Limited Assurance Report of the Independent Auditor regarding Sustainability Information1
To the Executive Board of Merck KGaA, Darmstadt
We have performed an independent limited assurance engagement on the qualitative and quantitative disclosures on sustainability in the “Sustainability Report 2021” (further “Sustainability Report”) , published at https://www.merckgroup.com/en/sustainability-report/2021/, of Merck KGaA, Darmstadt, (further “Company” or “Merck”) for the period from January 1 to December 31, 2021.
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 Sustainability Report.
As described in the Sustainability Report, Merck engaged external providers to perform assessments and audits. The evaluation of the adequacy and accuracy of the conclusions from these external assessments was not part of our limited assurance engagement.
The legal representatives of the Company are responsible for the preparation of the Sustainability Report in accordance with the Reporting Criteria. Merck applies the principles and standard disclosures of the Standards of the Global Reporting Initiative (GRI) in combination with the Corporate Accounting and Reporting Standard (Scope 1 and Scope 2) and the Corporate Value Chain Standard (Scope 3) of the Greenhouse Gas Protocol initiative by the World Resources Institute and the World Business Council for Sustainable Development (WBCSD) as Reporting Criteria (further “Reporting Criteria”).
The responsibility of the legal representatives includes the selection and application of appropriate methods to prepare the Sustainability Report and the use of assumptions and estimates for individual qualitative and quantitative sustainability disclosures which are reasonable under the circumstances. Furthermore, the legal representatives are responsible for the internal controls they deem necessary for the preparation of the Sustainability Report that is free of – intended or unintended – material misstatements.
1 Our engagement applied to the German version of the Sustainability Information contained in the Sustainability Report 2021. This text is a translation of the Independent Assurance Report issued in German, whereas the German text is authoritative.
It is our responsibility to express a conclusion on the Sustainability Report based on our work performed within a limited assurance engagement.
We conducted our work in the form of a limited assurance engagement 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”, published by IAASB. Accordingly, we have to plan and perform the assurance engagement in such a way that we obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Sustainability Report was not prepared, in all material respects, in accordance with the Reporting Criteria. We do not, however, issue a separate conclusion for each disclosure. As the assurance procedures in a limited assurance engagement are less comprehensive than in a reasonable assurance engagement, the level of assurance obtained is substantially lower. The choice of assurance procedures is subject to the auditor’s own judgement.
- Within the scope of our engagement, we performed, amongst others, the following procedures:
- Inquiries of group-level personnel responsible for the materiality analysis in order to understand the processes for determining material topics and respective reporting boundaries of Merck.
- A risk analysis, including media research, to identify relevant information on Merck’s sustainability performance in the reporting period.
- Evaluation of the design and implementation of systems and processes for the collection, processing and monitoring of the sustainability disclosures included in the scope of this engagement, including the consolidation of data
- Inquiries of group-level personnel who are responsible for determining and consolidating disclosures and for performing internal controls, including the explanatory notes
- Inspection of selected internal and external documents
- Analytical evaluation of data and of the trends of quantitative disclosures as reported at group level by all sites
- Evaluation of local data collection, validation and reporting processes as well as of the reliability of reported data based on a sample of the sites in Ulsan in South Korea, in Meyzieu in France and in Darmstadt in Germany in the form of virtual meetings
- Use of the insights and relevant work regarding audit procedures performed for the group and statutory audit of the (consolidated) financial statements for the fiscal year 2021 of Merck KGaA for the information and indicators that were derived from those consolidated financial statements
- Evaluation of the consistency of GRI Standards in accordance with option “Comprehensive” as reported by Merck with the qualitative and quantitative disclosures in the Sustainability Report
- Assessment of the overall presentation of the disclosures
- Evaluation of the process for the identification of taxonomy-eligible economic activities and the corresponding disclosures in the Sustainability Report
The legal representatives have to interpret vague legal concepts in order to be able to compile the relevant disclosures according to Article 8 of the EU Taxonomy Regulation. Due to the innate risk of diverging interpretations of vague legal concepts, the legal conformity of these interpretations and, correspondingly, our assurance thereof are subject to uncertainty.
In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the assurance engagement.
Independence and Quality Assurance on the Part of the Auditing Firm
In performing this engagement, we applied the legal provisions and professional pronouncements regarding independence and quality assurance, in particular the Professional Code for German Public Auditors and Chartered Accountants (in Germany) and the quality assurance standard of the German Institute of Public Auditors (Institut der Wirtschaftsprüfer, IDW) regarding quality assurance requirements in audit practice (IDW QS 1).
Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the qualitative and quantitative disclosures on sustainability for the period from January 1 to December 31, 2021, published in the Sustainability Report, have not been prepared, in all material respects, in accordance with the Reporting Criteria.
Restriction of use/General Engagement Terms
This assurance report is issued for purposes of the Executive Board of Merck KGaA, Darmstadt, only. We assume no responsibility with regard to any third parties.
Our assignment for the Executive Board of Merck KGaA, Darmstadt, and professional liability as described above was governed by the General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedingungen für Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in the version dated January 1, 2017 (https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf). By reading and using the information contained in this assurance report, each recipient confirms notice of the provisions contained therein including the limitation of our liability as stipulated in No. 9 and accepts the validity of the General Engagement Terms with respect to us.
Frankfurt am Main, March 17, 2022
[Original German version signed by:]
[German Public Auditor]