Poor storytelling fails to articulate Merck’s solid commitment to corporate responsibility
The sixth sustainability report from US pharmaceutical company Merck is fully online as part of its responsibility micro-site and available as a 309-page PDF, along with a 24-page highlights document. It clearly sets out its vision of “discovering innovative solutions to the world’s biggest health challenges”, which aligns to the company’s mission and is supported by four strategic priorities: access to health, environmental sustainability, employees, and ethics and transparency.
Successes include increased board representation of ethnic groups (up from 11% in 2011 to 25% in 2012), reduced direct greenhouse gas emissions every year from 2009 (meeting its 10% reduction goal three years early), and a 20% reduction in lost-time injury rates.
But seeking out more insight into the “hows” and “whys” of these strategic priorities is where things get a little murky.
Of the four priorities, access to health is considered No 1. But Merck’s main approach to access seems to be to collaborate and donate – not entirely strategic. The report includes a confusing array of occasionally irrelevant issues that fails to give confidence in a coherent strategy. For example, you might be surprised to see “Merck animal health” and “product safety” among the many issues covered as part of its work on improving access.
The World Health Organisation says affordability is a “building block” to ensure access to medicines. But information in the report on health care pricing feels a little light. Merck provides a lengthy explanation of the issue and the challenges that arise in different markets. But the detail – where and how flexible pricing models, price caps and tiered pricing are being applied and the benefits this is bringing – is missing. The KPIs indicate Merck made little progress in 2012.
With peers such as Johnson & Johnson and GlaxoSmithKline continuing to innovate in their approach to access and making progress in their reporting, Merck is in danger of being outpaced – perhaps already evident in its declining position in the 2012 Access to Medicine Index from second to fourth.
Merck has made some impressive strides in the area of maternal health. The centrepiece is the company’s $500m Merck for Mothers programme to reduce maternal mortality. Since its launch in 2011, it has pledged $105m to more than 30 projects in 20 countries. For example, the Merck for Ugandan Mothers programme is exploring how best to expand private delivery of maternal healthcare in a way that complements the existing public health system. Particularly promising are Merck’s efforts to measure, evaluate and report on the success of the programme against a set of metrics developed with the London School of Hygiene and Tropical Medicine.
Merck’s environmental performance is good. Merck identifies water, reducing GHG emissions and reducing and reusing materials as critical. It is the only priority area with medium and long-term 2020 goals and a roadmap to becoming “leaner and smarter”. It saw progress in four of its five KPIs, with notable reductions in GHG emissions (6%), emissions of volatile organic compounds (13%) and waste (4%).
Greater emphasis on the business benefits would help make Merck’s environmental agenda feel more strategic. It reports on the amount it intends to spend on water and energy reduction initiatives until 2015 – an impressive $100m and $50m respectively – but forgets to tell us about the cost savings and benefits.
Merck uses 36 KPIs. These are well aligned to the strategic pillars and sub-topics, and performance is presented clearly using a data dashboard. For the technical expert, downloadable Carbon Disclosure Project disclosures for climate change, water disclosure and supply chain performance is also available. It would have been of more interest to Merck’s stakeholders to give a detailed explanation of poor performance – specifically, why it is under-performing or showing no progress in 15 of 36 KPIs. For example, the number of healthcare workers trained almost halved in 2012 and executive roles held by women decreased to 31% in 2012 from 35% in 2011.
It is encouraging to see Merck attempting to engage with a wider audience by integrating social media into the online report. The report can be shared via Twitter and Facebook and a good amount of sustainability-related content fills its Facebook page, which has more than 10,000 likes. But iPad and smartphone users are unable to reproduce the report in relevant formats and sustainability-specific media channels are yet to feature.
Merck’s lengthy report demonstrates a solid commitment to corporate responsibility. But a lack of a clear storyline makes it difficult to understand how it all pieces together and why corporate responsibility is important to the business.
Follows GRI? Yes
Materiality analysis? Yes
Goals? Environmental goals only
Stakeholder input? No
Seeks feedback? Yes – online survey
Key strengths? Contribution to reducing maternal mortality
Chief weakness? Poor storytelling
Pleasant surprise? Environmental performanceCR Reporting Merck sustainability report
November 2013, London, UK
Add materiality to your business CR disclosure strategy, get to grips with all the latest CR reporting guidelines and bring your CR communications to the next level for increased brand loyalty and stakeholder engagement. Real life examples from Unilever, Virgin Media, IKEA, Nestle and more!