As a science and technology company with manufacturing operations, we have an impact on the environment. Take for instance the emissions, wastewater and waste generated by our activities, or the materials we utilize that could adversely affect the environment if not handled properly. To mitigate this impact, all our sites meet a strict set of environmental regulations. Intelligent environmental stewardship reduces resource use and lowers costs, which makes it highly important to adapt our processes to new regulatory requirements.
Our approach to environmental stewardship
A holistic approach is needed to minimize negative environmental impacts and preserve the environment. Our goal is to diligently monitor detrimental emissions into the air, water and soil resulting from our operations and do everything possible to prevent them.
How we structure our environmental stewardship practices
Executive Board member Walter Galinat is responsible for overall environmental governance, which also covers climate impact mitigation, water management, waste & recycling, and plant & process safety. Our Group function Environment, Health, Safety, Security, Quality (EQ) is in charge of steering all environmental measures Group-wide. At our individual sites, each site director is responsible for environmental stewardship as well as occupational health and safety at the operational level. At larger facilities, the site directors receive day-to-day support and advice from Environment, Health and Safety (EHS) managers, with EHS coordinators performing this role at smaller facilities. These local EHS organizations report to and work hand in hand with EQ.
In 2017, our EHS organization comprised more than 200 EHS managers along with other EHS personnel. At the local level, these employees receive support from other units. Our Group function EQ conducts annual EHS seminars at our various sites.
In 2017, environmental stewardship efforts accounted for 26% of our EHS spending, which consisted of both ongoing expenses as well as investment costs. This includes items such as air pollution control, noise reduction and environmental remediation.
The EQ leadership meets with Walter Galinat on a regular basis, usually once a month, to report on their environmental stewardship efforts. Every six months, EQ provides the Executive Board with a report on environment, health and safety issues that also covers climate impact mitigation, water management, waste & recycling, and plant & process safety. This report focuses on our current progress, documenting and assessing the work EHS has accomplished. The Executive Board utilizes this brief as a source of information and as documentation for ISO 14001 and BS OHSAS 18001 certification.
Moreover, the Executive Board is responsible for approving internal guidelines such as our Environmental, Health and Safety (EHS) Policy. Internal standards are approved by the head of EQ. While standards provide a concrete framework, guidelines create an overarching outline of our company's position on a specific issue.
Clearly defined incident reporting procedures
We have established a variety of reporting procedures to handle incidents as quickly as possible and take corrective action. In introducing our EHS Incident Rate (EHS IR) and EHS Leading Indicator Rate (EHS LR), two of our key performance indicators, we have created a reporting process that tracks the respective environmental incident, its degree of severity and all risk mitigation efforts. All incidents are logged Group-wide and reported every six months to the Executive Board.
In the event of major incidents, our Rapid Incident Report System (RIRS) promptly notifies the Executive Board, our EHS Group function and Group Communications. These could include fatalities, accidents with multiple casualties, or injuries and damage that occur beyond our premises, along with environmental disasters such as earthquakes and floods. Through the RIRS, we can coordinate the responses of all those involved and inform other potentially impacted sites immediately.
Our commitment: Standards and standard operating procedures
Our approach to environmental stewardship is built on our Group-wide EHS Policy (Corporate Environment, Health and Safety Policy), which has been endorsed by Stefan Oschmann, Chairman of the Executive Board. This policy is now aligned more closely with the stipulations of the chemical industry's Responsible Care® Global Charter, as well as with environmental management standard ISO 14001, and it emphasizes our leadership's responsibility toward environmental stewardship, health and safety. Moreover, it addresses our suppliers, encouraging them to adopt similarly enhanced standards for environmental sustainability and safety. In doing so, our Corporate EHS Policy complements the Responsible Sourcing Principles of our Group Procurement function.
The principles of our EHS policy are implemented through internal guidelines, standards and operating manuals. For instance, our Group EHS, Security and Quality Manual describes how environmental stewardship and occupational safety are organized across the company. This manual was revised in 2017 to reflect the updated ISO 9001:2015 and 14001:2015 standards. Our environmental management system was also updated in 2017 to bring it in line with the requirements of ISO 14001:2015.
