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1、 Combined Management Report _ Sustainability Statement _ General _ Introduction 104 Merck Annual Report 2024 General Introduction The Combined Management Report of Merck KGaA and the Merck Group for fiscal 2024 includes a combined Sustainability Statement.The Combined Sustainability Statement was pr

2、epared in order to meet the requirements set forth in Directive(EU)2022/2464 of the European Parliament and of the Council dated December 14,2022(Corporate Sustainability Reporting Directive,CSRD),in Article 8 of Regulation(EU)2020/852 and in sections 289b to 289e,315b and 315c of the German Commerc

3、ial Code(HGB)regarding a Combined Non-financial Statement.The Combined Sustainability Statement comprises the Group Sustainability Statement and the Non-financial Statement of the parent company.When preparing the Group Sustainability Statement,the first set of European Sustainability Reporting Stan

4、dards(ESRS)was implemented in full.The use of the ESRS as a framework represents a break in consistency.This is done to reflect the importance of the ESRS as reporting standards adopted by the European Commission.No specific framework was used when preparing the Non-financial Statement of Merck KGaA

5、;instead,conclusions drawn from the Group were used for support.The scope of consolidation of this Combined Sustainability Statement corresponds to that of the Annual Report for 2024.The concepts and results presented relate to both Merck KGaA and the Merck Group.We explicitly state when,in individu

6、al cases,the information provided deviates from this.Deloitte GmbH Wirtschaftsprfungsgesellschaft conducted a limited assurance engagement of the combined Sustainability Statement.References to information not included in the Management Report are not part of the Sustainability Statement.The informa

7、tion based on the standards of the Sustainability Accounting Standards Board(SASB),the Task Force on Climate-related Financial disclosures(TCFD)and the Global Reporting Initiative(GRI)can be found in the Annual Report under“Other Information”.These as well as the additional content provided on both

8、the companys websites and external websites that are linked in this report were not part of the limited assurance engagement performed by Deloitte.Pursuant to section 289c(3)and section 315c(2)HGB,we are obliged to review topics for their double materiality.In 2024,we carried out a materiality analy

9、sis in accordance with the ESRS and thus identified the topics that are material for us.Further information on the process and the detailed results of the materiality analysis can be found under ESRS 2 IRO-1.Pursuant to section 315c(1)HGB in conjunction with section 289c(2)HGB,the report contents ar

10、e classified as follows:We report environmental matters in accordance with section 315c in conjunction with section 289c(2)sentence 1 HGB under E1,E2,E3,E4,and E5.We report on employee matters in accordance with section 315c HGB in conjunction with section 289c(2)sentence 2 HGB under S1 and S2.We re

11、port on social matters in accordance with section 315c HGB in conjunction with section 289c(2)sentence 3 HGB under S1,S2 and S4.We report on respect for human rights in accordance with section 315c HGB in conjunction with section 289c(2)sentence 4 HGB under S1,S2 and S4.The topic of anti-corruption

12、and anti-bribery was not assessed as material in our materiality analysis in accordance with the ESRS.Thus,we report on this topic in accordance with section 315c HGB in conjunction with section 289c(2)sentence 5 HGB in the separate section on Anti-Corruption and Anti-Bribery.In order to adopt the t

13、erminology of the ESRS,we also use the term Sustainability Statement instead of Non-financial Statement in the following.*The Combined Sustainability Statement was not subject to a content review as part of the audit of the financial statements but was subject to a separate limited assurance audit b

14、y Deloitte.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)105 Merck Annual Report 2024 General Disclosures(ESRS 2)Basics for preparation General basis for preparation of the Sustainability Statement(BP-1)Our Sustainability Statement is prepared on a cons

15、olidated basis.The scope of consolidation corresponds to our financial reporting.The Sustainability Statement covers our own business operations.Based on our double materiality analysis,the reporting extends to the upstream and downstream value chain where applicable in the respective policies,actio

16、ns,metrics and targets.More information is provided in the respective topical chapters.Disclosures in relation to specific circumstances(BP-2)We define the time horizon of impacts,risks and opportunities(IROs)in our materiality analysis in accordance with the requirements of the European Sustainabil

17、ity Reporting Standards(ESRS):short-term(12 years),medium-term(35 years)and long-term(more than 5 years).With regard to risks and opportunities,we apply a more differentiated definition for long-term to align it with our risk management approach:We distinguish between more than 515 years and more th

18、an 15 years.To calculate our energy mix,we use estimates by relying on external sources such as“Our World in Data”(see E1-5).For the metrics related to renewable and non-renewable energy production,we used estimates also based on industry averages data.For the Scope 3 emissions category 11,which per

19、tain to the use of products sold,we use estimates based on internal expert assessments of greenhouse gas(GHG)emissions,energy consumption,and sales volumes.For the metrics related to resource inflows,we used estimations regarding the percentage of biological and reused or recycled materials(see E5-4

20、).There are no significant measurement uncertainties in relation to quantitative data and monetary amounts.Our previous reporting was carried out in accordance with sections 315b and 315c in conjunction with 289b to 289e of the German Commercial Code(HGB)and in accordance with the Global Reporting I

21、nitiative(GRI).The adoption of the ESRS resulted in changes to our reporting in terms of certain disclosures.Due to applying the new reporting requirements,we refrain from disclosing adjusted comparative figures.In addition to the information in accordance with ESRS,we provide information based on t

22、he standards of the Sustainability Accounting Standards Board(SASB),the Task Force on Climate-related Financial Disclosures(TCFD)and the Global Reporting Initiative(GRI).In doing so,we intend to meet the increasing transparency expectations of various investor groups and other stakeholders.The GRI,T

23、CFD and SASB disclosure are reported under“Other Information”and were not part of the limited assurance engagement conducted by Deloitte for our Sustainability Statement.We also base our process and data on the ISO standards ISO 14001,ISO 45001,ISO 9001,and ISO 50001.The corresponding certifications

24、 are validated by external auditors and reported in the appropriate places in this Sustainability Statement.We included information on the following disclosure requirement by reference:Information about key elements of our business model and value chain(ESRS 2 SBM-1 38,40a i-ii and 42a-c)can be foun

25、d under Company Profile and Structure in the section“Fundamental Information about the Group”.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)106 Merck Annual Report 2024 Our governance The role of the administrative,management and supervisory bodies(GOV-

26、1)The following table shows the composition and diversity of the members of the administrative,management and supervisory bodies.In our company,this includes the Executive Board and the Supervisory Board of Merck KGaA as well as the Board of Partners of E.Merck KG:2024 Number of Executive Board memb

27、ers Number of non-Executive Board members Boards gender diversity ratio(in%)35.6 Percentage of independent Board members 100 Due to specifics of our Merck KGaA corporate structure,there are no executive or non-executive members in the relevant bodies but only members as such.All members have compara

28、ble rights and duties.The boards gender diversity ratio reflects the average ratio of female to male board members.The following table shows the share of members of administrative,management and supervisory bodies broken down by gender:2024 Male(in%)63.3 Female(in%)36.7 Other(in%)Total number 30 The

29、 following table shows the share of members of administrative,management and supervisory bodies broken down by age group:2024 under 30 years old(in%)30-50 years old(in%)30.0 over 50 years old(in%)70.0 Total number 30 Combined Management Report _ Sustainability Statement _ General _ General Disclosur

30、es(ESRS 2)107 Merck Annual Report 2024 Supervisory Board and the associated Audit Committee Our Supervisory Board has 16 members and performs a monitoring function.It is composed of eight shareholder representatives and eight employee representatives.The Audit Committee is part of the Supervisory Bo

31、ard and is composed of three representatives each of shareholders and employees,who are responsible for monitoring IROs.The committee is generally responsible for accounting and audit matters.Its other tasks include auditing the Annual Financial Statements,the Consolidated Financial Statements and t

32、he respective reports of the auditor as well as the half-year financial report and the quarterly financial statements.The tasks also include monitoring sustainability reporting.The Audit Committee is informed about the risk report at least once a year and about the status report on risk management a

33、t least twice a year.In addition,the committee informs the Supervisory Board about the Sustainability Statement at least once a year.Further meetings are convened as and when necessary.Regular updates and reports are to be provided using trend descriptions and benchmark values to show both the statu

34、s quo and progress.In this way,the Supervisory Board and/or the Audit Committee monitor the sustainability goals and their achievement.The Supervisory Board aims to optimally fulfill its control function through the diversity of its members.Their expertise covers aspects including various sustainabi

35、lity topics and is determined annually through a self-assessment of relevant criteria for Supervisory Board members using a qualification matrix.The latest self-assessment revealed that 15 members of the Supervisory Board have sustainability-related expertise.In the self-assessment,four members stat

36、ed that they have good to very good knowledge in the field of sustainability,which is essentially based upon training courses,memberships in relevant associations and substantial practical experience in committees dealing with sustainability matters.These members possess specific expertise in topics

37、 such as climate change,social issues and corporate governance.This indicates that the Supervisory Board as a body has the appropriate skills and expertise to monitor sustainability aspects.Executive Board The Executive Board is made up of five members,whose areas of responsibility are listed in det

38、ail in the responsibility distribution plan of the Executive Board.The members of the Executive Board are jointly responsible for the management of the company.They work together on specialist matters and regularly brief one another on important matters in their areas of responsibility.This shared r

39、esponsibility applies in particular to the areas of sustainability and risk management.As part of the individual management responsibilities defined in the responsibility distribution plan,the sustainability aspects of the company were assigned to the CEO until September 30,2024,and have been the re

40、sponsibility of the CEO of Healthcare since October 1,2024.The Chief Financial Officer is responsible for the companys risk management.The Executive Board provides the Supervisory Board and its Audit Committee regularly,promptly and comprehensively about all company-relevant issues concerning strate

41、gy,planning,business development,the risk situation,risk management,and compliance.The rules of procedure of the Executive Board and of the Supervisory Board govern the further details and ensure that the Supervisory Board is kept adequately informed by the Executive Board.The Executive Board has ex

42、tensive knowledge of the key industries and business sectors in which the company operates.For each of the business sectors,Life Science,Healthcare and Electronics,there is at least one member of the Executive Board with in-depth expertise in accordance with the diversity concept.The Executive Board

43、 covers the full range of necessary industry experience.Furthermore,the Executive Board has a wealth of knowledge regarding the companys main markets in Europe,North America and Asia-Pacific region and possesses management experience in Denmark,Malaysia,Singapore,Spain,the United Kingdom,and the Uni

44、ted States.There are detailed reporting obligations below the Board level for senior executives who are specifically responsible for governance processes,procedures and controls.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)108 Merck Annual Report 2024

