Performance Report

Human rights

Respect for human rights is the basis for all fair and civilized social interaction. As a socially responsible company, Bayer therefore supports the United Nations’ Declaration of Human Rights and the 10 principles of the Global Compact. Our Group-wide Human Rights Position underscores our efforts to uphold internationally recognized principles in the areas of human rights and working conditions.

Bayer Human Rights Position

International framework and corporate management

Bayer supports the United Nations’ Universal Declaration of Human Rights and a number of globally recognized declarations for multinational enterprises¹. We also fully endorse the principles of the United Nations Global Compact initiative. Promoting human rights standards internally and throughout all of Bayer’s business operations is in line with our company’s Values and Leadership Principles and our Sustainable Development Policy. Bayer’s commitment to foster the implementation of human rights is supported through our Program for Legal Compliance and Corporate Responsibility. It is in effect in all Bayer locations and it applies to Bayer’s business operations worldwide.

We will use this position as a framework to guide our decision-making and constructive engagement within our sphere of influence, while the responsibility of the governments of the various countries for protection of human rights is respected.

Employees: Working conditions

We provide our employees with fair and competitive compensation and benefits. Our wages meet or exceed local market conditions and thus ensure an adequate standard of living for our employees and their families. Our compensation systems are linked to company and individual performance. Pension provision is a key element of our total compensation packages worldwide.

We encourage our employees to fully utilize their potential by offering ample training and education opportunities. Access to qualification and training measures is based on the principle of equal opportunities for all employees.

We comply with all applicable laws and agreements on working time and paid leave. We respect the right to rest and leisure, including vacation with pay, and the right to family life, including maternity leave. Where possible we will aim to offer more flexible work patterns to enable our employees to balance company with personal demands.

Harassment and discrimination

Equal treatment of all employees is a fundamental principle of our corporate policy. No person is to be unfairly disadvantaged, favored or ostracized because of ethnic or racial status, color, nationality, descent, religion, caste, gender, age, physical characteristics or appearance, sexual orientation, union membership, political affiliation, HIV/AIDS or parental status. Harassment of any kind is forbidden. We expect our employees to be friendly, objective and fair in their dealings with colleagues and third parties. Under comparable prerequisites, we provide equal pay for equal work.

Freedom of association and collective bargaining

We are committed to an open and constructive dialogue with our employees and their representatives. Our employees are free to join organizations of their choice that represent them. These organizations may engage in collective bargaining according to the applicable legal regulations. At all Bayer sites worldwide, employees have the right to elect their own representatives. Employees who act as representatives are neither disadvantaged nor favored in any way. In locations where employees have decided not to appoint representatives, we will ensure direct and open communication between employees and management.

Child labor

We follow a clear ‘zero tolerance to child labor’ policy in our business operations worldwide. We do not tolerate child labor in our supply chain either, where we take action against known cases of violations. Our efforts to fight against child labor are consistent with the ILO’s² (International Labor Organization) core labor standards and the United Nations Global Compact principles.

Health and safety

We ensure uniformly high health protection, safety, environmental protection and quality standards (HSEQ) at our sites through the implementation of appropriate management systems. HSEQ regulations are consistently applied worldwide to minimize the occurrence of accidents and incidents. Experts on occupational safety support line management in preventing illnesses and accidents by implementing appropriate measures. Our sites offer their employees an ample range of health care services, including measures going beyond health care at the place of work.

Bayer strictly believes that the respect for people is mandatory for business excellence. With this position we confirm our commitment to internationally recognized principles in the areas of human rights and labor conditions. We expect the conduct of our employees and business partners worldwide to reflect this commitment.

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e.g. “Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy” of the International Labor Organization (ILO), “Guidelines for Multinational Enterprises” of the Organization for Economic Cooperation and Development

Minimum Age Convention 1973; (No. 138); Worst Forms of Child Labour Convention, 1999, (No. 182)

Implementation of our Human Rights Position

We published our “Bayer Human Rights Position” for the first time in the Bayer Sustainable Development Report 2006. On November 1, 2007, it took effect as a binding directive for all employees Group-wide. The directive can be called up at any time from our globally accessible database in German and in our company language English. In addition, the Bayer Human Rights Position is available as an official company publication in Chinese, French, Italian, Japanese, Portuguese and Spanish. All Bayer Group companies worldwide were called on to enact the regulation after examining the respective legal framework conditions.

