Workers in the Value Chain (S2)

Our business model is based on scientific research and responsible entrepreneurship. For us, they are the key to technological progress. We source numerous raw materials, packaging materials, technical products, components, and services from all over the world. Accordingly, we depend on the stability and reliability of our suppliers and supply chains. The impacts identified in our materiality assessment related to workers in the value chain result from our complex supply chain, our business activities and geographical conditions. Therefore, the objectives of our supplier management are compliance with human rights and environmental due diligence obligations through suitable policies, processes, and actions. We aim to act ethically and responsibly in our own business practices as well as in our supply chain to minimize human rights violations and abuses. We expect the same commitment from our suppliers and have defined this in our Supplier Code of Conduct. In case human rights violations or breaches of labor standards occur in the supply chain, we apply remedial actions specifically targeted at our suppliers and expect the deviations to be addressed promptly and effectively.

Definition of workers in our value chain

Our company operates in complex supply chains, often involving several supplier levels between us and the sources of the raw materials used in our products. Consequently, our manufacturing operations may indirectly have adverse impacts on workers in our upstream value chain, especially their working conditions, equal treatment and opportunities, and other work-related rights. The risks of such impacts are mostly widespread and often systemic, particularly in supply chains involving raw materials extraction and sectors such as transportation, logistics and distribution.

In this context, workers who may be particularly affected by human rights violations in the value chain include:

• Workers who extract, process and transport conflict minerals such as tin, tungsten, tantalum, and gold (3TG). A significant proportion of these workers often operate in the informal economy and lack access to basic labor protections. They may be exposed to unsafe work environments, discrimination, insufficient health and safety practices, unfair pay and, in severe cases, child labor. In addition, conflict minerals may be extracted in conflict-affected and high-risk areas, where armed groups may trade minerals to finance and continue conflict that affects workers and local communities.

• Workers who extract, process and transport mica. Mica is an important raw material in effect pigments, which are used in the automotive, cosmetics, and plastics industries. We used this raw material in our business unit Surface Solutions, which we divested on July 31, 2025. We sourced most of our mica from Rajasthan and Bihar, India, where mining conditions are often hazardous. Similarly, as for the 3TG, there is a considerable risk of child labor, discrimination, unsafe working conditions and a lack of formal employment structures. Local authorities’ lax supervision further exacerbates this problem.

• Workers in the transportation, logistics, and distribution sector may experience precarious working conditions, excessive working hours, a lack of health and safety protection, and mistreatment and discrimination.

Workers in our upstream value chain from the aforementioned groups are particularly susceptible to negative effects. This includes people who do not have a good command of language in the workplace, meaning they have difficulty understanding safety instructions and/or communicating effectively with colleagues, for example. Workers with physical or mental challenges may also be more susceptible to injury or accidents in the workplace. Women can be discriminated against and treated unequally in the workplace, affecting their access to work in the first place, safe working conditions, fair promotion opportunities, and adequate health and safety resources.

Workers in our upstream and downstream value chain, such as distributors or agents, may be additionally affected by geopolitical events. These events and the risks they pose are external and therefore not linked to any impacts or dependencies by our business activities or relationships with workers in our value chain. Workers working in the operations of a joint venture or workers in our downstream value chain are not affected by our material impacts. Workers who work on our site and fall into the category of non-employees (for example, self-employed workers or temporary workers contracted by temporary employment agencies) are part of our own workforce (S1).

Our main impacts, risks and opportunities related to workers in the value chain (SBM-3)

Our policies related to workers in the value chain (S2-1)

Our human rights commitment

As an international company, we have the responsibility to respect human rights, including labor rights, in line with the UN Guiding Principles on Business and Human Rights (UNGPs), the ILO Declaration on Fundamental Principles and Rights at Work and the OECD Guidelines for Multinational Enterprises. We want to ensure that no human rights violations occur at our subsidiaries, suppliers, or business partners. We also aim to work toward improving the respective circumstances if human rights violations are identified. In doing so, we are fulfilling our due diligence obligations and complying with legal obligations, such as the German Supply Chain Due Diligence Act. In the event of inconsistencies between our Group-wide standards and national laws, we try to act in accordance with whichever standard is stricter while complying with the laws in the countries in which we operate. This helps us to contribute to the UN Sustainable Development Goals (SDGs).

