SUSTAINABLE DEVELOPMENT REPORT 2013

Science For A Better Life

Performance Highlights

Financial highlights

Environmental Performance highlights

Social Performance highlights

The following are Bayer’s performance highlights in the year 2012.

The EcoCommercial Building was awarded a LEED Platinum rating

Drip irrigation was introduced and implemented in cotton seed production farms

280 Farmers benefitted out of the Direct Seeded Rice Pilot Project

Nearly 70000 kWh solar energy generated at the EcoCommercial Building

Purified Drinking water was made available to 150 households under the Model Village Project

More than 3550 farmers have registered with BRSC Bayer Rural Service Centres

Child labour incidence per monitored acre reduced to 0.03% in the Kharif season of 2012/13 as on December 31, 2012

76 children from Kadivala village received scholarship under Bayer VidyaPrayas Scheme

Bayer is a global enterprise with core competencies in the fields of health care, nutrition and high-tech materials. Bayer has a long history in India. The Company first established its presence in this country in 1896, when the first wholly-owned subsidiary of Bayer in Asia “Farbenfabriken Bayer and Co. Ltd.” was set-up in Mumbai. The Group in India encompasses Bayer CropScience, Bayer HealthCare, Bayer MaterialScience and the service companies, Bayer Technology Services and Bayer Business Services. With Bayer now expanding its activities in the emerging markets, India is of strategic importance to the Group’s activities worldwide.

As an inventor Company, Bayer has set trends in research-intensive areas. Products and services from Bayer are designed to benefit people and improve their quality of life. At the same time, Bayer aims to create value through innovation, growth and high earning power. We are committed to the principles of sustainable development and to our social and ethical responsibilities as a corporate citizen.

The Bayer Group believes that its technical and commercial expertise entails a duty to contribute to sustainable development. The main areas that Bayer in India is involved in include Learning & Child Education, Youth Environmental Partnerships, Emergency Response, Partnerships with Associations to combat social and environmental problems and activities in the vicinity of the sites where Bayer has operations.

As a responsible corporate citizen, Bayer believes in transparent and ethical governance, and has undertaken several initiatives to reduce its environmental footprint and contribute to social causes. In January 2011, Bayer completed the construction of an EcoCommercial Building at Greater Noida, a unique “net positive energy” building which serves as an office for Bayer Material Science. Bayer has also been successful in reducing the incidence of child labour in farms through interventions undertaken as part of the supply chain compliance programme--- the Child Care Programme (CCP).

As a responsible corporate citizen, Bayer is firmly aligned with its mission statement – Bayer: Science for a Better Life.

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

COMPANY HIGHLIGHTS

Performance Highlights

Financial highlights

Environmental Performance highlights

Social Performance highlights

The following are Bayer’s performance highlights in the year 2012.

The EcoCommercial Building was awarded a LEED Platinum rating

Drip irrigation was introduced and implemented in cotton seed production farms

280 Farmers benefitted out of the Direct Seeded Rice Pilot Project

Nearly 70000 kWh solar energy generated at the EcoCommercial Building

Purified Drinking water was made available to 150 households under the Model Village Project

More than 3550 farmers have registered with BRSC Bayer Rural Service Centres

Child labour incidence per monitored acre reduced to 0.03% in the Kharif season of 2012/13 as on December 31, 2012

76 children from Kadivala village received scholarship under Bayer VidyaPrayas Scheme

Bayer is a global enterprise with core competencies in the fields of health care, nutrition and high-tech materials. Bayer has a long history in India. The Company first established its presence in this country in 1896, when the first wholly-owned subsidiary of Bayer in Asia “Farbenfabriken Bayer and Co. Ltd.” was set-up in Mumbai. The Group in India encompasses Bayer CropScience, Bayer HealthCare, Bayer MaterialScience and the service companies, Bayer Technology Services and Bayer Business Services. With Bayer now expanding its activities in the emerging markets, India is of strategic importance to the Group’s activities worldwide.

As an inventor Company, Bayer has set trends in research-intensive areas. Products and services from Bayer are designed to benefit people and improve their quality of life. At the same time, Bayer aims to create value through innovation, growth and high earning power. We are committed to the principles of sustainable development and to our social and ethical responsibilities as a corporate citizen.

The Bayer Group believes that its technical and commercial expertise entails a duty to contribute to sustainable development. The main areas that Bayer in India is involved in include Learning & Child Education, Youth Environmental Partnerships, Emergency Response, Partnerships with Associations to combat social and environmental problems and activities in the vicinity of the sites where Bayer has operations.

