Chairman’s Letter
Sustainable Development
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Sustainable Development
We steer the sustainable alignment of the Bayer Group on the basis of our mission statement, values and leadership principles. Our existing committees for sustainable development and for health, safety and environmental issues continued their work in 2006, developing a Group-wide Sustainable Development Policy that is enacted through corporate directives and positions, our voluntary commitments and our sustainable development performance management system. It applies in all countries and regions of the world in which Bayer is present. The subgroups and service companies are charged with implementing this policy on a day-to-day basis.
Our performance management efforts are brought together in the Sustainable Development Program 2006+, which combines the objectives of the subgroups and service companies and is divided into several fields of activity, including Innovation, Product Stewardship, Excellence in Corporate Management, Social Responsibility and Responsibility for the Environment. Within these fields, specific measures are assigned to each goal to ensure that they are realized on schedule.
During the reporting period, we matched or further improved most of the key performance indicators. There was an increase in environmental and transportation incidents. These incidents have been analyzed and evaluated, and the resulting measures are currently being implemented or planned.
We once again adjusted to changing conditions and new requirements in 2006.
For example, we made the necessary preparations for the inclusion of Schering AG’s sites in the collection and evaluation of environmental and safety data for 2006.
We also further improved our reporting. Our Sustainable Development Report, which now appears annually, was published largely on the basis of the “Global Reporting Initiative” (GRI) guidelines, receiving the “German Environmental Reporting Award 2006” (DURA) from the German Chamber of Certified Accountants. The Sustainable Development Report 2006 is scheduled to appear in May 2007. In 2006 we continued our commitment as an Organizational Stakeholder of the GRI, which was established by the United Nations. Since January 2007 a Bayer representative has been a member of the GRI’s Stakeholder Council, which decides on the initiative’s strategy and policy.
We renewed our commitment to the global Responsible Care initiative of the chemical industry with the signing by our Management Board Chairman of the Responsible Care Global Charter of the International Council of Chemical Associations (ICCA) in January 2006. Our revised Position on Responsible Care has been confirmed by our subgroups and service companies.
It is important to us to participate in the shaping of framework conditions. Bayer is keenly involved in both national and international debates on environmental and consumer protection strategies and regulations. With our commitment to product stewardship, we also support the goals of the E.U. chemicals policy (REACH) to ensure the safety of everyone who comes into contact with our products throughout their life cycle, as well as to further improve consumer safety and environmental protection. That is why we participated constructively in the revision of the E.U. chemicals policy with our own proposals for balancing environmental protection and consumer protection with competitiveness. We also initiated a process aimed at preparing our company for REACH.
We endorse the goals of the E.U. strategy for improving health and the environment (SCALE), which focuses particularly on children’s health. However, it is essential that all relevant influencing factors, and especially genuine health problems, be taken into account. The scientific assessment of risks must remain the basis for decision-making, and existing regulations should be kept in mind.
Our performance management efforts are brought together in the Sustainable Development Program 2006+, which combines the objectives of the subgroups and service companies and is divided into several fields of activity, including Innovation, Product Stewardship, Excellence in Corporate Management, Social Responsibility and Responsibility for the Environment. Within these fields, specific measures are assigned to each goal to ensure that they are realized on schedule.
During the reporting period, we matched or further improved most of the key performance indicators. There was an increase in environmental and transportation incidents. These incidents have been analyzed and evaluated, and the resulting measures are currently being implemented or planned.
We once again adjusted to changing conditions and new requirements in 2006.
For example, we made the necessary preparations for the inclusion of Schering AG’s sites in the collection and evaluation of environmental and safety data for 2006.
We also further improved our reporting. Our Sustainable Development Report, which now appears annually, was published largely on the basis of the “Global Reporting Initiative” (GRI) guidelines, receiving the “German Environmental Reporting Award 2006” (DURA) from the German Chamber of Certified Accountants. The Sustainable Development Report 2006 is scheduled to appear in May 2007. In 2006 we continued our commitment as an Organizational Stakeholder of the GRI, which was established by the United Nations. Since January 2007 a Bayer representative has been a member of the GRI’s Stakeholder Council, which decides on the initiative’s strategy and policy.
