Performance Report

Reporting principles

Data capture

We capture data from all of the relevant organizational units and companies worldwide which fall within the scope of the Bayer Group’s consolidated financial statements. The performance indicators for these companies have been fully consolidated, irrespective of the exact share held by Bayer in each company. Our hse (health, safety and environment) data cover all companies in which we have a holding of at least 51 percent. These data are collected using an electronic questionnaire and consolidated in our Group-wide site information system, BaySIS®. Additional data have been provided through our management systems, e.g. BayInfo for hr data.

Electronic data capture using BaySIS®

BaySIS® is an intranet-based universal data capture tool for hse reporting developed by Bayer Business Services. BaySIS® makes efficient reporting possible thanks to its user-friendly and highly configurable design. Specially designated on-site reporting managers enter the relevant data based on predefined questionnaires into a central database. Plausibility checks and cross-checking of data ensure a high degree of data integrity. BaySIS® provides an important basis for external data verification by an auditor.

Presentation of performance indicators

In order to identify trends, we map the data (with a few exceptions) for a five-year period – from 2003 to 2007. Due to the spin-off of lanxess from the Bayer Group in 2005, the data from 2004 onwards relate to Bayer excluding lanxess, while lanxess data are still included in the data for 2003. The years 2005, 2006 and 2007 reflect the Group’s continuing business operations without the Wolff Walsrode, H.C. Starck and Diagnostics sites, which had been sold. Schering sites have been included in the figures from the date of acquisition, June 23, 2006.

Interpreting performance indicators

In order to classify most performance indicators and interpret changes in figures over time, it is important to place these figures in the context of annual production volumes. Due to the increase in production at Bayer MaterialScience, the volume of products sold increased during the reporting year to 10.6 million metric tons compared with a sales volume of 10.1 million metric tons in 2006. Furthermore, when interpreting the Performance Report, it should be noted that 2007 was the first year in which performance indicators for the former Schering companies were fully incorporated in the data capture process. These points resulted in the increase in the values of individual indicators for 2007 observed here.

External audit certification

Since 1997, we have had our reporting process audited by independent external organizations. For this report, the auditing company Ernst & Young examined the data capture process and the conclusions of the focus issues of the report and of the Performance Report as a whole for consistency, appropriateness and credibility. The assurance statement is reproduced on page 94 f. of this report.

Integrated hseq systems

In order to ensure a consistently high standard in the areas of health, safety, environment and quality (hseq), Bayer has established the appropriate management systems. Operational responsibility for hseq lies with the management boards of each of the subgroups and service companies and the corresponding line organizations. In particular, the responsibilities of plant management are regulated by the Directive “Plant Management in the Bayer Group.”

Standards and certification

Our hseq management system is based on recognized international standards. Approximately one third of our production sites have been certified in accordance with the international environmental management standard iso 14001 or the European environmental regulation emas (Eco-Management and Audit Scheme); a further 10 per cent of the sites have an environmental management system complying with other external standards. Examples include Industria Limpia (Clean Industry) in Mexico, the Responsible Care Management System in the United States, and the Agrichemical Warehousing Standards and CropLife Manufacturing Code of Practice in Canada.

Additional certifications will be sought if this is deemed appropriate based on local factors. This is also the case with the international occupational safety management system standard ohsas 18001 (Occupational Health and Safety Assessment Series).

All subgroups and service companies have quality management systems. Since quality standards and norms are defined on a branch-by-branch basis, implementation is the responsibility of our subgroups and service companies. It is therefore not feasible to make a Group-wide statement regarding the nature and scope of the standards and certifications used

In addition, our sites are regularly reviewed by means of Bayer audits. In 2007, 64 percent of our production sites had a Bayer-audited hse management system. The audits are performed by each subgroup and reviewed by the Group in accordance with our Group-wide Directive on hseq Audits.

Certifications and audits (as a percentage of the total number of Bayer production sites)

	2004	2005	2006	2007
Sites with an environmental management system certified to iso 14001 or emas standards	33	36	36	33
Sites with an environmental management system based on other external standards	5	4	7	10
Sites with a management system certified to ohsas 18001	2	5	8	8
Sites with a Bayer-audited hse management system	–	–	62	64