About this Report

This integrated Annual Report combines our financial and our sustainability reporting. Our aim is to elucidate the interactions between financial, ecological and societal factors and underline their influence on our company’s long-term development, thus providing our stakeholders with comprehensive and transparent information on our performance.

Legal principles and reporting standards

The consolidated financial statements of the Bayer Group as of December 31, 2017, comply with the International Financial Reporting Standards (IFRS), as adopted by the E.U., valid at the closing date and with the provisions of the German Commercial Code in conjunction with German financial reporting standards (DRS). With due regard to these provisions, the combined management report provides an accurate overview of the financial position and results of operations of the Bayer Group. The Compensation Report for the Board of Management and the Supervisory Board complies with the recommendations of the German Corporate governance comprises the long-term management and oversight of the company in accordance with the principles of responsibility and transparency. The German Corporate Governance Code sets out basic principles for the management and oversight of publicly listed companies. Code. The consolidated financial statements and the combined management report are published in the Federal Gazette in line with the statutory disclosure requirement.

The Bayer Group’s sustainability reporting has been aligned to the guidelines of the GRI (Global Reporting Initiative) is a nonprofit organization that works to promote the dissemination and optimization of sustainability reporting. The GRI guidelines are considered the most frequently used and internationally most recognized standard for sustainability reporting. These guidelines are evolved in a multi-stakeholder process. GRI was established in 1997 by Ceres (Coalition for Environmentally Responsible Economies) and UNEP (United Nations Environment Programme). (GRI) and the 10 principles of the U.N. Global Compact ( United Nations Global Compact (UNGC) The United Nations Global Compact is the most far-reaching and important responsible corporate governance initiative in the world. Based on ten universal principles in the areas of human rights, labor, environment and anticorruption, the UNGC pursues the vision of an inclusive and sustainable global economy that benefits people, communities and markets everywhere. By committing to the UNGC, companies agree to document each year their efforts to uphold the ten principles. ) since 2000. The Annual Report 2017 was prepared in accordance with the “comprehensive” option of the GRI-G4 Guidelines. The detailed GRI content index with the corresponding UNGC principles can be found in the augmented online version of the Annual Report under “Further Information.” This index assigns Bayer’s areas of activity derived from the materiality analysis to key GRI (Global Reporting Initiative) is a nonprofit organization that works to promote the dissemination and optimization of sustainability reporting. The GRI guidelines are considered the most frequently used and internationally most recognized standard for sustainability reporting. These guidelines are evolved in a multi-stakeholder process. GRI was established in 1997 by Ceres (Coalition for Environmentally Responsible Economies) and UNEP (United Nations Environment Programme). aspects. This report also serves as a Communication on Progress (COP) in line with the U.N. Global Compact.

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Our reporting is also aligned to international guidelines and recommendations, including those on the definition and selection of nonfinancial indicators and on reporting such as those of the OECD and the ISO 26000 standards. In selecting and measuring our key data we also take into account the recommendations of the European Federation of Financial Analysts Societies (EFFAS) in the case of nonfinancial indicators, and those of the Greenhouse Gas Protocol regarding greenhouse gas emissions. We also consider the recommendations of the World Business Council for Sustainable Development (WBCSD) and the European Chemical Industry Council (CEFIC).

CSR Directive Implementation Act

Pursuant to the CSR Directive 2014 / 95 / EU published in the Official Journal of the European Union, certain publicly traded companies are required for the first time to publish a nonfinancial statement for the fiscal year beginning on or after January 1, 2017. The aim of this is to achieve a better understanding of business development and context as well as future developments of the company. German lawmakers approved the implementation of the Directive as the CSR Directive Implementation Act (CSR-RUG) and transposed it into German law (Section 289 et seqq. of the German Commercial Code for individual companies and Section 315b et seqq. of the German Commercial Code for consolidated financial statements).

In addition to a brief description of the business model, the Act requires the preparation of a nonfinancial statement containing information relating to at least environmental, employee-related and social aspects, as well as respect for human rights, anticorruption and bribery matters (Section 289c of the German Commercial Code). We have also prepared the nonfinancial statement in line with GRI-G4 Guidelines (Section 289d of the German Commercial Code).

