With our annual materiality analysis, we identify the social, economic and environmental issues that are of material importance to us and our stakeholders. In 2023, we closely examined for the first time the upcoming requirements of the European Sustainability Reporting standards (ESRS).
Identifying the material issues
We conduct an annual materiality analysis to identify sustainability topics that are particularly important to us. In this way, we determine the priorities for our sustainability management and our reporting. Our materiality analysis meets the requirements of the Global Reporting Initiative (GRI) reporting standard and also forms the basis for the materiality analysis of the CSR Directive Implementation Act (CSR-RUG). In 2023, we also addressed the upcoming requirements of the new EU Corporate Sustainability Reporting Directive (CSRD), which our company must comply with as of the 2024 reporting year, accompanied by the obligation to comply with the new ESRS reporting standards. Initial insights derived from these requirements were already incorporated into our analysis in 2023. For example, we compared our current material topics with the requirements of the ESRS and adapted the methodology for assessing actual and potential impacts.
In our analysis, we looked at actual as well as potentially positive and negative environmental, economic and social impacts of our business activities. In addition to internal data analyzed by us, the evaluation also included feedback from external stakeholders.
Similar to the previous year, we classified the negative impacts into four categories: low, moderate, significant, and critical. At the same time, we categorized the positive impacts as follows: low, moderate, significant, or substantial. We defined a topic as material if a positive or negative impact is classified as at least moderate in one of the steps of the value chain. The results of the materiality analysis were validated by the Sustainability Board (MSB).
The following list contains all material topics including their actual or potential positive and negative impacts. Impacts identified as material are indicated with a checkmark.
Results of the materiality analysis
Compliance management
Value chain
Positive impact:
Negative impact:
We take various measures to ensure that all employees have the opportunity to speak out anonymously and safely. In addition, we have numerous measures in place, such as policies, trainings and awareness campaigns. Therefore, we classify our potential positive impact in our own business as moderate.
Due to the nature of our business activities and the inevitable possibility of compliance-related risks, we classify the potential negative impact to be moderate in our upstream value chain and low in our own business. 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 our own company; we also include suppliers and our interactions with sales parties such as commercial agents, distributors and dealers.
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Data protection & cyber security
Value chain
Positive impact:
Negative impact:
Concerning the topic data protection & cyber security we have comprehensive measures in place. We strive to safeguard the rights of any person whose data we process, including but not limited to our employees, patients, customers, and healthcare professionals. When it comes to cyber security, our company understands the importance of protecting our business from cybercrime and ensuring our information is secure from any associated internal and external risks. Therefore, we classify our actual positive impact to be substantial.
Due to the nature of our business activities, there is always the possibility of data-related risks. 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 regarding data protection & cyber security to the boundaries of our own company; we also include suppliers and our interactions with sales parties such as commercial agents, distributors and dealers. We strive to make all important information regarding our products and their use accessible to our consumers and end users. In doing so, it is important to respect the privacy of our users. Therefore, we classify our potential negative impact in our own business as low and in the downstream value chain as moderate.
Chapter:
Interactions with health systems and responsible marketing
Value chain
Positive impact:
Negative impact:
We believe that in order to achieve health for all, it is imperative to help health professionals make informed decisions about treatment paths while keeping patient benefit always at the center. We interact with healthy systems by implementing various capacity and awareness-building initiatives to contribute to medical advances that benefit patients and to fostering stronger health systems. Therefore, we classify our actual positive impact on interactions with health systems in the downstream value chain as substantial.
Healthcare stakeholders need up-to-date information on diseases and treatments while safeguarding their independence at the same time. Due to the nature of our business activities, there is always the possibility of compliance-related risks. In response, we aim to ensure that all business activities adhere to the relevant laws, regulations and ethical standards. Thus, we classify the potential negative impact on the topic of interactions with health systems to be moderate in our downstream value chain.
Chapter:
Sustainable supply chain
Value chain
Positive impact:
Negative impact:
We offer opportunities for training and creating awareness of standards that can have a positive influence on how suppliers operate. Further potential positive impacts arise from the stakeholder dialogue, and in particular the dialogue with suppliers, which addresses what support suppliers need and in what form. We therefore classify our actual positive impact on sustainable supply chain in the upstream value chain as moderate.