As a responsible corporate citizen, Bayer believes in transparent and ethical governance, and has undertaken several initiatives to reduce its environmental footprint and contribute to social causes. In January 2011, Bayer completed the construction of an EcoCommercial Building at Greater Noida, a unique “net positive energy” building which serves as an office for Bayer Material Science. Bayer has also been successful in reducing the incidence of child labour in farms through interventions undertaken as part of the supply chain compliance programme--- the Child Care Programme (CCP).

As a responsible corporate citizen, Bayer is firmly aligned with its mission statement – Bayer: Science for a Better Life.

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

COMPANY HIGHLIGHTS

This is the first sustainability report of the Bayer Group of Companies in India. We have been reporting on our sustainability performance globally since 2004; however this is our first attempt to report on our sustainability performance in India. The financial data provided is for Bayer CropScience Ltd, which is the listed entity in India for the financial year 2012-13 (results released during the reporting period) unless explicitly stated otherwise, as per The Companies Act, 1956. Non-financial data is reported for the following entities and locations for the calendar year 2012, in

1line with the global report: BayerCropScience Ltd:

1Bayer Malibu and Bayer Healthcare are excluded from the boundary of the performance data in this report. Bayer Technology Services , which is globally a separate entity, is part of Bayer Material Science (BMS) in India and has been reported likewise in this Report.

For queries or feedback on the report, readers may contact:

Head - ECB Center of Excellence IndiaPhone: +91 120 6763 152E-mail: ramsai.yelaanchili@bayer.com

Dr. Ram Sai Yelamanchili

Dear Readers ,

I am proud to present to you the first sustainability report for the Bayer Group of Companies in India. It is a momentous occasion as Bayer is celebrating 150 years globally and the time seems just right to embark on our sustainability reporting journey in India. As a company whose driving force is innovation, we aim to provide solutions to the major challenges facing society which includes a steady growth in world population and dwindling resource availability. We view this report as a tool that would help us measure, report and improve our performance in addressing some ofour key sustainability challenges.

In 2013, our goal for the Bayer Group in India is to continue our efforts towards the global goal of Euro 2.020 million by 2020. Some of our actions include innovative and sustainable solutions like seeds with enhanced plant properties and high-quality materials that lead to energy savings for our customers and innovative medication , to name a few. Our products and solutions are in line with our vision of improving the lives of people.

We consider sustainable development to be the way forward for companies in the 21st century. In line with that, Bayer is committed to structuring its business processes in a way that they meet the economic, ecological and social needs of society without compromising on development opportunities for future generations. We do not compromise on the health and safety of our people. This is ensured internally through regular communication and targeted training courses and externally through close collaboration with our business partners reiterating our absolute focus on safety. In line with our sustainable development vision, intensive dialogue with our stakeholders is at the top of our agenda. We now have a role dedicated to managing stakeholder engagement in India. We hope that through the initiatives undertaken in this direction our relationship with stakeholders will grow stronger.

The EcoCommercial Building in Greater Noida is an emissions-neutral construction and serves as a model for future energy efficient office buildings in the world. We are proud to have used materials made by Bayer MaterialScience to achieve this high level of efficiency in the building and are further committed to a focus on energy efficiency and environmental performance of our products.

For us sustainable business practices mean finding a balance between our social responsibility and business interests. One of the most successful initiatives of Bayer in India is the Child Care Program: A social intervention model for mitigating child labor and protecting their right to education. No children in the fields – that is our aim.

At Bayer, we see Bayer: Science For A Better Life as our mission – an ideal that we live up to every day. This commitment will continue to be our guiding principle in the years to come as well.

ABOUT THE REPORT: SCOPE AND BOUNDARY

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

• Ankleshwar• Himmatnagar• Thane [Corporate Head Office]

Bayer Vegetable Seeds (Nunhems):• Gurgaon• Bangalore• Hyderabad

Bayer BioSciencePvt Ltd• R&D Farm for Cotton - Chinakanjarla• R&D Farm for Rice - Khanapur• R&D Farm for Mustard - Palwal• R&D Farm for Millet - Mokila• R&D Farm for Corn - Bangalore• Toopran

Bilag Industries Pvt Ltd• Vapi

Bayer MaterialSciencePvt Ltd:• Cuddalore• Greater Noida

Bayer Pharmaceuticals Pvt Ltd• Thane

Human Resources data is reported for all Bayer employees in the scope of the report as defined above. Health and safety data is reported for all Bayer employees and contract workers in the above scope.

This report has received GRI’s certificate of an “A” Reporting Application Level. Bayer has engaged Ernst and Young LLP to serve as advisors in the process of report content development.

This report has received GRI’s certificate of an “A” Reporting Application Level. Bayer has engaged Ernst and Young LLP to serve as advisors in the process of report content development.