We do not engage directly with workers in our value chain. We work with other companies in industry initiatives to ensure that we operate according to industry standards and can rely on comparative data and expert analyses. For example, until the divestment of our business unit Surface Solutions, we engaged in the multi-stakeholder group Responsible Mica Initiative (RMI). RMI aims to reduce human rights risks in the mica supply chain. In addition to the interests of companies, the interests of value chain workers are also considered in order to improve working conditions and eliminate child labor and forced labor. More information can be found under S2-4.

We have processes to remedy human rights and environmental violations. They include a Group-wide whistleblowing and complaints system through which any stakeholder can anonymously report potential violations. Regardless of the source – such as reports from the media or civil society or reports from our complaints system – we take effective action to end, remediate or otherwise address the potential harm to affected stakeholders. If an investigation confirms that a supplier poses a human rights or environmental risk or has committed a violation, we take appropriate steps, such as audits and corrective action plans. More information can be found under S2-3.

The implementation and operationalization of our human rights due diligence has been outlined, including clear responsibilities assigned for the monitoring of risk management. Our Human Rights Officer is responsible for monitoring human rights and environmental due diligence. As we consider the fulfillment of due diligence obligations as a cross-sectoral task, in addition to our Human Rights Officer, topic managers in the respective functions, business sectors and local units are also responsible for their operational implementation. In addition, external experts are consulted for certain topics and tasks. The overall responsibility for respecting human rights lies with our Executive Board.

In fiscal year 2025 we did not record any confirmed cases in accordance with the UN Guiding Principles on Business and Human Rights (UNGPs), the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct our supply chain (2024: 0). One case was reported through our Compliance Hotline. The case was investigated and not confirmed as a human rights violation. Our Human Rights Officer was informed about the matter.

Our processes for engaging with workers in value chain in relation to the impacts on them (S2-2)

We do not yet have processes in place to directly engage with workers in the value chain and their representatives about material actual/potential impacts and risks affecting them.

Our processes for addressing negative impacts and channels through which workers in the value chain can raise concerns (S2-3)

As a multinational company that operates globally, we cannot rule out the possibility that negative impacts on people and the environment occur in our supply chains. We therefore work systematically to identify, prevent, mitigate or otherwise address such impacts. These efforts include standardized processes – in particular, our supplier selection and supplier performance evaluation processes – as well as our integrated Human Rights and Environmental Due Diligence program. This program encompasses a full range of due diligence processes, such as risk management, preventive and remedial actions, our complaints system, news monitoring as well as our specific process for conflict minerals.

Supplier selection and evaluation processes

We factor social, human rights, and environmental expectations into the selection and evaluation of suppliers. Our supplier sustainability score combines ratings of suppliers’ ESG practices (primarily reflected in their EcoVadis assessment) with various decarbonization indicators (such as availability of product carbon footprint, SBTi targets, or share of renewable electricity). The supplier sustainability score is considered when selecting suppliers and when assessing their overall performance. Our overarching objective is to gradually shift a greater proportion of spend to suppliers that demonstrate a strong sustainability performance. The supplier sustainability score supports this objective.

Risk management process

We conduct an annual risk analysis to identify and monitor our suppliers’ human rights and environmental risks. If business realities change, we conduct additional risk analyses on an ad hoc basis. The analysis’s findings flow into our decision-making and other business processes and shape our choice of preventive and remedial actions. The annual risk analysis has two stages: abstract and concrete. The abstract risk analysis is based on third-party country and industry indices and our business volume with each supplier. It enables us to identify risky and top-spend suppliers, which are subjected to the second, concrete stage. This involves an EcoVadis assessment to evaluate the robustness of their sustainability management systems and to obtain a comprehensive scan of news reports about them and any sanctions they may face. We classify suppliers whose performance falls below a certain threshold as high-risk suppliers. For those, we need to take remedial action, as described in the next section.

