Performance Report

Sustainability Program 2006+

Our Group Sustainability Program provides an overview of our specifi c sustainability objectives through 2010. It is based around the key areas of innovation, product stewardship, excellence in corporate management, social responsibility and responsibility for the environment. In areas where we have identifi ed a greater need for action, we added additional objectives, some of which go beyond 2010.

The objectives of all subgroups and service companies have also been incorporated. Their management boards and executive committees are responsible for the successful implementation of these objectives.

Following the description of the implementation status, each objective is assigned a symbol that indicates how Bayer rates the current status of achievement. Further information on the objectives concerned can be found with the aid of the column on the right and in the Annual Report 2008.

Our objectives through 2010 (unless indicated otherwise)

Area of action: Innovation

Objective	Implementation status	Achieve - ment 2008	more
Promotion of a culture of innovation by implementing a long-term, Group-wide innovation initiative – the “Triple-i” program (Inspiration, Ideas and Innovations).	The global roll-out of the Group-wide innovation initiative “Triple-i” met with a very positive response. Our employees submitted around 7,700 ideas to date, some 80 of which were followed up by the Bayer subgroups. Two product ideas have already been introduced to the market.
Promotion of research projects on protecting drinking water and freshwater worldwide. Provision of funding and participation in project management for the National Geographic Global Exploration Fund set up by Bayer and National Geographic.	Support from Bayer has enabled the continuation of the nine external projects initiated in 2006 / 2007 with the aim of opening up, fairly distributing and conserving water resources. The results of our endeavors thus far were again documented in external publications in 2008, such as the Merian anniversary edition.
Contribution to safeguarding the food supply of a growing world population by developing plants with higher yields and improved stress tolerance of dry conditions. Further development of plant biotechnology and the latest seed breeding technology.	Using plant biotechnology to improve the tolerance of crops towards abiotic stress factors such as drought, heat, cold and soil salinity is one of the central research focuses of Bayer CropScience (BCS). In this area there are a large number of research projects at both early and advanced stages of development, with alliances also existing with public research institutions (e.g. CSIRO, the Commonwealth Scientific Industrial Research Organization in Canberra, Australia or the Helmholtz Research Center in Jülich, Germany).
Tapping the potential of renewable energy sources and renewable raw materials. Research work and technological developments for promising applications.	Bayer CropScience is investigating the potential of selected cultures that could be used as alternative raw materials for biofuels. Because of the limited area of agricultural land available, efforts are being made to avoid competition with foodstuffs for such land.
Selective, resource-optimized production of pharmaceutical active substances using therapeutic proteins from tobacco plants (plant-made pharmaceuticals). Development of patient-specific drugs within the next seven to nine years.	Around 50 known active substances have already been obtained from plants on a laboratory scale, including proteins for synthesizing vaccines and monoclonal antibodies for treating autoimmune diseases, infections and cancer. The first clinical trials using plant-based proteins are scheduled for 2010.
Provision of improved anticancer drugs. Extension of indications of the anticancer drug Nexavar® to include liver, skin, lung and breast cancer.	Nexavar® has already been approved in more than 70 countries for the therapy of liver cancer and in over 80 countries to treat advanced renal cell carcinoma (kidney cancer). Further studies in other indications such as non-small-cell lung cancer (NSCLC), breast cancer, bowel cancer and ovarian cancer (all Phase II) are ongoing. After the completion of a Phase III study in skin cancer, this indication will not be pursued further owing to a lack of efficacy.
Provision of a drug to combat dangerous blood clots. Provision of thrombosis prophylaxis in the form of the oral Factor xa inhibitor rivaroxaban (trade name: Xarelto®).	Xarelto® has been approved in the European Union for the prophylaxis of venous thromboembolism (VTE) in adults following elective hip or knee replacement surgery. The European Union approved the market launch of Xarelto® in September 2008. Further approvals have been granted in more than 50 countries, including Australia, Canada, China, Mexico and Singapore. An extensive development program is already at an advanced stage for using rivaroxaban for thrombosis prophylaxis and treatment in a wide range of indications. The program includes the treatment of venous thromboembolism, prevention of stroke in patients with atrial fibrillation, prevention of vte in hospitalized patients with internal medical conditions and secondary prophylaxis after acute coronary syndrome. It is planned for more than 60,000 patients to take part in the study program for rivaroxaban.
Extension of the duration of effi cacy of Kogenate®, a drug recombinant to treat hemophilia, using a new formulation based on liposome technology.	A Phase II study with Kogenate® is ongoing.
Development of new molecular imaging methods for early detection of cancer, inflammatory processes in the nervous system and Alzheimer’s disease.	Existing cooperation agreements were expanded and new ones entered into, e.g. with the University of Nagasaki on molecular imaging for Alzheimer’s or Hamamatsu Photonics K. K. in the field of tumor diagnostics..
Research into new methods of treating multiple sclerosis. Development of alemtuzumab.	A Phase III program with alemtuzumab is ongoing.
Development of solutions for tropical and other neglected diseases. Cooperation with stakeholders who are following novel approaches to enable more people to be treated.	Bayer is supporting the who’s clinical development program for the treatment of African sleeping sickness with the active substance nifurtimox. The studies in this area have been concluded; the who’s combination therapy is currently in the registration phase.
Provision of new treatments for gynecological disorders with a high level of unmet medical need.	In the past few months, many possible treatment options have been identifi ed and examined for endometriosis and myoma. Visanne® for the long-term treatment of endometriosis has been submitted for approval in Europe.
Better treatments for the most common cause of serious visual impairment and blindness in the over-65s in industrialized nations.	A Phase III program on treatment of the wet form of age-related macular degeneration (AMD) is ongoing.
Options for the early diagnosis of diseases with a high level of unmet medical need.	A Phase II study with a new PET tracer for the early diagnosis of Alzheimer’s disease is ongoing.
New objective: Strengthening of networks with academic institutions and utilization of shared research and development expertise.	An alliance has been established with the German Cancer Research Center for the faster utilization of research results for the development of new drugs to combat cancer and for the improved evaluation of innovative therapies for tumor-related diseases. Bayer is also working with the University Clinic in Cologne to utilize new findings from the research and development laboratory for the development of innovative approaches in the treatment and prevention of disease, e. g. in the area of oncology.
New objective: Development of a drug to combat various forms of pulmonary hypertension – riociguat.	Two Phase III studies have begun, focusing on the treatment of the two indications pulmonary arterial hypertension (PAH) and chronic thromboembolic pulmonary hypertension (CTEPH) with the oral drug riociguat.
Identifi cation of new mechanisms for fertility control using new approaches to non-hormonal contraception.	Project discontinued.		-
Objective achieved. Optimization of a production process for monomeric MDI (methylene diphenyl diisocyanate) for construction of a new large-scale plant in China in 2008 with a target energy saving of approx. 15 percent.	Bayer MaterialScience (BMS) has started up a production facility for MDI with an annual capacity of 350,000 metric tons in Shanghai.