On account of our reporting already being integrated, we have included the nonfinancial statement in the combined management report of our Annual Report, which covers data for the Bayer Group and Bayer AG as the parent company. The legality, accuracy and expediency of the nonfinancial statement has been verified by the Supervisory Board.

An index to the nonfinancial statement pursuant to the CSR Directive Implementation Act in A 4.6 provides an overview of where you can find the disclosures required by law (business model / concept and risks pertaining to the aspects / Diversity designates the variation within the workforce in terms of gender, origin, nationality, age, religion, sexual orientation and physical capability. concept) in the combined management report. The index also provides an overview of the corresponding areas of activity at Bayer in relation to the aspects set forth in the Act.

Owing to the increased importance of Bayer AG within the Group, the disclosure of significant nonfinancial information is also mandatory for the parent company Bayer AG. The relevant nonfinancial data and other key figures for Bayer AG are contained in the chapter "Nonfinancial and Other Disclosures by Bayer AG".

Versions of the report

We provide the integrated Bayer Annual Report 2017 in two audited versions:

  • in a print version (“Annual Report 2017”)
  • and an augmented online version (“Annual Report 2017 – Augmented Version”)

The augmented version also includes additional information in the management report as well as Bayer’s consolidated financial statements.

The print version contains numbered online annexes which refer the reader to additional information in the Augmented Version. You can enter these numbers in a search mask on www.bayer.de/AR2017 to access the desired information.

Both versions of the Annual Report are available in PDF format for download from the Bayer website.

Data collection and reporting thresholds

We collected the data of all relevant organizational units and companies worldwide that fell within the scope of the Bayer Group’s consolidated financial statements between January 1, 2017, and December 31, 2017.

Bayer ceded de facto control over Covestro AG at the end of the third quarter of 2017. Covestro is no longer a reportable segment of the Bayer Group and is now presented as a discontinued operation until the date of its deconsolidation.

In accordance with IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), financial indicators are given for Continuing operations Sales and earnings reporting for continuing operations pertains only to business operations that are expected to remain in the company’s portfolio for the foreseeable future; opposite of discontinued operations. unless otherwise explicitly indicated. The same applies to HR and HSE (health, safety and environment) indicators and our social data. Prior years’ figures were restated as necessary.

We mainly use SAP systems to collect financial data worldwide. We use the global SAP HR information system and the associated reporting application – the Sustainability Management Annual Reporting Tool (SMART) – to collect HR indicators and social data.

All HSE performance indicators for the Group are collated in our Group-wide site information system (BaySIS). The HSE data cover all fully consolidated companies in which Bayer owns at least 50% of the shares. Data on occupational injuries, transport accidents and environmental incidents are collected at all sites worldwide. Environmentally relevant indicators are measured at all production sites and at relevant research and development sites.

Several nonfinancial indicators (particularly related to employees and procurement) are reported only for our Significant locations of operation A selection of countries that accounted for more than 80% of total Bayer Group sales in 2017 (United States, Germany, China, Brazil, Japan, France, Canada, Italy, Mexico, U.K., India, Spain, Australia, Russia, Switzerland, Poland, Turkey and Argentina) in line with the requirements of the corresponding GRI indicators. In 2017, this covered 18 countries that accounted for more than 80% of total Bayer Group sales.

External verification

The auditing company Deloitte GmbH Wirtschaftsprüfungsgesellschaft (Deloitte), Munich, Germany, has audited the consolidated financial statements (including the notes thereto) of Bayer AG, Leverkusen, and the combined management report for the fiscal year from January 1, 2017, to December 31, 2017, and has issued an unqualified opinion (reasonable assurance). The audit also includes the disclosures pertaining to the nonfinancial statement pursuant to Section 315c of the German Commercial Code in conjunction with Section 289c of the German Commercial Code.

All the online annexes that supplement the management report in the augmented online version of the Bayer Annual Report 2017 (“Annual Report 2017 – Augmented Version”) for the fiscal year from January 1, 2017, to December 31, 2017, have been reviewed by Deloitte on a limited assurance basis. The corresponding text passages are marked in the augmented online version of the Annual Report with “limited assurance.”

Additional information

  • As the indicators in this report are stated in accordance with commercial rounding principles, totals and percentages may not always be exact.
  • For further guidance, the Annual Report contains references to: GRI G4-17-27
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