Potential EHS risks posed by acquisitions, divestments or site closures are assessed through due diligence, a process defined in our EHS Due Diligence and Post Merger Transaction Standard. During audits, new sites are given priority.
We regularly review our internal guidelines, standards and operating manuals. In 2017, we updated and introduced multiple standards and processes. For instance, we revised safe chemical handling standards to reflect the latest findings and state-of-the-art safety concepts. Furthermore, we updated our requirements for external warehouses to align them with our Transport Safety and Warehouse Safety standards.
Sizable investments in environmental impact mitigation
Preventing and monitoring air, water and soil emissions involves large expenditures on our company's part, as does proper waste disposal. At our Gernsheim site in Germany, for instance, we have set aside provisions for the remediation of contamination. Moreover, we allocate an annual budget for groundwater and soil remediation to ensure our ability to execute all measures required throughout the year.
Our spending on environmental protection, health and safety efforts totaled € 200 million in 2017, which also includes investments made during the year. In this period, our provisions for environmental protection totaled € 137, 94% of which were attributable to Merck KGaA, Darmstadt, Germany.
Parking lot remediation continued
In 2017, we continued our efforts to decontaminate a parking lot at our Gernsheim site. The scope of the environmental remediation required has turned out to be significantly greater than originally anticipated. Since 2008, we've been working to remove hexachlorocyclohexane (HCH) residue from the soil under the parking lot and have been properly disposing of it in external incinerators. In the course of the ten-year decontamination process, we have increased the relevant provisions from € 27 million to approximately € 50 million.
Assessing environmental impacts and reporting violations
In general, we conduct risk-based assessments along with internal and external audits on all our production facilities every three years. Our goal is to analyze and minimize our environmental footprint as well as to ensure that our requirements are being met. Our Group function EQ is responsible for these tasks. As needed, we use the results of such evaluations to define suitable measures. In addition, we have established grievance mechanisms to identify potential violations of our requirements. In 2017, our corporate EHS audits rated more than 86% of the 43 sites audited as “good” or “satisfactory”. We assess performance on a five-level scale: “excellent”, “good”, “satisfactory”, “poor”, and “critical”, which in turn determines how frequently an audit is conducted. If its findings are deemed to be good, a facility will undergo audits less often, while significant violations can increase the frequency.
Aside from using audits to identify issues, we also encourage our employees to report potential violations of our standards to our Compliance unit. All of these violations are reported to the Executive Board. In the 2017 period, no significant violations of environmental laws or regulations were recorded Group-wide.
ISO 14001 Group certificate
We have revamped our management systems to align them with the requirements of the updated version of ISO 14001:2015. In 2017, our environmental management system was successfully certified to ISO 14001:2015.
Since 2009, our company has held a Group ISO 14001 certificate, which means that all production sites with more than 50 employees must implement the requirements of the certificate. Other sites are not obligated to implement an ISO-certified environmental management system. New sites must gradually establish a corresponding environmental management system with predefined indicators for factors such as greenhouse gas emissions and water use, and furthermore obtain ISO 14001 certification.
sites worldwide are currently covered by the ISO 14001 certificate.
Beyond this ISO standard, we have a variety of other internal standards in place that govern environmental stewardship, such as our Air Emissions Standard, Waste Management Standard, and Energy Management Standard.
Every year, we contract a third party to perform a certification audit. In 2017, we passed 13 ISO 14001 audits, which also included facilities newly incorporated into the Group certificate. All sites pertinent to the Group certificate have thus been transitioned to the new version of ISO 14001:2015. Furthermore, we conduct internal audits to ensure compliance with our requirements.
Stakeholder engagement and dialogue
By participating in a variety of industry associations, we exchange information and ideas on environmental issues. In 2017, for instance, we took part in discussions between the German Chemical Industry Association e.V. (VCI) and German legislators on eliminating the thermal value criteria. The head of our Group function EQ chairs the VCI plant safety working group. Additionally, we contribute to the dialogue on plant and process safety in our capacity as members of the European Process Safety Center and the Commission on Process Safety of the German Federal Ministry for the Environment, Nature Conservation, Building, and Nuclear Safety.
Furthermore, we engage residents in the vicinity of our sites in discussions on issues of local relevance.