Management Report & Annexes | Fundamental Information About the Group

1.3 Targets and Performance Indicators

To consistently implement our strategy, we have set ourselves ambitious Group targets and measure their attainment annually in terms of selected performance indicators. This program encompasses not only financial targets and innovation goals, but also sustainability objectives that are aligned to important areas along the value chain. Our aim is to make clear the challenges we have identified in our core business in the context of sustainable development, and at the same time to highlight the continuous improvements we are committed to making throughout the Group. The current status of our progress in these areas is documented in the following table and the respective chapters.

Profitable Growth

Definition of target Target year Target attainment in 2014 New target for 2015 Explanations of target
Increase in Group sales (Fx & portfolio adj.); forecast issued in February 2014: approx. 5% increase to approx. €41 billion – €42 billion 2014

7.2% increase to €42.2 billion

Low-single-digit percentage increase (Fx & portfolio adj.) to approx. €46 billion  
Increase in EBITDA before special items; forecast issued in February 2014: low- to mid-single-digit percentage increase 2014

4.9% increase

Low- to mid-teens percentage increase  
Increase in core earnings per share; forecast issued in February 2014: mid-single-digit percentage increase 2014 7.3% increase Low-teens percentage increase  

Innovation

Definition of target Target year Target attainment in 2014 New target for 2015 Explanations of target
Group: Increase in R&D investment to approx. €3.5 billion 2014

€3.6 billion

Increase in R&D investment to over €4.0 billion  
HealthCare: Transition of more than 10 new molecular entities (NMEs) into development 2014

12 new molecular entities (NMEs) were transferred into development

Transition of more than 10 new molecular entities (NMEs) into development 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 6 new molecular entities (NMEs) or plant traits into confirmatory technical proof-of-concept field studies 2014 5 new molecular entities or plant traits Transfer of 2 new molecular entities (NMEs)
or plant traits into confirmatory technical
proof-of-concept field studies
A new plant trait is a specific characteristic that has not yet been available or offered at Bayer for the crop plant in question. The target was not fully achieved in 2014 due to changes in the legal framework in early selection.
MaterialScience: Improvement in production process technology to achieve better energy efficiency

Contin-

uous

Improved production technologies introduced (e.g. Dream Production, new TDI facility) Unchanged This innovation target supports the achievement of the resource efficiency targets. More information on “efficient production” in Chapter 12.2 (Climate Program).

Sustainability

Definition of target Target year Target attainment in 2014 New target for 2015 Explanations of target
Supplier Management
Evaluation of all strategically important suppliers 2017

66%. A total of 253 strategically important suppliers were evaluated by the end of 2014.

Unchanged Strategically important suppliers are those with a major influence on business, including in terms of procurement spend and long-term collaboration prospects (3-5 years). Sustainability performance is evaluated in assessments and audits.
Evaluation of all potentially high-risk suppliers with significant Bayer spend 2020

61%. A total of 157 potentially high-risk suppliers were evaluated by the end of 2014.

Unchanged 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 In implementation Unchanged 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. The goals include standardizing and sharing sustainability assessments and audits of suppliers in the same industry and describing clear expectations regarding sustainability so as to establish appropriate sustainability practices among our suppliers.
Resource Efficiency
Improvement of 10% in Group-wide energy efficiency. Reference
year 2012: 3.50 MWh/t
2020 3.37 MWh/t (3.8% improvement) Unchanged Energy efficiency is defined as the quotient of energy consumption in MWh per t manufactured sales volume.
Reduction of 20% in Group-wide specific greenhouse gas emissions. Reference year 2012: 0.98 t CO2/t 2020 1.02 t CO2/t (+4.3%) Unchanged Specific greenhouse gas emissions: measured in CO2 equivalents per t manufactured sales volume; special factor in 2014: inclusion for the first time of the energy-intensive site in Maasvlakte in our environmental reporting. This exclusively produces intermediates that according to our definition are not included in the manufactured sales volume.
Establishment of water management at all sites in water-scarce areas (35 sites) 2017 In the first stage, 80% of the identified sites were inspected to determine whether water management is in place, and if so, in what form. Unchanged The definition of water management is based, among other standards, on ISO 14001; identification of water-scarce areas according to WBCSD Global WaterTool™. As part of our analysis, we examined, for example, whether water-relevant strategies, targets and initiatives and an appropriate risk management system were already in place, for example. Based on this examination, specific steps to improve water management at the individual sites will be agreed beginning in 2015.
Safety
Reduction of 35% in occupational safety incident rate. Reference year 2012: RIR 0.49 2020 RIR 0.43 (-12.1%) Unchanged RIR (Recordable Incident Rate): number of reportable occupational injuries affecting Bayer employees with and without lost workdays per 200,000 working hours. 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. The level in 2014 was 0.22.
Reduction of 30% in transport incidents. Reference year 2012: 6 incidents 2020 12 (+100%) Unchanged Transport incidents relate to both our own chemical transport movements and those we commission and pay third parties to perform on our behalf.
Reduction of 30% in process and plant safety incidents. reference year 2012: LoPC-IR 0.38 2020 LoPC-IR 0.23 (-38%) Unchanged LoPC-IR (Loss of Primary Containment Incident Rate): number of incidents in which chemicals leak from their primary container, such as pipelines, pumps, tanks or drums, per 200,000 working hours in areas relevant to plant safety.
Product Stewardship
Conclusion of assessment of hazard potential of all substances (> 99%) used in quantities exceeding one metric ton per annum 2020 55%. Approx. 32,000 substances had been assessed by the end of 2014. Unchanged 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 in terms of substance characteristics, purity, intended use, toxicological data).
Compliance
Conducting of precautionary risk assessments in all three subgroups 2015 In implementation Unchanged Risk assessments are based on the integrated compliance management method developed by Ernst & Young. Integrated Compliance Management@Bayer (ICM@Bayer) preventively assesses and addresses risks in the following compliance areas: fairness in competition, integrity in business dealings, product-related communication at BHC, BHC price reporting, insider trading, foreign trade law, separation of corporate and private interests, fair and respectful working conditions, and data protection.
From 2015 annual compliance training for all Bayer managerial staff (> 99%)

Annu-

ally

In preparation Unchanged Managers will participate in specific training courses depending on the risk area.

Employees

Definition of target Target year Target attainment in 2014 New target for 2015 Explanations of target
Improvement in employee engagement (established using an employee survey conducted every two years; reference year 2012: 85%)

Contin-

uous

87%

Unchanged 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 to 30%; reference year 2010: 21% 2015

26%

Unchanged Senior managers are managers in the five highest management grade levels.
Increase in the proportion of senior managers from outside the European Union, the United States or Canada to 25%; reference year 2013: 18% 2015 20% Unchanged Senior managers are managers in the five highest management grade levels.

Details of further key financial data are found in Chapter 20 “Future Perspectives.”

Information on our Group targets is also provided in the relevant chapters. 

Last updated: February 26, 2015  Copyright © Bayer AG
http://www.annualreport2014.bayer.com