Management Report & Annexes | Basic Information About the Group

1.3 Targets and Performance Indicators

To consistently implement our strategy, we have set ambitious economic, social and ecological targets and measure their attainment in terms of selected performance indicators.

Bayer Business Targets[Graphic 3.1.2]

Profitable Growth
Approx. 5% increase in Group sales (Fx & portfolio adj.) in 2014 to approx. €41 billion – €42 billion (expected negative currency effects of approx. 2%)
Low- to mid-single-digit percentage increase in EBITDA before special items in 2014 (expected negative currency effects of approx. 5%, approx. minus €450 million)
Mid-single-digit percentage increase in core earnings per share in 2014 (expected negative currency effects of approx. 6%)

Innovation
Group:
Increase in R&D investment for the Bayer Group to approx. €3.5 billion in 2014
HealthCare:
Transition of more than 10 new molecular entities (NMEs) into development in 2014
CropScience:
Transfer of at least six new molecular entities (NMEs) or traits into confirmatory technical proof-of-concept field studies in 2014
MaterialScience:
Improvement of production process technology to achieve better energy efficiency

Sustainability
Supplier management
Evaluation of all strategic suppliers by 2017 and of all potential high-risk suppliers with significant Bayer spend by 2020, and development and establishment of a new sustainability standard for our supply base by 2020
Resource efficiency
Improvement in Group-wide energy efficiency of 10% and reduction in Group-wide specific greenhouse gas emissions of 20% by 2020 (based on 2012), and establishment of a water management system at all sites in water-scarce areas by 2017
Safety
Reduction in occupational safety incidents of 35% and in transport incidents and incidents relevant to process and plant safety of 30% (all by 2020 based on 2012)
Product stewardship
Conclusion of assessment of hazard potential for substances used in quantities exceeding one metric ton per annum by 2020
Compliance
Conducting of precautionary risk assessments in all three subgroups by 2015 and annual compliance training for all Bayer managers from 2015

Employees
Continuous improvement in employee engagement; increase in the proportion of women in senior ­management to 30% and in the proportion of managers from outside the European Union, the United States or ­Canada to 25% by 2015

The new non-financial targets replace the existing set of sustainability targets for 2015 and are explained in detail in the online annex, which also includes definitions and KPIs. The forecast for further key financial data is given in Chapter 20 “Future Perspectives.”

limited assurance

Online annex: 3-1.3-1

New non-financial targets

With the first integrated Annual Report, we have adopted a new program of non-financial targets based on the Group strategy. This enables us to highlight the challenges we see in our core business within the context of sustainable development and identify the continuous improvements we are endeavoring to make throughout the Group. This is achieved through clearly defined targets and indicators along the value chain. These are used to monitor our progress in Innovation, Supplier Management, Resource Efficiency, Safety, Product Stewardship, Compliance and Employees.

The targets are largely based on the old “Targets 2015” program. We have also conducted our own materiality analyses on the basis of stakeholder expectations and benchmarks. Table 3.1.0-1 shows all the new target categories and definitions in detail.

Previous targets for 2015

In 2010 the Bayer Group set ambitious non-financial targets with “Targets 2015.” We have reported on annual progress in achieving the targets as part of our sustainability communications.

At the end of 2013 we met the targets in the categories Product Stewardship and Process and Plant Safety in full. We have defined new targets for both categories. Our previous Research & Development target is being continued with an absolute value. In the categories Compliance, ­Supplier Management, Diversity, Safety and Climate Protection, we have – for the most part – made good progress over the last few years. The definitions of targets for these categories are being continued with a partial change of focus in the new target program. However, despite good reduction results, our emission reduction targets for volatile organic compounds (VOC) and ozone depleting substances (ODS) will no longer be part of the new program as, due to reasons of materiality, we will be focusing on the areas of Water and Energy in the future. This is the case for the Waste category as well. We will still be continuing to report on the indicators for waste, ODS and VOC. Spending and projects in the area Social Commitment also remain part of our reporting.

In Table 3.1.0-2, we give a detailed overview of the completed “Targets 2015” program.

New Non-Financial Target Program[Table 3.1.0-1]
Definition of target Target value Target year Explanations of target
Innovation
Group
Increase in R&D investment
€3.5 billion 2014 R&D investments include expenditures for research and development in the HealthCare, CropScience and MaterialScience subgroups and at Bayer Technology Services.

HealthCare

Transition of more than 10 new molecular entities (NMEs) into development

>10 new molecular entities 2014 A new molecular entity is a chemical or biological substance that has not yet been developed at Bayer for a specific indication.

