Merck KGaA, Darmstadt, Germany

Reference: page 107

Merck KGaA's relevant bodies are the Executive Board and Supervisory Board of Merck KGaA and the Board of Partners of E. Merck KG. Due to the corporate structure there are no executive or non-executive members, only members with comparable rights and duties. The board's gender diversity ratio is 35.6 percent, with 100 percent independent members; across the bodies the gender split is 63.3 percent male and 36.7 percent female across a total of 30 members. The Supervisory Board has 16 members, half shareholder and half employee representatives, and includes an Audit Committee that monitors IROs and sustainability reporting. A self-assessment found 15 Supervisory Board members have sustainability-related expertise. The Executive Board has five members; sustainability was assigned to the CEO until September 30, 2024, then to the CEO of Healthcare. The Board of Partners handles Executive Board remuneration.

Reference: page 110

The Supervisory Board, Executive Board and Board of Partners address sustainability matters in different ways. The Executive Board presents the Audit Committee with an assessment of the Group's risk portfolio once a year and the implementation status of risk management twice a year. At its February 2024 meeting the Supervisory Board and Audit Committee dealt with the Annual and Consolidated Financial Statements and the Non-financial Statement. The Head of Corporate Sustainability, Quality and Trade Compliance presents the Non-financial Statement annually. The Human Rights Officer monitors human rights and environmental due diligence, reporting to the Executive Board at least once a year. When deciding on major transactions, acquisitions, operating and capital expenditure, and research and development, the bodies consider IROs. During the reporting period the bodies addressed material IROs including the climate transition plan, circular economy, diversity and inclusion, human rights, and animal welfare.

Reference: page 111

Sustainability matters are an integral component of Executive Board remuneration, with performance assessed against GHG emission reduction targets reported under E1-4. The Long-Term Incentive Plan incorporates a sustainability factor that adjusts target achievement based on the three strategic sustainability goals over a three-year period, which can increase or decrease variable remuneration by up to 20.0 percent. The profit-sharing scheme applies bonus and malus criteria linked to these goals. The first LTIP target including GHG emissions was set in fiscal 2022 for Scope 1 and 2 emissions covering 2022 to 2024, with further targets set for 2023 to 2025 and 2024 to 2026. Targets align with the company's commitment to the Science Based Targets initiative to limit warming to 1.5 degrees Celsius. For 2024 the climate-related remuneration could not yet be determined, as LTIP 2022 will only be paid out in 2026.

Reference: page 112

The statement on due diligence maps the core elements of due diligence to the paragraphs in the Sustainability Statement where they are addressed. Embedding due diligence in governance, strategy and the business model is covered under ESRS 2 GOV-2, GOV-3 and SBM-3. Engaging with affected stakeholders in all key steps is addressed through GOV-2, SBM-2, IRO-1 and the topical policy disclosures such as E1-2, E2-1, E3-1, E4-1, E5-1, S1-1, S2-1, S4-1 and G1-1. Identifying and assessing adverse impacts is covered through IRO-1 and the topical SBM-3 disclosures. Taking actions to address adverse impacts is covered through the actions disclosures such as E1-3, E5-2, S1-4, S2-4 and S4-4. Tracking effectiveness and communication is covered through the targets and metrics disclosures, including E1-4 through E1-8, the S1 metrics and the G1 animal welfare metrics.

Reference: page 113

In 2024 work continued on developing a procedural and organizational concept and a roadmap 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. The Group's internal control system is oriented toward the COSO framework, divided into five components: control environment, risk assessment, control activities, information and communication, and monitoring. Compared with the previous year, internal controls for sustainability reporting were further formalized and integration into the overall internal control system was initiated. Risk assessment follows predefined quantitative and qualitative approaches with prioritization by impact and probability. Mitigation actions are reviewed twice a year to confirm effectiveness. Responsibility for the effectiveness of the internal control system lies with the respective senior leaders or risk and process owners, with confirmations signed by responsible functions and local managers.

Reference: page 114

Responsible action is an integral part of Merck KGaA's corporate culture, and the company integrates sustainability into the innovation process and all steps of the value chain across its three business sectors, Life Science, Healthcare and Electronics. The company employs people across Europe, North America, Asia-Pacific, Latin America, and the Middle East and Africa. It applies strict sustainability standards to procurement, focusing on tier 1 suppliers and special actions for conflict minerals. The sustainability strategy pursues three strategic goals: dedicated to human progress, partnering for sustainable business impact, and reducing the ecological footprint. The strategy is centered on seven focus areas and measured by 16 sustainability key indicators, part of which are mandatory for ESRS reporting. The Life Science sector takes a life-cycle approach, Healthcare balances patient and environmental needs and advances health equity, and Electronics focuses on the digital transformation and reducing environmental impact.

Reference: page 117

Engaging with stakeholders is central to Merck KGaA, which pursues continuous dialogue to identify societal and business trends and secure its social license to operate. It regularly conducts a systematic materiality analysis to learn about stakeholders' expectations. Its most important stakeholders include associations and political decision-makers, communities, competitors, customers, employee representation bodies, employees, healthcare systems, media, NGOs, patient organizations, patients, sales and business partners, scientists, shareholders, supervisory authorities, suppliers, and the Merck family. Interaction is organized on a decentralized basis through channels such as surveys and topic-specific dialogue. The company engages employees through surveys and Employee Resource Groups, applies a Diversity, Equity, Inclusion and Belonging approach, and upholds a Human Rights Charter. The Executive Board has Group-wide responsibility for the sustainability strategy, supported by the Group's Sustainability Board, which steers and monitors implementation.

Reference: page 120

The material topics identified in the double materiality analysis are ESRS 2, E1 Climate Change, E2 Pollution, E3 Water and marine resources, E4 Biodiversity and ecosystems, E5 Resource use and circular economy, S1 Own workforce, S2 Workers in the value chain, S4 Consumers and end-users, and G1 Business conduct. S3 Affected communities was assessed as not material. Merck splits several topics: E2 into pollution of water, pollution of soil, and substances of concern and substances of very high concern; S4 into health and safety of patients and access to products and services and (quality) information; and G1 into corporate culture, animal welfare, and anti-corruption. No company-specific IROs beyond the ESRS topics were identified. No material IROs were identified for compliance management, responsible interactions with health systems, bioethics and digital ethics, or innovation and technology. The current and anticipated financial effects are described in the topic-specific chapters.

