Case study: How Merck & Co. improves energy use at its facilities
As a global healthcare company with a 125-year history, seeking to discover, develop and provide innovative products and services that save and improve lives around the globe, Merck & Co. is launching initiatives to improve energy use, reduce greenhouse gas (GHG) emissions from its operations and understand its supply chain-related impacts. Tweet This!
This case study is based on the 2017/2018 Corporate Responsibility Report by Merck & Co. published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Abstract
Merck & Co.’s Energy Center of Excellence (CoE) identifies, shares and standardises best practices, prioritising the funding of energy projects to reduce energy usage across the company. In order to improve energy use at its facilities Merck & Co. took action to:
- establish an Energy Capital Fund
- create an energy road map
- carry out Energy Treasure Hunts
- organise Energy Kaizens
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With this case study you will see:
- Which are the most important impacts (material issues) Merck & Co. has identified;
- How Merck & Co. proceeded with stakeholder engagement, and
- What actions were taken by Merck & Co. to improve energy use at its facilities
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What are the material issues the company has identified?
In its 2017/2018 Corporate Responsibility Report Merck & Co. identified a range of material issues, such as pricing & commercialisation, research & development, privacy of patient data, ethics in sales & marketing. Among these, improving energy use at its facilities stands out as a key material issue for Merck & Co.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Merck & Co. engages with:
| Stakeholder Group |
| Patients and caregivers |
| Health care professionals |
| Payers |
| Governments, multilateral organisations and regulators |
| Shareholders |
| International and local organisations |
| Local communities |
| Environmental stakeholders |
| Employees |
| Suppliers and business partners |
| Trade and industry associations |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Merck & Co. carried out consultative interviews with both internal and external stakeholders.
What actions were taken by Merck & Co. to improve energy use at its facilities?
In its 2017/2018 Corporate Responsibility Report Merck & Co. reports that it took the following actions for improving energy use at its facilities:
- Establishing an Energy Capital Fund
- Merck & Co. has established an Energy Capital Fund of up to US$12 million per year, to switch to more energy-efficient technology and respond to energy demands in the future. The Energy Capital Fund supports the realisation of projects with a simple four-year payback, averaged over the entire portfolio. In 2017, Merck & Co. spent US$3.8 million on projects that resulted in US$1.4 million in annual savings and a reduction of over 9,100 metric tons of carbon dioxide from the company’s facilities. In 2018, Merck & Co. had more than 100 projects in progress, to reduce carbon dioxide emissions from its facilities by more than 35,000 metric tons.
- Creating an energy road map
- Merck & Co.’s Energy Center of Excellence (CoE) has created an “energy road map” to help facilities reduce energy demand and related GHG emissions – through large-scale metering and monitoring to assess and identify opportunities for constant improvement. Energy savings are sought by improving the reliability of the equipment, by the efficient operation of utility systems and by building efficiencies into systems design.
- Carrying out Energy Treasure Hunts
- Since 2010 Merck & Co. has conducted Energy Treasure Hunts at 13 facilities worldwide, identifying more than 1,000 energy-efficient project opportunities, many of which have been successfully implemented. In addition, Merck & Co. carries out online Energy Treasure Hunts to engage employees, using their unique expertise and local understanding of their facilities –obtaining high-level recommendations such as renewable energy assessments and lighting systems optimisation.
- Organising Energy Kaizens
- In 2017, thirteen Merck & Co. facilities participated in Energy Kaizens, which helped them reduce heat energy losses from missing or damaged insulation. These kaizen events identified more than US$500,000 in energy savings. In addition, through these events, employees received training and acquired assessment skills and knowledge that they can apply to the rest of their facilities.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 302-4 Reduction of energy consumption
2) Disclosure 305-5 Reduction of GHG emissions
Disclosure 302-4 Reduction of energy consumption corresponds to:
- Sustainable Development Goal (SDG) 7: Ensure access to affordable, reliable, sustainable and modern energy for all
- Business theme: Energy efficiency
- Sustainable Development Goal (SDG) 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
- Business theme: Energy efficiency
- Sustainable Development Goal (SDG) 12: Ensure sustainable consumption and production patterns
- Business theme: Energy efficiency
- Sustainable Development Goal (SDG) 13: Take urgent action to combat climate change and its impacts
- Business theme: Energy efficiency
Disclosure 305-5 Reduction of GHG emissions corresponds to:
- Sustainable Development Goal (SDG) 13: Take urgent action to combat climate change and its impacts
- Business theme: GHG emissions
- Sustainable Development Goal (SDG) 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development
- Business theme: Ocean acidification
- Sustainable Development Goal (SDG) 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
- Business theme: Forest degradation
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References:
1) This case study is based on published information by Merck & Co., located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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