45、The Executive Board exchanges information in regular meetings.At least once a year,members are informed about the work of the Human Rights Officer and the results of the human rights risk analysis.They also meet once a year to update the Group-wide policy statement on respecting human rights.Regular

46、 reporting monitors our targets and the achievement of the targets.When identifying potential members for the Executive Board and when they are subsequently appointed by E.Merck KG,we take into account,among other things,sustainability-related skills and expertise such as in-depth knowledge and expe

47、rience regarding the requirements for the transformation toward climate-neutral business models and industry-specific expertise.Board of Partners The Board of Partners of E.Merck KG,Darmstadt,Germany,complements the competencies and activities of the Supervisory Board and,like the latter,fulfills an

48、 independent advisory and controlling function toward the Executive Board.It has three committees to which individual tasks can be delegated:the Personnel Committee,the Finance Committee and the Research and Development Committee.The whole of the Board of Partners is involved in the annual corporate

49、 planning,including the corporate strategy,where sustainability aspects such as IROs are taken into account.In our company,unlike in joint stock companies,it is not the Supervisory Board but the Board of Partners of E.Merck KG that is responsible for the design and review of the remuneration system

50、and for the level and composition of the remuneration of the Executive Board members.The Board of Partners has delegated this task to its Personnel Committee.In addition,the Board of Partners has to monitor the management performance of the Executive Board.It informs itself about the affairs of Merc

51、k KGaA,Darmstadt,Germany,and may inspect and examine the companys accounts,other documents and assets for this purpose.Regular updates and reports,including a status quo report,are used to monitor the progress toward targets.The Board of Partners therefore monitors the targets and their achievement.

52、When appointing members of the Board of Partners,the Family Board of E.Merck KG takes into account competencies and expertise in relation to sustainability matters.With regard to the current members of the Board of Partners,expertise is largely based on internal and external training courses on sust

53、ainability matters as well as long-term experience from membership of relevant boards and committees.With regard to industry and product knowledge,the Board of Partners complements the expertise,experience and activities of the Supervisory Board with members who have in-depth expertise and experienc

54、e in the Life Science,Healthcare and Electronics sectors as well as strong management and leadership abilities.When selecting the administrative,management and supervisory bodies described above,we take into account sustainability-related expertise and competencies that are relevant to our identifie

55、d IROs.Their expertise in this regard is available to the Group through knowledge transfer in the form of discussions,training and expert meetings.Further information on the respective bodies can be found under“Statement on Corporate Governance”(content is not audited).Combined Management Report _ S

56、ustainability Statement _ General _ General Disclosures(ESRS 2)109 Merck Annual Report 2024 Information provided to and sustainability matters addressed by the administrative,management and supervisory bodies(GOV-2)The Supervisory Board,the Executive Board and the Board of Partners deal with sustain

57、ability matters in different ways.The Executive Board presents the Audit Committee of the Supervisory Board with an assessment of the Groups current risk portfolio once a year and the current implementation status of risk management twice a year.At the meeting in February 2024,the Supervisory Board

58、and the Audit Committee dealt intensively with the Annual and Consolidated Financial statements prepared by the Executive Board as well as with the Non-financial Statement.The Head of Corporate Sustainability,Quality and Trade Compliance(SQ)presents the Non-financial Statement to the Supervisory Boa

59、rd annually.SQ reports to the Member of the Executive Board and CEO of Healthcare.The Executive Board is informed about the risk report at least twice a year.The Executive Board is responsible for preparing the annual financial statements including the non-financial statement for Merck.Our Human Rig

60、hts Officer from the Group function SQ is responsible for monitoring human rights and environmental due diligence.The Executive Board is informed about the work of the Human Rights Officer and the implementation status of risk management and due diligence at least once a year.Our Board of Partners r

61、egularly monitors and discusses sustainability matters within the scope of the Executive Board remuneration in the form of performance indicators and as part of the companys annual strategy.When making decisions on major transactions,the administrative,management and supervisory bodies regularly con

62、sider the IROs and weigh them against one another by examining the advantages and disadvantages of the respective transaction.We also take sustainability matters into account when evaluating potential acquisitions,allocating operating expenditure,deciding on capital expenditure,as well as in researc

63、h and development.The following material IROs(see the respective identifiers in brackets)were addressed by the administrative,management and supervisory bodies or their relevant committees during the reporting period.Executive Board:Transition plan for climate change mitigation,see E1(E1-NI-01 to E1

64、-NI-06;E1-R-01 and E1-R-02;E1-O-01)Circular economy,including a new target,see E5(E5-PI-01)Diversity,equity,inclusion and belonging,see S1(S1-NI-03;S1-NI-04;S1-PI-02;S1-PI-03)Human rights,see S2(S2-NI-01;S2-NI-03;S2-NI-04;S2-NI-05;S2-NI-06;S2-NI-07)Animal welfare,including targets,see G1(G1-NI-01)Su

65、pervisory Board:Climate change and emission reduction,see E1(E1-NI-01 to E1-NI-06;E1-R-01 and E1-R-02;E1-O-01)Transition plan for climate change mitigation,see E1(E1-NI-01 to E1-NI-06;E1-R-01 and E1-R-02;E1-O-01)Circular economy,including a new target,see E5(E5-PI-01)Results of Employee Engagement S

66、urvey,see S1(S1-NI-01;S1-NI-02;S1-NI-03;S1-NI-04;S1-PI-01;S1-PI-02;S1-PI-03)Geopolitical risks and their relevance for business development,see S2(S2-R-01)Audit Committee:Climate change and emission reduction,see E1(E1-NI-01 to E1-NI-06;E1-R-01 and E1-R-02;E1-O-01)Gender pay gap,see S1(S1-NI-04)Comb

67、ined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)110 Merck Annual Report 2024 Integration of sustainability-related performance in incentive schemes(GOV-3)Sustainability matters are an integral component of the remuneration of our Executive Board.Specifically,

68、the performance of the Executive Board is assessed based on GHG emission reduction targets as reported under E1-4.The Long-Term Incentive Plan(LTIP)incorporates a sustainability factor that adjusts the target achievement based on the performance of our three strategic sustainability goals(“dedicated

69、 to human progress”,”partnering for sustainable business impact”and”reducing our ecological footprint”)over a three-year period.This adjustment can increase or decrease the variable remuneration of our Executive Board members by up to 20.0%depending on the achievement of these sustainability goals.A

70、dditionally,in the profit-sharing scheme for the Executive Board,bonus criteria for increasing profit sharing are based on extraordinary contributions to our three strategic sustainability goals including metrics such as CO2 reduction.Conversely,malus criteria for decreasing profit sharing apply in

71、cases where the sustainability goals are not reached.In the current reporting period,a percentage of the variable remuneration was directly linked to climate-related considerations.This includes the ongoing integration of sustainability targets into the LTIP for executives including the Executive Bo

72、ard.This first LTIP target including GHG emissions was set as of fiscal 2022,focusing on Scope 1 and 2 emissions,with an evaluation timeframe covering 2022,2023 and 2024.In fiscal 2023,we established a new LTIP target for the period of 2023 to 2025,and in fiscal 2024,we set another target for 2024 t

73、o 2026.Each target aims for absolute GHG emission reductions,with the target values being tightened annually.We are currently discussing the proposal for the 20252027 targets.The potential payout for the first evaluation timeframe for the Executive Board should take place in 2026 after an additional

74、 one-year holding period and will be performed accordingly going forward.The climate-related considerations factored into the remuneration include specific targets for reducing Scope 1 and 2 GHG emissions,which contribute to achieving our climate targets by 2030.These targets are aligned with our co

75、mmitment to the Science Based Targets initiative(SBTi)to limit global warming to 1.5C.The Executive Board is responsible for overseeing the implementation of targets for climate change mitigation.The Merck Sustainability Board regularly reviews progress toward implementing the targets.This board,led

76、 by the Chief Sustainability Officer,should ensure that the corporate sustainability strategy and the individual business strategies are aligned,with the aim of reinforcing the commitment to climate-related performance.The integration of climate-related targets into the remuneration framework reflec

77、ts our commitment to sustainability and the importance of leadership accountability in achieving our climate objectives.For 2024,the climate-related remuneration of the Executive Board could not be determined as LTIP 2022 will only be paid out in 2026.Further information on the integration of sustai

78、nability-related performance in incentive schemes of our Executive Board members can be found in our“Compensation Report”(not audited as part of the audit of the Sustainability Statement).Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)111 Merck Annual Re

79、port 2024 Statement on due diligence(GOV-4)Core elements of due diligence Paragraphs in the Sustainability Statement Embedding due diligence in governance,strategy and business model ESRS 2 GOV-2 ESRS 2 GOV-3 ESRS 2 SBM-3 Engaging with affected stakeholders in all key steps of the due diligence ESRS

80、 2 GOV-2 ESRS 2 SBM-2 ESRS IRO-1 E1-2 E2-1(Pollution of water)E2-1(Pollution of soil)E2-1(Substances of concern and substances of very high concern)E3-1 E4-1 E5-1 S1-1 S2-1 S4 SBM-2 S4-1(Health and safety of our patients)S4-1(Access to our products and services and access to(quality)information)G1-1

81、(Corporate culture)G1-1(Animal welfare)Identifying and assessing adverse impacts ESRS 2 IRO-1 E1 SBM-3 E2 SBM-3(Pollution of water)E2 SBM-3(Pollution of soil)E2 SBM-3(Substances of concern and substances of very high concern)E3 SBM-3 E4 SBM-3 E5 SBM-3 S1 SBM-3 S2 SBM-3 S4 SBM-3(Health and safety of

82、our patients)S4 SBM-3(Access to our products and services and access to(quality)information)G1 SBM-3(Corporate culture)G1 SBM-3(Animal welfare)Taking actions to address those adverse impacts E1-3 E2-2(Pollution of water)E2-2(Pollution of soil)E2-2(Substances of concern and substances of very high co

83、ncern)E3-2 E4-3 E5-2 S1-4 S2-4 S4-4(Health and safety of our patients)S4-4(Access to our products and services and access to(quality)information)G1-MDR-A(Corporate culture)G1-MDR-A(Animal welfare)Tracking the effectiveness of these efforts and communication Targets:E1-4 E2-3(Pollution of water)E2-3(

84、Pollution of soil)E2-3(Substances of concern and substances of very high concern)E3-3 E4-4 E5-3 S1-5 S2-5 S4-5(Health and safety of our patients)S4-5(Access to our products and services and access to(quality)information)G1-MDR-T(Corporate culture)G1-MDR-T(Animal welfare)Metrics:E1-5 E1-6 E1-7 E1-8 E

