This is Merck's seventh Corporate Responsibility (CR) Report. We have a long history of reporting on issues pertaining to our corporate responsibility - a tradition that began in 1993 with the publication of environmental reports. In 2003, we published our first full Corporate Responsibility Report detailing how we fulfill our obligation to society and have since done so every two years. Our goal is to create transparency and inform stakeholders about our activities and successes, as well as challenges that we face. At the same time, our CR Report also documents the progress we've made in implementing the principles of the United Nations Global Compact ("Communication on Progress") while also meeting the criteria of the Sustainability Code (DNK) established by the German Federal Government. We have issued a statement of compliance  with the German Sustainability Code.

Reporting framework

This CR Report covers the 2013 and 2014 fiscal years and pertains to the entire Merck Group with legal entities across 66 countries. This report also covers the activities of AZ Electronic Materials, a company that we acquired during this period. As needed, we specifically indicate when the information provided diverges from this reporting framework.

Data collection and consolidation systems

Since 2005, we have been using the Group-wide Location Information Online System (LION) to collect environmental data as well as occupational health and safety data, which is input locally at the individual sites and approved after being reviewed. In order to ensure that the data is highly reliable, the Merck Group function Environment Health Safety Security Quality (EQ) furthermore checks the data’s plausibility.

We compile environmentally relevant performance indicators from all Merck Group production sites, as well as from relevant warehouse and research sites. In assessing the relevance of these warehouse and research sites, we take into account the sites' environmental impact as well as the number of employees there. LION's scope of consolidation therefore covers all Merck Group sites that have a relevant impact on the environment.

The occupational health and safety indicators reflect the inclusion of the new AZ Electronic Materials production sites since they were incorporated into our data collection process in 2014, which now covers more than 95% of all employees.

To improve data quality, we help our sites optimize their data collection processes as well as the associated quality control procedures. The processes and the reported data are reviewed by EQ through measures such as internal EHS audits.

The data on employees and social engagement pertains to the entire Merck Group. Employee master data is continually updated in an SAP-based database. Other employee data - such as info pertaining to core ILO standards - and data on social engagement are queried on an annual basis.

Some employee data is only disclosed for the sites in Darmstadt, Gernsheim and Grafing (all in Germany), which employed around 24% of the Merck Group workforce in 2014. We indicate accordingly when referring only to this restricted set of data.

Determining report content

We use the results of our materiality analysis as well as input from stakeholders to inform our CR Reports, which are aligned to the internationally recognized guidelines of the Global Reporting Initiative (GRI ) as well as its principle of completeness. This report was drafted in accordance with the requirements of the GRI G4 guidelines and meets the criteria for a "comprehensive" application level.

We have furthermore taken into account the requirements of the capital market for assessing companies' contributions to sustainability.

In 2014, we performed a materiality analysis to determine the CR issues of relevance to Merck. As part of this process, we conducted an international online stakeholder survey in summer 2014, and hosted an internal materiality workshop in Darmstadt in autumn 2014. We have derived the content of this CR report from the results of this materiality assessment. This report addresses all issues identified as material. Detailed information on the materiality analysis as well as the materiality matrix can be found under  Materiality analysis.

The Executive Board of the Merck Group has reviewed and approved this report.

External audit

KPMG AG Wirtschaftsprüfungsgesellschaft has audited the annual financial statements and management report of the Merck Group and issued an unqualified opinion. Furthermore, after undergoing a limited assurance audit, Merck has obtained an independent audit certificate for non-financial key performance indicators.

Points of contact:

We are happy to receive your feedback and answer your questions.

Merck KGaA
Public Affairs & Corporate Responsibility

Maria Schaad
Frankfurter Str. 250
64293 Darmstadt
Germany

Telephone: +49 (0)6151 72-0
Fax: +49 (0)6151 72-200

Merck's next CR report is scheduled for publication in April 2017.