As a company that operates responsibly, we are committed to helping protect the environment and mitigate climate change by conserving energy and reducing our greenhouse gas emissions. Our climate change mitigation activities are also of financial benefit to us since improved energy efficiency means that we save on operating costs. Pressure from a growing number of statutory regulations governing greenhouse gas emissions has also encouraged us to take action. Merck KGaA, Darmstadt, Germany is subject to a variety of national as well as international energy and emissions regulations, such as emissions trading systems. Currently, the EU Directive 2012/27/EU on energy efficiency is being incorporated into the national legislation of EU member states. It requires major industrial companies to conduct energy audits or implement energy management systems.

Within the scope of the Carbon Disclosure Project, we have been reporting  on our greenhouse gas emissions activities, measures, and achievements for several years. In 2014, we were once more ranked in performance band B in the Climate Performance Scoring, which puts us clearly in the upper range of all participating companies in the Germany, Austria and Switzerland category. In the Climate Disclosure Scoring, which rates the thoroughness and transparency of a company's reporting, we scored 87 out of 100 points, putting it well above the average.

The company's function EQ is responsible for globally steering all climate protection activities (see Environmental management). At the individual sites, operational units are responsible for implementing climate change mitigation measures.

In 2014, we implemented a new guideline on Group-wide energy management. Our "Energy Management" standard defines general principles for uniform energy management across all Merck KGaA, Darmstadt, Germany sites. Our "Emissions of Refrigerants" standard, implemented at the end of 2013, aims to reduce emissions from cooling processes that may cause global warming as well as ozone layer depletion. In 2013, we furthermore revised our company car policy and set a goal to reduce the average CO₂ emissions from our global company car fleet by 30% by 2020, relative to 2012 levels. In order to reach this goal, we are switching our pool of leased company cars over to more efficient, more economical models.

Our strategic EDISON program

We have set ourselves the goal of reducing greenhouse gas emissions by 20% by 2020, relative to the 2006 baseline. In order to achieve this target, we initiated in 2009 the EDISON energy efficiency and climate protection program, which consolidates the climate change mitigation activities of the Group. Worldwide, 20 company sites jointly account for 80% of our greenhouse gas emissions, so EDISON is focusing on these sites in particular. The reduction of our energy-related emissions is one of our primary measures. To this end, we are working to reduce greenhouse gas emissions from energy generation as well as to enhance the energy efficiency of research and production processes. Furthermore, we wish to lower process-related emissions through initiatives such as a process efficiency program at the life science business. Improving the energy efficiency of our facility operations and employing renewable energy are other measures that will contribute to this goal. For our the life science business sites, we have set ourselves the intermediate goal of reducing greenhouse gas emissions by 10% by the end of 2015, relative to the 2006 baseline.

To create and implement climate change mitigation projects, EQ collaborates with a working group that spans all of the company's businesses. This group develops measures and evaluates site-specific project proposals in terms of absolute CO₂ reduction, CO₂ reduction relative to capital spending volume, and potential cost savings.

Through the approximately 300 EDISON projects that have been initiated since 2012, we aim to annually save around 60,000 metric tons of CO₂ in the medium term. Around two-thirds of these projects have already been launched, or are currently being implemented. For 2015, we have initiated 57 new projects, which we expect to reduce CO₂ emissions by approximately 37,000 metric tons in the medium term.

At the end of 2014, the company commissioned a carbon-neutral biomass power plant in Goa, India that runs on the shells of locally farmed coconuts and cashews. This will enable us to cut CO₂ emissions by around 11,500 metric tons per year. On top of this, a biomass central heat plant went into operation in Jaffrey, New Hampshire (USA) in December 2014. This renewable energy biomass plant will run on locally produced wood chips and will enable us to cut CO₂ emissions by around 3,500 metric tons per year.

The company's production sites in Darmstadt and Gernsheim, Germany, account for around 40% of our global energy consumption. With the cogeneration plant in Darmstadt and the heating plant in Gernsheim, these two sites are subject to the EU Emissions Trading System. Merck KGaA, Darmstadt, Germany operates very efficient energy generation plants and, in this third period of EU emissions trading stretching from 2013 to 2020, we are also benefiting from a situation in which some certificates are being allocated free of charge. As things stand today, however, we will need to purchase additional CO₂ certificates in the future.

At the Darmstadt site, the company is spending around € 27 million on the construction of two state-of-the-art energy stations. In July 2014, Executive Board Chairman Karl-Ludwig Kley and the German Federal Minister for Economic Affairs and Energy Sigmar Gabriel inaugurated the first station, which is supplying the site's pharmaceutical production operations and research activities with power, heating and cooling. The second station is currently under construction and will cover the refrigeration needed by the site's chemical plants and laboratories, among other power needs. Once both plants are in operation, the site's CO₂ emissions will decrease by around 2,500 metric tons per year.