85、2-4(Pollution of water)E2-5(Substances of concern and substances of very high concern)E3 MDR-M E4-5 E5-4 E5-5 S1-6 S1-8 S1-9 S1-10 S1-12 S1-13 S1-14 S1-16 S1-17 G1 MDR-M(Animal welfare)Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)112 Merck Annual Repor

86、t 2024 Risk management and internal controls over sustainability reporting(GOV-5)In the context of constantly evolving external and internal requirements for the management of non-financial risks,work continued in 2024 on the development of a procedural and organizational concept as well as a roadma

87、p for expanding non-financial risk management.The non-financial internal control system aligns with the sustainability strategy and is set up in accordance with the requirements of the Corporate Sustainability Reporting Directive(CSRD).The objective is to continuously improve compliance pursuant to

88、CSRD requirements by implementing organization-wide actions and controls.The Merck internal control system is oriented toward the COSO(Committee of Sponsoring Organizations of the Treadway Commission)framework,a globally recognized standard divided into five components:control environment,risk asses

89、sment,control activities,information,and communication as well as monitoring.In comparison with the previous year,the internal controls for sustainability reporting were further formalized and integration into the overall internal control system was initiated.Our risk assessment follows predefined a

90、pproaches for quantitative and qualitative assessments.Depending on the impact and probability,subsequent prioritization is possible.Mitigation actions for all relevant identified risks are key for their appropriate management and thus for reducing their impact and likelihood.The implementation of a

91、ctions to reduce the likelihood of relevant risks can include creating provisions to reduce gross impacts or adjusting insurance coverage.Based on the remaining risk,the risk owner and,if relevant,the Executive Board decide whether the implemented actions are sufficient or if the remaining risk need

92、s further mitigation actions.Every mitigation action is reviewed twice a year to confirm its effectiveness and determine whether additional actions are required.Group Risk Management monitors the aggregated mitigation measures and is regularly informed if deviations are determined regarding implemen

93、ted mitigation actions.The responsibility for the effectiveness of the internal control system and the further development of non-financial key metrics lies with the respective senior leaders or risk and process owners.In 2024,non-financial aspects were added to the approach for confirming the overa

94、ll effectiveness of the internal control system,with the responsible Group functions,the respective local Managing Director and the respective local Chief Financial Officer signing respective confirmations.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)1

95、13 Merck Annual Report 2024 Our strategy Strategy,business model and value chain(SBM-1)Responsible action is an integral part of our corporate culture.This also includes respecting the interests of our employees,customers,investors,and society.Our aim is to attach the same importance to safety and e

96、thical aspects as to business success.We want to mitigate ethical,economic,environmental,and social risks as far as possible.We integrate sustainability into the innovation process and into all steps of the value chain.Today,our products are already having a positive impact on human progress and glo

97、bal health,namely our medicines and our biological and chemical innovations that utilize the latest technologies.From the early stages of development,we keep an eye on the entire life cycle of a product including disposal.We want to continuously improve the way we measure our progress by adapting to

98、 existing and upcoming legal regulations and integrating quantitative sustainability-related criteria into our product development processes across all business sectors.Within our research and development(R&D)processes,we are committed to continuously improving and integrating sustainability and cir

99、cular economy criteria to assess the sustainability performance of our products and portfolio,enabling us to create more sustainable products for our customers and society.By supplying products that meet extensive sustainability criteria,we also help our customers to achieve their sustainability tar

100、gets.More information can be found under E5.We aim to drive health equity to address the global disparity in this area.We understand health equity as a concerted effort to ensure that all people,regardless of socioeconomic,geographical or other differences,can obtain the best possible care.We work w

101、ith partners to tackle these complex challenges and are committed to systematically integrating the interests and perspectives of our stakeholders into our strategy and business model.More information can be found under S4.A key element of our strategy is our commitment to advancing human progress t

102、hrough our employees,who engage with complex challenges while nurturing a culture of innovation and inclusion.Our business model is designed to empower our employees through fair working conditions,including the health and safety,alongside our dedication to diversity,equity,inclusion,and belonging.T

103、his approach enables our employees to pursue careers that resonate with their individual aspirations,skills,and passions.More information can be found under S1.The following table shows the number of employees in headcount by geographical region:20241 Europe 28,138 North America 14,187 Asia-Pacific(

104、APAC)15,593 Latin America 3,502 Middle East and Africa(MEA)1,137 1 Merck also employs people at sites of subsidiaries that are not fully consolidated.This number refers to people employed in fully consolidated subsidiaries excluding employees of HUB Organoids Holding B.V.,Netherlands,whose acquisiti

105、on was completed on December 23,2024.We apply strict sustainability standards to our procurement activities.With our efforts in supplier management in our upstream value chain,we strive to comply with basic environmental and social standards.Therefore,we have introduced corresponding strategies,proc

106、esses,and guidelines to prevent violations of these standards in the supply chain and continuously improve our sustainability performance.Unless otherwise stated,the approaches presented apply to tier 1 suppliers(direct suppliers).In addition,our supplier management activities include special action

107、s,in particular for indirect suppliers of conflict minerals.To achieve our sustainability goals,our purchasing team works closely with our suppliers.We want to create transparency in all our sourcing regions and fully integrate sustainability into all our value chains.More information can be found u

108、nder S2.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)114 Merck Annual Report 2024 As part of our efforts to ensure transparency and sustainability,it is important to have a precise knowledge of our negative impacts on the environment.Emissions are rele

109、ased into the air and water,and wastewater and waste are generated as a result of our business activities.In addition,we use materials that can adversely affect the environment if not handled properly.We aim to minimize our impact on the environment and have developed strategies to improve our envir

110、onmental performance.This includes making the most efficient use of increasingly scarce resources.Minimizing negative environmental impacts and taking meaningful climate action requires a holistic approach while also entailing the constant monitoring of practices and performance.Our objective is to

111、decouple business growth from negative environmental impacts wherever possible.During product manufacture,it is important to us to keep the environmental impact as low as possible,which is why we attach great value to safe production,upholding high environmental standards and strict quality manageme

112、nt.More information can be found under E1,E2,E3,E4 and E5.In a complex world increasingly characterized by dynamic macroeconomic and geopolitical developments,scientific breakthroughs are needed more urgently than ever.Factors such as an ageing population,new technologies and climate change present

113、both challenges and opportunities.At Merck,we see this change as a catalyst for innovation and growth.We closely monitor new global trends and challenges;among other things we use scenario analyses,in order to clearly understand the complex nature of potential impacts.In addition,we participate in d

114、ialogue and initiatives,consult with other organizations in our industry and assess media and news coverage.This enables us to minimize risks while also leveraging new business opportunities.Our sustainability strategy The rapidly growing challenges facing both society and the environment require a

115、clear objective for the coming years.Consequently,sustainability is an essential element of our corporate strategy.We are pursuing the following three strategic sustainability goals:Overall,our sustainability strategy is centered on seven focus areas,within which we realize and will continue to real

116、ize numerous initiatives and projects.We measure our progress using 16 sustainability key indicators,which we publish on our website(content of the website is not audited).Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)115 Merck Annual Report 2024 In the

117、 following table,we present the part of the sustainability indicators that is mandatory for our ESRS reporting:Strategic goal Value chain Sustainability key indicator 2024 2023 More information 1 Downstream Number of people treated with our Healthcare products(in million)1 184 177 S4 2 Own operation

118、s Percentage of women in leadership positions 39 39 S1 2 Own operations Environment,health and safety(EHS)incident rate 2.2 2.4 S1 2 Own operations Lost time injury rate(LTIR)1.2 1.3 S1 Upstream Percentage of relevant suppliers(in terms of number)that are covered by a valid sustainability assessment

119、1 75 66 S2 2 Upstream Percentage of relevant suppliers(in terms of spend)that are covered by a valid sustainability assessment1 94 94 S2 2 Own operations Violations of Global Social and Labor Standards Policy 57 60 S1 3 Own operations Greenhouse gas emissions Scope 1 and 2(in metric tons)1 1,085,124

120、 1,463,000 E1 3 Upstream;downstream Indirect greenhouse gas emissions(Scope 3 intensity:metric tons CO2eq per million gross profit)359 371 E1 3 Upstream Percentage of purchased electricity from renewable sources 52 51 E1 3 Own operations Circularity rate(in%)69.2 67.8 E5 3 Own operations Water effic

121、iency(m3 per million net sales)588 576 E3 1 The key indicator is used to determine the sustainability factor for the Merck Long-Term Incentive Plan(LTIP).Generally,our sustainability strategy is implemented Group-wide.Specific activities are defined for our three business sectors with their differen

122、t products and services portfolios.Unless stated otherwise,the sustainability key indicators apply globally.Where applicable,we differentiate according to geographical regions or relationships with stakeholders for example,our strategy within our Healthcare business sector that aims to improve acces

123、s to our products and services as well as to(quality)information focuses on low-and middle-income countries.The targets that we have defined in this context relate to our stakeholders,for example the end-users that benefit from our schistosomiasis elimination program mainly in sub-Saharan Africa.Our

124、 Life Science business sector takes a holistic life-cycle approach,embedding sustainability across the entire value chain:from the selection of raw materials and the supply chain to research and development,production,packaging,distribution,product use,and end-of-life cycle and disposal.We also go b

125、eyond the product life cycle and work to increase global access to science and STEM education.Our progress toward meeting these commitments supports our customers in their own sustainability journeys through targeted actions,such as our Design for Sustainability framework,SMASH Packaging program,or

126、our EDISON program for energy and water efficiency.Through global collaboration with cross-functional teams,industry partners,suppliers,and customers,we act as a sustainability multiplier for the life science industry.More information can be found in E1,E2,E3,and E5.The strategic focus of our Health

127、care business sector is to balance the needs of patients and the environment while driving long-term business growth.Our commitment includes reducing environmental impact and increasing circularity.In R&D we aim to develop medicines with a high health impact while minimizing their environmental foot

128、print.We are committed to advancing health equity.Our aim is to improve availability,accessibility and affordability with a particular focus on low-and middle-income countries.We aim to address unmet medical needs by providing tailored healthcare solutions,and leveraging digital health technologies.