Our values and leadership principles clearly reflect our position on human rights. They serve as the basis for all internal leadership training courses and are also communicated systematically in special modules – such as the thematic area “Respect for people and the environment.” What’s more, through our performance management system, which is applied uniformly around the world, individual conduct targets are agreed each year as leadership goals with all of our currently roughly 25,000 managerial employees, taken into consideration in the bonus system and monitored. The observation of human rights in countries and regions in which they could be at risk can be specifically addressed when establishing these conduct goals.

We already familiarize new employees with the Bayer Human Rights Position via our international employee portal HR//direct online. In addition, we are currently involved in the pilot phase of setting up an e-learning tool for introducing new employees to the company that also includes our Human Rights Position in its contents.

The implementation of our Human Rights Position is already supported by our Program for Legal Compliance and Corporate Responsibility. In the future we will explicitly expand this program to include all aspects of human rights so as to ensure that they are also observed through our existing compliance structure (see Focus Issue Corporate Compliance

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Responsible procurement management

We also expect the conduct of our business partners to reflect our efforts to uphold human rights. As an integral component and expression of our efforts on behalf of human rights, therefore, we demand through our procurement guidelines “Requirements for suppliers” that our suppliers clearly commit to the principles of sustainable development. We verify that this is the case before establishing business relations with them.

Key focus areas of our responsible procurement management are sensitization and qualification. That’s why in 2007 we not only further expanded the sustainability training measures for our purchasers, we also made the optimal implementation of sustainability criteria in our supplier chain a core theme of our first international Supplier Day.

The procurement departments of the subgroups and service companies regularly evaluate our strategic suppliers with respect to sustainability criteria. In 2008, Bayer Procurement aims to sharpen its focus on the theme “Sustainability in Procurement,” evaluating purchasing processes as part of this project. The emphasis here is on the further development and implementation of effective procurement management methods in the operating subgroups and service companies.

Resolutely tackling child labor

Our position on children’s rights is also clear: We do not tolerate child labor and we take resolute action against violations of this policy.

In some countries, such as India, child labor is unfortunately still widespread. Since the acquisition of Aventis CropScience, and more specifically its seeds business, Bayer has been confronted with the challenge of tackling child labor in the Indian seed production industry. Soon after the acquisition, therefore, we began working with various partners to introduce measures aimed at combating child labor, initially in the production of cotton seed. In 2005 we launched a multi-stage program of action here: In addition to the comprehensive monitoring of all cotton seed production activities, we invest in education for parents, children and village communities and demand a clear commitment on the part of our producers: Every farmer must contractually agree not to employ children as laborers. We consistently penalize farmers for violations of this agreement; the measures range from a verbal warning to contract cancellation. At the same time, we publicly reward producers who operate without child labor, paying a bonus at the end of each season for the fulfillment of the contracts. We also support farmers through training measures and micro-loans aimed at increasing their productivity and profitability. An important element of this integrated approach is training. Since 2005 we have maintained a partnership with the Indian-based Naandi Foundation to ensure that the prospects of disadvantaged children are improved through education. Through June 2007 we together paved the way for about 1,000 children to enter regular schools through enrollment in our specially established “Creative Learning Centers.” Together with a local partner, Bayer CropScience also founded the Hyderabad vocational training center, also in India, which provides qualified training in agricultural vocations to young people from socially disadvantaged families.

The multi-stage program is proving successful. Our audits and the external monitoring activities of Ernst & Young, India, confirm that systematic child labor no longer takes place in our cotton seed supply chain in India. We have since further expanded our program as a management system. On the basis of our experiences with cotton, we plan to apply the monitoring process to the arena of vegetable seed production, where a study in 2007 discovered incidences of child labor. Our goal is to establish and successfully implement a systematic and transparent monitoring system for our entire seed supply chain in India.