MESSAGE FROM THEMANAGING DIRECTOR

Dr. Dirk Van MeirvenneManaging Director

This is the first sustainability report of the Bayer Group of Companies in India. We have been reporting on our sustainability performance globally since 2004; however this is our first attempt to report on our sustainability performance in India. The financial data provided is for Bayer CropScience Ltd, which is the listed entity in India for the financial year 2012-13 (results released during the reporting period) unless explicitly stated otherwise, as per The Companies Act, 1956. Non-financial data is reported for the following entities and locations for the calendar year 2012, in

1line with the global report: BayerCropScience Ltd:

1Bayer Malibu and Bayer Healthcare are excluded from the boundary of the performance data in this report. Bayer Technology Services , which is globally a separate entity, is part of Bayer Material Science (BMS) in India and has been reported likewise in this Report.

For queries or feedback on the report, readers may contact:

Head - ECB Center of Excellence IndiaPhone: +91 120 6763 152E-mail: ramsai.yelaanchili@bayer.com

Dr. Ram Sai Yelamanchili

Dear Readers ,

I am proud to present to you the first sustainability report for the Bayer Group of Companies in India. It is a momentous occasion as Bayer is celebrating 150 years globally and the time seems just right to embark on our sustainability reporting journey in India. As a company whose driving force is innovation, we aim to provide solutions to the major challenges facing society which includes a steady growth in world population and dwindling resource availability. We view this report as a tool that would help us measure, report and improve our performance in addressing some ofour key sustainability challenges.

In 2013, our goal for the Bayer Group in India is to continue our efforts towards the global goal of Euro 2.020 million by 2020. Some of our actions include innovative and sustainable solutions like seeds with enhanced plant properties and high-quality materials that lead to energy savings for our customers and innovative medication , to name a few. Our products and solutions are in line with our vision of improving the lives of people.

We consider sustainable development to be the way forward for companies in the 21st century. In line with that, Bayer is committed to structuring its business processes in a way that they meet the economic, ecological and social needs of society without compromising on development opportunities for future generations. We do not compromise on the health and safety of our people. This is ensured internally through regular communication and targeted training courses and externally through close collaboration with our business partners reiterating our absolute focus on safety. In line with our sustainable development vision, intensive dialogue with our stakeholders is at the top of our agenda. We now have a role dedicated to managing stakeholder engagement in India. We hope that through the initiatives undertaken in this direction our relationship with stakeholders will grow stronger.

The EcoCommercial Building in Greater Noida is an emissions-neutral construction and serves as a model for future energy efficient office buildings in the world. We are proud to have used materials made by Bayer MaterialScience to achieve this high level of efficiency in the building and are further committed to a focus on energy efficiency and environmental performance of our products.

For us sustainable business practices mean finding a balance between our social responsibility and business interests. One of the most successful initiatives of Bayer in India is the Child Care Program: A social intervention model for mitigating child labor and protecting their right to education. No children in the fields – that is our aim.

At Bayer, we see Bayer: Science For A Better Life as our mission – an ideal that we live up to every day. This commitment will continue to be our guiding principle in the years to come as well.

ABOUT THE REPORT: SCOPE AND BOUNDARY

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

• Ankleshwar• Himmatnagar• Thane [Corporate Head Office]

Bayer Vegetable Seeds (Nunhems):• Gurgaon• Bangalore• Hyderabad

Bayer BioSciencePvt Ltd• R&D Farm for Cotton - Chinakanjarla• R&D Farm for Rice - Khanapur• R&D Farm for Mustard - Palwal• R&D Farm for Millet - Mokila• R&D Farm for Corn - Bangalore• Toopran

Bilag Industries Pvt Ltd• Vapi

Bayer MaterialSciencePvt Ltd:• Cuddalore• Greater Noida

Bayer Pharmaceuticals Pvt Ltd• Thane

Human Resources data is reported for all Bayer employees in the scope of the report as defined above. Health and safety data is reported for all Bayer employees and contract workers in the above scope.

This report has received GRI’s certificate of an “A” Reporting Application Level. Bayer has engaged Ernst and Young LLP to serve as advisors in the process of report content development.

This report has received GRI’s certificate of an “A” Reporting Application Level. Bayer has engaged Ernst and Young LLP to serve as advisors in the process of report content development.

MESSAGE FROM THEMANAGING DIRECTOR

Dr. Dirk Van MeirvenneManaging Director

BAYER INITIATIVES TOWARDS SUSTAINABILITY

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

Sustainability in Supply ChainThe Bayer Group requires all vendors to adhere to the Bayer Code of Conduct. This code has aspects of sustainability embedded in it. Select suppliers are also audited by the procurement team for adherence to the code and other sustainability practices. These audits are typically conducted annually and cover elements of compliance, labour practices, child labour, diversity and performance against industry best practices among others. Bayer code of conduct is a permanent attachment to RFQ (Requisition for Quotation). In the reporting period, BCS did business with 1464 suppliers and BMS with 745 suppliers. Of these, 102 suppliers were audited for sustainability performance as per the global guidelines. During the Sustainability audits in 2012, it was observed that all suppliers adhered to the Human Rights norms. A repeat audit is conducted if poor performance is evidenced.

