assured 2011
Strategy & Focus Issues

Our Sustainability Strategy

Nutrition, health care and the protection of the climate and natural resources – these are essential cornerstones of a prosperous society in which as many people as possible should share. Yet the requirements for this are more difficult than ever. With population growth particularly rapid in developing and emerging nations, local infrastructures and the ecological equilibrium are being put under increasing pressure, although high growth in these countries is helping many people maintain an increasing standard of living. At the same time, the population in most industrial nations is aging, generating an imbalance in the social structures. In addition, changes in consumption patterns and the massive demand for energy caused by the global spread of urbanization are exerting more pressure on natural resources and leading to an increase in global carbon dioxide emissions.
How can more and more people share in this prosperity in the future while the negative impact on the environment is minimized? This is a question that globally operating companies such as Bayer must address. It is one that is being directed to us by stockholders, politicians, employees and the general public alike. Some of these stakeholders are interested primarily in long-term business development with the help of future-oriented applications and products, while others expect us primarily to make substantial contributions to shaping global economic growth as sustainably as possible. One of our key objectives, which will also help to ensure our future viability, is to balance economic growth with ecological and corporate social responsibility.
We realize at four levels our goal of balancing ecological and social responsibility with corporate interests.

Contributing solutions to global challenges

Global requirements for sustainable development are very important to Bayer. The future of our areas of business is impacted by the political and societal consequences of tomorrow’s megatrends. To safeguard the existence of our company in the long term in the face of these global challenges, we are working on solutions for the future that drive forward sustainable development and our own business at the same time. In our three subgroups – Bayer HealthCare, Bayer CropScience and Bayer MaterialScience – we possess a product portfolio that addresses some of the most urgent problems affecting the provision of health care, the safeguarding of food supplies and the protection of the climate. Responsible business practices are our obligation: potential negative effects of our business activity on people and the environment must be limited.
Numerous Bayer products are helping to solve urgent problems in many parts of the world and support several of the United Nations’ Millennium Development Goals [ 3 ]. As the world market leader in the field of hormonal contraception, we support, for example, efforts by numerous governments to limit population growth in their countries through family planning activities. This also helps to prevent potential bottlenecks in health care capacities and food supplies. In addition, Bayer provides the World Health Organization (WHO) with drugs to treat neglected tropical diseases and, along with other major pharmaceutical companies, has joined the initiative founded in January 2012 by the Bill & Melinda Gates Foundation to tackle such diseases. Furthermore, crop protection products, seed, plants with improved traits (such as tolerance against abiotic stress factors like heat, drought and soil salinization) and new methods of cultivation also help to protect harvests in regions that are negatively impacted by climate change – thus contributing to the safeguarding of food supplies. Additionally, the materials produced by Bayer – such as building insulation materials – are helping our customers to save energy and thus reduce their CO2 emissions.

Opinion

Dr. Johannes von Schmettow, co-head of HR consultants Egon Zehnder International DeutschlandZoom image
Dr. Johannes von Schmettow, co-head of HR consultants Egon Zehnder International Deutschland
"Today the issue of sustainability is on the agenda of top management, something that would have been almost inconceivable 10 years ago. The shortage of natural resources, the growing world population and urbanization are, however, affecting companies today more directly than ever before. These trends will become even more critical. What's more, companies are moving in a multi-stakeholder environment that demands ever greater transparency and sustainable corporate governance. At the same time, changes are occurring in the behavior of consumers, who are making their purchase decisions dependent on sustainable products. For this reason, sustainability is not a fashionable phenomenon but a fundamental trend. Many companies have already begun to integrate sustainability into their core business. This in turn awakens the need for specially qualified managerial staff offered long-term incentives who are able to drive forward this process of transformation. In the future, sustainability will be one of the central factors determining just how competitive companies are.”

Our sustainability strategy

As an inventor company with the mission “Science For A Better Life,” [ 4 ] Bayer continues to focus on its core competencies in the development of new solutions in the fast-growing, innovation-driven areas of health care, nutrition and high-tech materials. Based on our innovation capability, we are pursuing a strategy of sustainable and profitable growth to increase the value of our company. For Bayer, sustainability essentially means future viability and is therefore an integral part of our business strategy. Together with our value concept LIFE [ 5 ]  ( see also Management & Corporate Governance), our mission forms the basis of our sustainable actions. The Bayer Sustainable Development Policy [ 6 ] formulates our common understanding of sustainability that applies to all subgroups and service companies worldwide.
The goal of our sustainability strategy is clearly defined: we want to create both business opportunities for our company and generate economic, ecological and social benefit through sustainability. We realize our goal of balancing ecological and social responsibility with corporate interests through the following elements:

