Assurance Report

Independent Assurance Report¹

To the Executive Board of Merck KGaA, Darmstadt

We have performed an independent limited assurance engagement on disclosures on the stakeholder dialogue and the materiality analysis, selected qualitative and quantitative disclosures on the sustainability performance including the accompanying explanatory notes in the chapter “Facts & figures – Indicators” and selected disclosures on management approaches in the “Corporate Responsibility Report 2016” (further “Report”) of Merck KGaA, Darmstadt (further “Merck”) for the fiscal year 2016 published at http://reports.merckgroup.com/2016/cr-report.

The selected disclosures on management approaches included in the scope of the assurance engagement apply to the aspects Procurement Practices, Energy, Water, Emissions, Effluents and Waste, Employment, Occupational Health and Safety, Training and Education, Diversity and Equal Opportunity, Supplier Environmental Assessment, Supplier Human Rights Assessment, as well as Supplier Assessment for Impacts on Society each described in the subchapters “Our principles”.

The selected qualitative and quantitative disclosures on the sustainability performance and the management approaches included in the scope of the assurance engagement are marked with the symbol in the GRI G4 Content Index, published at http://reports.merckgroup.com/2016/cr-report/facts-figures/gri-content-index.

It was not part of our engagement to review product or service related information, references to external information sources, expert opinions and future-related statements in the Report.

Management’s Responsibility for the Report

The legal representatives of Merck are responsible for the accurate preparation of the Report in accordance with the Reporting Criteria. Merck applies the principles and standard disclosures of the G4 Sustainability Reporting Guidelines of the Global Reporting Initiative, the Corporate Accounting and Reporting Standard (Scope 1 und 2), and the Corporate Value Chain (Scope 3) Standard of World Resources Institute/World Business Council for Sustainable Development, as described in the section of the Report “Report profile”, as Reporting Criteria.

This responsibility of the legal representatives includes the selection and application of appropriate methods to prepare the Report and the use of assumptions and estimates for individual qualitative and quantitative sustainability disclosures which are reasonable under the circumstances. Furthermore, this responsibility includes designing, implementing and maintaining systems and processes relevant for the preparation of the Report in a way that is free of – intended or unintended – material misstatements.

Independence and quality assurance on the part of the auditing firm

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants (IESBA-Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The quality assurance system of the KPMG AG Wirtschaftsprüfungsgesellschaft is based on the International Standard on Quality Control 1 “Quality Control for Audit, Assurance and Related Service Practices” (ISQC 1) and, in addition on national statutory requirements and professional standards, especially the Professional Code for Certified Accountants as well as the joint statement of WPK (Chamber of Public Accountants) and IDW (Institute of Public Auditors in Germany): Requirements for quality assurance in the auditing practice (VO 1/2006).

Practitioner’s Responsibility

Our responsibility is to express a conclusion based on our work performed and the evidence obtained on the information disclosed in the above-mentioned assurance scope.

Nature and extent of the assurance engagement

We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engagements other than Audits or Reviews of Historical Financial Information” and the International Standard on Assurance Engagements (ISAE) 3410: “Assurance Engagements on Greenhouse Gas Statements” of the International Auditing and Assurance Standards Board (IAASB). These standards require that we comply with our professional duties and plan and perform the assurance engagement to obtain a limited level of assurance to preclude that the above mentioned qualitative and quantitative sustainability disclosures are not prepared, in all material respects, in accordance with the aforementioned Reporting Criteria. In a limited assurance engagement the evidence gathering procedures are more limited than in a reasonable assurance engagement and therefore less assurance is obtained than in a reasonable assurance engagement. The choice of the audit procedures is subject to the auditor‘s own judgement. This includes the assessment of the risk of material misstatement in the Report under consideration of the Reporting Criteria.

Within the scope of our engagement, we performed amongst others the following procedures when conducting the limited assurance:

• Inquiries of personnel on Group level responsible for the materiality analysis, in order to gain an understanding of the processes for determining material sustainability topics and respective reporting boundaries of Merck.
• A risk analysis, including a media search, to identify relevant sustainability aspects for Merck in the reporting period.
• Evaluation of the design and implementation of the systems and processes for the collection, processing and control of the indicators, including the consolidation of the data, at corporate and site level.
• Interviews with relevant staff on corporate level responsible for providing and consolidating the data, as well as carrying out internal control procedures on the data including the explanatory notes.
• Visits to the sites Darmstadt (Germany) and Gernsheim (Germany) as well as Sante Meyzieu (France) and Martillac (France) to assess local data collection, validation and reporting processes and the reliability of the reported data.
• Evaluating internal and external documentation, to determine whether qualitative and quantitative information is supported by sufficient evidence and presented in an accurate and balanced manner.
• An analytical review of the data and trend explanations submitted by all sites for consolidation at group level.
• Use of the insights and relevant work performed for the group and statutory audit of the (consolidated) financial statements for the year ended December 31, 2016 of Merck KGaA with regard to audit procedures on those information and indicators that were derived from those consolidated financial statements.
• An evaluation of the overall presentation of the information, including the explanatory notes, within the scope of our engagement.

Conclusion

Based on the procedures performed and evidence received to obtain limited assurance, nothing has come to our attention that causes us to believe that the disclosures for the business year 2016 included in the scope of this engagement, published in the report and marked with the symbol in the GRI G4 Content Index are, in all material respects, not prepared in accordance with the Reporting Criteria.

Purpose of the assurance report

This assurance report is issued based on an assurance engagement agreed upon with Merck. The assurance engagement to obtain limited assurance is issued on behalf of Merck and the assurance report is solely for information purposes of Merck on the results of the assurance engagement.

Limited liability

This assurance report must not be used as basis for (financial) decision-making by third parties of any kind. We have responsibility only towards Merck. We do not assume any responsibility for third parties.

Frankfurt am Main, 12. April 2017

KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]

¹ Our engagement applied to the German version of the Corporate Responsibility Report 2016. This text is a translation of the Independent Assurance Report issued in German language, whereas the German text is authoritative.