Due to the nature of our business, we classify the potential negative impact regarding working conditions, equal treatment and opportunities, other work-related rights (e.g. child labor, forced labor), and sustainable supply chain to be moderate in the upstream value chain. 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.
Chapter:
Human rights
Value chain
Positive impact:
Negative impact:
The Responsible Mica Initiative can be seen as an initial pilot project (deep dive) where a real attempt is made to make a positive difference in the supply chain. This relates in particular to the improvement of livelihoods and educational opportunities, which have an impact on basic human rights in the respective region. Further potential positive impacts arise from the stakeholder dialogue, and in particular the dialogue with suppliers, which also includes the issue of human rights, e.g. through the initiative Together for Sustainability. In our own business we have several policies and guidelines in place, such as our Social and Labor Standards Policy, that help to extensively ensure attentive management of the topic of human rights. We therefore classify our actual positive impact to be moderate in the upstream value chain and our potential positive impact to be significant in our own business.
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 within the supply chain. We use our human rights due diligence approach to prevent and mitigate human rights risks and have integrated a Human Rights Charter and a Supplier Code of Conduct. Our projects and activities, such as the Responsible Mica Initiative and community empowerment show efforts to reduce human rights risks in the supply chain that also go beyond compliance with supply chain laws. We classify our potential negative impacts with regard to human rights in the upstream value chain as moderate and in our own business and the downstream value chain as low.
Chapter:
Clinical studies
Value chain
Positive impact:
Negative impact:
We conduct our clinical studies in compliance with high 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 classify the potential positive impact of our ethical conduct in the field of clinical studies in our own business and our downstream value chain to be significant.
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 classify the potential negative impacts in our own business as well as our downstream value chain to be moderate.
Chapter:
Animal welfare
Value chain
Positive impact:
Negative impact:
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 with animal-free alternatives, such as the animal-free test kits (e.g. PyroMAT) which replaced an animal test. The Life Science business sector also is involved in animal-free antibody production (e.g. the ZooMAb and Capricorn projects). Therefore, we classify our potential positive impact within our own business and in the downstream value chain on animal welfare as significant.
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 an actual negative impact. We have implemented the 4Rs for animal-based research (replacement, reduction, refinement, and responsibility) and have set ourselves the 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 classify the actual negative impact on animal welfare in our own business and in our upstream value chain to be critical. In the upstream value chain, we cannot guarantee the same animal welfare as in our own business.
Chapter:
Bioethics
Value chain
Positive impact:
Negative impact:
The Ethics Advisory Panel for Science and Technology (MEAP) 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 potential positive impact on bioethics as moderate within our own business.
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 potential negative impacts in our upstream and downstream value chain as well as in our own business to be low.
Chapter:
Digital ethics
Value chain
Positive impact:
Negative impact:
Through our CoDE and the Digital Ethics Advisory Panel (DEAP), we address ethical issues regarding 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 our company. Overall, we classify our potential positive impact on digital ethics within our upstream value chain and in our own business to be moderate.
Non-compliance with digital-ethical standards poses risks for people and the environment. We use various initiatives to support digital ethics and classify the potential negative impacts in our upstream value chain as well as in own business as low.
Chapter:
Innovation and R&D
Value chain
Positive impact:
Negative impact:
Our products, namely our medicines and our biological and chemical innovations that utilize the latest technologies, have an actual positive impact on human progress and global health. To develop pioneering solutions that have a positive impact on society and support organic growth, we are exploring transformative technologies beyond core products and markets. We therefore classify the actual positive impact concerning innovation and R&D in our own business and in our downstream value chain to be substantial.
Researching, innovating and manufacturing new 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 using more sustainable raw materials and packaging and by researching innovative and sustainable materials. Therefore, we classify the potential negative impact on this topic to be moderate in the upstream value chain and our own business and low in the downstream value chain.