Reference: page 123

To identify material IROs, Merck KGaA conducted a double materiality analysis covering its entire value chain and all business sectors. Impacts were assessed using ESRS criteria, evaluating whether they are actual or potential, their severity based on scale and scope, likelihood, and irremediable character. Financial materiality was assessed by likelihood and magnitude of financial effects on EBITDA pre and operating cash flow across five categories from immaterial to critical, aligned with Group Risk Management, applying a gross approach without mitigation measures. The process followed six steps: listing sustainability topics and identifying IROs; mapping the value chain; listing and involving relevant stakeholders; describing IROs; assessing IROs; and a final review and approval by the Group's Sustainability Board. Nature was considered a silent stakeholder, and no direct consultations with affected communities took place. The analysis will be reviewed annually, with the next review planned for the first half of 2025.

Reference: page 126

IRO-2 lists the disclosure requirements complied with when preparing the Sustainability Statement on the basis of the materiality analysis, presented in a cross-reference table. The table sets out each standard, the cross-cutting or thematic classification, the disclosure requirement number, the scope of reporting, the designation of the disclosure requirement, and a reference to where it is addressed. It covers the ESRS 2 general disclosures BP-1, BP-2, GOV-1 to GOV-5, SBM-1 to SBM-3, IRO-1 and IRO-2, together with the minimum disclosure requirements MDR-P, MDR-A, MDR-M and MDR-T. It then lists the topical disclosure requirements for the material topics E1 Climate Change, E2 Pollution, E3 Water and marine resources, E4 Biodiversity and ecosystems, E5 Resource use and circular economy, S1 Own workforce, S2, S4 and G1, including disclosures reported under Phase-In provisions.

Reference: page 151

In 2024 Merck developed its inaugural transition plan, in line with the Paris Agreement and the goal of limiting warming to 1.5C. It aims to reduce direct (Scope 1) and indirect (Scope 2) GHG emissions by 50% each by 2030, using 2020 as the base year, and to lower Scope 3 emissions across the value chain by 52% per euro value added, also from a 2020 baseline. By 2030, 80% of purchased electricity should come from renewable sources, and the company targets climate neutrality by 2040. Key decarbonization levers are energy management, process emissions reduction, material efficiency, mode shift, renewable energy purchase and supplier decarbonization. The plan is being integrated into business sector strategies, all approved by the Executive Board. Merck identified two potentially locked-in emission facilities, a gas turbine in Darmstadt and a gas engine in Gernsheim, both under the EU-ETS scheme.

Reference: page 152

Merck's policies address climate change mitigation and energy efficiency. Climate change adaptation is not yet integrated into policies, though an initial climate resilience analysis has been conducted. The Group-wide EHS Policy establishes measurable GHG reduction targets and promotes energy efficiency, with accountability held by the Chair of the Executive Board and CEO, and is certified to ISO 14001. The Air Emissions Standard sets protocols for monitoring and reducing air emissions and adopting cleaner technologies. The Emissions of Refrigerants Standard regulates refrigerant use, emphasizing leak detection and a transition to low-GWP alternatives. The Energy Management Standard, based on ISO 50001, improves energy efficiency and manages consumption, including regular energy audits. The Supplier Code of Conduct holds suppliers accountable for environmental practices, requiring them to report emissions and adopt sustainable practices, and since 2023 is reflected in the General Terms and Conditions of Purchase. Policies are available on the intranet and publicly on the website.

Reference: page 154

Merck's actions span upstream, own operations and downstream value chains across multiple decarbonization levers. In Life Science, the EDISON energy program cut 3,840 tons CO2eq, the Freon process gas reduction cut 12,655 tons, material efficiency avoided 240 tons and mode shift cut 1,862 tons, for a total of 19,678 tons CO2eq in 2024, with 15,907 tons expected in 2025. Healthcare invested in photovoltaics and HVAC optimization, totaling 2,000 tons CO2eq in 2024 and 2,423 tons expected in 2025. Electronics implemented NF3 abatement at Ulsan (South Korea) and Hometown (USA), achieving 385,743 tons CO2eq in 2024, with 195,118 tons expected in 2025. From 2020 to 2024, Scope 1 fell 53% and Scope 2 fell 30%. In 2024 Merck allocated 46 million euros CapEx to process emissions and 10 million euros to energy management, with 18 million and 12 million euros planned for 2025. A supplier decarbonization program addresses Scope 3.

Reference: page 158

Merck has four climate targets, three validated by the SBTi in April 2022 as 1.5C-aligned. The Scope 1 target is a 50% reduction by 2030 from a 2020 reference of 1,827,000 tons; in 2024 emissions reached 858,053 tons, a 53% cut, achieving the target early. The Scope 2 target is a 50% reduction by 2030 from 325,000 tons (2020); 2024 market-based emissions were 227,070 tons, a 30% reduction. The Scope 3 economic intensity target is a 52% reduction by 2030 to 230 metric tons CO2eq per euro million gross profit from 480 in 2020; in 2024 Merck reached 359. The renewable energy target is to cover 80% of purchased electricity with renewables by 2030 (not SBTi-approved); 2024 coverage was 52.2%. The climate neutrality target aims for neutrality across the entire value chain by 2040 (not SBTi-approved). Targets feed into Executive Board remuneration via the Long-Term Incentive Plan.

Reference: page 161

In 2024 Merck's total energy consumption was 2,394,720 MWh. Total fossil energy consumption was 1,723,598 MWh, a 72.0% share, comprising natural gas (1,148,361 MWh), purchased electricity, heat, steam and cooling from fossil sources (528,790 MWh), and crude oil and petroleum products (46,448 MWh). Consumption from nuclear sources was 98,936 MWh (4.1%). Total renewable energy consumption was 572,186 MWh, a 23.9% share, made up of purchased renewable electricity, heat, steam and cooling (524,673 MWh), renewable fuels including biomass (31,242 MWh), and self-generated non-fuel renewable energy (16,271 MWh). All business activities are considered high climate-impact under the ESRS definition. Renewable energy production was 43,110 MWh and non-renewable production 1,066,229 MWh. Energy intensity from high climate impact activities was 113 MWh per euro million net sales, based on net sales of 21,156 million euros.

Reference: page 165

In 2024 Merck's gross Scope 1 GHG emissions were 858,053 tons CO2eq, down from 1,827,123 tons in 2020 (2030 target 913,561 tons). Gross market-based Scope 2 emissions were 227,070 tons (2020: 324,698 tons; 2030 target 162,349 tons), while location-based Scope 2 was 385,483 tons. Total gross Scope 3 emissions were 4,482,938 tons, down from 5,104,508 tons in 2020. The largest Scope 3 categories were purchased goods and services (category 1) at 2,470,278 tons and use of sold products (category 11) at 1,021,008 tons, followed by capital goods at 371,086 tons and upstream transportation at 231,580 tons. Total GHG emissions were 5,726,474 tons (location-based) and 5,568,062 tons (market-based), down from 7,313,271 and 7,256,329 tons in 2020. Emissions are calculated per the GHG Protocol. GHG intensity per net sales was 271 (location-based) and 263 (market-based) tons CO2eq per euro million.