Preventive and remedial actions

When risks have been identified, we take preventive measures. These include, for example, acknowledging our Supplier Code of Conduct, completing the associated training, and conducting supplier assessments and audits. More information can be found under S2-4.

The Remedial Actions Guideline explains the actions that we need to take to incentivize suppliers to end, mitigate or otherwise address a human rights or environmental violation. There are two scenarios under which remedial action is necessary: first, if our suppliers’ sustainability assessment or audit results do not meet our expectations; second, if we obtain knowledge of adverse impacts through our complaints mechanism or news monitoring. The latter scenario is described in the next two sections: “Complaints mechanism” and “News monitoring”.

If suppliers do not meet our expectations regarding their sustainability assessment or audit, we work with them to define and implement remedial action plans within an appropriate timeframe. The most common issues requiring remedial action in 2025 were employee health and safety, social dialogue and diversity, discrimination and harassment. In addition, we ask our suppliers to formally acknowledge our Supplier Code of Conduct and complete a training module on the policy.

Complaints system

Potential violations of human rights, legal provisions and environmental regulations can be reported via our Group-wide whistleblowing and complaints system. A central component of this is our Compliance Hotline, which we have set up in collaboration with a third-party provider. Both our employees and workers in our value chain can report suspected cases in more than 40 languages via this system: free of charge and anonymously, either by telephone or via a web-based application. The channels can be accessed via our external website Compliance-Hotline. All reports are treated confidentially and are checked and processed according to a clear and transparent process. The persons responsible for the investigation are independent and autonomous. Group Compliance accepts complaints received via the aforementioned channels and passes them to the specialist departments responsible for processing. The respective Group functions are responsible for complaints that concern their business activity.

The Center of Excellence for Sustainability within Group Procurement is responsible for the timely handling of possible violations in the supply chain. If the investigation confirms human rights or certain environmental risks or violations in our company or at our suppliers, appropriate remedial measures are initiated in accordance with our Remedial Actions Guideline. At the same time, we regard the reports as an opportunity to review our internal processes and structures and improve them where necessary. The human rights and environmental whistleblowing procedures contain a description of our compliance process and are available on our website in the following languages: English, German, Chinese, French, Hindi, Japanese, Korean, Portuguese and Spanish. The complaints system is described in our Supplier Code of Conduct. Furthermore, we outline in our Supplier Code of Conduct that our suppliers need to have a complaint system in line with effectiveness criteria of the United Nations Guiding Principles on Business and Human Rights (UNGPs) or other applicable laws. They must encourage and enable their employees to report concerns or illegal activities. Suppliers shall follow up on concerns and take corrective actions if needed. The complaints system also needs to be made available and actively communicated to external rights holders. Additionally, our suppliers with low human rights scores have to complete a training module on our Supplier Code of Conduct, which specifically includes information about our complaints system.

Our complaints system meets all established effectiveness criteria for non-judicial grievance mechanisms, as set out in the UN Guiding Principles on Business and Human Rights (UNGPs): it is legitimate, accessible, predictable, fair, and transparent. We are working on improving the effectiveness of our complaints system.

News monitoring

When we become aware of news media, government or civil society reports of potential human rights or environmental violations in our supply chain, we investigate the matter immediately. If the allegations are substantiated, we take appropriate action to ensure that the supplier in question mitigates, ends or otherwise addresses the violations. In the event of severe human rights violations we may terminate our commercial relationship with a supplier if they fail to cooperate in remediating the violation.