129、Collaboration is key to this strategy:We build transparent relationships with suppliers while also engaging with local communities,academic institutions,and non-profit organizations.More information can be found under S4.Combined Management Report _ Sustainability Statement _ General _ General Discl

130、osures(ESRS 2)116 Merck Annual Report 2024 At our Electronics business sector,we are committed to shaping the digital transformation.We consider sustainability to be a core aspect of our technology roadmap and endeavor to address the critical industry challenges that lie ahead.We use data and digita

131、l tools to accelerate the development of new solutions,such as process gases with lower global warming potential or substitutes for substances of concern.As a major supplier to the electronics industry,we are committed to reducing the environmental impact of our business activities,focusing on green

132、house gas emissions,water consumption,energy use,and waste.More information can be found in E1,E2,E3,and E5.Details on our business model and our value chain can be found under Company Profile and Structure in the section“Fundamental Information about the Group”in our Management Report.Interests and

133、 views of stakeholders(SBM-2)Engaging with our various stakeholders is crucial for us.Through this dialogue,we communicate our decisions and actions transparently in order to secure our social license to operate.We aim to conciliate divergent interests as far as possible while also building trust an

134、d sustaining it in the long term.We pursue a continuous dialogue with our stakeholders and use this exchange to identify trends and developments in society and in our business fields so as to take them into account in our sustainability endeavors.We regularly conduct a systematic materiality analysi

135、s to learn about our stakeholders expectations.In doing so,we identify the economic,social and environmental issues that are important to our stakeholders and thus also to us.We have established guidelines and principles for interacting with certain stakeholders.The focus is always on compliance wit

136、h the rules.For example,we have defined internal guidelines and review processes for relationship with patients,for interactions in the healthcare sector and for business partnerships.Our most important stakeholders:Associations/political decision-makers Communities Competitors Customers Employee re

137、presentation bodies Employees Healthcare systems Media Non-governmental organizations(NGOs)Patient organizations Patients Sales and business partners Scientists Shareholders Supervisory authorities Suppliers The Merck family Combined Management Report _ Sustainability Statement _ General _ General D

138、isclosures(ESRS 2)117 Merck Annual Report 2024 We organize interaction with our stakeholders on a decentralized basis based on business requirements,legal frameworks(e.g.,interaction with patients or political decision-makers),relevance,and the type of interaction.We communicate regularly with our s

139、takeholders through a variety of channels.For instance,we conduct stakeholder surveys or organize topic-specific dialogue at a regional,national and international level.We also participate in exchange through discussions and informational forums as well as through our advocacy work and industry coal

140、itions.We believe that the interests,views and rights of our workforce are integral components of our strategy and business model.We engage in regular dialogue with our employees through different formats such as surveys or Employee Resource Groups to gather insights into their needs and concerns.Th

141、is feedback directly informs our policies and initiatives,which are aimed at continuously enhancing employee welfare,diversity,and inclusion.By integrating employee perspectives into our decision-making processes,we aim to ensure that our business model not only drives financial performance but also

142、 fosters a culture of respect and empowerment.We are committed to promoting a strong sense of inclusion and belonging among our employees.Therefore,we approach Diversity,Equity,Inclusion and Belonging(DEIB)with the same sense of purpose as our Groups other business objectives.For example,we aim to h

143、elp every employee maximize their potential,regardless of their gender identity,culture,ethnicity,race,religion or creed,sexual orientation,nationality,socioeconomic and family status,language,disability status,age,mindset,faiths,military service,or political conviction.We believe that our DEIB appr

144、oach inspires progress,strengthens our ability to innovate in all areas of our business sectors and fuels our efforts to make positive impacts in the communities where we live and work.In our Human Rights Charter and the complementing policies,we outline our commitment to uphold the rights of our em

145、ployees,aiming to ensure a safe,equitable,and inclusive work environment.For example,our Social and Labor Standards Policy states that our company does not tolerate any form of discrimination,physical or verbal harassment,or intolerance.We conduct regular risk assessments to identify and mitigate an

146、y potential human rights risks within our workforce.More information on our own workforce can be found under S1.With regard to workers in the value chain,our objective is to ensure that no violations of human rights occur in our own business activities or at our suppliers or business partners.Our co

147、mmitment to the human rights of our value chain workers is reflected in our respective policies.As a key element of our approach,we adapted our guideline on supplier category strategies to integrate sustainability criteria into our decision-making processes.This has implications for our supplier sel

148、ection processes and supplier performance evaluation.Moreover,we are active members in multi-stakeholder groups in order to exchange on and consider the interests of value chain workers from specific areas.We conduct regular assessments and offer training courses for suppliers with the aim of ensuri

149、ng that our suppliers adhere to human rights due diligence requirements.More information on the processes for collaborating with value chain workers can be found under S2.With regard to consumers and end-users,we want to conduct high-quality clinical research that complies with applicable laws and r

150、egulations.We set Group-wide requirements that aim to ensure that high ethical and scientific standards are met when we conduct our clinical studies.Our top priority is the safety,well-being,dignity,and rights of the sick and healthy people who take part in our clinical studies.Once our products are

151、 commercially available,they can only be purchased from a pharmacy with a prescription from a licensed physician.This is to ensure the safe use of our medications for our end-users as access to the drug is only given when medically justified.We aim to ensure that our products are effective in combat

152、ing a disease,while posing the lowest possible risk for the end-users.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)118 Merck Annual Report 2024 Furthermore,we prioritize access to our products and services as well as access to(quality)information based

153、 on their impact on patients particularly in low-and middle-income countries.We focus on affordability,availability and accessibility.Alongside access to our healthcare portfolio,our strategy focuses on diseases that disproportionately affect underserved populations.Our approach involves close coope

154、ration with governments of various countries,non-governmental organizations and other stakeholders.In the context of access to(quality)information,our business model focuses on strengthening healthcare systems and local healthcare capabilities with the aim to enhance the skills and capacities of sci

155、entific and medical professionals through a network of experts.More information on processes for engaging with consumers and end-users can be found under S4.In order to gain a comprehensive understanding of our internal and external stakeholders,we identified and classified stakeholders and users of

156、 sustainability reports as part of the materiality analysis.Further information can be found in the process description for identifying and evaluating our material IROs,see step 3:“List and involvement of relevant stakeholders”.Information from the administrative,management and supervisory bodies on

157、 the views and interests of the stakeholders concerned regarding the companys sustainability impacts Our Executive Board has Group-wide responsibility for our sustainability strategy.In 2020,it adopted our three strategic sustainability goals.The Group Corporate Sustainability unit is responsible fo

158、r the development and design of the sustainability strategy and informs the Executive Board about progress and need for action at least once a year.Group Corporate Sustainability is part of the Group function Corporate Sustainability,Quality and Trade Compliance(SQ),which reports to the CEO of the H

159、ealthcare business sector on behalf of the Executive Board.At Executive Board level,responsibility for environment,social and corporate governance(ESG)aspects also lies with the CEO of Healthcare on behalf of the Executive Board.The Head of SQ also acts as Chief Sustainability Officer.She informs th

160、e Executive Board about relevant sustainability matters,for example in relation to climate change mitigation.Group Corporate Sustainability is also responsible for coordinating the Merck Sustainability Board(MSB),which is chaired by the Head of SQ.The board is made up of representatives from our bus

161、iness sectors and important Group functions,such as Procurement,Communications and Controlling.Members of the Executive Board may participate in the meetings of the MSB.The MSB steers and monitors the Group-wide implementation of the sustainability strategy,defines priorities and stipulates globally

162、 applicable sustainability policies.In addition,it ensures that the initiatives of our various business sectors,Group functions and subsidiaries are aligned with our global sustainability strategy.Moreover,it recommends corresponding initiatives to the Executive Board.Within their respective area of

163、 responsibility,each Executive Board member is also responsible for sustainability,reviews the priorities that have been set,and decides on the implementation of initiatives.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)119 Merck Annual Report 2024 Mate

164、rial impacts,risks and opportunities and their interaction with our strategy and business model(SBM-3)The material IROs that we identified in our materiality analysis are briefly listed below and are described in detail in the respective topic chapters.We describe the methodology of our double mater

165、iality analysis under“Description of the process to identify and assess material impacts,risks and opportunities(IRO-1).”Impact,risk and opportunities(IRO)identifier Type of IRO Sustainability matter Reference chapter E1-NI-01 Actual negative impact Climate change adaptation;Climate change mitigatio

166、n E1 Climate Change E1-NI-02 Actual negative impact Climate change mitigation;Climate change adaptation;Energy E1 Climate Change E1-NI-03 Actual negative impact Climate change mitigation;Climate change adaptation;Energy E1 Climate Change E1-NI-04 Actual negative impact Climate change mitigation;Clim

167、ate change adaptation E1 Climate Change E1-NI-05 Actual negative impact Climate change mitigation;Climate change adaptation;Energy E1 Climate Change E1-NI-06 Actual negative impact Energy E1 Climate Change E2-NI-01 Actual/potential negative impact Pollution of water E2 Pollution E2-NI-02 Potential n

168、egative impact Substances of concern;Substances of very high concern E2 Pollution E3-NI-01 Actual/potential negative impact Water withdrawals E3 Water and marine resources E4-NI-01 Potential negative impact Direct impact drivers of biodiversity loss-Land-use change,fresh water-use change,and sea-use

169、 change E4 Biodiversity and Ecosystems E5-NI-01 Actual negative impact Resource inflows,including resource use E5 Resource Use and Circular Economy E5-NI-02 Actual/potential negative impact Resource outflows related to products and services;Waste E5 Resource Use and Circular Economy E5-NI-03 Actual/

170、potential negative impact Waste E5 Resource Use and Circular Economy S1-NI-01 Potential negative impact Working conditions:Secure employment;Working time;Adequate wages;Collective bargaining,including rate of workers covered by collective agreements S1 Own Workforce S1-NI-02 Potential negative impac

171、t Working conditions:Work-life balance S1 Own Workforce S1-NI-03 Potential negative impact Equal treatment and opportunities for all:Employment and inclusion of persons with disabilities S1 Own Workforce S1-NI-04 Potential negative impact Equal treatment and opportunities for all:Gender equality and

172、 equal pay for work of equal value S1 Own Workforce Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)120 Merck Annual Report 2024 Impact,risk and opportunities(IRO)identifier Type of IRO Sustainability matter Reference chapter S2-NI-01 Actual negative impa

173、ct Equal treatment and opportunities for all:Diversity;Employment and inclusion of persons with disabilities S2 Workers in the value chain S2-NI-02 Actual negative impact Equal treatment and opportunities for all:Measures against violence and harassment in the workplace S2 Workers in the value chain

174、 S2-NI-03 Potential negative impact Other work-related rights:Child labor;Forced labor S2 Workers in the value chain S2-NI-04 Potential negative impact Other work-related rights:Child labor;Forced labor S2 Workers in the value chain S2-NI-05 Actual negative impact Other work-related rights:Child lab