Reference: page 170

As part of its own business activities, Merck does not currently carry out any activities to remove or reduce greenhouse gases that it finances via CO2eq certificates. The company reports no GHG removals and no GHG mitigation projects financed through carbon credits for the reporting year.

Reference: page 171

While GHG emissions are generally considered in Merck's R&D and product development, a dedicated carbon pricing scheme applies to major investment projects. In these CapEx projects the company uses a shadow price of 100 euros per ton of CO2eq, applied globally. The shadow price is informed by EU ETS guidance on carbon price monitoring and was determined through a peer review analysis. It ensures GHG emission criteria are integrated early in project development and is used for CapEx projects exceeding 10 million euros, and those over 2 million euros with high sustainability impact. Because the scheme is geared toward avoiding or reducing future GHG emissions, it does not apply to actual emissions in the current year and does not affect the value of existing assets in the Financial Statements.

Reference: page 172

Merck treats pollution as water pollution, soil pollution, and substances of concern/SVHC, and reports policies for each. For water pollution the Group-wide EHS Policy, certified to ISO 14001, sets the basis for operational environmental management, supported by the Sustainable Water Management - Wastewater policy (risk-based management of wastewater), the Spillage Control of Hazardous Substances policy, and the Corporate EHS Audit Process policy that defines an audit plan for production, R&D and warehouse sites at intervals of three to five years. For soil pollution Merck applies the EHS Policy, the Management of Contamination at Sites policy (systematic identification, management and reporting of subsurface risks), and Spillage Control of Hazardous Substances. For substances of concern and SVHC the policies include M-SPOT (portfolio sustainability assessment), Umbrella (sustainability in R&D), Occupational Health and Safety Protection Concepts for Handling Hazardous Substances based on the STOP principle, and EHS Fire Protection. Policies are based on the UN Global Compact and the Responsible Care Global Charter.

Reference: page 174

For water pollution, Merck aims by 2030 to emit every water-polluting substance below its predicted no-effect concentration (PNEC). At the end of 2024, 41 Life Science sites, 14 Healthcare sites and 27 Electronics sites with production wastewater were involved; 12 Life Science, three Healthcare and one Electronics site had confirmed all water-hazardous substance concentrations are below the no-effect threshold. No significant CapEx or OpEx was allocated in 2024 for water pollution actions. For soil pollution, the Darmstadt, Gernsheim (Germany) and Norwood (USA) sites are affected by historic underground contamination. Darmstadt uses 32 remediation and process water wells; Gernsheim lowers groundwater via ten wells with monitoring at 64 measuring points; Norwood uses in-situ chemical oxidation injections. As of December 31, 2024, environmental protection provisions totaled 158 million euros, 96.6% attributable to Merck KGaA. In 2024, 9 million euros of OpEx was allocated to soil pollution, with 10 million euros planned for 2025. For substances of concern, the M-SPOT and Umbrella programs drive product assessments.

Reference: page 175

For water pollution, Merck aims by 2030 to reduce potentially harmful residues in its wastewater to below the no-effect threshold (PNEC). Activities started in 2020 and progress is measured every six months, monitored centrally for each site in scope through defined project steps covering identification of relevant water-hazardous substances, risk assessment, mitigation actions, and verification monitoring. Beyond this ambition, no further targets related to water pollution are set. For soil pollution, the ambition is to systematically prevent, identify, manage and report risks associated with soil and groundwater, with no quantitative targets set beyond this. For substances of concern and substances of very high concern, Merck states that at the current stage there are no explicit corporate targets defined concerning SoC and SVHC.

Reference: page 176

Merck reports water pollutant emissions in kilograms for 2024 with estimated median, minimum and maximum values. Total nitrogen was 55,992 kg (median, minimum and maximum). Chlorides (as total Cl) were the largest pollutant at 5,483,545 kg estimated median and maximum, with an estimated minimum of 4,219,545 kg. Nickel and compounds were 59 kg, 1,2,3,4,5,6-hexachlorocyclohexane (HCH) was 2 kg, and Nonylphenol and Nonylphenol ethoxylates (NP/NPEs) were 1 kg. Most other listed pollutants, including heavy metals such as mercury, lead, cadmium and chromium, and various organic compounds, were reported as not applicable (only values above applicable threshold values are reported). Each site determines pollutant relevance through measurement, calculation or estimation, recorded in a central EHS data management system. Many sites discharge wastewater to municipal treatment plants, and a scientifically based reduction range is applied to derive the estimated minimum, median and maximum values. The metric has not been validated separately by an external body.

Reference: page 187

Merck reports volumes of substances of concern (SoC) and substances of very high concern (SVHC) in metric tons for 2024, with SoC excluding SVHC volumes. For substances of concern, the total volume generated or procured per path was 33,415.2 metric tons, of which 26,732.3 tons left facilities as products or part of products or services. The largest SoC hazard classes by volume generated or procured were specific target organ toxicity single exposure (11,003.4 t), carcinogenicity (8,916.0 t), chronic hazard to the aquatic environment (8,016.1 t), specific target organ toxicity repeated exposure (7,321.6 t) and reproductive toxicity (6,920.1 t). For substances of very high concern, the total volume generated or procured was 8,492.6 metric tons, of which 6,194.9 tons left facilities. The largest SVHC class was reproductive toxicity at 7,939.4 tons. Substances were identified using a commercial chemical regulatory compliance list updated in July 2024. The metric has not been validated separately by an external body.

Reference: page 189

Merck's policy is the Sustainable Water Management - Water Use standard, a Group-wide policy that aims to minimize the negative environmental, health and safety impact of facilities worldwide. It sets the water efficiency target and defines global guidelines for responsible water use and reducing the water footprint. The Group's Sustainability Board (MSB) monitors and controls implementation, with target achievement first checked by business sectors then quarterly by the Greenhouse Gas steering group and the MSB. The policy applies Group-wide at all sites, including those in areas at water risk and high water stress, covering water withdrawal, use and discharge. It considers the UN Global Compact and UN Sustainable Development Goal 6 on Clean Water and Sanitation. Sites must trace their entire water flow from extraction through processing, use and treatment to discharge, with water withdrawal measured using water meters. Merck does not have policies or practices on sustainable oceans and seas, and the Water Use policy does not regulate products preserving marine resources.