Our investigation process consists of identifying the nature of our business relationship with the entity (direct supplier or indirect upstream supplier), establishing a timeline of events, collecting contextual information from various public sources and requesting that the supplier provide a formal statement on the matter. Regardless of whether the violation occurs at a direct or indirect supplier, our respective sourcing team first engages with the direct supplier with which we have a contractual relationship. If the violation involves an upstream indirect supplier, we collaborate with our direct supplier to investigate and remediate the case. The complaints procedure is closed if the investigation determines with sufficient certainty that no violation occurred. If the supplier responsible for the violation is unresponsive and/or unwilling to take remedial action, we initiate an escalation process as defined in our Remedial Actions Guideline.

Similarly, as for cases reported through our complaints system, the investigation, remedial actions and escalations draw on expertise from across our company, including Procurement, the Human Rights Office of Merck KGaA, Darmstadt, Germany, the Legal team, and business risk owners from the affected business sectors (Life Science, Healthcare, Electronics).

Due diligence process for responsible mineral sourcing

During the fiscal year 2025, we were subject to the EU Conflict Minerals Regulation (EU) 2017/821, which requires companies to exercise due diligence in sourcing minerals from conflict-affected and high-risk areas. As part of this obligation, we conducted and publicly disclosed an independent third-party assessment of our responsible minerals sourcing practices. Our human rights and environmental due diligence program prioritizes materials with elevated risk profiles, particularly mica and conflict minerals, namely tin, tantalum, tungsten and gold (3TG). We identified high-risk suppliers in India and conducted independent third-party on site audits for all of them.

In addition to our standard due diligence procedures, we implement dedicated activities as outlined in our Conflict Minerals Due Diligence Guideline. Our Procurement and Quality departments worked together to collect Conflict Minerals Reporting Templates (CMRTs) and/or Extended Minerals Reporting Templates (EMRTs) from our suppliers and validate them. If the Responsible Minerals Initiative’s (RMI) Responsible Minerals Assurance Process deems a smelter listed in our suppliers’ CMRTs or EMRTs to be non-conformant, we engage with the smelter and require them to implement a remedial action plan within a defined timeframe. If there are clear indications that suppliers do not adhere to our principles for responsible minerals sourcing, we require an independent third-party on site audit. In cases where serious concerns persist and the supplier fail to cooperate, we reserve the right to terminate the business relationship.

Our initiatives and actions regarding workers in the value chain (S2-4)

In order to fulfill our human rights due diligence obligations, we have implemented a variety of measures as described in the following. The aim is to protect affected workers and to prevent, end, mitigate or otherwise address adverse impacts on human rights. Unless otherwise stated, all memberships in the industry initiatives listed below-are ongoing.

Together for Sustainability supplier assessments and audits

Together for Sustainability (TfS) is a global initiative that brings together more than 50 leading companies to promote sustainable sourcing practices in the chemicals industry. Suppliers’ sustainability performance is assessed by TfS member companies or by EcoVadis, an independent rating agency. EcoVadis assesses suppliers from more than 175 countries and over 200 sectors in four key areas: environment, labor and human rights, ethics, and sustainable procurement. On top of the assessments, suppliers are also monitored through a 360-degree news watch. The results are shared among TfS member companies in compliance with all restrictions stipulated by antitrust law.

TfS provides us access to 2,179 (2024: 2,695) valid scorecards on the assessment of our suppliers, almost 2,092 (2024: 2,587) of which completed a new assessment or re-assessment in 2025. These were either initiated by us or by other TfS members. In 2025, we continued our collaboration with member companies in TfS workstreams. We contributed to several best practice sharing and collaboration formats such as the TfS Talks as well as TfS Coordinator Roundtable. The TfS Academy offers training courses for employees of member companies. The module on human rights due diligence covers topics such as child labor, forced labor, human trafficking, discrimination and harassment. We use this leverage to enforce sustainability standards and requirements in supplier contracts to ensure compliance with ethical practices and environmental responsibility. We pool our knowledge and resources in a global network to drive systematic improvements in the supply chain.

