With our annual materiality analysis, we identify the social, economic and environmental issues that are of special importance to us and our stakeholders. In 2022, we broadened this materiality analysis to show to the extent to which our business activities impact these issues, both positively and negatively.
Identifying the material issues
Materiality analyses help us define and verify the focus of our sustainability management efforts and the contents of our reporting. In 2022, we adapted our material analysis to the new requirements of the Global Reporting Initiative (GRI) reporting standards. In the analysis, we focused on actual and potentially positive and negative environmental, economic and social impacts of our business activities.
Based on the set of topics included in our most recent materiality analysis, we have already made an initial comparison with the potential topics of the EU Corporate Sustainability Reporting Directive (CSRD), which is expected to apply to our company as of the 2024 reporting year. In addition, we drew on internal data and secondary sources such as specialist literature, databases and publicly available ESG indices to investigate the ecological and social impacts of our work. In doing so, we looked not only at our own activities, but also at the impacts within our upstream and downstream value chain.
This data provided us with a basis for a quantitative assessment of the actual and potentially positive and negative impacts across the entire value chain, which we then used to derive a net assessment. We classified the negative impacts into four categories: low, moderate, significant, and critical. Similarly, we categorized the positive impacts as follows: low, moderate, significant, or substantial.
Internal subject matter experts validated the results in three topic workshops.
The following list of topics provides an overview of our actual and potentially positive and negative impacts. A topic was classified as being material if a positive or negative impact was at least categorized as “moderate”. A checkmark is used in the table to indicate this.
Compliance
(incl. anti-corruption, anti-competitive behavior, data protection and privacy, interactions with health systems, responsible marketing)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Due to the nature of our business activities, there is always the possibility of compliance-related risks resulting in potentially moderate negative impacts. In response, our company aims to ensure that all business activities adhere to the relevant laws, regulations and ethical standards. In addition, we do not limit our compliance management to the boundaries of our own company; we also include suppliers and our interactions with sales parties such as commercial agents, distributors and dealers.
Through our compliance policies, standards and procedures, we have comprehensive mitigation measures in place. We believe that there are no additional positive impacts that exceed the regulatory requirements for compliance management systems. Nevertheless, further efforts and continuous improvements are always analyzed and implemented to elevate the quality and effectiveness of our Compliance function.
Supply chain management
(incl. working conditions, equal opportunities, other work-related rights)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Due to the nature of our business, we believe the potential negative impact regarding sustainable supply chain management to be significant. We have guidelines and measures in place to improve working conditions in the supply chain, in addition to careful monitoring through regular assessments and audits. These measures reduce the potential for negative impacts within our supply chain. At the same time, the possibility for us to influence external organizations is more limited than within our own company.
We actively contribute to a moderately positive impact in our supply chain by implementing measures beyond compliance.
Human rights
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
When it comes to our global supply chains, we pay close attention to human rights risks. We expect our suppliers to exercise the greatest care in dealing with human rights. Unlike in our own business activities, we can often only have an indirect influence along our supply chain to prevent negative impacts. Our principles have been set out in Group-wide policies, which we use to derive measures to avoid negative impacts. We classify our overall negative impacts with regard to human rights as moderate.
We aim to increase the awareness of our employees and suppliers on the topic of human rights and the associated due diligence obligations. To this end, we use various communication formats and offer training. In addition, we are active in various initiatives. Through these efforts, we make a positive contribution to the protection of human rights. Nevertheless, we assess our positive impacts on the protection of human rights outside our company as low.
Clinical studies
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Our company is conducting clinical trials of its products. We address the potential risks of non-compliance and non-adherence with international laws through measures such as implementing strict standards, policies, audits and country selections. We therefore assess our potential negative impacts as moderate.
We conduct our clinical studies adhering to the highest ethical and scientific standards, going beyond the minimum legal requirements and implementing patient-focused drug development that more actively involves patients, caregivers, and their advocates. These activities ultimately improve the healthcare people receive and enable the delivery of new treatments for people worldwide. In addition, we make our research studies available to the public and other institutions to enhance the efficiency and effectiveness of medicine and treatments globally. Therefore, we believe the positive impact of our ethical conduct in the field of clinical studies to be significant.
Animal welfare
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
The use of animals is often a legal and regulatory requirement across many areas of our business to ensure the quality, safety and efficacy of our products and processes. Consequently, our use of animals inevitably creates a negative impact. However, we have implemented the 4Rs for animal-based research (replacement, reduction, refinement, and responsibility) and have set ourselves an ambitious goal of phasing out animal use and replacing animals with better alternatives on a long term basis. Until we achieve this goal, we accept the ethical standards as defined in our quality documents in animal science and welfare. We believe that through our strong mitigation measures, our negative impact on animal welfare is moderate.