Sustainability audits for BMS operations at Greater Noida were started in 2011 and 20 out of 30 key vendors were covered over the course of the year. The audit was carried out in two modes. First, a self- review process was initiated, in which questionnaires were sent to vendors outside India. After this process, on-site and off-site audits were conducted by the Bayer procurement team.

Over the years, improvements have been observed during these audits and no cases of violation of code of conduct have been noticed. Due to our continued engagement, vendors today are keen to know more about the sustainability programme at Bayer. Annually, Bayer organises ‘Baybuy Award,’ that recognises the supplier performance. This also includes an award for Most Sustainable Supplier.

The Bayer supplier code also focuses on green procurement. An e-Procurement tool is used to handle a major part of the procurement process. At BMS, the procurement function is completely paperless.

At Nunhems, audit” is undertaken to make sure child labour is not used by the non-seed suppliers. This is in addition to the implementation of Child Care Programme in the seed production farms. The company is also currently standardising all warehouses as per global standards to ensure quality in systems and processes.

The Bayer procurement team supports local suppliersthrough its audit and feedback process. A new “P4U tool” is being launched by the BMS procurement replacing BayBuy, which has a module for supplier complaints management. The supply chain management function further conducts satisfaction surveys to gauge the perception of both internal and external stakeholders.

Bayer engages with its distributor network across companies very closely. Performance of the distributors is monitored regularly with provision of good monetary incentives for high performers. In addition to this, bonus and incentives are given for supporting the field activities.

Bayer CropScienceorganiszes an award ceremony annually for distributers known as ‘Elitia’, which is based on the volume of business. The awards given out as a part of this ceremony are:

• Elitia Platinum, which is given out to the top 25 distributers nationally

• Elitia Gold, which is given out to the top 25 distributers in each of the 8 zones of Bayer’s operations

• Elitia Silver, which is given out to the top 25 distributers at a regional level

A similar award ceremony is also held for retailers, and is known as ‘Maitree – I Club’. This too is based on the volume of business. The mechanism is similar to Elitia; however it is run by the distributers and funded by Bayer.

Rewards programme: A points-based incentive system known as ‘M-Points’ is in place to motivate the distributors where points are accrued for every unit of product sold. These points can be redeemed against a set of prelisted products.

In the Bayer CropScience Environmental Science (ES) business, distributors are selected based on their relationship with local pest control operators (PCO). The companytrains its distributors’ sales officers, and conducts joint farmer meetings in which films are shown on the benefits of ES products. As part of the Bayer Network Initiative, key PCOs are identified, following which training is provided to them on both technical and soft skills. At the end of the programme, they are allowed to use the Bayer logo. Currently, the programme is being piloted in 18 cities.

Distributors

“P4U- Stands for Procurement for You. Replacing BayBuy at Bayer Material Science.

Customers

Materiality Analysis

Bayer understands the importance of engaging with its customers. The companyconstantly endevours to enhance customer awareness and measurethe satisfaction levels.

For example, the Environmental Science business,has conducted an awareness programme in Kalyan, Mumbaiabout the importance of public health and hygiene.

Bayer MaterialScience guides customers on safe usage of its products including safe handling and management. Normally, there are 2-3 such trainings every year where the BMS team visits a customer’s facility and conducts the safety training. Feedback is formally collected after the training. Sale is also accompanied with a booklet detailing product specifications and usage. In case of any issue, onsite support is provided to the customer.

Compliance and safety form a part of the key result area even in the Sales functions. This translates to ensuring that there is no non-compliance. Safe working conditions for people in the team are ensured.

Bayer has received awards from customers at various vendor meets. It also closely engages with customers for product development to meet emerging market demands and performance requirements.

Often BMS organises road shows in association with Original Equipment Manufacturers (OEMs), where Tier1 suppliers are invited. In these road shows, discussion and brainstorming regarding new technologies take place. Sometimes, Bayer technology experts are invited from global offices to engage with Indian customers. In 2012, similar road shows were conducted with Nissan, Tata Motors, Bajaj and Maruti.

Bayer has a high customer retention rate over the years due to its focus on

• Consistency in service delivery

• Meeting customer requirements

• Delivering quality to customers

In case, a customer wants to register a complaint, he or she can reach Bayer through dedicated emails which are suitably directed.

