Compliance

Bayer manages its businesses responsibly and in compliance with the statutory requirements and regulations of the countries in which it operates. We define compliance as legally and ethically impeccable conduct by all employees in their daily work, because the way they carry out their duties affects our company’s reputation. We do not tolerate any violation of laws, codes of conduct or internal regulations. Compliance is essential for our long-term economic success.

Following the acquisition of Monsanto, compliance responsibilities for the acquired agriculture business now lie with Bayer and its Law, Patents & Compliance function. Monsanto had its own compliance management system prior to the start of the integration process. This system, which mitigates compliance risks and addresses largely the same risk areas as Bayer, will remain in place until integration into Bayer’s compliance processes and systems has been completed. The integration process has already begun and is scheduled to be completed in 2019.

Bayer compliance management

The Board of Management is unreservedly committed to compliance, and Bayer will forgo any business transaction that would violate any of the 10 principles in our (Corporate) compliance comprises the observance of statutory and company regulations on lawful and responsible conduct. Policy observed throughout the Bayer Group. These principles include the following:

  • We compete fairly in every market.
  • We act with integrity in all our business dealings.
  • We balance economic growth with ecological and social responsibility.
  • We observe trade controls that regulate our global business.
  • We safeguard equal opportunity in securities trading.
  • We keep accurate books and records.
  • We treat each other with fairness and respect.
  • We protect and respect intellectual property rights.
  • We act in Bayer’s best interest.
  • We protect and secure personal data.

Equivalent business principles are in place for our newly acquired business, forming part of its own existing Code of Conduct that will continue to apply for the interim. The chapters contained within this Code of Conduct correspond to the relevant chapters in the Bayer Corporate Compliance Policy.

All employees are required to observe the compliance principles and to immediately report any violation of the Corporate Compliance Policy. Bayer’s senior managers serve as role models and have a vital part to play in implementing the compliance principles. They may lose their entitlement to variable compensation components and be subject to further disciplinary measures if violations of applicable law or internal regulations have occurred in their sphere of responsibility. Compliant and lawful conduct also factors into the performance evaluations of all managerial employees.

The global compliance management system is steered by a central compliance organization within the Bayer Group. This organization is headed by the Group Compliance Officer, who reports directly to the Chairman of the Board of Management and to the Audit Committee of the Supervisory Board. It is staffed with specialist compliance managers who are responsible for the corporate functions and for establishing business- and industry-specific standards in the divisions, business units and service companies.

Potential compliance risks are identified together with the operational units to ensure the systematic and preventive detection and assessment of risks. Potential risks are then entered into a global compliance risk management database that we use to develop suitable measures for specific processes, business activities or countries, for example. In addition, we assess our business partners according to risk criteria as we look to identify potential compliance risks.

Adherence to the corporate compliance principles is among the subjects covered in audits conducted by Bayer’s Internal Audit. The planning of these audits follows a function- and risk-based approach that also takes a Corruption Perceptions Index (CPI) Since 1995, NGO Transparency International has produced an annual index of countries by the perceived level of public-sector corruption. The CPI ranks countries according to the extent to which public servants and politicians are believed to engage in bribery and to grant or accept undue advantage. into account. The largest companies, which account for about 80% of Group sales, are generally subjected to audits at three-year intervals. A total of 180 compliance audits were completed in 2018, of which 23 were preventive or incident-related audits. The head of Internal Audit and the Group Compliance Officer regularly attend the meetings of the Audit Committee of the Supervisory Board and once a year present an overview of the audits performed.

In connection with the acquisition of Monsanto, the Bayer Internal Audit Charter directly entered into force, guaranteeing regular transparency over audit findings of the internal audit organization of the acquired agriculture business. The integration of the two companies’ internal audit processes and systems is set to be largely implemented over the course of 2019.

Handling of suspected and actual compliance violations

Suspected compliance violations can be reported – anonymously if desired and if permitted by respective national law – to a central, worldwide compliance hotline that is also accessible to the general public. In 2018, the compliance organization received a total of 251 reports in this way (including 166 anonymous reports), with 17 reports coming from Germany and 234 from other countries. The compliance hotline of our newly acquired agriculture business received a total of 77 reports (including 47 anonymous reports) in 2018. The hotline will remain available for a transitional period, ensuring that any reports received via that channel are recorded in the Bayer Group incident database and processed in line with Bayer regulations. The central Bayer compliance hotline was rolled out for the newly acquired agriculture business at the end of 2018. Alternatively, suspected violations may also be reported to the respective compliance functions in Germany or the country organizations, or to Internal Audit.