CropScience

Transfer of at least six new ­molecular entities (NMEs) or traits into confirmatory­­­ ­technical proof-of-concept field ­studies

>6 new molecular entities or plant traits 2014 A new molecular entity is a chemical or biological substance that has not yet been developed at Bayer for a specific indication. A new plant trait is a specific characteristic that has not yet been available or offered at Bayer for the crop plant in question.

MaterialScience

Improvement of production process technology to achieve better energy efficiency

    This innovation target supports the achievement of the resource efficiency targets.
Supplier Management
Increase in evaluation coverage of strategic suppliers 100% Reference year: 2013* 2017 Strategic suppliers for Bayer are those with a ­major influence on business in terms of procurement spend, sales and long-term collaboration prospects (3-5 years). Sustainability performance is evaluated in assessments and audits.
Increase in evaluation coverage of potential high-risk suppliers with significant Bayer spend 100% Reference year: 2013* 2020 Risk definition is based on a country- and ­material-based approach. We define significant procurement spend as>€1 million p.a.
Development and establishment of a new sustainability standard for our supply base   2020 The sustainability standard for our suppliers is to be driven forward in tandem with relevant industry initiatives. We are currently working with the ­“Together for Sustainability” initiative and the Pharmaceutical Supply Chain Initiative. Among other objectives, the goal is to standardize and share sustainability assessments of suppliers in the same industry.
Resource Efficiency
Improvement in Group-wide energy efficiency +10% Reference year: 2012 Reference value: 3.50 MWh/t 2020 Energy efficiency at Bayer is defined as the ­quotient of energy consumption in MWh per t ­manufactured sales volume.
Reduction in Group-wide specific greenhouse gas emissions -20% Reference year: 2012 Reference value: 0.98 t CO2/t 2020 Specific greenhouse gas emissions: measured in CO2 equivalents per t manufactured sales volume
Establishment of a water management system at all sites in water-scarce areas 100% 2017 We define water management as part of environmental management systems as specified in ISO 14001, for example. We use the WBCSD Global Water Tool™ to define water-scarce areas and differentiate activity levels and local targets.
Safety
Reduction in occupational ­safety incident rate among the Bayer workforce -35% Reference year: 2012 Reference value: RIR of 0.49 2020 The basis is the number of injuries with and without lost workdays per 200,000 working hours, summarized as RIR (Recordable Incident Rate). Until the end of 2015, we will continue reporting on our success in achieving our LTRIR (Lost Time Recordable Incident Rate) target, which covers only occupational injuries with lost workdays per 200,000 working hours. The 2015 target is an LTRIR of 0.21.
Reduction in transport ­incidents -30% Reference year: 2012 Reference value: 6 2020 Transport incidents relate to both our own transports and those we commission and pay third parties to perform on our behalf.
Reduction in process and plant ­safety incidents -30% Reference year: 2012 Reference value: 0.38 2020 The key indicator is the number of incidents in which chemicals leak from their primary container, such as pipelines, pumps, tanks or drums, designated as LoPC (Loss of Primary Containment). We use the associated rate (LoPC Incident Rate) to determine the number of LoPC incidents per 200,000 working hours in areas relevant to plant safety.
Product Stewardship
Completion of assessment of hazard potential for substances used in quantities exceeding one metric ton p.a. >99% Reference year: 2013* 2020 This globally harmonized Bayer standard also ­covers assessment of such substances that are not subject to the REACH Regulation (No. 1907/2006). If no relevant datasets are generated within the scope of REACH, substance information and the ability to provide data on key substance properties are to be determined to ensure and document ­responsible handling of the substances (including substance characteristics, purity, intended use, toxicological data).
Compliance
Conducting of precautionary risk assessments in all three subgroups 100% 2015 Risk assessments are based on the integrated compliance management method developed by Ernst & Young.
From 2015 compliance training for all Bayer managerial staff >99% annually Managers will participate in specific training courses depending on the risk area.
Employees
Continuous increase in ­employee engagement (determined using an employee survey) Current reference year: 2012
Current reference value: 85%
every two years We measure employee engagement in line with the Towers Watson engagement system. Engagement looks at how strongly an employee identifies with/feels attached to his/her company by supporting corporate values and objectives, for example.
Increase in the proportion of women in senior management 30% Reference year: 2010 Reference value: 21% 2015 Senior managers are managers in the five highest management grade levels.
Increase in the proportion of ­senior managers who do not come from the E.U., the United States or Canada 25% Reference year: 2013* 2015 Senior managers are managers in the five highest management grade levels.
* reference value will be specified in 2014; calculation of values for 2013 not yet complete

Targets 2015: Development of Targets since the Start of the Program and Final Documentation
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Last updated: February 28, 2014  Copyright © Bayer AG
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