Merck could benefit from some clearer reporting
On its website, Merck Group says its DNA is “concealed deep inside and really visible only to those who are part of it”. For those of us not in possession of such privileged insight, its Corporate Responsibility Report 2011 offers some hope of learning what makes the group tick.
The Merck Group (also referred to as Merck KGaA) is a global pharmaceutical, chemical and life-sciences company headquartered in Germany. It should not be confused with the US-based Merck & Co pharmaceuticals company (known outside the US and Canada as Merck Sharp & Dohme).
The Merck Group has four divisions. Merck Serono markets prescription drugs; the consumer healthcare division offers over-the-counter products; Merck Millipore provides scientists with tools for life science research; and Merck Performance Materials sells chemicals to the IT, printing, plastics and cosmetics industries.
Anyone following corporate attempts to eradicate child labour from supply chains will recognise Merck’s well-documented connection to the issue in India. It is there that Merck sources a mineral called mica for processing into compounds used in the pharmaceuticals industry. Children are widely known to be involved in the collection of mica and Merck is working with Indian authorities, suppliers and NGOs to find solutions to this complex problem.
Merck is a signatory to the Global Compact and its report conforms to the Global Reporting Initiative guidelines, so one would expect that the child labour issue would feature prominently in the document. Not so. We are told that in 2009 the company signed up to the German Association of Materials Management, Purchasing and Logistics and its code of conduct that requires signatories to apply minimum social standards, including anti-corruption and anti-child-labour. We learn that Merck has begun to ask its suppliers to provide assurances that will help the company conform to the code of conduct.
Given that it only asked for such information in 2010 – why did it take so long? – we can hope that next year’s report may provide further detail that would assure readers that Merck is making the necessary investments so that its efforts match its commitments. Readers judge reports by how well the documents reflect reality. The lack of reporting on such a significant issue seems, at best, a lost opportunity to demonstrate transparency.
Perhaps something is lost in translation from the German, but Merck’s super-dry, methodical approach to reporting makes for a tedious read. The 2011 report covers issues from animal testing to orphan drugs and the fight against counterfeit medicines – all potentially fascinating subjects. But the report eschews examples and stories and relies heavily on policies and programmes to convince its audience that Merck takes its responsibilities seriously.
The report’s clean and simple design reflects the culture of Merck’s sector, but such sterility sucks the vitality from the overall message of a company whose products help us lead better, healthier lives.
On the positive side, the report points to some solid signs of responsible business. The chairman’s message, for example, clearly indicates that Merck views responsible business as integral to its long-term success. Various programmes mentioned throughout the report support this position.
Merck’s work to stop counterfeit medicine is an interesting example, demonstrating again that being a responsible corporate citizen has clear business benefits. Counterfeit medicine poses a real threat to Merck’s brand and profitability as well as the health and well-being of patients.
Clear layout
Merck’s goals – and actions to achieve them – are clearly laid out with updates on progress. Merck’s CR governance sounds impressive, with the executive board being responsible for corporate responsibility issues and associated risks.
Merck is committed to developing what it describes as a realistic approach to calculating the carbon footprint for each of its 50,000 products. Determining the volume of greenhouse gases a product creates during its entire lifecycle is no small task. Merck acknowledges that no industry standard exists to do this, but says it is committed to increasing transparency up and down its supply chain. This is a highly ambitious programme and two pilots are already under way. The process of measuring the footprints and the business benefits expected from the data will make an interesting story in subsequent reports.
Will it seize that opportunity? Judging from the dry and rather opaque qualities of the 2011 report, it seems unlikely. And that’s a pity because Merck has an interesting business and fascinating stories to tell. But, on current form, Merck’s DNA seems destined to remain visible only to those who are “part of it”. That excludes you and me.
Snapshot:
Follows GRI? Yes, self-declared B+.
Assured? External verification for data only.
Materiality analysis? Yes
Goals? Yes
Stakeholder input? Yes
Seeks feedback? No
Key strengths? Clearly outlines policies, initiatives, goals and progress.
Chief weakness? Few examples. Lacks a coherent story to tie report together.
Pleasant surprise? Ambition to calculate the carbon footprint of its 50,000 products.
Marguerite Pettit is a consultant at Context America.