We renewed our commitment to the global Responsible Care initiative of the chemical industry with the signing by our Management Board Chairman of the Responsible Care Global Charter of the International Council of Chemical Associations (ICCA) in January 2006. Our revised Position on Responsible Care has been confirmed by our subgroups and service companies.
It is important to us to participate in the shaping of framework conditions. Bayer is keenly involved in both national and international debates on environmental and consumer protection strategies and regulations. With our commitment to product stewardship, we also support the goals of the E.U. chemicals policy (REACH) to ensure the safety of everyone who comes into contact with our products throughout their life cycle, as well as to further improve consumer safety and environmental protection. That is why we participated constructively in the revision of the E.U. chemicals policy with our own proposals for balancing environmental protection and consumer protection with competitiveness. We also initiated a process aimed at preparing our company for REACH.
We endorse the goals of the E.U. strategy for improving health and the environment (SCALE), which focuses particularly on children’s health. However, it is essential that all relevant influencing factors, and especially genuine health problems, be taken into account. The scientific assessment of risks must remain the basis for decision-making, and existing regulations should be kept in mind.
| Category | Key Performance Indicator | 20051 | 20061,2 |
| Health, Safety and Environment | |||
| Health and Safety | Industrial injuries to Bayer employees resulting in at least one day’s absence (number of injuries per million hours worked) | 2.7 | 2.8 |
| Reportable industrial injuries to Bayer employees (number of injuries per million hours worked) | 4.0 | 4.3 | |
| Major environmental incidents | 2 | 8 | |
| Transportation incidents | 3 | 9 | |
| Emissions and waste | Greenhouse gases, CO2 equivalents (million metric tons/year) | 3.8 | 3.8 |
| Volatile organic compounds (VOC) (thousand metric tons/year) | 3.4 | 2.9 | |
| Total phosphorus in waste water (thousand metric tons/year) | 0.7 | 0.8 | |
| Total nitrogen in waste water (thousand metric tons/year) | 0.6 | 0.7 | |
| Total organic carbon (TOC) (thousand metric tons/year) | 1.5 | 1.5 | |
| Hazardous waste generated (million metric tons/year) | 0.4 | 0.3 | |
| Hazardous waste landfilled (million metric tons/year) | 0.2 | 0.1 | |
| Use of resources | Water use (million m3/day) | 1.2 | 1.2 |
| Energy use (petajoules [1015 joules]/year) | 82 | 91 | |
| Employees and Society | |||
| Diversity and opportunity | Percentage of women in Bayer Group senior managements3 | 3.9 | 3.8 |
| Number of nationalities in Bayer Group senior management3 | 17 | 17 | |
| Training and development | Training costs in percent of personnel expenses | 2.3 | 2.2 |
| Employment | Number of employees by region as of December 31 (permanent and temporary) | ||
| Europe | 45,700 | 57,800 | |
| North America | 13,100 | 17,200 | |
| Asia/Pacific | 13,200 | 17,300 | |
| Latin America/Africa/Middle East | 10,600 | 13,700 |
2005 figures restated
1 excluding H.C. Starck, Wolff Walsrode and the Diagnostics Division
2 including Schering AG as of June 23, 2006
3 At year end 2006 no former Schering employees had yet been named to the Bayer Group Leadership Circle.
1 excluding H.C. Starck, Wolff Walsrode and the Diagnostics Division
2 including Schering AG as of June 23, 2006
3 At year end 2006 no former Schering employees had yet been named to the Bayer Group Leadership Circle.
Biotechnology and nanotechnology offer enormous potential for essential products and applications in the areas of health care, nutrition and environmental protection. For example, biotechnology opens up new options for the efficient and targeted manufacture of renewable raw materials. The statements contained in our Position on Responsible Care also apply to the use of biotechnology and nanotechnology at Bayer. This means in particular that safety and environmental protection have the same standing as quality and cost-effectiveness. In the field of nanotechnology, we are involved in the “Nanocare” and “TRACER” safety research projects of the German Ministry of Education and Research.