Our business

Sustainability is a key element of our Group strategy and also of our subgroups’ business strategies. And above all through our innovations and products (see chapter  “Innovation & Product Stewardship”), it is integral to our business activities. In this way, we identify and exploit new market opportunities that create added value for society and that address the nexus of the sustainability challenges.
Our Sustainability Program [ 12 ] introduced in 2009 as part of our sustainability strategy offers solutions to major social challenges such as sustainable health care, high-quality nutrition for a growing world population, and protection of the climate and natural resources. With our activities to address these overarching social needs, we also pursue long-term company objectives. We thus help not only to solve global challenges, but also to open up the markets of the future with the help of innovative products and technologies. Our nine lighthouse projects (see chapter Promoting health worldwide  and the Ecology chapter) illustrate particularly clearly the core of our strategy.

License to operate

Responsible business practices form the foundation of our operational business and are our license to operate. Bayer attaches great importance to responsible practices in the areas of compliance, human resources policy, product stewardship, health, safety and environmental protection, and supplier management. These issues are anchored in our business operations through internal Group management regulations. These regulations include above all our Human Rights Position [ 7 ] including labor conditions, the Corporate Compliance Policy [ 8 ], the new Responsible Marketing & Sales Policy [ 9 ], our Supplier Code of Conduct [ 10 ], and our Water Position [ 11 ] that was adopted in 2011.
We take account in our sustainability strategy of the expectations of our stakeholder groups. This basic understanding includes above all the efforts on behalf of our employees, the discourse between industry, the scientific community, society and politicians (see “Stakeholder dialogue”) and our social needs activities. Our commitment to sustainable development is expressed by our active participation in important international initiatives and associations [ 13 ] such as the United Nations Global Compact (UNGC) [ 14 ] and its “Corporate Sustainable Development Leadership (LEAD)” initiative, the Responsible Care® initiative [ 15 ] of the chemical and pharmaceutical industry, and the World Business Council for Sustainable Development (WBCSD) [ 16 ].

Sustainability management and steering

A key element of our sustainability strategy is central management and strategic anchoring of the issue at the Management Board level. To underline the relevance of our commitment to this issue, the job description of Professor Plischke – the Management Board member who was already previously responsible for this area – was formally expanded on January 1, 2012, to include sustainability. The Corporate Center department Environment & Sustainability – headed up by Dr. Wolfgang Grosse Entrup – reports directly to him in his function as the company’s highest ranking sustainability officer. Dr. Grosse Entrup also chairs the Sustainable Development (SD) Committee that steers the operational implementation of sustainability within the company. This committee is comprised of the top-ranking sustainability officers in the subgroups, together with the heads of Corporate Development, Communications and Human Resources & Organization. The committee’s tasks include identifying and evaluating sustainability-relevant opportunities and risks for the company, as well as establishing objectives, initiatives and suitable Group management regulations and monitoring their implementation. The exchange of information – including dialogue across departmental boundaries – takes place with the other committees for the areas of Health, Safety, Environmental Protection, Quality (HSEQ); Innovation; Industrial Operations; Technology; and Public and Governmental Affairs. To disseminate our sustainability strategy, we made a conscious decision not to employ an advisory committee, but instead to regularly engage in intensive and challenging dialogue involving alternating prominent stakeholders and our top management on company-specific themes and challenges.
Targets and indicators serve to operationalize our sustainability strategy. To further integrate sustainability into our business activities, the Group committees responsible for sustainability in 2011 defined new, ambitious Targets 2015 [ 17 ] all along the value chain. We document the development of these targets in the relevant chapters of the Performance Report.
In addition to these Group-wide committees and targets, our subgroups, regions and countries have created organizational structures focused on specific relevant issues, targets and measures. An overview of the development of sustainability at Bayer [ 18 ] can be found online.

Steering sustainability at Bayer

Professor Wolfgang Plischke (left), member of the Bayer Board of Management responsible for Innovation, Technology and Sustainability and for the Asia/Pacific region, and Dr. Wolfgang Grosse Entrup, Head of Environment & Sustainability at Bayer AG and of the Sustainable Development (SD) Committee, do a final check of the current Bayer Sustainable Development Report.