Area of action: Product stewardship

Objective	Implementation status	Achieve - ment 2008	more
Area of action: Product stewardship Further contribution to improved crop yields through highly effective crop protection agents with good plant tolerability, coupled with a good environmental and health profile.	Further development of the Bayer CropScience product portfolio through the market launch of innovative products: • Laudis® (herbicide): New standard for crop selectivity and outstanding weed control in corn crops • Movento® (insecticide): For the first time, all parts of the food crop are protected against harmful pests thanks to this new two-way systemic approach • Infinito® (fungicide): New, unique active mechanism, which precludes cross-resistance with other active substances and is highly effective against potato diseases • Oberon® and Envidor® (acaricides): Ideal for combined use in biological forms of pest control thanks to their outstanding selectivity vis-à-vis useful insects
Analysis and evaluation of the environmental properties of our pharmaceutical active substances and their occurrence in the environment to prevent damaging effects on people and the environment.	Bayer HealthCare (BHC) is continually expanding its database of environmental properties by conducting tests on ecological toxicity and the propagation and decomposition behavior of drugs. The company also supports external monitoring studies (e. g. measurements in rivers and seas) on drugs and plays a role in improving guidelines for the evaluation of the environmental compatibility of medicines for humans and animals. The erapharm project was concluded in 2008.
Timely implementation of the REACH Regulation in the Group.	As stipulated by REACH, Bayer pre-registered around 1,000 substances with the European Chemicals Agency (ECHA) in Helsinki, Finland, by December 1, 2008. In doing so, we met the key prerequisite for continuing to work with these substances in the future. The next step is to draw up registration dossiers for substances that are required in particularly large quantities.