We encourage all our internal and external stakeholders to share with us their sustainability priorities and concerns as part of our ongoing dialogue with them. Their expectations and concerns together with our views form the basis of our material issues. During the reporting year, a structured

brainstorming exercise was conducted internally by a core team with relevant functions across Bayer Group of Companies in India, to prioritise issues that are of concern to us as well as our key stakeholders.

This report demonstrates our broad understanding of the sustainability context, which includesdiverse topics such as the ones highlighted in thelist below. We intend to further sharpen our materiality analysis, goals and action plans in the forthcoming year with respect to the evolving sustainability challenges in India.

A position focusing on Stakeholder engagement has been created at Bayerduring the reporting period. Subsequent to appointment of dedicated personnel to this position, a comprehensive strategy for stakeholder engagement that focuses on stakeholder universe mapping, messaging, mapping of issues across sub-groups and creation of holistic engagement platforms with stakeholders is in the process of being rolled out.

BAYER INITIATIVES TOWARDS SUSTAINABILITY

01 | Bayer Sustainable Development Report 2013 | Company Highlights 01 | Bayer Sustainable Development Report 2013 | Company Highlights

Sustainability in Supply ChainThe Bayer Group requires all vendors to adhere to the Bayer Code of Conduct. This code has aspects of sustainability embedded in it. Select suppliers are also audited by the procurement team for adherence to the code and other sustainability practices. These audits are typically conducted annually and cover elements of compliance, labour practices, child labour, diversity and performance against industry best practices among others. Bayer code of conduct is a permanent attachment to RFQ (Requisition for Quotation). In the reporting period, BCS did business with 1464 suppliers and BMS with 745 suppliers. Of these, 102 suppliers were audited for sustainability performance as per the global guidelines. During the Sustainability audits in 2012, it was observed that all suppliers adhered to the Human Rights norms. A repeat audit is conducted if poor performance is evidenced.

Sustainability audits for BMS operations at Greater Noida were started in 2011 and 20 out of 30 key vendors were covered over the course of the year. The audit was carried out in two modes. First, a self- review process was initiated, in which questionnaires were sent to vendors outside India. After this process, on-site and off-site audits were conducted by the Bayer procurement team.

Over the years, improvements have been observed during these audits and no cases of violation of code of conduct have been noticed. Due to our continued engagement, vendors today are keen to know more about the sustainability programme at Bayer. Annually, Bayer organises ‘Baybuy Award,’ that recognises the supplier performance. This also includes an award for Most Sustainable Supplier.

The Bayer supplier code also focuses on green procurement. An e-Procurement tool is used to handle a major part of the procurement process. At BMS, the procurement function is completely paperless.

At Nunhems, audit” is undertaken to make sure child labour is not used by the non-seed suppliers. This is in addition to the implementation of Child Care Programme in the seed production farms. The company is also currently standardising all warehouses as per global standards to ensure quality in systems and processes.

The Bayer procurement team supports local suppliersthrough its audit and feedback process. A new “P4U tool” is being launched by the BMS procurement replacing BayBuy, which has a module for supplier complaints management. The supply chain management function further conducts satisfaction surveys to gauge the perception of both internal and external stakeholders.

Bayer engages with its distributor network across companies very closely. Performance of the distributors is monitored regularly with provision of good monetary incentives for high performers. In addition to this, bonus and incentives are given for supporting the field activities.

Bayer CropScienceorganiszes an award ceremony annually for distributers known as ‘Elitia’, which is based on the volume of business. The awards given out as a part of this ceremony are:

• Elitia Platinum, which is given out to the top 25 distributers nationally

• Elitia Gold, which is given out to the top 25 distributers in each of the 8 zones of Bayer’s operations

• Elitia Silver, which is given out to the top 25 distributers at a regional level

A similar award ceremony is also held for retailers, and is known as ‘Maitree – I Club’. This too is based on the volume of business. The mechanism is similar to Elitia; however it is run by the distributers and funded by Bayer.

Rewards programme: A points-based incentive system known as ‘M-Points’ is in place to motivate the distributors where points are accrued for every unit of product sold. These points can be redeemed against a set of prelisted products.

In the Bayer CropScience Environmental Science (ES) business, distributors are selected based on their relationship with local pest control operators (PCO). The companytrains its distributors’ sales officers, and conducts joint farmer meetings in which films are shown on the benefits of ES products. As part of the Bayer Network Initiative, key PCOs are identified, following which training is provided to them on both technical and soft skills. At the end of the programme, they are allowed to use the Bayer logo. Currently, the programme is being piloted in 18 cities.

Distributors

“P4U- Stands for Procurement for You. Replacing BayBuy at Bayer Material Science.

Customers

Materiality Analysis

Bayer understands the importance of engaging with its customers. The companyconstantly endevours to enhance customer awareness and measurethe satisfaction levels.