Working for climate protection
Climate change is a major global challenge. Bayer is facing up to this challenge and intensifying its efforts to improve its greenhouse gas emissions profile. In this context, we see various ways to contribute to reducing carbon dioxide emissions. We support new technologies and research projects that promote the development of biofuels and the use of biomass, for example, in technical applications. In our own production operations we use innovative process technologies that reduce direct carbon dioxide emissions, one example being the conversion of our chlorine electrolysis plants from the amalgam to the modern membrane process. We offer products that contribute to significantly reducing energy consumption, such as our polyurethanes used as thermal insulation materials in buildings or refrigerators. Also of note is the technology transfer we facilitate through direct investment in countries such as China. The application of ultra-modern technologies there reduces greenhouse gas emissions in the country that is currently registering the world’s fastest economic growth.
At the European level we advocate an emissions trading system that does justice both to the interests of industry and the need to protect the Earth’s climate.
In the United States, Bayer Corporation is voluntarily taking part in the emissions trading program of the Chicago Climate Exchange (CCX) and committed to reduce its greenhouse gas emissions by one percent a year between 2003 and 2006. This goal was significantly exceeded and it is planned to extend the commitment through 2010.
We represent our positions in numerous industry associations, initiatives and organizations that work for sustainable and responsible development, such as the United Nations’ Global Compact network, the World Business Council for Sustainable Development (WBCSD), the German sustainable development forum “econsense” and the CSR Alliance for the implementation of the E.U. sustainable development strategy. We are also active in the business leadership initiative “3 C: Combat Climate Change,” as well as in the Climate Change Dialogue organized by GLOBE International.
At the European level we advocate an emissions trading system that does justice both to the interests of industry and the need to protect the Earth’s climate.
In the United States, Bayer Corporation is voluntarily taking part in the emissions trading program of the Chicago Climate Exchange (CCX) and committed to reduce its greenhouse gas emissions by one percent a year between 2003 and 2006. This goal was significantly exceeded and it is planned to extend the commitment through 2010.
We represent our positions in numerous industry associations, initiatives and organizations that work for sustainable and responsible development, such as the United Nations’ Global Compact network, the World Business Council for Sustainable Development (WBCSD), the German sustainable development forum “econsense” and the CSR Alliance for the implementation of the E.U. sustainable development strategy. We are also active in the business leadership initiative “3 C: Combat Climate Change,” as well as in the Climate Change Dialogue organized by GLOBE International.
Sustainable investment
Bayer stock is included in various indices and investment funds that focus on companies with a responsible corporate policy.
The company’s shares have been included in the Dow Jones Sustainability Index World (DJSI World) continuously since it was established in 1999. Bayer stock has also been listed in the European Dow Jones Sustainability Index STOXX (DJSI STOXX) since its inception in 2001. Furthermore, our shares have been included in the benchmark sustainability indices of the FTSE4Good series since it was launched by the Financial Times and the London Stock Exchange in 2001. Analysts at the Storebrand Principal Fund recently again rated Bayer as one of the top companies in its peer group, awarding it the ranking “Best in Class – Environmental and Social Performance.” In addition, our shares were again listed in the French ASPI Eurozone Index in 2006. As in 2005, Bayer was last year named “Best in Class” as one of the world’s leading companies in the area of climate protection. Consequently, the company is once again listed in the Climate Leadership Index – the world’s first climate protection index – and was rated best in its industry sector. This was announced by the investor group Carbon Disclosure Project (CDP) on September 18, 2006 in New York.
The company’s shares have been included in the Dow Jones Sustainability Index World (DJSI World) continuously since it was established in 1999. Bayer stock has also been listed in the European Dow Jones Sustainability Index STOXX (DJSI STOXX) since its inception in 2001. Furthermore, our shares have been included in the benchmark sustainability indices of the FTSE4Good series since it was launched by the Financial Times and the London Stock Exchange in 2001. Analysts at the Storebrand Principal Fund recently again rated Bayer as one of the top companies in its peer group, awarding it the ranking “Best in Class – Environmental and Social Performance.” In addition, our shares were again listed in the French ASPI Eurozone Index in 2006. As in 2005, Bayer was last year named “Best in Class” as one of the world’s leading companies in the area of climate protection. Consequently, the company is once again listed in the Climate Leadership Index – the world’s first climate protection index – and was rated best in its industry sector. This was announced by the investor group Carbon Disclosure Project (CDP) on September 18, 2006 in New York.
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