Reference: page 190

Merck is implementing water efficiency actions in its Life Science and Healthcare business sectors. The largest Life Science action reduces drinking water use for process applications in Altdorf, Switzerland, aiming to cut water withdrawal by 70,000 cubic meters per year from the second quarter of 2025. Life Science actions in 2024 covered sites including Altdorf and Buchs (Switzerland), Cleveland, Carlsbad, Norwood and Visalia (USA), Mumbai (India), Molsheim (France) and Nantong (China), with Carlsbad, Visalia and Nantong in areas at water risk and high water stress. In Healthcare, actions at Aubonne (Switzerland) include optimizing purified water (estimated 15,000 cubic meters per year savings from 2025) and replacing outdated plant components by 2026 (expected 30,000 cubic meters per year savings from 2026). A new Water Circularity Guideline applies from 2025 at 20 Healthcare sites. A completed study at Jakarta, Indonesia, estimates reusing treated wastewater to reduce freshwater use by 11,000 cubic meters per year. No significant OpEx or CapEx was allocated in 2024.

Reference: page 192

Merck's water efficiency target is to achieve a 50% reduction in its water efficiency ratio, calculated as total water withdrawal per net sales, compared with the 2020 baseline, reaching 396 cubic meters per million euros net sales by 2030. The 2020 reference value was 792 cubic meters per million euros net sales. The target covers the complete water withdrawal of the company. In 2024 Merck achieved a water efficiency of 588 cubic meters per million euros net sales. The target is voluntary and set at Group level, covering all legal entities and sites, and is supported by the Water Use policy. Progress is monitored through quarterly reviews. No interim targets have yet been set, and no external stakeholders were involved in creating the target. To determine whether a site is in a water stress area, Merck applies a water risk factor from the World Resources Institute (WRI) Aqueduct Water Risk Atlas.

Reference: page 193

Merck reports water withdrawal metrics for 2024 under E3 MDR-M. Total water withdrawal was 12,430,923 cubic meters, of which 1,056,170 cubic meters was in areas at water risk, including high water stress. Water efficiency was 588 cubic meters per million euros net sales in 2024, against a 2030 target of 396 cubic meters per million euros net sales. Of the total water withdrawal, 797,418 cubic meters was attributable to Merck KGaA, Darmstadt, Germany. Operational sites and larger dedicated R&D and office sites record total water withdrawal in the central EHS data management system, with on-site methods varying by data source and frequency. Smaller R&D and office locations are not required to document in the system due to their relatively low water withdrawal, estimated at approximately 2% of the total water volume, and their volume is estimated based on employee numbers. Sites are defined as located in a water risk area if the WRI Aqueduct total water risk factor is 3 or higher. The metric has not been validated separately by an external body.

Reference: page 195

Merck identified biodiversity as integral to its strategic focus area of water and resource use. It built understanding of frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD) and the Science Based Targets Network (SBTN), and on this basis developed a biodiversity roadmap whose aim is to integrate biodiversity into business activities. The roadmap is divided into six focus areas covering dependencies as well as financial risks and opportunities, enabling the company to formulate specific objectives. Merck has not yet comprehensively analyzed the resilience of its strategy and business model regarding biodiversity; this is planned for 2025. The company plans to develop and implement a biodiversity strategy for all business sectors and their supply chains. Affected communities have not yet been taken into account.

Reference: page 198

Two policies relate to biodiversity. The Supplier Code of Conduct sets expectations for suppliers and sales intermediaries on protection of the environment, including biodiversity and ecosystems, and applies globally; the sourcing of materials that could lead to biodiversity loss must be avoided. The Access to Genetic Resources policy defines roles and procedures for accessing and using genetic material to ensure compliance with Access and Benefit Sharing obligations under the Nagoya Protocol and the Convention on Biological Diversity, covering land-use change, freshwater-use change and sea-use change. Merck plans to implement a biodiversity policy from 2025 addressing direct biodiversity loss, sustainable agriculture, water management, sustainable seas and deforestation, to be integrated into existing policies. It is also working on implementing the EU Deforestation Regulation for 2026.

Reference: page 199

Group Corporate Sustainability is responsible for developing the biodiversity strategy. In 2024 actions focused on deepening understanding of biodiversity impacts plus certification of one site. The Swiss Nature and Economy Foundation recertified the Vevey, Switzerland site as a pioneer for biodiversity; there Merck plants native trees, uses goats instead of crop protection products, monitors 53 species, builds reptile and insect refuges, and keeps five beehives. As a benefit sharing action, Merck sources algae from Brittany for a RonaCare product and financially supported the Regional Marine Fisheries and Aquaculture Committee. It also advanced TNFD-based work and IBAT analyses, with a final evaluation planned by end of 2025. No significant CapEx or OpEx was allocated to biodiversity actions in 2024, and none is intended for 2025.

Reference: page 200

Merck did not set any biodiversity targets for the reporting year and is therefore unable to report on the performance and effectiveness of such targets. It initially focused on understanding its impacts, risks and opportunities related to biodiversity. In 2025 it will work on implementing a biodiversity roadmap, for which it plans to consider targets at the interfaces with nature (for example the amount of water used in water stress areas), operational targets (for example water efficiency in industrial processes), and business model or implementation targets (for example the share of the supply chain that is certified and the degree of circularity). The planned targets are to be confirmed by the Group's Sustainability Board in 2025.

Reference: page 196

To understand the influence of its sites on biodiversity, Merck analyzes the environment around its sites in relation to key biodiversity areas using the Integrated Biodiversity Assessment Tool (IBAT). It selected sites classified as production sites under ISO 14001, with IBAT analyzing a one-kilometer radius around each. The result is that 10 of its 108 production sites worldwide, with a cumulative area of 135 hectares, are located within a one-kilometer radius of key biodiversity areas. These sites are in France, Germany (Gernsheim 95 ha, Steinheim, Wiesbaden), Ireland, Japan, South Korea and Spain (Mollet del Vallès 16 ha). Using TNFD and 2023 purchasing data, Merck also identified possible dependence and influence on water and land use in Asia and in North and South America.

Reference: page 203

Six policies relate to resource use and the circular economy. The Supplier Code of Conduct sets expectations for suppliers on resource use, reuse and recycling. The EHS Policy is the basis of operational environmental management and commits the company to minimizing negative environmental impact; Merck is certified to ISO 14001. The Waste Management Standard frames waste management to reduce environmental impact and ensure regulatory compliance, referencing the Circular Economy Action Plan, Green Deal, Packaging and Packaging Waste Directive and Waste Framework Directive. The Guidebook on Sourcing Strategies defines requirements for sustainable procurement. The Design for Sustainability policy applies a life-cycle approach to product design. The SMASH Packaging policy is built on four pillars: SHRINK (reduce packaging), SECURE (zero deforestation), SWITCH (improve plastic sustainability) and SAVE (maximize recycling).

