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 ethical 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 global 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 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 circular 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 targets. 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 with 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 through 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. This 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:

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, processes, 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 actions, 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 under S2.

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 released 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 environmental 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 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 management. 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 both challenges and opportunities. At our company, 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 dialogue 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 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 realize 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). In the following table, we present the part of the sustainability indicators that is mandatory for our ESRS reporting:

Generally, our sustainability strategy is implemented Group-wide. Specific activities are defined for our three business sectors with their different 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 access 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 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 beyond 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 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 Healthcare 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 footprint. 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. 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.

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 digital 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 greenhouse 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.