Area of action: Excellence in corporate management

Objective	Implementation status	Achieve - ment 2008	more
Ongoing improvement of internal work processes and employee motivation.	We have continued our regular worldwide managerial staff surveys. The subgroups also perform regular surveys of their staff. The global leadership principles are integrated into the regular performance assessments; the annual target agreements of our managerial employees include behavioral leadership objectives. Regular feedback between supervisors and staff in the performance assessment process boosts participant motivation and satisfaction.
Management of the process to implement the Directive on Health, Safety, Environment and Quality (HSEQ) Audits.	Implementation of subgroup-specific HSEQ management systems is completed; full auditing is under way in all regions.
Improvement of leadership qualities of all managers, e.g. through 360° Feedback analysis.	Ongoing.
Implementation of the objective formulated at the United Nations World Summit on Sustainable Development in Johannesburg in 2002 on the globally harmonized classifi cation and labeling of substances and preparations (GHS = Globally Harmonized System).	Implementation in Europe was supported through to the approval of the regulation by the chemical industry associations. In countries that have already implemented the GHS, BMS products are marketed with GHS-compliant labels and material safety data sheets. BMS will classify all its substances in line with GHS by December 2010 and all its preparations by June 2015.
Permanent ongoing safeguarding of compliance with regulations on drug safety and quality assurance with regard to human drugs.	The BHC Compliance Management System describes measures for ensuring permanent ongoing compliance with regulatory requirements in the fields of drug safety and quality assurance. These were harmonized during the integration of Schering. Contacts have been appointed and responsibilities allocated. Detailed information obligations and procedures have also been defined and are being implemented. A system of internal inspections is being used to ensure adherence with compliance standards. These audits also apply to suppliers. Risks are identified and assessed using a risk management system. Among other measures, a risk analysis on label compliance has been carried out. The results have been incorporated into the “Regulatory Affairs” instruction, which regulates the creation and change of labels and product information. The Quality Assurance Department systematically processes violations of compliance in cross-disciplinary projects. After a single case analysis, preventive or corrective measures are introduced as necessary. Support is being provided to help countries and regions meet compliance requirements in specific projects.
New objective: Expansion of sustainable procurement management.	The Bayer policy guidelines for procurement support the principles of the UN Global Compact, our values and leadership principles, and the Bayer Human Rights Position. The Bayer Procurement Community is also developing a code of conduct for suppliers, which is to be implemented in phases from 2009. Various training and communication activities have been introduced to raise awareness for sustainability among purchasers.
New objective: Formulation, communication and implementation of the company’s stance on human rights.	The Bayer Human Rights Position was published in May 2007 and is a globally valid Group directive (updated version since January 1, 2009). An information brochure for managers was distributed in all German-speaking countries in 2008; the content of the Position is integrated into our employee training courses..

Area of action: Social responsibility

Objective	Implementation status	Achieve - ment 2008	more
Worldwide promotion of environmental knowledge among young people. Expansion of cooperation with the United Nations Environment Programme (UNEP), including establishment of youth environmental networks and capacity building programs in Asia, America, Africa and Europe.	At the start of 2008, our contract with the UNEP was extended for another three years. Bayer has increased its funding by €200,000 to €1.2 million a year. Activities sponsored in 2008 include the establishment of a youth environment network in North America, the preparation of a network in Europe and the extension of existing networks in Asia, Latin America and Africa. A dozen regional environmental conferences in Asia, Latin America, North America and Africa received financial and organizational support from Bayer. So, too, did the Tunza International Children’s Conference 2008 in Stavanger, Norway, which attracted 1,000 participants. Bayer and UNEP once again organized the International Children’s Painting Competition on the Environment, with record involvement. South Africa became the 18th country to join the Bayer Young Environmental Envoy Program.
Strengthening the basic understanding of natural sciences in schools by extending to other countries the “Making Science Make Sense” program founded in the United States.	In 2008, Denmark was the 11th country to join Bayer’s international educational initiative.
Promotion of access to school and vocational education for children and young people, particularly in newly industrializing and developing countries.	The “Learning for Life” initiative under the bcs child care program in India has been extended. Continuation of training of teachers and pre-school staff at the Monheim site in Germany for the promotion of natural sciences among young children. The “Baylab plants” international laboratory for school students opened in November 2008, and a child care center is under construction at the Monheim site.
Promotion of education in sustainable development and improvement of environmental awareness in newly industrializing countries (capacity building) in line with the voluntary undertaking by the chemical industry based on the Johannesburg Declaration and the declaration adopted by the International Conference on Chemicals Management (ICCM) known as the Strategic Approach to International Chemicals Management (SAICM). Development of a training program and support for the establishment of a Chair for Sustainable Development at Tongji University in Shanghai, China.	Professor Zhao Jianfu has been named as the chair holder. In his work he will focus on climate research and climate impact research.
Support for education, science and research. Stronger focus of foundations on promoting knowledge and increasing the budget.	In 2008, the sponsorship activities of the Bayer Science & Education Foundation included the presentation of the Bayer Climate Award, which has a prize fund of €50,000, the award of five Bayer Climate Fellowships for school students, each endowed with €5,000, the support of 47 scientific school projects totaling around €500,000, and the award of student grants totaling around €140,000.
Promotion of solutions as a contribution to the un Millennium Development Goals for tackling poverty, lowering child mortality and improving health care for mothers.	In cooperation with the German Foundation for World Population (DSW), Bayer has initiated a pilot project in Uganda to raise awareness and improve knowledge of reproduction and sexuality among schoolchildren and to improve access to methods of family planning.
Investigation into whether the duration of treatment for tuberculosis (TB) can be reduced by around half by using the active substance moxifloxacin.	The Phase III study REMOXTB is scheduled to run until 2011. If the clinical trials are successful, the intention is to have moxifloxacin approved for the treatment of TB and made available to patients in developing countries at reduced prices.
Responsible approach to gene technology.	The Bayer Position on Gene Technology and specific regulations in the subgroups and service companies are being implemented.
Reduction in the number of occupational injuries with days lost per 1 million hours worked (MAQ < 2).	The occupational injury rate was cut by 8.3 percent in 2008 compared with the previous year.
Consistent implementation of our corporate values in the area of equal opportunities for all, regardless of gender, nationality, color, religion, sexual orientation or age..	Our Corporate Compliance Policy and the Bayer Human Rights Position are being applied and monitored throughout the Group. We have implemented a globally harmonized compensation system for the Group Leadership Circles and included behavior with regard to diversity in the 360° Feedback process. A project to achieve a sustained increase in the proportion of women in top management positions has been started in the bhc subgroup.