Reference: page 206

Actions span all business sectors. Under the Umbrella initiative, sustainability scorecards assess sustainable design from product development; in 2024 the sustainability assessment covered more than 99% of all R&D initiatives. The GreenSpeed tool evaluates the sustainability of chemical products during manufacturing, tracking water usage, solvent consumption, energy and greenhouse gas emissions via process mass intensity. In Life Science the SMASH Packaging program targets packaging sustainability; in Healthcare the MPact initiative supports the 70% circularity target by 2030, and a Returpen fertility pen take-back pilot in Denmark aims to recycle 75% of returned pens. In Electronics, optimized specialty gases received EUR 6 million of CapEx in 2024, and solvent recycling in OLED production in Darmstadt improves resource efficiency. No other significant OpEx or CapEx was allocated.

Reference: page 208

Merck's waste target for 2030 is to further reduce production-related waste or direct it towards material recovery. It aims to achieve a company-wide circularity rate of 70% as part of this 2030 waste target, against a reference value of 64.1% in 2022; in 2024 the circularity rate amounted to 69.2%. The circularity rate is calculated as waste and avoided waste divided by total waste and avoidance in metric tons, with waste-to-energy excluded. Under SMASH Packaging, Life Science aims to reduce packaging weight by 6,300 metric tons by 2030 (from around 63,000 tons in 2020), saving over 396 tons annually in 2024, and targets 100% deforestation-free fiber-based packaging (66% in 2020, 81.6% in 2024). Product packaging aligned with circularity principles was 46.4% in 2024 versus 49% in 2020.

Reference: page 211

In 2024 the total weight of products and technical and biological materials used was 12,878,998 metric tons. The share of biological materials used to manufacture products and services (including packaging) that is sustainably sourced was 32.6%. The absolute weight of secondary reused or recycled components, secondary intermediary products and secondary materials used was 739,400 metric tons, representing a 5.7% share. The majority of resource inflows consist of virgin materials. Procured materials are subdivided into raw materials, biologics and chemicals. Chemicals include organic basics and solvents such as ethanol, toluene and acetone; inorganic basics; precious metals; and critical raw materials such as tungsten powder, titanium, lithium and aluminum. Packaging materials are categorized into glass, metal, plastic, paper and timber. Data is based on invoicing data, with approximations used for the biological and secondary material shares.

Reference: page 214

Merck reports key products that advance circularity. Packaging for specialty gases, thin films and select patterning products is designed for repeated use; emptied containers are returned for cleaning, refurbishment and refilling. OLED materials production improves solvent recycling and facilitates return of end-of-life products. Healthcare production sites continued a zero-landfill initiative begun in 2023, reusing pallets and deblistering tablets. The bio-based solvents portfolio helped Life Science customers avoid over 47 metric tons of CO2eq in 2024, and replacing expanded polystyrene with molded pulp avoided the use of over 3.1 million EPS inserts globally. The proportion of recyclable content in packaging was 97.7% in 2024, determined from procurement data on a mass basis. Product repairability was 51.0% in Life Science and 100.0% in Electronics, and the expected durability of Healthcare products was 3.1 years.

Reference: page 215

In 2024 Merck generated 161,143 metric tons of waste (64,234 tons at Merck KGaA, Darmstadt, Germany). Total waste diverted from disposal was 115,326 metric tons, while the total amount of waste directed to disposal was 45,817 metric tons. Total hazardous waste was 64,264 metric tons and total hazardous waste combining all treatment types was 29,548 tons directed to disposal. Non-hazardous waste diverted from disposal due to recycling was 70,636 metric tons and hazardous waste diverted due to recycling was 22,177 tons. Non-recycled waste was 68,330 metric tons, a share of non-recycled waste of 42%. There was no radioactive waste and zero metric tons reported for preparation for reuse, as materials prepared for reuse are documented under avoidance. Waste data is based on production data and quantities reported by disposal companies and has not been externally validated.

Reference: page 223

Merck manages material impacts and risks for its own workforce through a set of Group-wide policies. These include the Social and Labor Standards Policy, the Human Rights Charter, the Code of Conduct (available in 22 languages), the Group Policy Statement on Compliance with Human Rights and Environmental Due Diligence Obligations, the Flexible Working Guideline, the EHS Policy, the Group Employee Health Standard, the Contractor EHS Management Standard, the Safety Culture Excellence Standard, the DEIB Policy (introduced in 2024) and the Group Standard on People Development and Learning. The policies cover secure employment, working time, adequate wages, collective bargaining, work-life balance, health and safety, inclusion of persons with disabilities, gender equality and equal pay, diversity, and training. They are based on the International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights, the UN Global Compact (signatory since 2005) and ILO standards. Most are available internally and publicly.

Reference: page 229

Merck engages its workforce through several processes. The annual global Employee Engagement Survey (EES) is the central confidential feedback channel covering satisfaction, leadership, mental health and work-life balance, with operational responsibility held by the Chief Human Resources Officer. Topic-specific pulse surveys supplement it, and in some markets voluntary self-identification questions cover disability, LGBTQIA+ affiliation and ethnic origin. The Euroforum is the key dialogue platform between employer and employee representatives at European level, representing employees in EU countries plus Switzerland, Norway and the United Kingdom, meeting at least once a year with direct access to top management. The FutURe project engages employees under 30 through an advocacy group, surveys and quarterly roundtables with senior leaders including the CEO. Nine clusters of internal DEIB employee networks (covering well-being, disability, LGBTQIA+, women, veterans, and cultural and ethnic diversity) inform decisions. An annual learning needs analysis survey shapes training catalogs.

Reference: page 231

Merck has multiple reporting channels enabling employees to raise concerns or report violations of its standards. First points of contact are supervisors, HR or compliance units, and employees can make anonymous calls to a compliance hotline reachable via the website in more than 40 languages. Information on reporting channels, investigation procedures and protection from retaliation is set out in the Whistleblowing and Investigations Standard, updated in 2023 and assigned as mandatory training to all and every new employee. A compliance case management procedure systematically processes reports; all complaints are treated confidentially and investigated by independent personnel, with preventive and remedial actions where violations are confirmed. The grievance system is designed to meet the effectiveness criteria for non-judicial mechanisms set out in the UN Guiding Principles, being legitimate, accessible, predictable, fair and transparent. Further specific processes address working time, work-life balance, occupational safety training, equal pay, and inclusion of people with disabilities.