We are developing and commercializing various technologies and systems in order to replace the use of animals by alternatives step-by-step, and eventually entirely. We also engage in external partnerships to promote animal welfare beyond our own company and contract research organizations and foster transparency in animal research communication. Additionally, we are involved in developing sustainable technologies, such as cultured meat, which could eventually support a global transition towards more sustainable nutrition systems and reduced meat consumption (and interlinked health and environmental impacts). Furthermore, we are working to replace fetal bovine serum and other animal-derived products in cell culture with animal-free alternatives. Therefore, we believe our positive impacts on animal welfare to be moderate.
Bioethics
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Our company is committed to ethical research. When we advise on innovations from a bioethical perspective, questions may well arise that go far beyond the applicable legislation. Such issues often only come to light after an in-depth ethical analysis. Therefore, there is a risk that we may not always behave in a bioethically correct manner along our value chain. Our goal is to minimize these potential negative impacts by developing clear guidelines and establishing regulations for bioethical issues. Thus, we consider the company-specific negative impacts on society to be low.
The Ethics Advisory Panel for Science and Technology enables our various business units to adequately address (bio)ethical issues that arise in connection with our scientific and technological innovations. Through our work, we demonstrate how bioethical principles and guidelines can be considered and integrated in scientific and technological progress in a corporate context. The MEAP provides ethically sound guidance – especially for cases of scientific and technological progress that are not yet covered by existing guidelines. With guidelines such as the Genome Editing Principle or the Stem Cell Principle, we help to establish ethical positions beyond the boundaries of our company and thus assess our positive impacts on responsible research as moderate.
Digital ethics
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Non-compliance with digital-ethical standards poses risks for people and the environment. We use various initiatives to support digital ethics and assess negative impacts attributable to our company as low.
Through our CoDE and the Digital Ethics Advisory Panel (DEAP), we address ethical issues resulting in the area of data & digital. We thus have a positive cross-border impact, which sets an example for the further development of ethical standards beyond the border of our company. Overall, we classify our positive impacts as moderate.
Sustainable products
(incl. product design, packaging, innovation and R&D)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Manufacturing our products creates a negative environmental footprint owing to the use of a large variety of resources. We reduce this impact through internal measures, such as utilizing more sustainable raw materials and packaging and by researching innovative and sustainable materials. Additionally, we have launched several initiatives to foster sustainable resource use and develop and implement sustainable product alternatives. Therefore, we believe we have only a moderately negative impact on this topic.
We expect to see the largest potential positive impacts from a project that strategically incorporates sustainability criteria into our product development. However, we will only realize the positive impacts of these actions in the future. In the short-term, we aim to create a positive impact by implementing the SMASH packaging strategy, which can directly contribute to more sustainable products and packaging design. We recognize that most of these activities will mitigate negative impacts but will not result in a positive impact overall. However, one particular initiative that generates a positive impact is our DOZNTM tool, which enables our customers to identify toxic or hazardous materials and suggests sustainable alternatives. Additionally, the investment activities of M Ventures may contribute to more sustainable production processes and products while supporting innovative business ideas. Partnerships with customers also help to develop more sustainable products and enable other industry players to act more sustainably. Therefore, our current positive impact on the topic of sustainable products can be classified as moderate.
Health for all
(incl. access to health, prices of medicines, health awareness)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
We strive to make health solutions affordable and accessible and collaboratively work with partners and stakeholders to speed up access to quality health solutions for all – focusing on low-and middle-income countries. As part of these efforts, we have implemented patient access programs and our equitable pricing policy to enable more patients to afford our product portfolio. We have also invested in initiatives to strengthen health systems and improve access to health. Our efforts have been recognized by external assessments and rankings. When taking our measures and projects into account, we believe to have a low negative impact on the topic of health for all.
We address unmet global health challenges. For example, we make substantial investments to eliminate schistosomiasis as a public health problem. Furthermore, we embed initiatives to define new models to ensure equitable and sustainable access to our innovations for neglected tropical diseases. We are also engaged in the fight against malaria, developing and providing access to new drugs and tools supporting its prevention, control and elimination. We also implement capacity and awareness-building initiatives. Therefore, we believe that we have a substantial positive impact on health for all.
Chemical product safety
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
To mitigate potential negative impacts of hazardous chemicals, we have strict guidelines and measures in place that ensure safe working conditions. Some uncertainty exists regarding the state of chemical product safety at the supplier level. For users of our products, we provide the necessary information for dealing with hazardous substances safely. Therefore, the potential negative impact is classified as moderate.
