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TAG overview

Our business operations impact the environment, generating greenhouse gas emissions, wastewater and waste. In addition, we also make use of use materials that can adversely affect ecosystems if not handled properly. Across all our production sites, we meet a strict set of environmental regulations and continually adapt our processes to new regulatory requirements. With natural resources growing ever scarcer, we aim to utilize energy, water and materials as efficiently as possible.

Our approach to environmental stewardship

Minimizing negative environmental impacts and taking meaningful climate action requires a holistic approach while also constantly monitoring practices and performance. We do our best to prevent detrimental emissions into the air, water and soil. Our production sites are located in established industrial and commercial zones. Before acquiring a company – and thus its facilities – we first conduct an environmental risk assessment, taking into consideration information from publicly accessible sources such as local neighbors and non-governmental organizations (NGOs).

How we structure environmental stewardship

The Vice Chair of the Executive Board and Deputy CEO is responsible for environmental stewardship, which also covers climate action, water management, waste and recycling, , and plant and process safety. Her duties include the approval of overarching Group-wide guidelines such as our Policy.

Our Group Environment, Health, Safety, , Quality () function oversees all related efforts Group-wide. EQ senior leadership approves operational standards and regularly reports on environmental sustainability to the Executive Board. Once a year, EQ prepares an environment, health and safety report for the Executive Board that covers topics such as climate action, water management, waste and recycling, and plant and process safety. The Executive Board uses this report to steer the strategic direction and as documentation for our certifications.

At our individual sites, each site director is responsible for environmental stewardship as well as occupational health and safety at the operational level. At larger facilities, the site directors receive support from EHS managers, with EHS coordinators performing this role at smaller sites. These local EHS units report to the respective business sector and work in close collaboration with EQ. In 2020, we employed more than 200 EHS managers, supported at the local level by further staff members.

Within our business sectors, the Operations Leadership Committee (OLC) makes strategic decisions on issues pertaining to emissions and energy, water and waste. This body consists of representatives from Healthcare, Life Science, Performance Materials, and our Group EQ function. Decisions made by the OLC and any resulting actions are implemented by the respective business sector. Once per quarter, the OLC members update their leaders on matters relating to environmental sustainability.

Whenever designing new sites or plants, we always involve EQ, which is responsible for reviewing the ecological aspects of a project and advising our sites. Additionally, EQ performs detailed environmental impact assessments for large-scale projects.

Our commitment: Standards and standard operating procedures

Our approach to environmental management is built on our Group EHS (Environment, Health and Safety) Policy, which has been approved by our Executive Board. Closely aligned with the requirements of the chemical industry’s Responsible Care® Global Charter and the environmental management standard, this policy underscores our leaders’ responsibility for environmental stewardship, health and safety. It is also aimed at our suppliers, calling on them to likewise adopt higher standards of environmental sustainability and safety. Our EHS Policy thus complements the Responsible Sourcing Principles of our Group Procurement function.

Internal guidelines, standards and standard operating procedures define how we put the principles of our EHS Policy into practice, structure our environmental stewardship efforts and implement occupational safety Group-wide. In addition, we also have in place a number of other internal environmental sustainability standards such as our Air Emissions Standard, Waste Management Standard, sustainable water management standards, and Energy Management Standard.

Potential EHS risks posed by acquisitions, divestments or site closures are assessed within the scope of , a process outlined in our EHS Due Diligence and Post Merger Transaction Standard. We prioritize new sites when performing audits.

Material investments in environmental impact mitigation

Efforts to prevent and monitor air, water and soil emissions entail significant expense on our part, as does proper waste disposal. Moreover, we set up provisions for groundwater and soil remediation to ensure that we can execute all the necessary measures. As of December 31, 2020, our provisions for environmental protection totaled € 148 million, 95% of which was attributable to Merck KGaA, Darmstadt, Germany.