Compliance violations are systematically sanctioned. The action taken depends on factors including the gravity of the compliance violation and applicable law. All cases are recorded according to uniform criteria throughout the Bayer Group and dealt with under the rules set forth in Bayer’s corporate policy entitled “Management of Compliance Incidents.”

Starting in 2019, this will also apply to compliance violations assigned to the acquired agriculture business, ensuring that these cases are also subject to our Bayer Group documentation, processing and reporting criteria. Cases assigned to the newly acquired agriculture business that were received between the closing of the acquisition and the end of 2018 were documented in a designated Monsanto database and, if deemed to be significant in nature, were reported to the responsible Bayer representatives. These cases were processed in line with principles that mirror our Bayer-wide standards. Significant cases from the acquired agriculture business that had yet to be processed were analyzed and, where necessary, measures were drawn up.

Where an investigation confirms that a compliance violation has occurred, the company has a graduated set of measures at its disposal. These include a verbal warning or written reprimand, transfer to a different unit, cancellation of a planned promotion, a reduction in the short-term incentive payment, downgrading to a lower collectively agreed pay rate or managerial contract level, and ordinary or extraordinary termination. Bayer also reserves the right to assert further claims against the employee for cost reimbursement or damages and / or to initiate criminal proceedings.

Compliance training and communications activities

We support all employees in acting with integrity and proactively avoiding potential violations by implementing Bayer-wide training measures and communication campaigns that are tailored to target groups and based on identified needs. Both supervisors and compliance managers can answer employees’ questions about lawful and ethical behavior.

In 2018, 97.6% (34,381) of Bayer’s managerial employees worldwide (excluding the acquired agriculture business) completed at least one compliance training program. In 89 countries, we also implemented a new global web-based training program covering the principles set out in our Corporate Compliance Policy. The program, which takes the form of an interactive infographic, is currently available in nine languages. As of December 31, 2018, it had been completed by 70% (67,190) of employees (excluding the acquired agriculture business).

Relevant employees at the acquired agriculture business received training on insider trading directly after closing of the transaction. 397 employees completed this training course at the Monsanto University in June 2018, with a pass rate of 100%. As the next step, 865 employees from around the world who were working at the acquired agriculture business were invited to take an antitrust training course via the Bayer training portal in August and September 2018. In 2019, we will begin gradually rolling out further compliance training sessions, starting with a web-based training course in the form of an interactive infographic on the principles of our Corporate Compliance Policy. Training courses on the risk areas of anticorruption, conflicts of interest, fairness and respect at work, and data protection will follow. Employees at the acquired agriculture business have had access to all compliance training courses available in the Bayer training portal since Day One in August 2018.

The (Corporate) compliance comprises the observance of statutory and company regulations on lawful and responsible conduct. Policy forms the basis of our compliance communication and training activities. In 2018, we launched a speak-up campaign in both digital and print form. The rollout of the Bayer Group compliance hotline to employees at the acquired agriculture business was also accompanied by a speak-up campaign. Employees can additionally access compliance updates and training courses using a specially designed app.

Marketing compliance

We do not tolerate bribery or any other form of improper exertion of influence on our business partners. As part of our compliance management system, we register and investigate any suspected violation of our responsible marketing principles, irrespective of whether the complaints come from internal or external sources.

The most important internal Bayer corporate policy in this context is our Anti-Corruption Policy, which is supplemented by the rules of conduct established in our corporate policy entitled “Responsible Marketing & Sales.” Furthermore, we are committed to ethical advertising and communication for all our products and services.

Bayer has also put in place directives and corporate policies to prevent price fixing and ensure data protection. Where several regulations are applicable, we principally comply with the more stringent standards. Our corporate policies and the respective training programs are implemented in the segments on a decentralized basis.