In mid-2013, a highly efficient cogeneration plant was commissioned in Gernsheim, which saves around 7,000 metric tons of CO₂ emissions per year.

Energy management is another component of EDISON. Eight of our sites have been certified to ISO 50001 "Energy Management Systems": Darmstadt, Gernsheim and Wiesbaden in Germany, Molsheim in France, Bari and Tiburtina in Italy, Taoyuan in Taiwan, and Poseung in South Korea.

You can find more information on our website:

• Biomass power plant  in Goa, India
• Use of geothermal energy  in Atsugi, Japan
• Solar power  in Bedford & Billerica, Massachusetts (USA)
• Green buildings  (LEED Gold-designed site in Bangalore, India)

Energy consumption and CO₂ emissions in 2013 and 2014

In 2014, Merck KGaA, Darmstadt, Germany consumed a total of 1,622 GWh of energy, which represents a slight increase over 2013 (1,566 GWh). Due to the complexity involved in collecting the data, we are currently not calculating the energy that is consumed upstream or downstream during the production and transport of our raw materials.

In 2014, the company emitted 524,000 metric tons of greenhouse gas emissions (CO₂ equivalents), with 567,000 metric tons emitted in 2013. This decrease can be attributed mainly to a 30% reduction in emissions from one production process. In this process, we have managed to reduce the emissions relative to production volume by almost two-thirds since 2008. CO₂ emissions fell by 9% relative to the 2006 baseline, which means that the company is on the right path to achieving its 20% reduction target by 2020.

In order to report and calculate its greenhouse gas emissions, the company utilizes the Greenhouse Gas (GHG) Protocol , an internationally recognized standard. We are currently reporting Scopes 1 and 2 of the GHG protocol, and parts of Scope 3. Scope 1 covers direct emissions that the company produces itself by burning fossil fuels, or through its own processes. Scope 2 pertains to emissions from imports of energy, such as electricity or district heating. Scope 3 includes emissions such as those from the manufacture and transportation of products, raw materials, and waste, or from employee business travel. Due to the complexity of Scope 3 emissions reporting, we are currently only reporting on Scope 3 emissions from business travel, from employee commuting, from fuel and energy-related activities, and from the disposal and recycling of waste generated in the course of our business operations. Merck KGaA, Darmstadt, Germany has done some product life cycle assessments and carbon footprint analyses (see Sustainable products).

Educating employees

Our commitment to climate change mitigation is not only observed at work - we encourage our employees to exhibit this through more sustainable living habits as well.

To keep our employees informed, we publish a selection of climate protection facts and figures on our intranet. Furthermore, various tools such as energy checklists or examples of best practices are also available to help employees share information and learn from one another. We continuously provide information on the company's climate change mitigation efforts in our employee magazine and in an employee newsletter.

Through an online training system, we have trained employees at our Darmstadt and Gernsheim sites in Germany on the topic of energy management. As an incentive to use public transportation, the Darmstadt site offers a "Jobticket", the cost of which is partially covered by the company. In 2014, nearly 4,000 employees took advantage of this option.

In the United States, the life science business supports employees' individual climate change mitigation efforts through engagement programs and monetary subsidies. Employees receive subsidies to install solar panels on their homes, have an energy audit conducted on their homes, or purchase hybrid and/or electric vehicles. New for 2015 will be the addition of select electric motorcycles to the personal climate change mitigation subsidies. The vehicle subsidy has already encouraged over 150 employees to switch to a hybrid or electric car. In addition to this, the life science business is bolstering its employees' awareness of and engagement in environmental protection through global campaigns such as Energy Month and its Corporate Responsibility Ambassador Network. Through the end of 2014, the life science business and the biopharmaceuticals business also installed electric vehicle charging stations at our Bedford and Billerica sites (Massachusetts, USA), where employees and visitors can charge their electric cars free of cost.

Logistics

We are working to reduce the greenhouse gas emissions that result from the transport of our products. To achieve this, we are reducing the use of air transport in favor of sea shipping. We have undertaken a project to identify products that can be shipped by sea instead of air in order to reduce costs and CO₂ emissions. These products need to safely withstand the longer travel time at sea without compromising the product quality and service level to customers. This project encompasses all shipments from our Global Distribution Centers to customers and local warehouses worldwide. For instance, thanks to changing how we transport goods worldwide from Darmstadt, Germany, we reduced CO₂ emissions by approximately 800 metric tons in 2014.

We are also focused on reducing emissions from shipping thousands of products to customers. In the United States, the life science business is an EPA SmartWay^® Shipper . As a SmartWay^® Shipper, we are committed to benchmarking operations and implementing supply chain efficiencies in order to improve our performance annually with respect to how we ship our products.

As we continue to evaluate our logistics for further climate-saving measures, we believe this will not only help reduce our own greenhouse gas emissions, but will also support our customers' needs as they seek more products and services with reduced carbon footprints.