For example, the Environmental Science business,has conducted an awareness programme in Kalyan, Mumbaiabout the importance of public health and hygiene.

Bayer MaterialScience guides customers on safe usage of its products including safe handling and management. Normally, there are 2-3 such trainings every year where the BMS team visits a customer’s facility and conducts the safety training. Feedback is formally collected after the training. Sale is also accompanied with a booklet detailing product specifications and usage. In case of any issue, onsite support is provided to the customer.

Compliance and safety form a part of the key result area even in the Sales functions. This translates to ensuring that there is no non-compliance. Safe working conditions for people in the team are ensured.

Bayer has received awards from customers at various vendor meets. It also closely engages with customers for product development to meet emerging market demands and performance requirements.

Often BMS organises road shows in association with Original Equipment Manufacturers (OEMs), where Tier1 suppliers are invited. In these road shows, discussion and brainstorming regarding new technologies take place. Sometimes, Bayer technology experts are invited from global offices to engage with Indian customers. In 2012, similar road shows were conducted with Nissan, Tata Motors, Bajaj and Maruti.

Bayer has a high customer retention rate over the years due to its focus on

• Consistency in service delivery

• Meeting customer requirements

• Delivering quality to customers

In case, a customer wants to register a complaint, he or she can reach Bayer through dedicated emails which are suitably directed.

We encourage all our internal and external stakeholders to share with us their sustainability priorities and concerns as part of our ongoing dialogue with them. Their expectations and concerns together with our views form the basis of our material issues. During the reporting year, a structured

brainstorming exercise was conducted internally by a core team with relevant functions across Bayer Group of Companies in India, to prioritise issues that are of concern to us as well as our key stakeholders.

This report demonstrates our broad understanding of the sustainability context, which includesdiverse topics such as the ones highlighted in thelist below. We intend to further sharpen our materiality analysis, goals and action plans in the forthcoming year with respect to the evolving sustainability challenges in India.

A position focusing on Stakeholder engagement has been created at Bayerduring the reporting period. Subsequent to appointment of dedicated personnel to this position, a comprehensive strategy for stakeholder engagement that focuses on stakeholder universe mapping, messaging, mapping of issues across sub-groups and creation of holistic engagement platforms with stakeholders is in the process of being rolled out.

CORPORATE GOVERNANCE

01 | Bayer Sustainable Development Report 2013 | Company Highlights

Bayer has always placed great importance on responsible corporate governance. The company’s philosophy of Corporate Governance is based on preserving its core LIFE values and ethical business conduct, commitment to maximise stakeholder value .This is the primary responsibility of the Board of Directors, Management, as well as employees. Our Board judiciously exercises its fiduciary responsibilities in a spirit of trust, transparency and fair play.

The company’s focus on adopting the highest standards of Corporate Governance and Ethical Business Practices is fundamental to its commitment to sustainable development. We believe that sound Corporate Governance is critical for enhancing and retaining stakeholder trust. We always seek to ensure that our performance goals are met with integrity. Honesty, integrity, y and respect for people remain some of our core values.

We have enhanced our internal control functions and risk management framework to meet the progressive standards of governance .

Bayer Code of ConductThe Corporate Compliance Policy states that Bayer is unreservedly committed to corporate compliance and will forgo any business transactions that would violate compliance principles as stated in the Code of Business Conduct. The policy also details the organisational framework for corporate compliance and specifies areas in which violations of applicable law could have serious adverse consequences, both- for the Group as a whole as also for the individual employees. The principles set forth in the Corporate Compliance Policy are designed to guide employees in their business related actions and protect them from potential misconduct.

Its core requirements are:

• Adherence to antitrust regulations,

• Integrity in business transactions and a ban on exerting any kind of improper influence,

• The observance of product stewardship and the commitment to the principle of sustainability,

• The commitment to ensure fair and re

The Bayer procurement team supports local suppliersthrough its audit and feedback process. A new “P4U tool” is being launched by the BMS procurement replacing BayBuy, which has a module for supplier complaints management. The supply chain management function further conducts satisfaction surveys to gauge the perception of both internal and external stakeholders.

Bayer engages with its distributor network across companies very closely. Performance of the distributors is monitored regularly with provision of good monetary incentives for high performers. In addition to this, bonus and incentives are given for supporting the field activities.

Bayer CropScienceorganiszes an award ceremony annually for distributers known as ‘Elitia’, which is based on the volume of business. The awards given out as a part of this ceremony are:

• Elitia Platinum, which is given out to the top 25 distributers nationally

• Elitia Gold, which is given out to the top 25 distributers in each of the 8 zones of Bayer’s operations

• Elitia Silver, which is given out to the top 25 distributers at a regional level

A similar award ceremony is also held for retailers, and is known as ‘Maitree – I Club’. This too is based on the volume of business. The mechanism is similar to Elitia; however it is run by the distributers and funded by Bayer.