Reference: page 232

Merck implemented several actions to address material impacts on its workforce. The Fertility Benefit Program, continued Group-wide in 2024 building on a 2023 policy, offers employees and partners reimbursement for fertility treatments and is now available in all markets. The BeHealthy Toolbox provides health promotion services, a Mindfulness Community and an Employee Assistance Program offering confidential counseling; mandatory health-oriented leadership training for managers is planned to reach 95% rollout by the end of 2026. An analysis of pay differences progressed from ten largest markets in 2021 (about 80% of the workforce) to all markets except the US in 2023, with the US analysed in 2024. Helping diverse talent flourish includes programs for female and underrepresented ethnic talent. Daily commitment to inclusion includes the mandatory Inclusive Leadership Workshop. The MyGrowth platform (launched 2024) supports individual development, with significant OpEx reported under G1 and no significant CapEx allocated.

Reference: page 235

Merck set measurable, outcome-oriented targets for several workforce matters. The Lost Time Injury Rate (LTIR) target is to reduce LTIR below 1.0 by the end of 2025, from a 1.2 baseline (2021); performance in 2024 was 1.2. For gender equity, the company aims for gender parity in management (role 4+) by 2030, from 36% in 2021, reaching a stable 39.0% women in leadership. For US culture and ethnicity, it aims to raise managers from underrepresented ethnic groups to 30% by 2030 from 21% (2021), reaching 24.1%. Globally it aims for 30% of management from Asia, Latin America and MEA by 2030 from 16% (2021), reaching 18.2%. For inclusion, all people managers must complete the Inclusive Leadership Workshop by 2026, from 37% (2021), reaching 95.0%. No ESRS-compliant targets were set for adequate wages, collective bargaining, secure employment, working time, work-life balance or training and skills development.

Reference: page 238

As of December 31, 2024, Merck employed 62,557 people (headcount, fully consolidated subsidiaries, excluding HUB Organoids). The breakdown by gender was 35,168 male, 27,245 female and 144 other, meaning women represented about 43.6% of the total workforce. Of these, 3,715 worked at Merck KGaA, Darmstadt, Germany. By country, Germany had 13,236 employees and the United States 13,976. By contract type, 59,020 were permanent employees and 3,537 were temporary; the company does not use non-guaranteed hours contracts. By age, 8,174 employees were under 30, 39,520 were between 30 and 50, and 14,862 were over 50. During the reporting year 5,746 employees left the company, giving an employee turnover rate of 9.2% in 2024, calculated as total leavers (voluntary and involuntary) divided by average headcount.

Reference: page 240

For the first reporting year Merck applies the phase-in option per ESRS 1 Appendix C, so collective bargaining figures cover only countries and markets within the European Economic Area (EEA). Total employees covered by collective bargaining agreements amounted to 86.0%, and 16.0% at Merck KGaA, Darmstadt, Germany. Both Germany and Merck KGaA, Darmstadt fall in the 80-100% coverage band for EEA collective bargaining and for workplace representation (social dialogue). For non-EEA regions the phase-in option is applied. In countries where collective agreements do not apply due to different administrative, commercial and legal structures, Merck works closely with trade unions and workers' representatives, and working conditions are determined by legal requirements and global guidelines. For employee representation, the company has an agreement establishing its Euroforum.

Reference: page 243

Merck discloses gender distribution at top management level (defined as senior management positions, Role 6+). In 2024 there were 58 female employees at top management level, a share of 29.9%, and 136 male employees, a share of 70.1%, with no employees of other gender; the total at top management level was 194. At Merck KGaA, Darmstadt, Germany, there were 15 female (30.6%) and 34 male (69.4%) at top management, totaling 49. The company also discloses the workforce by age group: 8,174 employees under 30 years old, 39,520 between 30 and 50, and 14,862 over 50. Positions are rated using a market-oriented system with an overarching job architecture classifying each role across 11 levels, 15 functions and a range of career types.

Reference: page 240

Merck is committed to the principle of equal pay for equal work and offers competitive remuneration including additional benefits, intended to ensure a decent standard of living for employees and their families. Remuneration at least meets or exceeds local conditions and guidelines, is benchmarked externally and updated based on prevailing local conditions, and is based on the requirements of the position and the employee's performance. Managers decide on employees' pay within the company's compensation structures and philosophy and are responsible for explaining pay structures and addressing concerns, with Human Resources Business Partners available for further concerns. To assess whether all employees receive an adequate wage, Merck records local minimum wage requirements and compares them with the wage of the lowest-paid employee per country, with a cut-off date of December 31, 2024. In the reporting period the company paid all employees an adequate wage and complied with local remuneration regulations in all markets worldwide.

Reference: page 244

Merck discloses the share of persons with disabilities among employees, subject to legal restrictions on the collection of such data. In 2024 the share of persons with disabilities amongst employees was 2.5%, and 4.9% at Merck KGaA, Darmstadt, Germany (the latter pertaining only to the joint operation, calculated under the German Social Code IX, SGB IX). The indicator includes all employees with disabilities who voluntarily disclose their status, proven by an official document, and only for countries where it is legally permitted to request such information. Because legal definitions of persons with disabilities vary across markets and reporting relies on voluntary submission, the actual percentage may be higher. Merck provides reasonable accommodations across the employee life cycle, operates the I'M Able Employee Resource Group, revised an accessibility toolkit in 2024, and is a signatory of the CEO Letter on Disability Inclusion.

Reference: page 245

Merck discloses participation in regular performance and career development reviews. In 2024, 98.0% of employees participated in regular performance and career development reviews. By gender, participation was 99.0% for female employees, 98.0% for male employees and 3.0% for the other gender category. The indicator is based on the number of performance reviews (year-end conversations) documented in the central HR system, which are positioned as input for career and development conversations. The comparatively low participation in the other gender category is attributed to the majority of those employees belonging to the newly acquired subsidiary Unity SC SAS (acquired October 31, 2024), whose performance management data is not yet fully integrated, so the actual percentage may be higher.

Reference: page 241

Merck reports that 100.0% of its own workforce is covered by its occupational health and safety management system, which considers ISO 45001 and is established Group-wide. In 2024 there were no fatalities as a result of work-related injuries among employees or non-employees, and none among other workers such as contractors. There were 287 recordable work-related accidents among employees, 14 among non-employees and 301 in total. The rate of recordable work-related accidents (per one million hours worked) was 2.5 for employees and 2.5 in total. There were 36 cases of recordable work-related ill health among employees, and 5,783 days lost to work-related injuries and fatalities. At Merck KGaA, Darmstadt, Germany, there were 37 recordable accidents among employees (rate 3.4). The Lost Time Injury Rate (LTIR), reported under S1-5, was 1.2, and the EHS Incident Rate was 2.2 in 2024.

