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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

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

 

78% of the world’s 250 largest companies report in accordance with the GRI Standards

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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/

Note to Merck & Co.: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

What are the material issues the company has identified?

In its 2014 Corporate Responsibility Report Merck & Co. identified a range of material issues, such as pricing and commercialization, intellectual property, privacy of patient data, continuity of supply, capacity building. Among these, promoting patient and product safety stands out as a key material issue for Merck & Co., recognizing that when people take its medicines and vaccines, they must feel that they are safe to use.

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:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

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

Healthcare professionals

Payers

Governments, multilateral organizations and regulators

Shareholders

International and local organizations

Local communities

Environmental stakeholders

Employees

Suppliers and business partners

Trade and industry associations

How stakeholder engagement was made to identify material issues

From a list of hundreds of potentially material issues, Merck & Co. identified 42 to test with internal and external stakeholders. Internally Merck & Co. engaged with senior executives from key functional areas and business units including Ethics & Compliance, Global Clinical Development, Scientific Affairs, Global Health Innovation, Global Medical Affairs, Global Public Policy, Human Resources, Manufacturing, Market Access, Philanthropy, Safety and Environment, Vaccines and others. Merck & Co.’s goal was to understand which of the 42 material issues were most linked to the company’s business strategy and to its business success. Merck & Co. asked its business leaders to select the issues of highest importance in terms of their impact on:

• Financial value and revenue
• Operational excellence
• Compliance with regulations
• Corporate reputation
• Shareholders
• Employees and their level of engagement

Externally, Merck & Co. engaged more than 30 stakeholder groups that represented a cross section of advocacy interests, including on-the-ground implementation partners, socially responsible investors, environmental NGOs, public health advocates and health providers. Through in-person interviews, Merck & Co. asked its stakeholders to indicate which issues were important to their groups or communities; where action from the private sector, and from the company in particular, is critical; and how Merck & Co. can drive excellence through its corporate responsibility efforts.

Stakeholders were asked to rank the list of 42 material issues and impacts; assess the company’s performance on these priority issues; and share their expectations related to strategy, reporting and stakeholder engagement. This process was less of an accounting exercise and more of a strategic one, designed to both understand Merck & Co.’s impacts and articulate its priorities. Merck & Co. asked stakeholders to evaluate its 42 priority issues based on criteria heavily influenced by the International Integrated Reporting Council (IIRC), including impacts on and contributions to the six “capitals”: Financial, Manufactured, Intellectual, Social and Relationship, Human and Natural. Merck & Co. augmented these criteria with considerations such as critical risk factors, unique opportunities for the private sector and for the company, and contributions to the global sustainability agenda set by the United Nations.

What actions were taken by Merck & Co. to promote patient and product safety?

In its 2014 Corporate Responsibility Report Merck & Co. set the following targets for promoting patient and product safety, based on the company’s approach to materiality – on taking action on what matters, where it matters:

• Promoting monitoring and compliance

The Global Clinical and Pharmacovigilance Compliance (GC&PVC) function at Merck & Co. is part of the company’s Research Laboratories (MRL) Compliance organization, which in turn is part of the Global Compliance Organization (GCO). This group is responsible for conducting independent, periodic audits of the processes, computerized systems, technology and collaborative partners supporting the Human Health and Animal Health divisions within the company. Merck & Co.’s research laboratories have a comprehensive, risk-based audit and compliance oversight program that encompasses a broad range of GC&PVC audits and assessments of the following:

Clinical investigator sites: Audits to assess compliance with the protocol and with GC&PVC regulations and guidelines

Collaborative partners: Pre-contractual assessments and selected post-contractual audits of contracted research organizations (CROs), central laboratories and other third-party business partners and vendors

Computerized systems and technology: Audits and assessments of the computerized systems and technology supporting clinical development

Internal process/systems audits: Systematic evaluations of compliance of clinical and animal health development processes with standard operating procedures, Global Development Procedures (ICH-GCP) and other applicable regulations and guidance

Country operations audits: Periodic and systematic assessments of the company’s clinical trial and animal health operations and activities carried out by its subsidiaries worldwide

Business partner audits: Audits of external companies with which a licensing or development agreement exists in which compliance with contractual and regulatory requirements is assessed

Verification audits: Audits to verify that the corrective actions that have been implemented are effective at remediating the noncompliance

Through the oversight and implementation of this comprehensive audit program, GC&PVC provides independent assurance to the company’s senior management that the operations, processes and computerized systems and technology supporting Merck & Co.’s Human Health and Animal Health development activities comply with applicable global regulations and guidelines as well as internal company policies and procedures.

• Promoting risk management for all products

Clinical Safety and Risk Management (CSRM) leads the Risk Management & Safety teams for all products, from the beginning of Phase IIb through the end of the product life cycle. CSRM is responsible for the formation of a proactive clinical safety risk-management strategy, including the Risk Management Plan, which is a regulatory requirement in many countries for marketed drugs and vaccines. Development of the overall risk-management strategy incorporates all available internal information (e.g., basic research data and animal and human studies with the product and/or related products) and external information (e.g., literature and public data related to the class of drugs and/or therapeutic target) that contribute to the overall risk-benefit assessment of the product. The strategy focuses on activities needed to identify, evaluate and manage potential patient-safety risks. The Risk Management & Safety teams assess patient safety using product labeling, physician and patient educational programs, and other risk-minimization strategies, as appropriate. The Risk Management & Safety teams also implement strategies to determine the effectiveness of these interventions, as appropriate.