Rewards programme: A points-based incentive system known as ‘M-Points’ is in place to motivate the distributors where points are accrued for every unit of product sold. These points can be redeemed against a set of prelisted products.

In the Bayer CropScience Environmental Science (ES) business, distributors are selected based on their relationship with local pest control operators (PCO). The companytrains its distributors’ sales officers, and conducts joint farmer meetings in which films are shown on the benefits of ES products. As part of the

Distributors

“P4U- Stands for Procurement for You. Replacing BayBuy at Bayer Material Science.

Bayer Network Initiative, key PCOs are identified, following which training is provided to them on both technical and soft skills. At the end of the programme, they are allowed to use the Bayer logo. Currently, the programme is being piloted in 18 cities.

Bayer understands the importance of engaging with its customers. The companyconstantly endevours to enhance customer awareness and measurethe satisfaction levels.

For example, the Environmental Science business,has conducted an awareness programme in Kalyan, Mumbaiabout the importance of public health and hygiene.

Bayer MaterialScience guides customers on safe usage of its products including safe handling and management. Normally, there are 2-3 such trainings every year where the BMS team visits a customer’s facility and conducts the safety training. Feedback is formally collected after the training. Sale is also accompanied with a booklet detailing product specifications and usage. In case of any issue, onsite support is provided to the customer.

Compliance and safety form a part of the key result area even in the Sales functions. This translates to ensuring that there is no non-compliance. Safe working conditions for people in the team are ensured.

Bayer has received awards from customers at various vendor meets. It also closely engages with customers for product development to meet emerging market demands and performance requirements.

Often BMS organises road shows in association with Original Equipment Manufacturers (OEMs), where Tier1 suppliers are invited. In these road shows, discussion and brainstorming regarding new technologies take place. Sometimes, Bayer technology experts are invited from global offices to engage with

Customers

Indian customers. In 2012, similar road shows were conducted with Nissan, Tata Motors, Bajaj and Maruti.

Bayer has a high customer retention rate over the years due to its focus on • Consistency in service delivery • Meeting customer requirements• Delivering quality to customers

In case, a customer wants to register a complaint, he or she can reach Bayer through dedicated emails which are suitably directed.

We encourage all our internal and external stakeholders to share with us their sustainability priorities and concerns as part of our ongoing dialogue with them. Their expectations and concerns together with our views form the basis of our material issues. During the reporting year, a structured brainstorming exercise was conducted internally by a core team with relevant functions across Bayer Group of Companies in India, to prioritise issues that are of concern to us as well as our key stakeholders.

This report demonstrates our broad understanding of the sustainability context, which includesdiverse topics such as the ones highlighted in thelist below. We intend to further sharpen our materiality analysis, goals and action plans in the forthcoming year with respect to the evolving sustainability challenges in India.

A position focusing on Stakeholder engagement has been created at Bayerduring the reporting period. Subsequent to appointment of dedicated personnel to this position, a comprehensive strategy for stakeholder engagement that focuses on stakeholder universe mapping, messaging, mapping of issues across sub-groups and creation of holistic engagement platforms with stakeholders is in the process of being rolled out.

Materiality Analysis

Steering sustainability at Bayer

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It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

01 | Bayer Sustainable Development Report 2013 | Company Highlights

CORPORATE GOVERNANCE

01 | Bayer Sustainable Development Report 2013 | Company Highlights

Bayer has always placed great importance on responsible corporate governance. The company’s philosophy of Corporate Governance is based on preserving its core LIFE values and ethical business conduct, commitment to maximise stakeholder value .This is the primary responsibility of the Board of Directors, Management, as well as employees. Our Board judiciously exercises its fiduciary responsibilities in a spirit of trust, transparency and fair play.

The company’s focus on adopting the highest standards of Corporate Governance and Ethical Business Practices is fundamental to its commitment to sustainable development. We believe that sound Corporate Governance is critical for enhancing and retaining stakeholder trust. We always seek to ensure that our performance goals are met with integrity. Honesty, integrity, y and respect for people remain some of our core values.

We have enhanced our internal control functions and risk management framework to meet the progressive standards of governance .

Bayer Code of ConductThe Corporate Compliance Policy states that Bayer is unreservedly committed to corporate compliance and will forgo any business transactions that would violate compliance principles as stated in the Code of Business Conduct. The policy also details the organisational framework for corporate compliance and specifies areas in which violations of applicable law could have serious adverse consequences, both- for the Group as a whole as also for the individual employees. The principles set forth in the Corporate Compliance Policy are designed to guide employees in their business related actions and protect them from potential misconduct.