Chapter:
Access to Health
Value chain
Positive impact:
Negative impact:
We strive to make health solutions available, affordable and accessible to all. As part of our commitment, we are implementing our Access Strategy for low- and middle-income countries (LMICs) to fulfill our ambition to serve over 170 million patients per year in these countries by 2030. For non-communicable diseases (such as cancer indications and endocrine disorders), we are committed to offering equitable pricing and to strengthen health systems. We aim to, firstly, make our existing innovative therapies available to more countries and patients and, secondly, to launch our healthcare innovations in LMICs within 12 months after the first global launch. For the neglected tropical disease, schistosomiasis, we apply an integrated approach towards the elimination of the disease as a public health problem by 2030. We also engage in the fight against malaria. On top of that, we want to enable patients and health professionals to make informed decisions about treatment paths. Thus, we are implementing several initiatives to build health capacity and awareness in LMICs. Therefore, we classify our actual positive impact on access to health in the downstream value chain of our existing products and innovations as substantial.
We are committed to health for all. Through our Access Strategy for low- and middle-income countries, we aim to increase the impact of our healthcare innovations and existing products, such as therapies for cancer and endocrine disorders, through access efforts in those countries. We continue to engage in the fight against schistosomiasis and malaria. We also invest in local initiatives to strengthen health systems and improve access to health.
We recognize that these are extremely difficult and complex challenges, which is why we take a collaborative approach with our partners and stakeholders in all our access initiatives. Considering these, we classify our potential negative impact on the topic of access to health in our downstream value chain to be moderate.
Chapter:
Prices of medicines
Value chain
Positive impact:
Negative impact:
As part of our commitment to health for all, we will implement our Access Strategy to reach millions of patients in low- and middle-income countries. Our holistic approach includes a focus on affordability. We are working to prevent cost from becoming a barrier to treatment. Therefore, we adapt our medicine prices according to people’s ability to pay in different geographic and socioeconomic segments. We are committed to fair, flexible and sustainable pricing – both within and across countries. We therefore adapt our prices based on local market considerations, such as unmet medical and treatment needs, health system capacity as well as infrastructure and socioeconomic standards. Therefore, we classify our actual positive impact on prices of medicine in the downstream value chain of our healthcare portfolio as substantial.
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. When taking our measures and projects into account, we classify our potential negative impact on the topic of prices of medicines in our downstream value chain as low.
Chapter:
Chemical product safety
Value chain
Positive impact:
Negative impact:
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 to the benefit of 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. Regarding chemical product safety, we consequently classify our actual positive impact in our own business and in our downstream value chain to be substantial.
Many of our chemical products have intrinsic hazardous properties. To mitigate potential negative impacts of hazardous chemicals, we have strict guidelines and measures in place to ensure safe working conditions. For users of our products, we provide the necessary information for dealing with hazardous substances safely. Some uncertainty exists regarding the state of chemical product safety at the supplier level. Therefore, we classify our potential negative impact on the topic of chemical product safety for the upstream value chain to be significant. In our own business as well as in the downstream value chain we classify our potential negative impact to be moderate.
Chapter:
Patient safety
Value chain
Positive impact:
Negative impact:
We collaborate with health authorities in low- and middle-income countries to help improve national pharmacovigilance systems and operating environments. We implement pharmacovigilance measures widely around the world even in countries without pharmacovigilance regulations. In 2022, we included the topic of patient safety in the update of our Supplier Code of Conduct, which we published in 2023. Therefore, we classify our potential positive impact on the topic in the downstream value chain to be significant.
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. It is the nature of medicinal products to bear intrinsic safety risks while providing treatment benefits to patients. Considering the therapeutic areas of our product portfolios, we classify the potential negative impact on the topic of patient safety in our downstream value chain as moderate.
Chapter:
Product-related crime
Value chain
Positive impact:
Negative impact:
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 classify our potential positive impact in our downstream value chain to be moderate.
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. We have enacted various measures to mitigate the risk of product-related crime. However, we classify the potential negative impact in our downstream value chain to be significant.
Chapter:
Working Conditions for employees
Value chain
Positive impact:
Negative impact:
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. Further, 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. Therefore, we classify our potential positive impact on the topics of working conditions in our own business as significant.
Poor working conditions (including occupational health and safety) and a negative working environment can negatively impact quality and productivity. Further, a 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, including competitive compensation structures. Therefore, we classify our potential negative impact on the topic working conditions for our employees in our own business as low.