• Rigorously studying products and working with regulators and healthcare professionals to characterize their safety profile

Merck & Co. rigorously studies its products and works with regulators and healthcare professionals over many years to characterize their safety profiles. Initially, test compounds are evaluated in the laboratory. If they pass stringent laboratory tests, the compounds move into next-stage testing in animals. Only a few compounds ever make it that far. If the compound makes it through the animal-testing stage, Merck & Co. then begins clinical development, during which multiple studies are conducted over several years. Clinical testing begins in Phase I in a small number of people and progresses through Phase III, in which the safety and efficacy of a medicine is rigorously evaluated. If the clinical studies are successful, Merck & Co. submits extensive documentation and data to regulators in a product-licensing application. Before approving a medicine or vaccine for use, regulators scrutinize these extensive data and analyses. Even after a product is approved, Merck & Co. continues to actively monitor the safety of its medicines and vaccines in various ways, including post-marketing studies. If Merck & Co. identifies safety issues following a product’s approval, it works closely with the regulatory authorities to communicate promptly and appropriately with healthcare professionals and patients.

• Communicating about product risks

Merck & Co.’s information leaflets in its product packaging contain information on possible side effects and, if appropriate, how to avoid some potential problems. Merck & Co. includes contact details on its corporate website for patients, caregivers and health professionals to report adverse experiences in the U.S. Outside the U.S., adverse events are reported according to local laws and practices. Depending on label changes and their context, Merck & Co. may determine, in consultation with regulatory agencies, that more extensive communications may be appropriate. In such cases, Merck & Co. works with regulatory authorities to contact healthcare professionals in a timely manner, so that they can communicate these findings to patients through appropriate mechanisms. Contacting healthcare professionals might include “Dear Doctor” letters and media releases.

• Identifying, evaluating and reporting adverse experiences occurring in association with the use of products

Although regulations vary by country, most countries require drug manufacturers to promptly review adverse experience (AE) information they receive from any source, both domestic and foreign, relating to the use of their products. Manufacturers are also required to have written procedures in place for evaluating and reporting adverse experiences. In accordance with global regulatory reporting requirements, Merck & Co. has developed a written procedure to provide personnel worldwide – including all contractors – with a consistent and thorough process for identifying, evaluating and reporting AEs occurring in association with the use of its products. These procedures cover the reporting of AEs originating in clinical studies and those associated with the use of marketed products. Adherence to these procedures ensures timely and accurate monitoring of the safety profile of Merck & Co.’s investigational and marketed products globally. To report an adverse experience to regulatory authorities, Merck & Co. needs at least minimal information: the name of the product involved, the adverse experience, an identifiable patient and an identifiable reporter. In addition to submission of individual AE reports to regulatory authorities, either within 15 calendar days or periodically, Merck & Co. also files aggregate reports either quarterly, twice a year or annually for as long as it markets a product. Merck & Co.’s Risk Management & Safety teams review adverse experience information received from all sources (foreign, domestic, clinical trials, published literature, post-marketing) for its products and determine what actions may need to be taken with reference to the evolving safety profile of Merck & Co.’s products. These teams include physicians and epidemiologists who are trained to review this type of data. It can be difficult to determine the exact cause of an adverse experience because many patients have more than one condition and may be taking multiple products. Merck & Co.’s Global Safety staff takes great care to make sure that AE reporting is as accurate as possible. Merck & Co. reviews the data to determine if there are any patterns or emerging trends that need additional surveillance. Another major safety focus is the ongoing oversight and monitoring of Merck & Co.’s product labels. Merck & Co.’s Label Review teams monitor information on its products and work with the company’s Product Safety teams to develop or update product labeling. Information is then communicated to regulatory agencies worldwide. Employees responsible for monitoring and reporting adverse experiences undergo rigorous training every other year. New employees within Merck & Co.’s research laboratories – including all contract personnel – working in areas related to clinical research and global safety undergo training on Merck & Co.’s AE policies and procedures when they join the company. All other employees are trained in AE reporting procedures as part of Merck & Co.’s Code of Conduct training.

Which GRI indicators/Standards have been addressed?

The GRI indicators/Standards addressed in this case are:

1) G4-PR1: Percentage of significant product and service categories for which health and safety impacts are assessed for improvement – the updated GRI Standard is: Disclosure 416-1 Assessment of the health and safety impacts of product and service categories

2) G4-PR3: Type of product and service information required by the organization’s procedures for product and service information and labeling, and percentage of significant products and service categories subject to such information requirements – the updated GRI Standard is: Disclosure 417-1 Requirements for product and service information and labeling

 

References:

 

1) This case study is based on published information by Merck & Co., located at the links 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 following links:

http://database.globalreporting.org/

http://www.msdresponsibility.com/ (September 2015)

2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Merck & Co.: With each case study we send out an email to your listed address in request for a comment on this case study. If you have not received such an email please contact us.