Our commitment to chemical product safety is one of the cornerstones of our business as we process and handle hundreds of thousands of hazardous chemicals. We continuously improve our activities around product safety, thus benefitting the environment as well as our customers and employees. In addition, we proactively and regularly develop, assess and implement new safety-related data and information and adapt our risk mitigation measures accordingly. Consequently, our positive impact is classified as substantial.
Patient safety
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Patient safety is fundamental to delivering quality health services and therefore has high relevance throughout the Healthcare business sector. Our company follows international guidance, standard procedures and all relevant pharmacovigilance regulations to mitigate the potential negative impacts on patient safety. We believe our negative impact on the topic of patient safety to be moderate.
We collaborate with health authorities in low- and middle-income countries to help improve their pharmacovigilance systems and operating environments. The measures are widely implemented and benefit patients around the world. In 2022, we included the topic of patient safety in the update of our Supplier Code of Conduct, which we will publish in 2023. Therefore, we believe our positive impact on the topic to be substantial.
Product-related crime
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Illegal, counterfeit and substandard medicines pose a significant risk to public health, and chemicals may be misused for criminal purposes such as manufacturing illicit drugs. Therefore, we have enacted various measures to mitigate the risk of product-related crime, reducing the potential negative impact to moderate.
In addition, our actions and initiatives to reduce the risks associated with product-related crime often exceed the minimum legal requirements. For example, we support authorities in detecting and resolving cases of product-related crime. We also provide training for employees and business partners to strengthen their competencies in detecting product-related crime. Overall, we assess our positive impacts as significant.
Attractive employer
(incl. attracting employees, recruiting and retaining employees)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
A negative working environment can negatively impact quality and productivity and poor work-life balance may be detrimental to employees’ physical, mental and emotional well-being. For this reason, we have implemented several charters, policies and standards to create an attractive and healthy working environment for all employees. We believe the negative impact on the topic of attractive employer to be low.
In addition, we are enhancing our attractiveness as an employer, for instance by creating flexible working environments and taking beneficial measures for our employees extending well beyond compliance with national laws worldwide. Therefore, we believe our positive impact on the topic of attractive employer to be significant.
Employee development
(incl. employee training and education, good leadership)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Employee development and vocational training play a crucial role in enabling us to improve our employees’ skills. We have a variety of leadership measures in place to mitigate potential monetary and non-monetary consequences that could be caused by deviant behaviors, stress, anxiety, turnover intentions, or poor organizational performance. Therefore, we believe the potential negative impact on the topic employee development to be low.
In many cases, we go beyond compliance with our employee development and vocational training approaches. We believe we have a significantly positive impact on the topic of employee development as a result of building social capital through our employee training and personal development opportunities.
Diversity and inclusion
(incl. equal opportunity, non-discrimination, inclusive culture)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Disrespecting equal opportunities and non-discrimination can lead to human rights violations in the workplace and therefore have potential negative impacts on humans and society. Our efforts to promote and support diversity, equity, inclusion, non-discrimination, and LGBTQI+ rights are extensive, which is why we believe our negative impact on diversity, equity and inclusion to be low.
Our aspiration to build an inclusive culture in which employees feel welcome and valued extends well beyond compliance with existing laws and regulations. For example, we have more than 60 internal DE&I employee groups and networks worldwide that actively contribute to our DE&I strategy. Therefore, we believe our positive impact on DE&I is significant.
Occupational health and safety
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Health and safety aspects play a major role in the manufacture of chemical and pharmaceutical products – especially for employees working in research and production. To reduce health and safety risks for our employees globally, we have introduced Group-wide standards, initiatives and training programs. We therefore estimate negative impacts on health and safety to be low.
Our activities aim to ensure the safety of the people who work for us since we continuously assess and reduce safety risks. Through training measures, we are also raising awareness both of occupational hazards and behaviors that promote health and safety. By taking various measures, we encourage our employees to live a healthy lifestyle. These measures go beyond compliance with regulations and mitigating negative impacts. Thus, we believe our positive impacts to be moderate.
Non-GHG emissions
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Manufacturing processes can release emissions into the air, water or soil. Where needed, we install exhaust air purification systems or wastewater treatment plants to reduce or avoid emissions. Despite these measures such emissions can still be unintentionally released. Additionally, our customers may incorrectly dispose of our products. This could potentially lead, for example, to a build-up of pharmaceuticals or other chemicals in the environment and leave traces of active pharmaceutical ingredients in water. In response, we have taken various measures to mitigate these risks so that we believe our negative impacts of our non-GHG emissions to be moderate.