Reference: page 245

Merck's remuneration is based on the requirements of the position and individual performance, with no distinctions based on gender or other demographic characteristics, and the salary policy is regularly reviewed using data analysis and industry benchmarks. In 2024 the percentage gap in pay between female and male employees, expressed as a percentage of the average pay level of male employees, amounted to 8.8% (unadjusted gender pay gap); in previous years Merck reported the adjusted gender pay gap. The ratio between the remuneration of the highest-paid individual and the median remuneration of employees amounted to 97.3 in the reporting year. The underlying calculations are based on taxable employee compensation, including annual base salary, short-term and long-term incentives, other recurring payments and benefits in kind. Objective factors such as type of work, country, sector, qualifications, length of service, age and performance influence both the pay gap and total remuneration.

Reference: page 243

Merck discloses work-related incidents and complaints concerning violations of its Social and Labor Standards Policy within its own workforce. In 2024 there were 183 reported incidents filed through grievance channels, of which 28 were complaints of discrimination including harassment. There were 57 confirmed violations of the Social and Labor Standards Policy, of which 10 were confirmed incidents of discrimination including harassment. Fines, penalties and compensation for damages as a result of these incidents and complaints totaled 0 euro, and no complaints related to employee matters were filed to the National Contact Points for OECD Guidelines for Multinational Enterprises. For severe human rights incidents (forced labor, modern slavery, human trafficking and child labor), the number connected to the own workforce was zero, including zero cases of non-respect of the UN Guiding Principles, ILO Declaration or OECD Guidelines, with related fines and compensation totaling 0 euro.

Reference: page 251

Merck states that as an international company it has a responsibility to respect human rights worldwide and to ensure no violations occur at subsidiaries, suppliers or business partners, fulfilling due diligence obligations under the German Supply Chain Due Diligence Act (LkSG). Its policies, in particular the Supplier Code of Conduct, are based on a zero-tolerance approach to child and forced labor, modern slavery and human trafficking, rejection of discrimination, the right to form employee representative bodies and collective bargaining, compliance with national legislation on working hours, remuneration and minimum wage or ILO standards, and prevention of accidents and work-related illnesses. The Supplier Code of Conduct applies globally to all suppliers and sales intermediates and has been reflected in the General Terms and Conditions of Purchase since 2023. Other policies include the Human Rights Charter, the Group Policy Statement on human rights and environmental due diligence, the Responsible Minerals Sourcing Charter, the Conflict Minerals Due Diligence Guideline, the Mica Sourcing Governance Process and the external supply chain risk management process.

Reference: page 255

Merck reports that it does not yet have processes in place to directly engage with workers in the value chain and their representatives about material actual or potential impacts and risks affecting them. The company notes elsewhere that it does not engage directly with workers in the value chain. Instead it works with other companies in industry initiatives to operate according to industry standards and to rely on comparative data and expert analyses. For example, Merck is a founding member of the multi-stakeholder Responsible Mica Initiative (RMI), which aims to reduce human rights risks in the mica supply chain and considers the interests of value chain workers in order to improve working conditions and eliminate child labor and forced labor.

Reference: page 256

Merck has established standardized processes including supplier selection, remedial actions under its Remedial Actions Guideline, human rights risk management, a complaints mechanism and conflict minerals due diligence. Suppliers who do not pass an audit must implement corrective and preventive actions through a CAPA plan within a defined time frame and complete training on the Supplier Code of Conduct. Potential violations can be reported through the Group-wide whistleblower and complaints system, centered on a Compliance Hotline run with a third-party provider, available to employees and value chain workers in more than 40 languages, free of charge and anonymously, by telephone or web application. The grievance system meets the UN Guiding Principles effectiveness criteria of being legitimate, accessible, predictable, fair and transparent. In the reporting year, Merck received four reported cases of complaints, none of which were confirmed as human rights violations involving value chain workers. Complainants are protected against discrimination and reprisals.

Reference: page 258

Through the Together for Sustainability (TfS) initiative, suppliers are assessed via audits or EcoVadis ratings covering Environment, Labor and Human Rights, Ethics and Sustainable Procurement across more than 175 countries and 200 sectors. Merck has access to 2,695 valid scorecards, of which almost 2,587 completed a new assessment or re-assessment in 2024. Suppliers with a low human rights score must undertake e-learning training on the Supplier Code of Conduct. Merck is a member of the Responsible Minerals Initiative, using the RMAP smelter database, and a founding member and president since 2017 of the Responsible Mica Initiative. For mica workers in the Indian states of Jharkhand and Bihar, Merck contractually agreed a monthly living wage of 17,500 Indian rupees. Since 2012 it has funded three schools in Jharkhand with around 490 students plus five vocational training centers, and fully funds an IGEP health center in Sapahi, Bihar, serving around 20,000 residents. ERM conducts annual audits of mica mines and processing units, and IGEP has carried out unannounced visits since 2013. No significant OpEx or CapEx was allocated in 2024.

Reference: page 261

Merck has set a quantitative target on the sustainability assessment of relevant suppliers, linked to its strategic goal of anchoring sustainability throughout value chains by 2030. Relevant suppliers are defined as those rated with a higher human rights and environmental risk score, plus suppliers contributing to 50% of procurement-related spend. The indicator was implemented in 2022 using 2021 supplier spend as the baseline. In 2022, 33% of relevant suppliers were covered by a valid sustainability assessment and 74% of procurement spend attributable to relevant suppliers was covered. For 2024 Merck achieved its objective. For 2025, the objective is to cover 92% of relevant supplier spend and 73% of relevant suppliers, using 2024 spend data as baseline. Performance in 2024: 75% of relevant suppliers were covered by a valid sustainability assessment, and 94% of procurement spend attributable to these suppliers was covered. Data is reviewed by the Group Sustainability Board.

Reference: page 269

Merck frames S4 around health and safety of patients and access to products, services and quality information. For patient health and safety, policies include Standards on Human Research and Clinical Studies, the Medical Governance Standard, Standards on Managed Access to Medicines, the Standard Procedure on Product Quality Complaint Management, the Code of Conduct (available in 22 languages), the Pharmacovigilance Governance Standard, the Standard on Patient Support Programs, the Group Standard Illicit Trade and Product Crime Prevention and the Group Quality Policy. Many are based on the WMA Declaration of Helsinki, ICH Good Clinical Practice and CIOMS guidelines. For access, policies include the Group Pricing and Access Policies (Pricing Governance, Patient Access Program Governance, Tender Management Governance) and the Charter on Access to Health in Developing Countries, which is publicly available and was assessed in 2024 ahead of a new policy document planned for 2025. Compliance with the Human Rights Charter is currently not monitored with regard to consumers and end-users. Due to strict regulatory requirements, no interviews with consumers and end-users were conducted.