Chapter:
Equal treatment and opportunities for all
Value chain
Positive impact:
Negative impact:
Our aspiration to build an inclusive culture in which employees feel welcome and valued extends well beyond compliance with existing laws and regulations. We have taken clear commitments on DE&I to hold ourselves accountable and have realized numerous initiatives to underpin our commitments, for example a global gender pay equity review or inclusive leadership training seminars offered to all people managers. In addition, we have more than 60 internal DE&I employee groups and networks worldwide that actively contribute to our DE&I strategy. Therefore, we classify our potential positive impact on the topic of equal treatment and opportunities for all in our own business as significant.
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. Therefore, we classify our potential negative impact on equal treatment and opportunities for all in our business as low.
Chapter:
Climate Action
Value chain
Positive impact:
Negative impact:
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. In our upstream value chain, we have a supplier decarbonization program in place to reduce GHG emissions. Furthermore, we have set incentives for our own workforce to increase their use of green mobility and, with our Green Fleet pilot, we are increasing the number of charging stations to expand the charging infrastructure for e-mobility. On top of that, various activities and targets are being implemented to reduce our process-related emissions and we are striving to increase our share of energy gained from renewable resources. Overall, we classify our potential positive impact within our upstream value chain as significant and in our own business regarding climate change and energy as moderate. Within our downstream value chain, no potential or actual positive impact was identified.
Company-specific greenhouse gas (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 classify our actual negative impact on the topic climate action (including climate change and energy) to be critical in the upstream value chain. In the Electronics business sector, we classify the actual negative impact to be critical in our own business and in the downstream value chain. For our Life Science and Healthcare business sectors of our own business and our administration, we classify our actual negative impact on the topic climate action to be significant.
Chapter:
Water management
Value chain
Positive impact:
Negative impact:
With respect to our water management activities, we have strong mitigating measures in place. These are primarily aimed at complying with regulations. Moreover, our goal is to bring our effluents to the predicted no effect concentration (PNEC). Consequently, we classify the actual positive impact concerning water management to be low.
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 go beyond 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. We classify our actual negative impact to be moderate in our upstream value chain and in our own business. In the downstream value chain, we classify our potential negative impact to be moderate.
Chapter:
Circular economy, waste & recycling
Value chain
Positive impact:
Negative impact:
Regarding circular economy, waste and recycling, we have strong mitigating measures in place. Beyond this, our Quantitative Green Chemistry Evaluator DOZN enables our customers to calculate the impact of a process or product using the 12 principles of green chemistry. Based on outcomes, a process or a material can be changed to help decrease the score. Furthermore, 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, we classify our potential positive impact on the topic of circular economy as well as waste and recycling to be moderate in our own business and to be substantial in the downstream value chain of our Life Science business sector.
The use of chemical and pharmaceutical products is associated with a high risk of improper use, improper disposal and, especially 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. Therefore, we classify the potential negative impact in our upstream value chain and in our own business to be moderate. For the downstream value chain, we classify our actual negative impact as significant.
Chapter:
Plant, process & transport safety
Value chain
Positive impact:
Negative impact:
Our regulations and measures regarding plant, process and transport safety go beyond fulfilling local legal requirements. Our most important protective measure during storage and transport is our good quality and stable packaging. For the transport of dangerous goods, we only use tested packaging that meets the requirements of the Recommendations on the Transport of Dangerous Goods – Model Regulations (UN Orange Book). In our own business we classify our actual positive impact on the topic as low.
The pharmaceutical and chemical sectors are associated with a particular risk of pollution 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 leakage into the environment at manufacturing locations during storage and transportation. Therefore, we classify our actual negative impact in the upstream value chain and in our own business to be moderate. In our downstream value chain, we classify the potential negative impact as moderate.
Chapter:
Biodiversity and ecosystems
Value chain
Positive impact:
Negative impact:
To enhance biodiversity at our own sites, we have created several substitute habitats for flora and fauna. We classify the actual positive impact of these measures on the state of species and on the extent and condition of ecosystems within our own business to be low. Nevertheless, there is still a significant room for improvement in this area as it is necessary to extend our measures across the entire value chain.
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. Due to our technical and organizational measures, we classify our potential negative impact on biodiversity and ecosystems to be low in our upstream value chain as well as in our own business; we classify it to be moderate in our downstream value chain.
Chapter:
The list of material topics did not change in comparison with 2022. In the analysis, “Tax Governance” once again fell below the materiality threshold. Nevertheless, we report on this topic as we expect tax-related disclosures to become increasingly important to our stakeholders. In addition, we provide information about our 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.