16.3 Compliance

Bayer manages its businesses responsibly and in accordance with the statutory requirements 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 the company’s reputation. Bayer does not tolerate any violation of applicable laws, relevant codes of conduct or internal regulations. Compliance is essential for our long-term economic success.

Corporate compliance

The Board of Management is unreservedly committed to compliance, and Bayer will forgo any business transaction that would violate our compliance principles. These principles are enshrined in our (Corporate) compliance comprises the observance of statutory and company regulations on lawful and responsible conduct. Policy, which is available in 42 languages and sets out our commitment to:

  • Fair competition,
  • Integrity in business dealings – including zero tolerance of corruption
  • The principles of sustainability and product stewardship
  • The upholding of foreign trade laws and insider trading laws
  • The separation of business and personal interests
  • Proper record-keeping and transparent financial reporting
  • Fair and respectful working conditions and the avoidance of all forms of discrimination

Every employee is required to observe these rules and to immediately report any violation of the Corporate Compliance Policy. This general reporting requirement does not apply in France due to peculiarities of national law. Managerial employees have a vital role to play in implementing the Corporate Compliance Policy in the Bayer Group. As role models, they help to ensure this essential code of conduct is actively adhered to. Managers may lose their entitlement to variable compensation components and be subject to further disciplinary measures if systematic violations of applicable law have occurred in their sphere of responsibility. Compliant and lawful conduct factors into the performance evaluations of all managerial employees.

Adherence to the (Corporate) compliance comprises the observance of statutory and company regulations on lawful and responsible conduct. Policy is among the subjects covered in all audits conducted by Bayer’s Internal Audit. Audits are planned using a function- and risk-based approach that also takes a corruption awareness index into consideration. Audits of the major companies, which together account for about 90% of Group sales, are planned to take place every three years. A total of 214 audits were conducted in 2015. These included 38 preventive or incident-related compliance audits. The head of Internal Audit regularly attends the meetings of the Audit Committee of the Supervisory Board, presenting a list of conducted audits and their outcomes at least once a year.

Compliance organization

The Bayer Group’s compliance organization is headed by the Group Compliance Officer, who regularly reports directly to the Chairman of the Board of Management and to the Audit Committee of the Supervisory Board. A central compliance department supports the Group Compliance Officer in steering and implementing the Group-wide compliance activities. In 2015 each subgroup and service company had its own compliance officer, whose responsibilities included ensuring adherence to subgroup- or industry-specific standards. A central compliance officer – supported where necessary by further compliance functions – is available in every country or country group to answer questions from all employees’ regarding lawful and ethical behavior in business-related situations.

The compliance organization operates in accordance with international standards such as the OECD Recommendations of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions.

The mission and the goals of the Bayer Group’s compliance organization are set forth in our Compliance Charter, which forms the basis for proactive, risk-based, collaborative cooperation with the operational business aimed at early prevention of compliance violations. For compliance to continue developing as a permanent, active part of Bayer’s corporate culture, it must be integrated into all operational business units and their work processes.

A Group-wide compliance management system serves the purpose of early prevention. This system is based on partnership with the operational business and features dialogue, transparency and continuous improvement. It also includes the punishment of compliance violations.

The preventive approach is driven by the Integrated Compliance Management (ICM) project. This promotes close, systematic cooperation between compliance experts and operational business managers. With the help of ICM, relevant business risks can be identified and minimized. A systematic process is in place involving roundtable meetings to discuss identified compliance risks and coordinate steps to mitigate them. The participants in these roundtables are the compliance functions and the operational business managers. The results of the roundtables are entered and tracked in a Group-wide compliance risk management database.

Group target 2015:

conducting preventive risk assessments in all three subgroups

In line with our Group target, we had carried out comprehensive, preemptive risk assessments in the holding company, all three subgroups and the country organizations by the end of 2015. The project also includes regular self-monitoring by the operational business units based on appropriate auditing and inspection procedures. ICM is focused on the areas of antitrust law, anticorruption measures, export control, conflicts of interest, insider trading, antidiscrimination and privacy. At the beginning of 2016, the project was transferred to the company’s compliance and privacy organization.

Compliance violations can be reported – anonymously if desired – via a central, global compliance hotline, which was switched in 2015 to a new international provider offering additional services. In 2015 the compliance organization received a total of 185 reports via this compliance hotline (121 of these anonymous), which is also accessible to the general public. Of these reports, 10 came from Germany and 175 from other countries. As an alternative to the compliance hotline, suspected compliance violations may also be reported to the compliance officer for the respective country organization or to Internal Audit.

All suspected compliance violations in the Group are recorded according to uniform criteria and dealt with under the rules set forth in Bayer’s Directive on the Management of Compliance Incidents.

Online annex: 3-16.3-1:

limited assurance

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 or written warning, 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. This does not preclude the company from asserting further claims against the employee concerned for cost reimbursement or damages or from initiating a criminal prosecution. The action taken in each case depends on the gravity of the compliance violation and on applicable law.

Compliance training and communications

Group-wide training programs tailored to requirements and target groups, along with extensive communications activities, help to further raise the employees’ awareness for compliance issues and the risks involved. In 2015, 38,609 Bayer managers, or 96.6% of the global total, took a compliance training program. This was in line with the Group target.

Online annex: 3-16.3-2:

limited assurance

The aim of these targeted training programs is to ensure that employees do not overstep boundaries out of ignorance or uncertainty. Our compliance training programs reflect the focus areas of the ICM project and are available in various formats to meet the needs of different employee groups. Some take the form of web-based training (WBT) programs, while others involve face-to-face training sessions or workshops.

In 2015, we implemented a new global web-based training program in 83 countries on the subject of conflicts of interest. This program, initially available in 10 languages, has already been completed by 26,163 employees.

Group target 2015:

annual compliance training for all Bayer managers (> 99%)

New hires and employees switching to different areas of responsibility within Bayer are regularly invited to participate in the training programs relevant to their functions. This ensures that all new employees receive the appropriate compliance training.

In view of the particularly strict compliance rules in the area of health care, we offer special training programs for the employees working in this field. Further details are given in Chapter 7 “Procurement, Products, Logistics, Distribution.”

We again ran a broad-based communications campaign in 2015 to provide comprehensive information to all employees about compliance and the availability of advice from compliance staff under the new partnering concept, as well as to enhance their awareness for compliance-critical situations. The communications activities in 2015 focused on conflicts of interest and product-related communications. A wide range of internal media offerings was available on both topics. At the start of the year, a quiz provided the opportunity for employees to refresh their knowledge of various aspects of compliance.