Reference: page 276

Merck works with consumers and end-users or their legitimate representatives directly or through credible proxies, with engagement phases and frequency varying by process. Patient Advisory Boards are a key channel to gather patient and carer insights, used to discuss protocol design, educational materials and clinical study approaches. The Patient 360 program involves patients and carers four to five times per program via e-mail, virtual or personal contact, followed by surveys, and has co-created a medical information website. Medical Advisory Board meetings gather indirect feedback from healthcare professionals. Patient-reported outcomes are included as endpoints in some clinical studies. For pharmacovigilance, Individual Case Safety Report Management provides e-mail, fax, telephone, web pages and program channels for reporting adverse events. For access topics, Merck reports it does not have specific processes for involving consumers and end-users but conducts regular stakeholder dialogue with payers, patient representatives, healthcare professionals and NGOs, with the CEO of Healthcare as the most senior responsible role.

Reference: page 278

Violations of the Code of Conduct, legal provisions or human rights and environmental concerns can be reported via the Group-wide whistleblowing and complaints system, with a free and anonymous compliance hotline available in more than 40 languages and countries. Complaints from consumers and end-users about medicines are forwarded to functions such as Global Patient Safety. Merck generally confirms receipt within seven days and aims to provide status information within three months. A general call center, referred to as call center 720, serves healthcare professionals, patients and carers, with contact details in package leaflets and on therapeutic-area websites. Centralized follow-up of corrective and preventive actions (CAPA) supports product quality complaint handling, with trend analyses to identify improvement areas. Merck does not assess whether consumers and end-users are aware of or trust the compliance hotline or call center 720. There were no reports for this target group in the reporting year and no severe human rights issues connected to consumers and end-users were reported in 2024.

Reference: page 280

For patient health and safety, Merck conducts global internal audits of Good Clinical and Pharmacovigilance Practice covering R&D, Healthcare units and external service providers; it carried out 113 audits in 2024 and underwent 17 health authority inspections, all completed without legal action by an authority. Each critical or major observation triggers root cause analysis, CAPAs and effectiveness checks. The annual Patient Safety Day raises awareness of pharmacovigilance. In 2024 there were 5 drug product recalls affecting 46,465 units. Anti-counterfeiting actions include product serialization, track-and-trace, online monitoring and sponsorship of the Global Pharma Health Fund GPHF-Minilab, which tests for 113 active ingredients. For access, Merck served around 103 million patients with its healthcare portfolio in 2024, around 65 million in LMICs, and enabled treatment of around 81 million people against schistosomiasis (total 184 million people reached). The SHAPE program had 17 pilot projects. Access OpEx in 2024 was EUR 4 million; schistosomiasis EUR 29 million; malaria EUR 12 million; equitable pricing EUR 3 million. Patient Access Programs ran for nine products in around 20 markets.

Reference: page 282

For patient health and safety, Merck's target for Good Clinical and Good Pharmacovigilance Practice is to achieve a 100% completion rate of the annual audit plan, with inspection observations properly mitigated to maintain compliance. In 2024 it documented 17 inspections and conducted 113 audits, with the 2024 annual audit plan completion rate (Q2/2024 to Q1/2025) expected to reach 96%. Beyond this, no other health and safety targets were set. For access, the LMIC access strategy aims to reach more than 170 million patients per year by 2030, including more than 80 million patients with the healthcare portfolio (reference around 57 million in 2023; 65 million in LMICs reached in 2024) and more than 90 million people with the global health portfolio. The schistosomiasis target is to provide sufficient praziquantel for 90 million people per year by 2030 (reference around 73 million school-aged children in 2021; 203 million tablets enabling around 81 million people treated in 2024). A new arpraziquantel target aims to reach up to 12 million preschool-aged children by 2030, with first children treated in early 2025.

Reference: page 295

Merck's research and business decisions are guided by its Code of Conduct, which commits the company to respect human rights and responsible business conduct, follows the UN Global Compact, and is available in 22 languages internally and publicly. Six defined workplace behaviors support a High-Impact Culture. A group-wide whistleblower and complaints system centers on a Compliance Hotline run with a third-party provider, accessible to employees and external stakeholders in more than 40 languages, around the clock, free of charge and anonymously. The Whistleblowing and Investigations Standard is based on EU Directive 2019/1937; reports go to an independent Group Compliance team, with high-risk cases escalated to the Compliance Case Committee. Employees complete compliance training on Code of Conduct, anti-corruption and data privacy during onboarding and repeat it based on risk exposure. On animal welfare (G1-NI-01), the Group Animal Science and Welfare Policy applies the 3Rs (Replacement, Reduction, Refinement) plus Responsibility, based on EU Directive 2010/63 and ILAR guidelines, overseen by the Group Animal Welfare Council; all animal facilities are AAALAC-accredited.

Reference: page 307

Although anti-corruption and anti-bribery were not assessed as material, Merck maintains robust policies and measures. The Group Anti-Corruption Policy is aligned with the United Nations Convention against Corruption and the Anti-Corruption Group Standard strictly prohibits all forms of bribery and corruption, applying group-wide and to third parties acting on Merck's behalf. Group Legal and Compliance, led by the Chief Compliance Officer, owns the framework. A compliance risk assessment covering all business sectors uses a risk matrix with country-specific risk segmentation, and a risk-based due diligence process governs external partner selection. Strict value limits apply to gifts and entertainment. An external certification of the Compliance Management System under IDW PS 980 has been underway since 2022, with the effectiveness assessment rolling out across regions in 2025. In 2024, Group Internal Auditing conducted 30 audits involving bribery and corruption-related risks (6 of them at Merck KGaA, Darmstadt). A mandatory e-learning course on anti-corruption, anti-bribery and anti-money laundering is targeted by risk exposure; 17,002 persons were trained in 2024 (16,967 employees, 27 percent of employees).

Reference: page 310

Merck reports compliance cases received via the compliance hotline and other reporting channels. In 2024 there were 89 reported compliance incidents (1 at Merck KGaA, Darmstadt) and 30 confirmed incidents (1 at Merck KGaA, Darmstadt). Of these, 2 confirmed cases of bribery and corruption were recorded across the Group, with none at Merck KGaA, Darmstadt. Any concerns related to corruption and bribery can be reported via central reporting channels and are investigated under the Whistleblowing and Investigation Standard and the internal investigation procedure. The committee responsible for investigating incidents is separate from the chain of management involved in the matter. The Chief Compliance Officer reports to the Executive Board and Supervisory Board on the status of compliance activities, potential risks and serious compliance violations at least twice a year.