall-moleculekind.SpontaneousreportsonadverseeffectsAnunsolicitedcommunicationbyahealthcareprofessionalorconsumertoacompany,regulatoryauthorityorotherorganization(e.g.theWorldHealthOrganization,aregionalcenterorpoisoncontrolcenter)thatdescribesoneormoreadversereactionsinapatientwhowasgivenoneormoremedicinalproductsandthatdoesnotderivefromastudyoranyorganizeddatacollectionscheme.StakeholderPeopleororganizationsthathavealegitimateinterestinacompany,entitlingthemtomakejustifieddemands.Stakeholdersincludepeoplesuchasemployees,businesspartners,neighborsinthevicinityofoursites,andshareholders.StemcelllinesGroupsofstemcellsderivedfromanimalorhumantissue.Theycanbecultivatedinvitroandmultiplyindefinitely.StemcellsUndifferentiatedcellswiththepotentialtodevelopintomanydifferentcelltypesthatcarryoutdifferentfunctions.TRIPSTheAgreementonTrade-RelatedAspectsofIntellectualPropertyRightsisaninternationallegalagreementbetweenallthemembernationsoftheWorldTradeOrganization.TRIPSseekstoensurethatthemeasuresandproceduresforenforcingintellectualpropertyrightsdonotbecomeabarriertolawfultrade.TechnicalinfrastructureInformationandcommunicationsystems,orsystemsusedforoperationalcapabilities.Tetramethylammoniumhydroxide(TMAH)Aquaternaryammoniumsalt.Itisastrongbaseandiscommonlyencounteredasconcentratedsolutionsinwaterormethanol.TMAHhasnumerousanddiverseindustrialandresearchapplications,suchastheanisotropicetchingofsilicon.ThinfilmsAverythinlayer(oneatomoronemoleculethick)ofasubstancedepositedonasupportingmaterialsuchasasemiconductor.Customersuseourproductstocreatesuchthinfilms.TracesubstancesSubstancesdissolvedinwaterthatarepresentonlyinminuteamounts.Alsoreferredtoasmicropollutants,thesearesyntheticsubstancespresentinconcentrationsrangingfromonenanogramtoonemicrogramperliterofwater.TransferofvalueDirectandindirecttransfersofvalue,whetherincash,inkindorotherwise(forinstancepromotionalpurposes).Glossary250VivariumThevivarium,alsoknownasanimalresearchfacility,isaspeciallydesignedbuildingtype,whichaccommodatescontrolledenvironmentsforthecare,useandmaintenanceofexperimentalanimals.WACWholesaleacquisitioncost(WAC)means,withrespecttoadrugorbiological,themanufacturer’slistpriceforthedrugorbiologicaltowholesalersordirectpurchasersintheUnitedStates,notincludingpromptpayorotherrebates,discountsorreductionsinprice,forthemostrecentmonthforwhichtheinformationisavailable,asreportedinwholesalepriceguidesorotherpublicationsofdrugorbiologicalpricingdata.WACistheUSequivalentforEx-Factory(EXF)wholesalepricethatourcompanyusesgloballytolabelthepricefromthemanufacturertothewholesaler.WASHThisstandsfor“water,sanitationandhygiene”.Theacronymisusedtorefertoasetofactivitiesaddressinginadequateaccesstocleanwaterandsanitationfacilities,aswellaspoorhygienebehavior.iooi-methodTheabbreviationiooistandsforinput-output-outcome-impactandisamethodformeasuringgoalachievementandoutcomeandimpactdevelopedbytheBertelsmannFoundation.Glossary251ImprintPublishedonApril13,2023byMerck,GroupCorporateSustainabilityFrankfurterStrasse250,64293Darmstadt,GermanyTel.:+49(0)6151-720Email:service@merckgroup.comwww.merckgroup.comContactforquestionsregardingthisreport:MariaSchaad,GroupCorporateSustainabilitycorporate-sustainability@merckgroup.comConceptandimplementationofHTML&PDF:nexxarGmbH,Vienna–OnlineannualreportsandonlinesustainabilityreportsTextandconsulting:StakeholderReportingGmbH&Co.KGwww.stakeholder-reporting.comPhotosandgraphics:Merck,BerndHartungImprint252Merck,GroupCorporateSustainabilityFrankfurterStrasse250,64293Darmstadt,GermanyTelephone:+49615172-0Email:corporate-sustainability@merckgroup.comwww.merckgroup.com