175、or;Forced labor;Adequate housing;Water and sanitation;Privacy S2 Workers in the value chain S2-NI-06 Actual negative impact Working conditions:Secure employment;Working time;Adequate housing;Health and safety;S2 Workers in the value chain S2-NI-07 Actual negative impact Working conditions:Health and

176、 safety S2 Workers in the value chain S4-NI-01 Potential negative impact Personal safety of consumers and/or end-users:Health and safety S4 Consumers and End-users G1-NI-01 Actual negative impact Animal welfare G1 Business conduct E5-PI-01 Actual positive impact Resource outflows related to products

177、 and services E5 Resource Use and Circular Economy S1-PI-01 Actual positive impact Working conditions:Health and safety S1 Own Workforce S1-PI-02 Actual positive impact Equal treatment and opportunities for all:Diversity S1 Own Workforce S1-PI-03 Actual positive impact Equal treatment and opportunit

178、ies for all:Training and skills development S1 Own Workforce S4-PI-01 Actual positive impact Personal safety of consumers and/or end-users:Health and safety S4 Consumers and End-users S4-PI-02 Actual positive impact Personal safety of consumers and/or end-users:Health and safety;Information-related

179、impacts for consumers and/or end-users:Access to(quality)information S4 Consumers and End-users S4-PI-03 Potential positive impact Personal safety of consumers and/or end-users:Health and safety S4 Consumers and End-users S4-PI-04 Potential positive impact Personal safety of consumers and/or end-use

180、rs:Health and safety S4 Consumers and End-users S4-PI-05 Potential positive impact Personal safety of consumers and/or end-users:Health and safety S4 Consumers and End-users S4-PI-06 Actual positive impact Social inclusion of consumers and/or end-users:Access to products and services S4 Consumers an

181、d End-users S4-PI-07 Actual positive impact Social inclusion of consumers and/or end-users:Access to products and services S4 Consumers and End-users S4-PI-08 Actual positive impact Information-related impacts for consumers and/or end-users:Access to(quality)information S4 Consumers and End-users Co

182、mbined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)121 Merck Annual Report 2024 Impact,risk and opportunities(IRO)identifier Type of IRO Sustainability matter Reference chapter G1-PI-01 Potential positive impact Corporate culture G1 Business conduct E1-R-01 Ri

183、sk Climate change adaptation E1 Climate Change E1-R-02 Risk Climate change mitigation E1 Climate Change E2-R-01 Risk Pollution of soil E2 Pollution E2-R-02 Risk Substances of concern and substances of very high concern E2 Pollution E5-R-01 Risk Resource inflows,including resource use E5 Resource Use

184、 and Circular Economy E5-R-02 Risk Resource inflows,including resource use E5 Resource Use and Circular Economy S1-R-01 Risk Working conditions:Health and safety S1 Own Workforce S2-R-01 Risk Working conditions:Health and safety S2 Workers in the value chain S4-R-01 Risk Personal safety of consumers

185、 and/or end-users:Health and safety S4 Consumers and End-users E1-O-01 Opportunity Climate change mitigation E1 Climate Change S4-O-01 Opportunity Personal safety of consumers and/or end-users:Health and safety S4 Consumers and End-users Beyond this,no company-specific IROs were identified that exce

186、ed the topics stipulated by the ESRS.The current and anticipated financial effects of our material IROs on our business model,value chain,strategy and decision-making are described in the topic-specific chapters.With regard to the identified material risks and opportunities,there were no events in t

187、he reporting year that led to significant effects on our results of operations,financial positions,net assets and liquidity beyond the provisions to environmental protection reported under E2.We do not expect any significant change in the next reporting period.Changes to the materiality analysis res

188、ulted from the change in reporting framework.In previous years,we applied the Global Reporting Initiative(GRI)standard for our materiality analysis.Our 2024 materiality analysis has been conducted in accordance with the ESRS.In contrast to the GRI,the ESRS requirements stipulate that the materiality

189、 analysis must also consider financial materiality(double materiality).Another difference is that the ESRS provide a more detailed list of sustainability matters in greater detail to be considered in the analysis.For example,we identified material IROs for substances of concern.Another change compar

190、ed to the previous year is that no material IROs were identified for the topics of compliance management,responsible interactions with health systems,bioethics and digital ethics,as well as innovation and technology.Therefore,we do not provide any information on these topics in this report.Thanks to

191、 our robust business model with three business sectors operating in different markets and our clear positioning as a science and technology company,we are well positioned even in economically difficult times.In 2024,we updated our resilience analysis,focusing on climate risks and opportunities to en

192、sure a comprehensive understanding of the challenges and prospects ahead.For details see E1.Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)122 Merck Annual Report 2024 Our management of impacts,risks and opportunities Description of the process to identi

193、fy and assess material impacts,risks and opportunities(IRO-1)For the impact assessment,we assessed impacts using all the criteria specified in the ESRS.Accordingly,negative impacts occur when the company causes harm to society and/or the environment through its direct or indirect business activities

194、.We consider positive impacts as activities that go well beyond compliance with laws and generate clear added value for the environment and/or society.For the assessment we considered whether the impact is actual or potential and evaluated the severity based on scale and scope,as well as the likelih

195、ood of potential impacts.Additionally for negative impacts we considered whether the impact was of irremediable character.We conducted the assessment along our entire value chain for all our business sectors,taking into account our portfolios of products and services,our assets,our diverse business

196、relationship and our geographical location.To determine which of the sustainability matters are material for reporting purposes,we assessed individually each of the impacts identified as actual or potential and gave them a quantitative threshold.Impacts rated as significant or substantial/critical a

197、re considered material for reporting purposes.In order to determine financial materiality,we assessed the risks and opportunities with regard to their likelihood of occurrence and the potential magnitude of the financial effects in accordance with the ESRS requirements.For the magnitude of a risk or

198、 opportunity we assessed five categories with their effect on EBITDA pre and/or operating cash flow:immaterial,minor,moderate,significant,or critical.For the likelihood,we determined the categories highly improbable,improbable,possible,likely,or more likely than not.The total financial impact was ca

199、lculated by multiplying the magnitude by the likelihood.We aligned the assessment criteria with our Group Risk Management and took into account their risk matrix.To set the threshold,we considered every sub-(sub-)topic including its underlying risks and opportunities and its respective quantitative

200、assessment results.The threshold for financial materiality corresponding to that of Group Risk Management was set for all sub-(sub-)topics whose risks and opportunities were assessed as having a magnitude of significant or critical.When assessing IROs,a gross approach was applied,meaning that no mit

201、igation measures were taken into consideration.To identify our material IROs,we conducted a double materiality analysis.The process can be described in the following steps:Step 1 List of sustainability topics and identification of IROs:We created a list of topics based on the sustainability matters

202、listed in ESRS 1 AR 16 and compared them with our sustainability topics from the 2023 materiality analysis.To compile the list of IROs,we conducted additional research in the SASB standards and further databases.We assigned each IRO to the appropriate ESRS sub-(sub-)topic.For risks,including physica

203、l and transition risks and opportunities,we additionally considered risk assessments,for example in the risk report,risk tables and the TCFD risk report.We conducted the assessment for our entire value chain,also taking into account country-specific features.Step 2 Mapping the value chain:Due to the

204、 differing nature of our business sectors business models,the value chain stages were identified for each business sector in order to gain an overview of the whole value chain.Based on that,we identified business activities and related industries.We then derived the underlying ESRS sectors and indus

205、tries in referring to the ESRS SEC 1 sector classification standard.Where possible,we also indicated dependencies on countries,geographic regions and sites,e.g.in connection with pollution.Step 3 List and involvement of relevant stakeholders:We identified and classified our internal and external sta

206、keholders.Based on their involvement in the overall assessment process of the materiality analysis,we divided them into two groups:Internal experts of the Group functions,such as Procurement,Human Resources,and the Financial departments(Risk Management,Financial Reporting,Controlling),as well as exp

207、erts from the three business sectors were involved in the detailed identification,validation,and evaluation of the IROs in their respective field of expertise.Further external and internal stakeholders were involved in Combined Management Report _ Sustainability Statement _ General _ General Disclos

208、ures(ESRS 2)123 Merck Annual Report 2024 validating the results via questionnaires.We considered nature as a silent stakeholder when assessing IROs regarding the respective topics,for example biodiversity.During the process,no direct consultations with affected communities took place.Step 4 Descript

209、ion of IROs:We then analyzed whether IROs exist for the identified business activities and the underlying industries of the value chain.We also reviewed our business activities for impacts,risks and opportunities in connection with pollution,water and marine resources as well as resource use and cir

210、cular economy.An unbiased approach was applied throughout the process.New insights,which originated either from internal topic experts or from other stakeholders,were included and taken into account in all steps of the approach as needed.Step 5 Assessment of IROs:As described in step 3,the identifie

211、d IROs were evaluated by internal experts in their respective area of expertise on the basis of aligned quantified assessment criteria along the value chain.The results of the impact assessment were validated by involving internal and external stakeholders to ensure that the results align with stake

212、holder perspectives.Step 6 Final review and approval:Finally,the results of the impact and financial materiality assessment were validated.This included various quality controls,such as checks and validations by the management of the business sectors.Finally,the Merck Sustainability Board(MSB)approv

213、ed the results.Our process to identify and assess climate-related impacts,risks,and opportunities Our approach to identifying and evaluating climate-related impacts,risks,and opportunities consists of several key steps:Identification of Critical Sites:We began by shortlisting our most significant si

214、tes for our global operations,also considering their total insured value.GHG Inventory Analysis:We used our existing internal analysis to evaluate emissions across our operations,helping us understand the sources and magnitudes of our emissions.Physical Risks Identification:We then conducted a compr

215、ehensive assessment of climate-related physical risks by identifying potential hazards such as floods,heatwaves,and windstorms,particularly under the high-emission climate scenario(4.0C).This involved evaluating the exposure and sensitivity of our assets and activities to these hazards.Transition Ri

216、sks and Opportunities:We assessed climate-related transition risks and opportunities within our operations and value chain by identifying key transition drivers related to a 1.5C climate scenario.We then evaluated how our activities and financials might be exposed to these variables,with related qua

217、ntifications of gross transition risks or opportunities.Risk Assessment:We analyzed historical data,scientific research,and expert opinions to determine the probability and characteristics of potential catastrophic events in specific areas.For relevant risks,we evaluated their potential impacts both

218、 with and without mitigation actions,considering,for instance,strategic investments in renewable energy and enhancing energy efficiency.Exposure Analysis:We identified and quantified the assets that could be at risk due to climate events,for example,buildings,infrastructure,inventory,and other physi