Training on the Code of Conduct

Since January 1, 2023, a specific contractual clause has been applied to all new contracts, through which we enshrine the obligation to comply with our Supplier Code of Conduct. Suppliers that present certain risk factors or a low human rights score must undertake training on our Supplier Code of Conduct. This involves using an interactive e-learning tool that we have developed based on the content of the policy in various language formats. The training can also be carried out as part of an existing action plan or to enhance supplier awareness. All remedial actions and training initiatives of suppliers are documented. By this, we aim to ensure that the implemented measures are driving continuous improvement of our supplier’s performance. If the supplier fails to meet the minimum requirements and does not show improvement, appropriate escalation is initiated.

Membership of the Responsible Minerals Initiative

Our membership in the Responsible Minerals Initiative (RMI) reflects our commitment to safeguarding the labor and human rights of workers in our minerals supply chains. The RMI provides us with various tools and resources that support us in making responsible sourcing decisions that comply with the EU Conflict Minerals Regulation (EU) 2017/821. For example, the RMI Facilities Database allows us to check audit results of smelters and refiners that are in our suppliers’ supply chains in accordance with the RMI’s Responsible Minerals Assurance Process. The Reasonable Country of Origin Inquiry list gives insights into smelters’ and refiners’ source countries. In addition, RMI’s Global Risk Mapping Platform allows users to identify material mineral-related risks at early on.

Membership of the Responsible Mica Initiative

We are a founding member of the Responsible Mica Initiative and held its presidency from 2017 to 2025. The initiative brings together more than 100 companies and organizations dedicated to eliminating child labor and unacceptable working conditions in the mica supply chain. In 2025, we continued to support the initiative’s efforts to improve both the working conditions in mica extraction (in part by conducting audits) and the living conditions in nearby communities. We divested Surface Solutions – our only business unit that used mica as a raw material, effective July 31, 2025, and therefore ended our membership in the initiative.

Improving the living conditions of mica workers

Our business unit Surface Solutions, which was divested on July 31, 2025, sourced mica from the Indian states of Jharkhand and Bihar. Insufficient social and economic factors contribute to poor working conditions, including child labor in these regions. We supported this region by safeguarding local employment and livelihoods. Therefore, we contractually agreed a monthly wage of 17,500 Indian rupees with our suppliers for the workers in the mines and factories. In 2023, the workers in processing units and mines in our supply chain already received the aforementioned fixed salary, independent of mica volumes harvested or processed. This wage is a living wage that contributes to a decent standard of living for workers and their families while helping to eliminate the root cause of child labor. We continued to monitor the maintenance of this living wage. Moreover, we worked to improve the living conditions of families in mica mining areas. Since 2012, we have been funding three schools in Jharkhand, India, which currently have around 490 students, as well as five vocational training centers, all of which are run by our local partner, the non-governmental organization “The Indo-German Export Promotion Project” (IGEP). In addition to our support for education, we also helped to improve access to healthcare. For example, we fully fund a health center operated by IGEP in Sapahi, Bihar, which serves around 20,000 residents of the region. Due to the divestiture of our Surface Solutions business unit, which used mica as raw material, by July 31, 2025 the initiative will no longer be moved forward by us.

External audits in the mica supply chain

Until the divesture of our business unit Surface Solutions, we collaborated with our partner IGEP. This organization IGEP has been carrying out regular unannounced visits since 2013: IGEP monitors occupational safety and compliance with laws to combat child labor. In 2025, its inspections focused on medical check-ups for workers and conducting mock fire drills. We regularly optimized the escalation process together with IGEP. Supplier assessments were carried out in meetings every third week with representatives of our company. These meetings helped to identify any required actions, which our sourcing teams then discussed and implemented with our suppliers. Our employees in Kolkata and Darmstadt took action to address any identified issues. As a result, our suppliers have successfully improved the working conditions at these sites. If the corrective actions are not respected, we may suspend or even terminate our business relationship with them.