Its core requirements are:

• Adherence to antitrust regulations,

• Integrity in business transactions and a ban on exerting any kind of improper influence,

• The observance of product stewardship and the commitment to the principle of sustainability,

• The commitment to ensure fair and re

The Bayer procurement team supports local suppliersthrough its audit and feedback process. A new “P4U tool” is being launched by the BMS procurement replacing BayBuy, which has a module for supplier complaints management. The supply chain management function further conducts satisfaction surveys to gauge the perception of both internal and external stakeholders.

Bayer engages with its distributor network across companies very closely. Performance of the distributors is monitored regularly with provision of good monetary incentives for high performers. In addition to this, bonus and incentives are given for supporting the field activities.

Bayer CropScienceorganiszes an award ceremony annually for distributers known as ‘Elitia’, which is based on the volume of business. The awards given out as a part of this ceremony are:

• Elitia Platinum, which is given out to the top 25 distributers nationally

• Elitia Gold, which is given out to the top 25 distributers in each of the 8 zones of Bayer’s operations

• Elitia Silver, which is given out to the top 25 distributers at a regional level

A similar award ceremony is also held for retailers, and is known as ‘Maitree – I Club’. This too is based on the volume of business. The mechanism is similar to Elitia; however it is run by the distributers and funded by Bayer.

Rewards programme: A points-based incentive system known as ‘M-Points’ is in place to motivate the distributors where points are accrued for every unit of product sold. These points can be redeemed against a set of prelisted products.

In the Bayer CropScience Environmental Science (ES) business, distributors are selected based on their relationship with local pest control operators (PCO). The companytrains its distributors’ sales officers, and conducts joint farmer meetings in which films are shown on the benefits of ES products. As part of the

Distributors

“P4U- Stands for Procurement for You. Replacing BayBuy at Bayer Material Science.

Bayer Network Initiative, key PCOs are identified, following which training is provided to them on both technical and soft skills. At the end of the programme, they are allowed to use the Bayer logo. Currently, the programme is being piloted in 18 cities.

Bayer understands the importance of engaging with its customers. The companyconstantly endevours to enhance customer awareness and measurethe satisfaction levels.

For example, the Environmental Science business,has conducted an awareness programme in Kalyan, Mumbaiabout the importance of public health and hygiene.

Bayer MaterialScience guides customers on safe usage of its products including safe handling and management. Normally, there are 2-3 such trainings every year where the BMS team visits a customer’s facility and conducts the safety training. Feedback is formally collected after the training. Sale is also accompanied with a booklet detailing product specifications and usage. In case of any issue, onsite support is provided to the customer.

Compliance and safety form a part of the key result area even in the Sales functions. This translates to ensuring that there is no non-compliance. Safe working conditions for people in the team are ensured.

Bayer has received awards from customers at various vendor meets. It also closely engages with customers for product development to meet emerging market demands and performance requirements.

Often BMS organises road shows in association with Original Equipment Manufacturers (OEMs), where Tier1 suppliers are invited. In these road shows, discussion and brainstorming regarding new technologies take place. Sometimes, Bayer technology experts are invited from global offices to engage with

Customers

Indian customers. In 2012, similar road shows were conducted with Nissan, Tata Motors, Bajaj and Maruti.

Bayer has a high customer retention rate over the years due to its focus on • Consistency in service delivery • Meeting customer requirements• Delivering quality to customers

In case, a customer wants to register a complaint, he or she can reach Bayer through dedicated emails which are suitably directed.

We encourage all our internal and external stakeholders to share with us their sustainability priorities and concerns as part of our ongoing dialogue with them. Their expectations and concerns together with our views form the basis of our material issues. During the reporting year, a structured brainstorming exercise was conducted internally by a core team with relevant functions across Bayer Group of Companies in India, to prioritise issues that are of concern to us as well as our key stakeholders.

This report demonstrates our broad understanding of the sustainability context, which includesdiverse topics such as the ones highlighted in thelist below. We intend to further sharpen our materiality analysis, goals and action plans in the forthcoming year with respect to the evolving sustainability challenges in India.

A position focusing on Stakeholder engagement has been created at Bayerduring the reporting period. Subsequent to appointment of dedicated personnel to this position, a comprehensive strategy for stakeholder engagement that focuses on stakeholder universe mapping, messaging, mapping of issues across sub-groups and creation of holistic engagement platforms with stakeholders is in the process of being rolled out.

Materiality Analysis

Steering sustainability at Bayer

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus Page Maker including versions of Lorem Ipsum.

It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

01 | Bayer Sustainable Development Report 2013 | Company Highlights

Cover picture: Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.