219、cal or financial assets.Vulnerability Analysis:We assessed the vulnerability of exposed assets,to understand how different asset types respond to hazards and to estimate their susceptibility to damage or loss.Event Simulation:We simulated the potential impact of events by combining hazard characteri

220、stics,such as intensity and duration,with asset vulnerability to estimate possible losses.Loss Estimation:We calculated expected losses in terms of financial impact,including property damage,business interruption,liability claims,and other relevant factors.Combined Management Report _ Sustainability

221、 Statement _ General _ General Disclosures(ESRS 2)124 Merck Annual Report 2024 Assessment of Climate-Related Hazards Our company utilizes Climate Risk Assessment(CRA)methodology and models of an external provider to quantify both physical and transition risks and opportunities across various time ho

222、rizons.For physical hazards,these are linked to the expected lifetime of assets,strategic planning,and capital allocation.Our identification of climate-related hazards and assessment of exposure and sensitivity are informed by high-emission climate scenarios and relevant regional climate projections

223、.This process involves detailed analysis using climate models to evaluate the potential frequency and severity of hazards.We systematically assess the exposure and sensitivity of our assets and business activities by considering geographic,operational,and temporal factors:Likelihood:Evaluating the p

224、robability of occurrence for each identified hazard based on historical data and climate models.Magnitude:Assessing the potential severity of each hazard and its scale of impact on our operations and assets.Duration:Considering the expected duration of each hazard to understand potential long-term i

225、mpacts on our business.Geospatial Coordinates:Incorporating geospatial data to analyze specific locations of our operations and supply chains,identifying vulnerabilities based on geographic exposure to climate-related hazards.This structured approach enables us to systematically assess whether our a

226、ssets and business activities may be exposed to these hazards.Our analysis of physical climate-related risks is based on geospatial coordinates specific to our locations,allowing for a detailed assessment of vulnerabilities.In general,material risks and opportunities derive from impacts,dependencies

227、 or other factors,such as exposure to climate hazards or regulatory changes that address systemic risks.Therefore,we assessed whether financial risks and opportunities arise from the identified material impacts.Moreover,we also assessed and considered risks and opportunities that are not directly co

228、nnected to an impact.The risk assessment follows predefined approaches for quantitative and qualitative assessments.Sustainability risks are treated in the same way as other risk types according to their magnitude and likelihood of occurrence.Depending on the magnitude and likelihood,subsequent prio

229、ritization is possible following the categories such as significant or critical.Accordingly,risks that are rated as significant or critical in terms of their magnitude have an impact on EBITDA pre and/or operating cashflow above 100 million.According to our Group Risk Management,all business sectors

230、 are required to ensure an adequate level of local risk management.This includes regular and continuous efforts to identify,assess,monitor,and control local risks.The business sectors are instructed to analyze the risks in an aggregated manner that enables a realistic overview of our overall risk pr

231、ofile.Our opportunities are identified as part of the strategy development or forecasting processes.We then evaluate the potential,taking opportunities and risks into account and using scenarios to obtain a holistic view of possible developments.The materiality analysis considers our entire value ch

232、ain,i.e.our upstream and downstream value chain as well as own business.As described in step 1,the data sources for our list of sustainability topics are derived from the materiality analysis 2023 and other sources.According to the topic-specific requirements of E4,a preliminary analysis using the I

233、BAT tool has shown that we have own sites near key biodiversity areas.However,the data does not allow any conclusions about our actual impact on biodiversity in these areas.A detailed list of the sites,as well as further information can be found under E4-SBM-3.The materiality analysis process has ev

234、olved in the reporting period to incorporate a more structured stakeholder engagement approach,including identifying and classifying stakeholders.The analysis explicitly follows a double materiality approach,considering both our companys impacts on the environment and society and the financial impli

235、cations of sustainability matters for our company.Furthermore,the assessment employs standardized criteria for evaluating IROs.For risks and opportunities,criteria were aligned with Group Risk Management.The materiality analysis was last modified in preparation for 2024.Alongside the alignment with

236、ESRS requirements,this involved a comprehensive review of previously identified sustainability topics as well as the integration of new insights,e.g.,from stakeholders.The materiality analysis will be reviewed annually,with the next scheduled review planned for the first half of 2025.Combined Manage

237、ment Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)125 Merck Annual Report 2024 Disclosure requirements in ESRS covered by the non-financial statement(IRO-2)The following table lists the disclosure requirements complied with when preparing the non-financial statement on th

238、e basis of our materiality analysis:Standard Cross-cutting/thematic No.Scope of reporting Designation of DRs Reference ESRS 2 General disclosures BP-1 Basis for preparation General basis for preparation of sustainability statements ESRS 2 BP-1 ESRS 2 General disclosures BP-2 Basis for preparation Di

239、sclosures in relation to specific circumstances ESRS 2 BP-2 ESRS 2 General disclosures GOV-1 Governance The role of the administrative,management and supervisory bodies ESRS 2 GOV-1 ESRS 2 General disclosures GOV-2 Governance Information provided to and sustainability matters addressed by the undert

240、akings administrative,management and supervisory bodies ESRS 2 GOV-2 ESRS 2 General disclosures GOV-3 Governance Integration of sustainability-related performance in incentive schemes ESRS 2 GOV-3 ESRS 2 General disclosures GOV-4 Governance Statement on due diligence ESRS 2 GOV-4 ESRS 2 General disc

241、losures GOV-5 Governance Risk management and internal controls over sustainability reporting ESRS 2 GOV-5 ESRS 2 General disclosures SBM-1 Strategy Strategy,business model and value chain ESRS 2 SBM-1 ESRS 2 General disclosures SBM-2 Strategy Interests and views of stakeholders ESRS 2 SBM-2 ESRS 2 G

242、eneral disclosures SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model ESRS 2 SBM-3 E1 SBM-3 E2 SBM-3(Pollution of water)E2 SBM-3(Pollution of soil)E2 SBM-3(Substances of concern and substances of very high concern)E3 SBM-3 E4 SBM-3 E5 SBM-3

243、 S1 SBM-3 S2 SBM-3 S4 SBM-3(Health and safety of our patients)S4 SBM-3(Access to our products and services and access to(quality)information)G1 SBM-3(Corporate culture)G1 SBM-3(Animal welfare)ESRS 2 General disclosures IRO-1 Impact,risk and opportunity management Description of the process to identi

244、fy and assess material impacts,risks and opportunities ESRS 2 IRO-1 ESRS 2 General disclosures IRO-2 Impact,risk and opportunity management Disclosure requirements in ESRS covered by the undertakings sustainability statement ESRS 2 IRO-2 Combined Management Report _ Sustainability Statement _ Genera

245、l _ General Disclosures(ESRS 2)126 Merck Annual Report 2024 Standard Cross-cutting/thematic No.Scope of reporting Designation of DRs Reference ESRS 2 General disclosures MDR-P Impact,risk and opportunity management Policies adopted to manage material sustainability matters E1-2 E2-1(Pollution of wat

246、er)E2-1(Pollution of soil)E2-1(Substances of concern and substances of very high concern)E3-1 E4-1 E5-1 S1-1 S2-1 S4-1(Health and safety of our patients)S4-1(Access to our products and services and access to(quality)information)G1-1(Corporate culture)G1-1(Animal welfare)ESRS 2 General disclosures MD

247、R-A Impact,risk and opportunity management Actions and resources in relation to material sustainability matters E1-3 E2-2(Pollution of water)E2-2(Pollution of soil)E2-2(Substances of concern and substances of very high concern)E3-2 E4-2 E5-2 S1-4 S2-4 S4-4(Health and safety of our patients)S4-4(Acce

248、ss to our products and services and access to(quality)information)G1-MDR-T(Corporate culture)G1-MDR-T(Animal welfare)ESRS 2 General disclosures MDR-M Metrics and targets Metrics in relation to material sustainability matters E1-5 E1-6 E1-7 E1-8 E2-4(Pollution of water)E2-5(Substances of concern and

249、substances of very high concern)E3 MDR-M E4-5 E5-4 E5-5 S1-6 S1-8 S1-10 S1-14 S1-17 S1-9 S1-12 S1-13 S1-16 G1 MDR-M(Animal welfare)Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)127 Merck Annual Report 2024 Standard Cross-cutting/thematic No.Scope of rep

250、orting Designation of DRs Reference ESRS 2 General disclosures MDR-T Metrics and targets Tracking effectiveness of policies and actions through targets E1-4 E2-3(Pollution of water)E2-3(Pollution of soil)E2-3(Substances of concern and substances of very high concern)E3-3 E4-4 E5-3 S1-5 S2-5 S4-5(Hea

251、lth and safety of our patients)S4-5(Access to our products and services and access to(quality)information)G1-MDR-T(Corporate culture)G1-MDR-T(Animal welfare)ESRS E1 Climate Change GOV-3 Governance Integration of sustainability-related performance in incentive schemes ESRS 2 GOV-3 ESRS E1 Climate Cha

252、nge E1-1 Strategy Transition plan for climate change mitigation E1-1 ESRS E1 Climate Change SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model E1 SBM-3 ESRS E1 Climate Change IRO-1 Impact,risk and opportunity management Description of the p

253、rocesses to identify and assess material climate-related impacts,risks and opportunities ESRS 2 IRO-1 ESRS E1 Climate Change E1-2 Impact,risk and opportunity management Policies related to climate change mitigation and adaptation E1-2 ESRS E1 Climate Change E1-3 Impact,risk and opportunity managemen

254、t Actions and resources in relation to climate change policies E1-3 ESRS E1 Climate Change E1-4 Metrics and targets Targets related to climate change mitigation and adaptation E1-4 ESRS E1 Climate Change E1-5 Metrics and targets Energy consumption and mix E1-5 ESRS E1 Climate Change E1-6 Metrics and

255、 targets Gross Scopes 1,2,3 and Total GHG emissions E1-6 ESRS E1 Climate Change E1-7 Metrics and targets GHG removals and GHG mitigation projects financed through carbon credits E1-7 ESRS E1 Climate Change E1-8 Metrics and targets Internal carbon pricing E1-8 ESRS E1 Climate Change E1-9 Metrics and

256、targets Anticipated financial effects from material physical and transition risks and potential climate-related opportunities Phase-In ESRS E2 Pollution IRO-1 Impact,risk and opportunity management Description of the processes to identify and assess material pollution-related impacts,risks and oppor