Evaluating and tracking mica sources

We used a digital traceability system to help ensure that the mica we purchase is derived from mica sources qualified by our company and audited accordingly as described above, focused on working conditions as well as environmental, health and safety aspects. Based on written records of the daily extraction quantities, we reviewed the volumes of mica reported and supplied to the processing facilities. The effectiveness of this initiative was proven by the fact that we only sourced mica from mines that fulfill due diligence requirements.

Monitoring of supply chain resilience

To increase supply resilience, we identify and monitor relevant suppliers against criteria such as financial, operational and ESG related risks, and their strategic importance to the business. This approach supports our category sourcing teams to identify potential mitigation actions with impacted suppliers and supports them in making improvements. As part of our comprehensive procurement risk management approach, which is based on various external data sources and indices, we also monitor potential global events (for example, geopolitical, climate, natural catastrophes, military conflicts, etc.). In the case of an identified risk, our sourcing teams work closely with our business sectors to take the necessary action, for example, creating a contingency plan with our suppliers.

Ensuring ethical labor practices: Our commitment to SDG 8.7

We demonstrate our commitment to Goal 8 of the 17 UN Sustainable Development Goals “decent work and economic growth” through our initiatives, taking immediate and effective actions to contribute to the elimination of forced labor, end modern slavery and human trafficking, prohibit and eliminate the worst forms of child labor, including conscription and the use of child soldiers, and end all forms of child labor. We have an ongoing commitment to help establish and maintain fair and ethical labor practices in our operations and throughout the supply chain. By adhering to stringent ethical and social standards, regularly reviewing compliance, as well as engaging with suppliers to ensure ethical practices, our approach facilitates continued improvement in eradicating forced labor, modern slavery, human trafficking, and child labor. This commitment to human rights due diligence and responsible supply chain standards aligns with the aim of SDG target 8.7 and contributes to the company’s ongoing dedication to ensuring fair and ethical labor practices within its operations and across its supply chains.

Roles and Responsibilities

Procurement is responsible for integrating sustainability requirements into the relevant stages of our sourcing and supplier management processes. Our Center of Excellence for Sustainability coordinates the relevant actions, such as updating our guidelines where necessary, examining processes and coordinating our participation in external initiatives to collaborate with peers and further stakeholders about human rights due diligence in our supply chain. We use internal communication channels and training to regularly inform and update Sourcing teams responsible for selecting and contracting suppliers. These updates include our guidelines and sustainability requirements, including human rights requirements affecting workers in the value chain as set out in our Supplier Code of Conduct.

We have defined clear roles for the governance of the due diligence process for conflict minerals. The Conflict Minerals Project Lead oversees the governance process, leads the project teams, and updates senior management. The Business Sector Conflict Minerals Lead oversees supplier reporting and participates in due diligence activities, for example, by monitoring conflict mineral supplier assessments, including human rights aspects for workers in the value chain via the RMI Facility database at an early stage. The procurement team engages in risk mitigation and ensures compliance with sourcing expectations. They are also responsible for gathering supplier information and managing supplier relationships.

The Head of Corporate Responsibility, Surface Solutions, was the central contact for topics related to mica sourcing until July 31, 2025. Under his responsibility business requirements were defined, audits executed and outcomes reviewed to manage corrective actions that affect working conditions for mica workers, for example. Our procurement unit responsible for sourcing mica was in direct contact with suppliers to reiterate the importance we place on ethical, social and environmental standards. Our Head of Product Compliance, Surface Solutions headed mica advocacy efforts and served as the President of the Responsible Mica Initiative until the divestment of our business unit Surface Solutions effective July 31, 2025.

Our targets in relation to workers in the value chain (S2-5)

The measurement of metrics related to workers in the value chain has not been separately validated by an external body.