Assessing environmental impacts

In general, we conduct risk-based assessments along with internal and external audits on all our production facilities every three years with the goal of analyzing and minimizing our environmental footprint. Conducted by our Group function, these assessments serve to ensure that our requirements are being met, with appropriate corrective measures being taken as needed. In our Group EHS audits, we assess our sites’ performance on a five-tier scale (excellent, good, satisfactory, poor, and critical), which in turn determines how frequently audits are conducted. If the findings are deemed to be good, we audit the facility less often, while significant violations can increase the frequency. Because of the travel restrictions during the Covid-19 pandemic, we could not conduct the majority of the audits scheduled for 2020 and therefore postponed them to 2021. It was, however, possible to perform audits either virtually or on site in ten cases. All audited sites received a good or satisfactory rating, and no site was rated as critical.

Reporting incidents and violations

To review critical situations, near misses and environmental incidents as quickly as possible and take countermeasures, we have a set of reporting procedures in place that allow us to track the respective incident, its degree of severity and all risk mitigation efforts. We record all incidents Group-wide and report them to the Executive Board on an annual basis.

In the event of a major occurrence, our digital Rapid Incident Report System (RIRS) promptly notifies the Executive Board as well as our Group EQ and Communications functions. Major incidents could include fatalities, accidents with multiple casualties, incidents that impact neighboring communities, or natural disasters such as earthquakes and flooding. Through the RIRS, we can quickly coordinate with all those involved and inform the impacted sites immediately of the respective event. Apart from using this system to identify issues, we also encourage employees to report potential breaches of our standards to Group Compliance. In 2020, we recorded no significant violations of environmental laws or regulations Group-wide.

Environmental training and continuing education

All new managers are required to complete EHStart-up!, a three-day orientation held at our global headquarters in Darmstadt. This seminar covers energy efficiency and climate action, water management, occupational health and safety, and plant and process safety, along with our Rapid Incident Report System (RIRS). In 2020, the Covid-19 pandemic prompted us to offer this onboarding as a series of topic-specific webinars. We recorded these classes so that they are accessible on our intranet any time. Beyond this training, all EHS managers also regularly participate in virtual and in-person courses on new requirements and regulations.

ISO 14001:2015 Group certificate

Since 2009, our company has held an Group certificate that requires all production sites with more than 50 employees to implement an environmental management system with predefined indicators for factors such as greenhouse gas emissions and water consumption. Other sites are not obligated to undergo this certification. The annual internal audit reports and management reviews carried out under the Group certificate afford us a better overview of how all our sites are performing.

92

of our sites worldwide are currently covered by our ISO 14001 certificate.

Every year we contract a third party to perform a certification audit. In 2020, a random sampling of 13 sites underwent an audit for our Group certificate, with all audited facilities passing. Beyond undergoing external inspections, we also conduct internal audits to ensure Group-wide compliance with our requirements.

Biodiversity at our sites*

Unsealed surfaces represent an important habitat for plants and animals. At our facilities, however, we are required to seal certain surfaces to minimize the risk of chemicals entering the ecosystem. When safety requirements permit, we increase the number of surfaces that are unsealed. The next species conservation assessment of our Darmstadt site is scheduled for 2021 and will document the species present along with the protected nesting areas and refuges located on our premises. The last species conservation assessment was conducted in 2015.

* The paragraph on Biodiversity has been assigned to the chapter on Environmental Stewardship for thematic reasons. Since Biodiversity does not correspond to the criteria of double materiality, this paragraph is not part of the non-financial report.

Biodiversity
The diversity of ecosystems, habitats and landscapes on earth, the diversity of the species, and the genetic diversity within a biological species or population.
EHS
Short for “Environment, Health and Safety”, this refers to environmental management, health protection and occupational safety throughout a company.
Security
This term stands for all necessary measures and governance activities to detect, analyze, handle, and mitigate security- and crime-based threats to the company. This helps to protect employees as well as the tangible and intangible assets of the company.
EQ
Our Group Environment, Health, Safety, Security, Quality function
ISO 14001
This international standard defines globally recognized requirements for an environmental management system.
ISO 14001
This international standard defines globally recognized requirements for an environmental management system.
Due diligence
A risk analysis exercised with particular care.
EQ
Our Group Environment, Health, Safety, Security, Quality function
EHS
Short for “Environment, Health and Safety”, this refers to environmental management, health protection and occupational safety throughout a company.
ISO 14001
This international standard defines globally recognized requirements for an environmental management system.

Information

The current Sustainability Report 2021 can be found here.