257、tunities ESRS 2 IRO-1 ESRS E2 Pollution E2-1 Impact,risk and opportunity management Policies related to pollution E2-1(Pollution of water)E2-1(Pollution of soil)E2-1(Substances of concern and substances of very high concern)ESRS E2 Pollution E2-2 Impact,risk and opportunity management Actions and re

258、sources related to pollution E2-2(Pollution of water)E2-2(Pollution of soil)E2-2(Substances of concern and substances of very high concern)Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)128 Merck Annual Report 2024 Standard Cross-cutting/thematic No.Scop

259、e of reporting Designation of DRs Reference ESRS E2 Pollution E2-3 Metrics and targets Targets related to pollution E2-3(Pollution of water)E2-3(Pollution of soil)E2-3(Substances of concern and substances of very high concern)ESRS E2 Pollution E2-4 Metrics and targets Pollution of air,water and soil

260、 E2-4(Pollution of water)ESRS E2 Pollution E2-5 Metrics and targets Substances of concern and substances of very high concern E2-5(Substances of concern and substances of very high concern)ESRS E2 Pollution E2-6 Metrics and targets Anticipated financial effects from pollution-related risks and oppor

261、tunities Phase-In ESRS E3 Water and marine resources IRO-1 Impact,risk and opportunity management Description of the processes to identify and assess material water and marine resources-related impacts,risks and opportunities ESRS 2 IRO-1 ESRS E3 Water and marine resources E3-1 Impact,risk and oppor

262、tunity management Policies related to water and marine resources E3-1 ESRS E3 Water and marine resources E3-2 Impact,risk and opportunity management Actions and resources related to water and marine resources E3-2 ESRS E3 Water and marine resources E3-3 Metrics and targets Targets related to water a

263、nd marine resources E3-3 ESRS E3 Water and marine resources E3-5 Metrics and targets Anticipated financial effects from water and marine resources-related impacts,risks and opportunities Phase-In ESRS E4 Biodiversity and ecosystems E4-1 Strategy Transition plan and consideration of biodiversity and

264、ecosystems in strategy and business model E4-1 ESRS E4 Biodiversity and ecosystems SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model E4 SBM-3 ESRS E4 Biodiversity and ecosystems IRO-1 Impact,risk and opportunity management Description of p

265、rocesses to identify and assess material biodiversity and ecosystem-related impacts,risks,dependencies and opportunities ESRS 2 IRO-1 ESRS E4 Biodiversity and ecosystems E4-2 Impact,risk and opportunity management Policies related to biodiversity and ecosystems E4-2 ESRS E4 Biodiversity and ecosyste

266、ms E4-3 Impact,risk and opportunity management Actions and resources related to biodiversity and ecosystems E4-3 ESRS E4 Biodiversity and ecosystems E4-4 Metrics and targets Targets related to biodiversity and ecosystems E4-4 ESRS E4 Biodiversity and ecosystems E4-5 Metrics and targets Impact metric

267、s related to biodiversity and ecosystems change E4-5 ESRS E4 Biodiversity and ecosystems E4-6 Metrics and targets Anticipated financial effects from material biodiversity and ecosystem-related risks and opportunities Phase-In ESRS E5 Resource use and circular economy IRO-1 Impact,risk and opportunit

268、y management Description of the processes to identify and assess material resource use and circular economy-related impacts,risks and opportunities ESRS 2 IRO-1 ESRS E5 Resource use and circular economy E5-1 Impact,risk and opportunity management Policies related to resource use and circular economy

269、 E5-1 ESRS E5 Resource use and circular economy E5-2 Impact,risk and opportunity management Actions and resources related to resource use and circular economy E5-2 ESRS E5 Resource use and circular economy E5-3 Metrics and targets Targets related to resource use and circular economy E5-3 Combined Ma

270、nagement Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)129 Merck Annual Report 2024 Standard Cross-cutting/thematic No.Scope of reporting Designation of DRs Reference ESRS E5 Resource use and circular economy E5-4 Metrics and targets Resource inflows E5-4 ESRS E5 Resource

271、use and circular economy E5-5 Metrics and targets Resource outflows E5-5 ESRS E5 Resource use and circular economy E5-6 Metrics and targets Anticipated financial effects from resource use and circular economy-related impacts,risks and opportunities Phase-In ESRS S1 Own workforce SBM-2 Strategy Inter

272、ests and views of stakeholders ESRS 2 SBM-2 ESRS S1 Own workforce SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model S1 SBM-3 ESRS S1 Own workforce S1-1 Impact,risk and opportunity management Policies related to own workforce S1-1 ESRS S1 O

273、wn workforce S1-2 Impact,risk and opportunity management Processes for engaging with own workers and workers representatives about impacts S1-2 ESRS S1 Own workforce S1-3 Impact,risk and opportunity management Processes to remediate negative impacts and channels for own workers to raise concerns S1-

274、3 ESRS S1 Own workforce S1-4 Impact,risk and opportunity management Taking action on material impacts on own workforce,and approaches to managing material risks and pursuing material opportunities related to own workforce,and effectiveness of those actions S1-4 ESRS S1 Own workforce S1-5 Metrics and

275、 targets Targets related to managing material negative impacts,advancing positive impacts,and managing material risks and opportunities S1-5 ESRS S1 Own workforce S1-6 Metrics and targets Characteristics of the undertakings employees S1-6 ESRS S1 Own workforce S1-7 Metrics and targets Characteristic

276、s of non-employees in the undertakings own workforce Phase-In ESRS S1 Own workforce S1-8 Metrics and targets Collective bargaining coverage and social dialogue S1-8 ESRS S1 Own workforce S1-9 Metrics and targets Diversity metrics S1-9 ESRS S1 Own workforce S1-10 Metrics and targets Adequate wages S1

277、-10 ESRS S1 Own workforce S1-11 Metrics and targets Social protection Phase-In ESRS S1 Own workforce S1-12 Metrics and targets Persons with disabilities S1-12 ESRS S1 Own workforce S1-13 Metrics and targets Training and skills development metrics S1-13 ESRS S1 Own workforce S1-14 Metrics and targets

278、 Health and safety metrics S1-14 ESRS S1 Own workforce S1-15 Metrics and targets Work-life balance metrics Phase-In ESRS S1 Own workforce S1-16 Metrics and targets Remuneration metrics(pay gap and total remuneration)S1-16 ESRS S1 Own workforce S1-17 Metrics and targets Incidents,complaints and sever

279、e human rights impacts S1-17 ESRS S2 Workers in the value chain SBM-2 Strategy Interests and views of stakeholders ESRS 2 SBM-2 ESRS S2 Workers in the value chain SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model S2 SBM-3 Combined Manageme

280、nt Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)130 Merck Annual Report 2024 Standard Cross-cutting/thematic No.Scope of reporting Designation of DRs Reference ESRS S2 Workers in the value chain S2-1 Impact,risk and opportunity management Policies related to value chain w

281、orkers S2-1 ESRS S2 Workers in the value chain S2-2 Impact,risk and opportunity management Processes for engaging with value chain workers about impacts S2-2 ESRS S2 Workers in the value chain S2-3 Impact,risk and opportunity management Processes to remediate negative impacts and channels for value

282、chain workers to raise concerns S2-3 ESRS S2 Workers in the value chain S2-4 Impact,risk and opportunity management Taking action on material impacts on value chain workers,and approaches to managing material risks and pursuing material opportunities related to value chain workers,and effectiveness

283、of those action S2-4 ESRS S2 Workers in the value chain S2-5 Metrics and targets Targets related to managing material negative impacts,advancing positive impacts,and managing material risks and opportunities S2-5 ESRS S4 Consumers and end-users SBM-2 Strategy Interests and views of stakeholders ESRS

284、 2 SBM-2 S4 SBM-2 ESRS S4 Consumers and end-users SBM-3 Strategy Material impacts,risks and opportunities and their interaction with strategy and business model S4 SBM-3(Health and safety of our patients)S4 SBM-3(Access to our products and services and access to(quality)information)ESRS S4 Consumers

285、 and end-users S4-1 Impact,risk and opportunity management Policies related to consumers and end-users S4-1(Health and safety of our patients)S4-1(Access to our products and services and access to(quality)information)ESRS S4 Consumers and end-users S4-2 Impact,risk and opportunity management Process

286、es for engaging with consumers and end-users about impacts S4-2(Health and safety of our patients)S4-2(Access to our products and services and access to(quality)information)ESRS S4 Consumers and end-users S4-3 Impact,risk and opportunity management Processes to remediate negative impacts and channel

287、s for consumers and end-users to raise concerns S4-3(Health and safety of our patients)ESRS S4 Consumers and end-users S4-4 Impact,risk and opportunity management Taking action on material impacts on consumers and end-users,and approaches to managing material risks and pursuing material opportunitie

288、s related to consumers and end-users,and effectiveness of those actions S4-4(Health and safety of our patients)S4-4(Access to our products and services and access to(quality)information)ESRS S4 Consumers and end-users S4-5 Metrics and targets Targets related to managing material negative impacts,adv

289、ancing positive impacts,and managing material risks and opportunities S4-5(Health and safety of our patients)S4-5(Access to our products and services and access to(quality)information)ESRS G1 Business Conduct GOV-1 Governance The role of the administrative,supervisory and management bodies ESRS 2 GO

290、V-1 ESRS G1 Business Conduct IRO-1 Impact,risk and opportunity management Description of the processes to identify and assess material impacts,risks and opportunities ESRS 2 IRO-1 ESRS G1 Business Conduct G1-1 Impact,risk and opportunity management Business conduct policies and corporate culture G1-

291、1(Corporate culture)G1-1(Animal welfare)Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)131 Merck Annual Report 2024 The table below contains all data points that derive from other EU legislation as listed in ESRS 2 appendix B.It indicates where the data

292、points can be found in our report and which of these data points are assessed as“not material”.Disclosure Requirement Data point Topic of Disclosure Requirement SFDR Reference Pillar 3 Reference Bench-mark Regulation reference EU Climate Law reference Materiality Reference ESRS 2 GOV-1 21d Boards ge

293、nder diversity x x material ESRS 2 GOV-1 ESRS 2 GOV-1 21e Percentage of board members who are independent x material ESRS 2 GOV-1 ESRS 2 GOV-4 30 Statement on due diligence x material ESRS 2 GOV-4 ESRS 2 SBM-1 40d-i Involvement in activities related to fossil fuel activities x x x not material ESRS

294、2 SBM-1 40d-ii Involvement in activities related to chemical production x x not material ESRS 2 SBM-1 40d-iii Involvement in activities related to controversial weapons x x not material ESRS 2 SBM-1 40d-iv Involvement in activities related to cultivation and production of tobacco x not material E1-1