As the steering body for sustainability in the Group, the SD Committee supports Prof. Plischke in his function as CSO (Chief Sustainability Officer) in the implementation of the sustainability strategy across the Group. This also applies in specific terms to the corresponding sustainability-relevant targets, Group regulations and management systems. As the interface between stakeholder interests and Board decisions the committee assumes an important management role at Bayer. The Sustainable Development Report documents the results annually.

Shaping a sustainable future together

Sustainable development is only possible if equal importance is attached to economic, ecological and societal interests. This networked approach, which was given due recognition at the latest at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992, has drifted out of focus somewhat in recent years. Many solutions proposed by the international community have ignored the major contexts. They only address certain aspects, although most of the economic, ecological and societal challenges are closely related and thus should not be considered in isolation. For example, extreme weather conditions are increasing as a result of global climate change. Drought, flooding, storms and soil erosion are resulting in bad harvests in many regions of the world. That leads to shortages of staple foodstuffs. And this in turn harbors the risk of many life-threatening diseases. It is essential for the future that we recognize the correlation between the various factors of a phenomenon and address the root causes of the major challenges of our time based on these findings. Of late the term “nexus” has emerged as a way to describe this type of comprehensive approach. Germany especially will address the nexus issue at the Rio successor conference in June 2012. 25 years after the Brundtland Report “Our Common Future,” the goal is to shift the focus once again to the holistic approach that is essential for sustainable development.
No one can solve the global challenges of sustainable development alone. As the problems are closely interlinked, the approaches taken to solve these must be as well. What are needed are effective collaborations between countries, multilateral organizations, non-governmental organizations (NGOs), the scientific community and industry. That is why Bayer places great value on constructive dialogue and specific cooperation with a large number of dedicated stakeholders. We can only be successful in the long term through cooperation and through conduct that is commensurate with the requirements of our stakeholders. This dialogue with our stakeholders reveals among other things potential for development and leads to specific research and development projects. As a highly diversified company, we also take advantage of the fact that we can observe, analyze and systematically factor into our solutions the correlations and interactions between the various global challenges. As the focus issues described, it is in our own interest to consistently align our portfolio to the challenges of the future and systematically pursue partnership-based collaborations that bring us closer to finding joint solutions.
We regularly analyze the suggestions and expectations of external and internal stakeholders pooled during stakeholder dialogues and surveys to compare the pertinence of sustainability-relevant issues for our stakeholder groups with that of our own assessments. In this way, we can determine the areas in which our sustainability strategy requires further development and identify issues that we must focus on more clearly in the future. We document the comparison of external and internal priorities in a materiality matrix. Within the context of a stakeholder process, we recently examined, restructured and refocused this matrix together with an international think tank. This process involved surveys of external stakeholders, internal stakeholder workshops at various levels, benchmarking and external analyses. The materiality matrix has been changed since 2010 to encompass the changing priorities of our external and internal stakeholders and a new method of analysis. We have created new groupings in order to focus more strongly on particular issues, thereby reducing their overall number and creating a sharper profile. We have also expanded the matrix to include a number of explanations.
  1. New technologies: managing risks & opportunities
  2. Commitment to job security
  3. Fighting health risks imposed by counterfeits
  4. Product safety, REACH, monitoring impact of endocrines and active ingredients in the environment, HCFCs and withdrawal of WHO Class I products
  5. Innovation to meet customer and societal needs
  6. Incl. compliance, integrity, anticorruption, responsible marketing & sales
  7. Promoting energy efficiency, efficient resource use (e.g. water, energy) and switch to renewables where possible
  8. Facilitating greater access to health care through R&D, pricing, patent protection, collaboration etc.
  9. Respect and promotion of human rights throughout the value chain, incl. the abolition of child labor
  10. Safeguarding IP while providing access to products and innovations
  11. Contributing to sustainable food production, supply and availability
  12. Climate protection through mitigation & adaptation
  13. Social investment and social volunteering programs
  14. Reduced use of animals where possible, commitment to welfare of animals as part of scientific R&D process
  15. Comprises employee training & development, remuneration, benefits, recruitment, retention
  16. Ensuring a sound diversity of gender, ethnic background etc. of employees
  17. Ensuring occupational, process & plant and transport safety
  18. Promoting fair and constructive relations and influencing sustainable behavior in the supply chain, incl. ESG performance and human rights
  19. Reducing environmental impacts of products and processes on water, air, soil, supporting biodiversity
http://www.sustainability2011.bayer.com/en/our-sustainability-strategy.aspx

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Last updated: June 6, 2012