Area of action: Responsibility for the environment

Objective	Implementation status	Achieve - ment 2008	more
10 percent reduction in the discharge of TOC (total organic carbon) and nitrogen into receiving waters per metric ton of sales product (base year 2005).	TOC emissions have been reduced by around 10 percent compared to 2007. Nitrogen levels remain roughly on a par with the previous year.
30 percent reduction in VOC (volatile organic compound) emissions per metric ton of sales product (base year 2005).	VOC emissions increased by about 10 percent compared to 2007 due to the marked increase in production at the BCS site in Vapi, India. Tests are ongoing into the technical possibilities for reduction.
Compliance with a maximum limit for ods (ozone-depleting substance) emissions of less than 20 metric tons per year (CFC-11 equivalents) (base year 2005).	ODS air emissions amounted to 17 metric tons in continuing operations in 2008.
Air emissions: BMS: 25 percent reduction worldwide in specific greenhouse gas emissions (CO₂ equivalents in metric tons) per metric ton of sales product between 2005 and 2020. The byproducts sodium hydroxide and hydrochloric acid, which occur during production, are not considered because they will in future occur in much smaller amounts thanks to measures aimed at enhancing energy efficiency. The trade products are also not considered. The reduction of specific emissions is recognized as an adequate and ambitious emissions objective in this energy-intensive segment because it enables tough energy effi ciency targets to be achieved while also increasing sales. BCS: 15 percent absolute reduction in greenhouse gas emissions (CO₂ equivalents in metric tons) worldwide between 2005 and 2020. BHC: Five percent absolute reduction in greenhouse gas emissions (CO₂ equivalents in metric tons) worldwide between 2005 and 2020. Greenhouse gas emissions from Bayer Group to stay at 2007 level up to 2020 according to today’s estimates despite expected growth in production.	From 2007 to 2008, the specific greenhouse gas emissions of BMS (CO-equivalents in metric tons per metric ton of sales product) fell from 0.95 metric tons of CO₂ equivalents per metric tons of product to 0.90 metric tons of CO₂equivalents per metric tons of product. Compared to 2005 (1.07 CO₂ equivalents per metric ton of product), the fall amounts to 15.9 percent. From 2007 to 2008, the greenhouse gas emissions of BCS rose slightly from 0.85 million to 0.87 million metric tons of CO₂ equivalents. This is a rise of 2.2 percent compared to 2005 (0.89 million metric tons in CO₂ equivalents). At BHC, the greenhouse gas emissions from 2007 to 2008 fell from 0.57 million to 0.56 million metric tons of CO₂equivalents. This represents a reduction of around 4.3 percent over 2005 (0.585 million metric tons of CO₂ equivalents). For the Bayer Group as a whole, the greenhouse gas emissions fell from 8.15 million metric tons of CO₂ equivalents (2007) to 7.57 million metric tons of CO₂ equivalents (2008). Compared to 2005 (8.15 million metric tons in CO₂equivalents), the fall amounts to 7.1 percent.
Reduction in the volume of hazardous production waste to less than 2.5 percent per metric ton of sales product.	In 2008, production waste requiring monitoring in continuing operations came to 3.05 percent per metric ton of sales product compared to 2.59 percent in 2007. This rise can be attributed primarily to the BCS sites in Dormagen, Germany; Kansas City, United States; and Muttenz, Switzerland, and the BHC site in Bergkamen, Germany , where the quantities