To understand which social, economic and environmental issues matter most to our stakeholders and to our long-term business success, we conduct an annual materiality analysis. This also enables us to meet the applicable reporting requirements of the Global Reporting Initiative (GRI) and the German CSR Directive Implementation Act.
Material issues updated and validated
Conducting materiality assessments helps us define and verify key topics for our sustainability management and for the contents of our report. We conducted our last comprehensive analysis in 2018, which reflected the requirements and expectations that our stakeholders place on us. In 2019 and 2020, we built on this approach and extended the analysis to include even more stakeholders and impact factors. In 2020, the materiality analysis therefore included:
- Relevant regulations
- Goals and positions of our competitors
- Requirements imposed by investor ratings
- Expectations that non-governmental organizations (NGOs) express towards the chemical and pharmaceutical industries
- The relevance of sustainability topics to our economic environment
- Media resonance
- Issues that are relevant to our clients’ industries (new in 2020)
- Issues that matter to our employees (new in 2020).
The analysis also includes the ways in which our industries, value chain and sites impact sustainable development.
Materiality process
Results of the update
The 35 topics identified as being significant to our sustainability management and reporting did not change relative to the 2019 analysis. The results changed minimally because employees and client industries were incorporated into the analysis, but this impacted neither the reporting framework nor the contents.
We disclose information on our tax governance for the first time in this report. This topic has not yet been defined as one of our material topics, but we expect it to gain more relevance for our reporting audience in the future.
Material topics
Topics for the non-financial report
The German CSR Directive Implementation Act obliges us to review the double materiality of topics according 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: Firstly, the information is necessary to understand the company’s business performance, business results and financial situation and secondly, the information makes it possible to understand how the company’s business activities affect non-financial aspects.
In 2020, we again reviewed the double materiality of the identified topics. We extended the review methodology and evaluated the following factors:
- Significant impact on expenses and income
- Significant impact on cash flow
- Impact on reputation
- Regulatory requirements
- Impact on the business model/future business areas/R&D.
This year, for the first time, the topics of “Supply chain standards”, “Energy efficiency and renewable energies” and “Greenhouse gas emissions” reached the double materiality threshold and are therefore included in the non-financial report. Topics that were included in the non-financial report in 2019 are also included this year. Topics that fall within the scope of the double materiality definition are marked in the materiality matrix and linked to the respective chapters in this report.
Material issues in our value chain
The following table shows where our material issues fall within the value chain: upstream in our supply chain, in the course of activities within our own business sectors or downstream with our customers and patients. Moreover, we listed the issues to show the breakdown of materiality by stakeholder groups.
Product safety and quality
Material for:
Customers, Merck family, NGOs, regulatory agencies, sales and business partners, shareholders
Material for:
Health systems, Merck family, NGOs, patients, regulatory agencies, shareholders
Material for:
Customers, federations and policy makers, health systems, Merck family, NGOs, patients, regulatory agencies, sales and business partners, shareholders, patients
Material for:
Communities, customers, regulatory agencies, sales and business partners, suppliers
Ethical conduct
Material for:
Customers, federations and policy makers, media, NGOs, regulatory agencies, scientists
Material for:
Federations and policy makers, media, Merck family, NGOs, patients, regulatory agencies, scientists, shareholders, suppliers
Material for:
Media, NGOs, regulatory agencies, scientists, suppliers
Good business practice
Material for:
Competitors, employees, health systems, Merck family, NGOs, regulatory agencies, sales and business partners, shareholders, supplier
Material for:
Customers, federations and policy makers, health systems, media, patients, sales and business partners
Material for:
Communities, employees, media, Merck family, NGOs
Material for:
Federations and policy makers, health systems, NGOs, patients, regulatory agencies
Material for:
Customers, employees, employee representatives, Merck family, regulatory agencies, sales and business partners, shareholders, suppliers
Material for:
Customers, employees, employee representatives, patients, sales and business partners, suppliers
Health for all
Material for:
Health systems, media, NGOs, patients, sales and business partners
Material for:
Health systems, media, Merck family, NGOs, patients, sales and business partners, shareholders
Material for:
Communities, competitors, health systems, media, NGOs, patients, sales and business partners
Supply chain standards
Material for:
Competitors, customers, federations and policy makers, media, Merck family, NGOs, shareholders, suppliers
Human rights
Material for:
Communities, customers, employees, federations and policy makers, media, NGOs, suppliers
Sustainable products
Material for:
Customers, scientists
Attractive employer
Material for:
Employees, employee representatives, media, Merck family
Material for:
Competitors, employees, employee representatives, Merck family, shareholders
Material for:
Employees, employee representatives
Material for:
Employees, employee representatives
Material for:
Employees, employee representatives
Material for:
Employees, employee representatives, regulatory agencies
Material for:
Employees, employee representatives
Technology
Material for:
Customers, health systems, Merck family, patients, scientists, shareholders
Material for:
Customers, patients, scientists, sales and business partners
Resource efficiency
Material for:
Communities, customers, NGOs, regulatory agencies
Material for:
Communities, NGOs, regulatory agencies
Environmental protection
Material for:
Customers, federations and policy makers, NGOs
Material for:
Customers, federations and policy makers, media, NGOs, regulatory agencies, suppliers
Material for:
Employees, media, Merck family, regulatory agencies, shareholders
Material for:
Federations and policy makers, NGOs, regulatory agencies
Material for:
Federations and policy makers, NGOs, regulatory agencies