In the area of non-GHG emissions, we have various mitigating measures in place. Beyond this, we could not identify any additional positive impacts on society or the environment.
Biodiversity
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Our production sites are predominantly located in industrial areas with low biodiversity value. Nevertheless, unintentional chemical leakages can contaminate soil or water resources and damage ecosystems. Therefore, we have technical and organizational measures in place to prevent the release of substances into the environment. For example, we are sealing relevant surfaces at our sites to protect soil, groundwater and the associated ecosystems from chemical spillages. These efforts may impact habitats and animals that potentially live in unsealed surfaces. Water use and the release of greenhouse gases are also linked to biodiversity loss. In addition, as a manufacturer, we use various raw materials and understand that their extraction and processing can negatively impact biodiversity. Overall, due to our technical and organizational measures that are in place, we classify our negative impact on biodiversity as moderate.
Some of our sites are biodiversity-certified and assessed annually. These assessments show that biodiversity at these sites is increasing. In addition, various other sites are making efforts to foster biodiversity. Therefore, we believe to have a low positive impact on biodiversity.
Climate action
(incl. GHG-emissions, energy efficiency, renewable energies)
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
Company-specific GHG emissions (Scope 1 and 2) contribute to global environmental degradation. Overall, the GHG emissions associated with our purchased goods and services (part of Scope 3) represent the largest share of our total carbon footprint. We believe our negative impact on the topic of climate change to be significant.
We are in the early stages of a long carbon-reduction journey. Therefore, we are investigating and implementing a variety of mitigation measures to significantly reduce our carbon footprint. We also aim to generate value for the environment via initiatives such as signing Virtual Power Purchase Agreements (VPPAs) that bring additional renewable electricity to the grid. Overall, we classify our positive impact regarding GHG emissions as low.
Water management
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
As a manufacturer of chemical and pharmaceutical products, we require significant volumes of water. The extraction of water reduces its availability in the natural environment and for other water users. Additionally, there is always a risk of negatively impacting the health and viability of ecosystems due to wastewater discharge and the potential pollution of water and soil. We have many initiatives in place to reduce our impact on water quality and availability. For example, we have implemented strict global standards and requirements at all of our manufacturing sites for wastewater treatment. Some of these requirements also exceed our own business, such as the Responsible Minerals Sourcing Charter, which requires suppliers to have wastewater management systems and processes in place. These activities mitigate our negative impacts; therefore, we believe our overall negative impacts on water to be moderate.
With respect to our water management activities, we have strong mitigating measures in place. These are primarily aimed at complying with regulations. Beyond this, we could not identify any additional positive impacts on society or the environment.
Waste & recycling
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
The use of chemical and pharmaceutical products is characterized with a high risk of improper use, wrong disposal and particularly in developing countries with weak waste management systems. For waste generated within our own operations, we mitigate negative impacts by adhering to regulations as well as fostering education, waste reduction and recycling initiatives. We classify our overall negative impacts to be moderate.
Regarding waste and recycling, we have strong mitigating measures in place. As these activities concentrate on compliance and the mitigation of negative impacts and do not specifically aim at generating value for environment or society beyond our own scope, we did not identify positive impacts.
Plant, process and transport safety
Negative impacts
along the value chain
Positive impacts
along the value chain
Chapter:
The pharmaceutical and chemical sector is associated with a particular risk of pollutions to air, soil, and water through chemical spills. We have implemented strong standards and safe manufacturing practices at all sites worldwide to significantly reduce the risk of a leakage into the environment at manufacturing locations, during storage and transportation. Therefore, we believe the potential negative impact of our company is moderate.
Our regulations and measures do not only fulfill local legal requirements but go beyond these. We believe our positive impact on the topic plant, process and transport safety to be low.
The set of topics covered by the materiality analysis did not change in comparison with 2021. In the analysis, “Tax Governance” once again fell below the materiality threshold. Nevertheless, we have included the relevant information in this report as we expect that tax matters will become increasingly important to our stakeholders in the future. In addition, we report on the topic of “Community Engagement” as we have been supporting and running a wide range of activities and campaigns for many years now. We would like to continue to play an active role in the community and to continue reporting on our outreach efforts.
Section 289c (3) of the German Commercial Code requires us to report on topics of double materiality in a combined non-financial statement. Pursuant to section 289c (3) of the German Commercial Code, the principle of double materiality requires companies to disclose non-financial information when the following two criteria are met: First, the information makes it possible to understand how the company’s business activities affect non-financial aspects. And second, the information is necessary to understand the company’s course of business, results of operations and economic position.