295、 14 Transition plan to reach climate neutrality by 2050 x material E1-1 E1-1 16g Undertakings excluded from Paris-aligned Benchmarks x x material E1-1 E1-4 34 GHG emission reduction targets x x x material E1-4 E1-5 38 Energy consumption from fossil sources disaggregated by sources(only high climate

296、impact sectors)x material E1-5 E1-5 37 Energy consumption and mix x material E1-5 ESRS E1-5 40-43 Energy intensity associated with activities in high climate impact sectors x material E1-5 E1-6 44 Gross Scope 1,2,3 and Total GHG emissions x x x material E1-6 E1-6 53-55 Gross GHG emissions intensity

297、x x x material E1-6 E1-7 56 GHG removals and carbon credits x material E1-7 E1-9 66 Exposure of the benchmark portfolio to climate-related physical risks x not reported(phase-in option)E1-9 66a 66c Disaggregation of monetary amounts by acute and chronic physical risk/Location of significant assets a

298、t material physical risk x not reported(phase-in option)E1-9 67c Breakdown of the carrying value of its real estate assets by energy-efficiency classes x not reported(phase-in option)E1-9 69 Degree of exposure of the portfolio to climate-related opportunities x not reported(phase-in option)E2-4 28 A

299、mount of each pollutant listed in Annex II of the E-PRTR Regulation(European Pollutant Release and Transfer Register)emitted to air,water and soil x material E2-4 Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)132 Merck Annual Report 2024 Disclosure Requ

300、irement Data point Topic of Disclosure Requirement SFDR Reference Pillar 3 Reference Bench-mark Regulation reference EU Climate Law reference Materiality Reference E3-1 9 Water and marine resources x material E3-1 E3-1 13 Dedicated policy x material E3-1 E3-1 14 Sustainable oceans and seas x materia

301、l E3-1 E3-4 28c Total water recycled and reused x not material E3-4 29 Total water consumption in m3 per net revenue on own operations x not material ESRS 2 SBM-3 E4 16a-i x material ESRS 2 SBM-3 E4 ESRS 2 SBM-3 E4 16b x material ESRS 2 SBM-3 E4 ESRS 2 SBM-3 E4 16c x material ESRS 2 SBM-3 E4 E4-2 24

302、b Sustainable land/agriculture practices or policies x material E4-2 E4-2 24c Sustainable oceans/seas practices or policies x material E4-2 E4-2 24d Policies to address deforestation x material E4-2 E5-5 37d Non-recycled waste x not material E5-5 39 Hazardous waste and radioactive waste x not materi

303、al ESRS 2 SBM-3 S1 14f Risk of incidents of forced labour x material S1 SBM-3 ESRS 2 SBM-3 S1 14g Risk of incidents of child labour x material S1 SBM-3 S1-1 20 Human rights policy commitments x material S1-1 S1-1 21 Due diligence policies on issues addressed by the fundamental International Labor Or

304、ganization Conventions 1 to 8 x material S1-1 S1-1 22 Processes and measures for preventing trafficking in human beings x material S1-1 S1-1 23 Workplace accident prevention policy or management system x material S1-1 S1-3 32c Grievance/complaints handling mechanisms x material S1-3 S1-14 88b 88c Nu

305、mber of fatalities and number and rate of work-related accidents x x material S1-14 S1-14 88e Number of days lost to injuries,accidents,fatalities or illness x material S1-14 S1-16 97a Unadjusted gender pay gap x x material S1-16 S1-16 97b Excessive CEO pay ratio x material S1-16 S1-17 103a Incident

306、s of discrimination x material S1-17 S1-17 104a Non-respect of UNGPs on Business and Human Rights and OECD Guidelines x x material S1-17 Combined Management Report _ Sustainability Statement _ General _ General Disclosures(ESRS 2)133 Merck Annual Report 2024 Disclosure Requirement Data point Topic o

307、f Disclosure Requirement SFDR Reference Pillar 3 Reference Bench-mark Regulation reference EU Climate Law reference Materiality Reference ESRS 2 SBM3 S2 11b Significant risk of child labour or forced labour in the value chain x material ESRS 2 SBM-3 S2 S2-1 17 Human rights policy commitments x mater

308、ial S2-1 S2-1 18 Policies related to value chain workers x material S2-1 S2-1 19 Non-respect of UNGPs on Business and Human Rights and OECD Guidelines x x material S2-1 S2-1 19 Due diligence policies on issues addressed by the fundamental International Labor Organization Conventions 1 to 8 x materia

309、l S2-1 S2-4 36 Human rights issues and incidents connected to its upstream and downstream value chain x material S2-4 S3-1 16 Human rights policy commitments x not material S3-1 17 Non-respect of UNGPs on Business and Human Rights,ILO principles or OECD Guidelines x x not material S3-4 36 Human righ

310、ts issues and incidents x not material S4-1 16 Policies related to consumers and end-users x material S4-1 S4-1 17 Non-respect of UNGPs on Business and Human Rights and OECD Guidelines x x material S4-1 S4-4 35 Human rights issues and incidents x material S4-4 G1-1 10b United Nations Convention agai

311、nst Corruption x material G1-1 G1-1 10d Protection of whistleblowers x material G1-1 G1-4 24a Fines for violation of anti-corruption and anti-bribery laws x x not material G1-4 24b Standards of anti-corruption and anti-bribery x not material The requirements of standard S3 affected communities are s

312、trongly aligned toward human rights issues in local communities in which a company operates or which may be affected by a companys supply chain.In general,our business activities within our supply chains do not go so far that we influence human rights aspects of the local communities.We interpret th

313、e disclosure requirements of the standard in a broader sense and track our activities in the area of community engagement.In the materiality analysis,we identified and assessed impacts related to the mandatory disclosures as per S3;however,these were below the stated threshold.The standard is theref

314、ore not material for our reporting.Combined Management Report _ Sustainability Statement _ Environment _ EU Taxonomy Regulation 134 Merck Annual Report 2024 Environment Reporting in Accordance with the EU Taxonomy Regulation Fundamentals The EU taxonomy for sustainable activities(hereinafter“EU taxo

315、nomy”)is a classification system that translates the climate and environmental objectives of the European Union(EU)into criteria for sustainable economic activities.For this purpose,the EU taxonomy defines various key figures and qualitative information that Merck must disclose.The introduction of t

316、he disclosure obligation under Article 8 of Regulation(EU)2020/852 of the European Parliament and of the European Council dated June 18,2020,which establishes a framework to facilitate sustainable investment and amends Regulation(EU)2019/2088(hereinafter“EU Taxonomy Regulation”)and the Delegated Act

317、s adopted in this regard,was carried out in several phases:For the 2021 reporting year,key figures were initially stated only for what are known as taxonomy-eligible economic activities and were limited to those that make a substantial contribution to climate change mitigation or climate change adap

318、tation,as defined by the EU Taxonomy Regulation.An economic activity is considered taxonomy-eligible if it falls within the regulatory scope of the EU taxonomy.For the 2022 reporting year,in addition to the degree to which economic activities making a substantial contribution to climate change mitig

319、ation or climate change adaptation as defined by the EU Taxonomy Regulation are taxonomy-eligible,it was also necessary to report the extent to which the identified economic activities are taxonomy-aligned.According to the EU taxonomy,an economic activity qualifies as taxonomy-aligned if it is taxon

320、omy-eligible and makes a substantial contribution to one of the environmental objectives without causing significant harm to the other objectives or failing to fulfill minimum social standards.As well as the aforementioned information,the degree of taxonomy eligibility for economic activities making

321、 a substantial contribution to the following four additional environmental objectives of the EU were included in the disclosure obligation in the 2023 reporting year:1)sustainable use and protection of water and marine resources,2)transition to a circular economy,3)pollution prevention and control,a

322、nd 4)protection and restoration of biodiversity and ecosystems.Furthermore,new economic activities for the environmental objectives of climate change mitigation and climate change adaptation were added,for which the degree of taxonomy eligibility was required to be disclosed in the 2023 reporting ye

323、ar.Reporting on the degree of taxonomy alignment for these newly added environmental objectives was not required at this time.From the 2024 reporting year,the degree of taxonomy eligibility and taxonomy alignment must be reported for all six environmental objectives.Combined Management Report _ Sust

324、ainability Statement _ Environment _ EU Taxonomy Regulation 135 Merck Annual Report 2024 Approach To ensure the legally compliant fulfillment of its disclosure obligations,Merck has established an interdisciplinary project team that continuously analyzes the existence of taxonomy-eligible and taxono

325、my-aligned activities in close coordination with representatives of the business sectors and various Group functions.Identification of taxonomy-eligible economic activities When implementing the EU taxonomy requirements,the business model of Merck was subjected to a comprehensive analysis.Taxonomy-e

326、ligible economic activities were identified using a top-down approach on the basis of structured inquiries submitted to the relevant specialist departments.For the environmental objectives of climate change mitigation and climate change adaptation,the results of this analysis were supplemented by bi

327、g data-supported analyses as part of a bottom-up approach.Among other things,the information referred to is also used in connection with the requirements of the REACH Regulation and in the context of customs declarations.The economic activities for the other four environmental objectives were also i

328、dentified by referring to existing reporting structures and hierarchies.As a result of this process,taxonomy-eligible activities generating net sales were identified only in conjunction with the following economic activities:Manufacture of energy-efficient building equipment in the Electronics busin

329、ess sector(environmental objective“climate change mitigation”)Manufacture of active pharmaceutical ingredients in the Healthcare and Life Science business sectors(environmental objective“pollution prevention and control”)Manufacture of medical products in the Healthcare business sector(environmental

330、 objective“pollution prevention and control”)Manufacture of electrical and electronic equipment in the Life Science business sector(environmental objective“transition to a circular economy”)The EU Taxonomy Regulation differentiates between three categories of capital expenditure:Capital expenditure

331、that relates to assets or processes associated with taxonomy-aligned economic activities(category A)Capital expenditure that is part of a plan to expand taxonomy-aligned economic activities or to transform taxonomy-eligible economic activities into taxonomy-aligned economic activities(category B)Cap

332、ital expenditure related to the acquisition of products from taxonomy-eligible economic activities and individual actions that enable the target activities to be performed in a low-carbon manner or that reduce greenhouse gas emissions(category C)On account of its business model,Merck only engages in

333、 taxonomy-eligible economic activities in conjunction with the manufacture of active pharmaceutical ingredients,medical products,electrical and electronic equipment,and,to a limited extent,energy-efficient building equipment,meaning it has only limited taxonomy-eligible capital expenditure in category A.There is no capital expenditure in category B to date,as Merck is not preparing any plans for c