Industry codes adopted by major associations for pharmaceutical products and medical devices also apply in marketing and distribution at Bayer at the global or regional levels. In many countries, these standards are further underpinned by local codes – all of which apply to prescription pharmaceuticals and some of which also apply to nonprescription medicines, dietary supplements, medical devices and cosmetics.

All codes of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) serve as a binding minimum global standard for all human pharmaceutical products marketed by Bayer. In addition, Bayer observes the codes of the European Federation of Pharmaceutical Industries and Associations (EFPIA) in its interaction with health care professionals and patient organizations. The WHO Ethical Criteria for Medicinal Drug Promotion, together with national ethical standards that are usually also enshrined in industry codes at the local level, represent the minimum global standards for the advertising of human pharmaceutical products at Bayer.

All the aforementioned codes contain provisions governing, among other matters, advertising materials, the distribution of samples, cooperation with members of specialist groups in connection with speaker and consultancy contracts, and scientific studies. Based on the EFPIA transparency code and the corresponding local interpretations, Pharmaceuticals annually discloses any payments and other remunerations made to health care professionals and organizations for the preceding calendar year.

In line with the principles of sustainable development and the responsible use of crop protection products and seeds, Crop Science follows the guidelines of its Product Stewardship Policy. This policy, which also satisfies the requirements of our corporate policy entitled “Responsible Marketing & Sales,” is based on the International Code of Conduct on Pesticide Management issued by the Food and Agriculture Organization (FAO) of the United Nations and the International Code of Conduct on Pesticide Management issued by CropLife International.

Training measures on product-related communication, antitrust law, data protection and anti-corruption are fundamental elements of our compliance management system. Principles communicated in these training courses provide an overview of globally applicable minimum requirements for cooperation with key stakeholders, explicitly including those in the health care industry such as physicians, hospitals or patient organizations. In addition to explaining general compliance principles, the anti-corruption courses provide specific advice on approaches to nonreciprocal benefits and the exchange of services with health care professionals.

Lobbying

Forming part of our commitment to ensuring transparent lobbying, our corporate policy entitled “Code of Conduct for Responsible Lobbying” sets out binding rules for our involvement in political matters and creates transparency in our interactions with the representatives of political institutions. Following the acquisition of Monsanto, responsibility for the public affairs activities of the acquired business transferred to the corresponding corporate function at Bayer. The corresponding corporate policy on lobbying was updated in 2018 and is now binding for employees at the acquired agriculture business.

As set out in this corporate policy, Bayer as a company did not make any donations to political parties, politicians or candidates for political office in 2018. This does not include political donations in the United States, which permits Bayer to make donations in support of candidates and elections at the state level. Such donations are subject to stringent conditions and mandatory transparency measures that include a publicly accessible list documenting donations made at state level.

In the United States, where applicable law may prohibit corporate donations for some federal, state or local elections, Bayer’s employees have organized the Bayer Corporation Political Action Committee (Bayer-US PAC) to support legislative candidates through private donations. Political action committees are separate, segregated funds governed by Bayer employees and further regulated by the U.S. Federal Election Commission and some state governments. The private donations made by Bayer-US PAC are regularly reported to the U.S. Federal Election Commission and can be viewed on its website.

Liaison offices – Contact with political stakeholders

For Bayer, national liaison offices are key touchpoints between the company and political stakeholders. We publish details of material costs, project expenses, employee numbers and any of the other statistics required in each country in the transparency registers of the European institutions and the U.S. Congress. Bayer goes beyond the statutory requirements in doing so. For instance, we also publish data for countries such as Germany where there is no legal disclosure requirement. In 2018, the costs incurred at the liaison offices (excluding the acquired agriculture business) totaled approximately €1.31 million in Berlin, Germany; €3.3 million in Brussels, Belgium; €7 million in Washington, United States; €0.33 million in Moscow, Russia; €0.35 million in Brasília, Brazil; and €0.98 million in Beijing, China.

The acquired agriculture business had previously used a different system, which is why its data cannot be combined with Bayer’s data. This part of the company is scheduled to be integrated into Bayer’s processes in 2019. Once completed, combined figures will be available. For the United States, various categories of lobbying spending by the acquired agriculture business can be accessed on the political disclosures website, while lobbying spending at federal level can also be viewed in the transparency registry of the U.S. Congress. In Europe, disclosures in the E.U. Transparency Register were last updated in 2017.

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