A materiality assessment seeks to identify the issues that are important to the business, the community, and the environment, and prioritize them for action by the company.

Merck's global operations, covering a range of activities, include: research laboratories and farms; manufacturing and packaging facilities; warehouse and distribution centers; a field sales force; and business offices. Our products include pharmaceuticals, vaccines, biologics, animal health medicines and consumer products. In recent years, we have begun moving from manufacturing the majority of our products at company-owned facilities toward a supply model that also leverages external manufacturers to augment our internal capabilities.

Our direct environmental footprint is largely related to the resources and materials we use to do research and to manufacture our products, as well as the wastes that are generated, treated and disposed of as the result of those activities. Pharmaceutical compounds are complex organic molecules and the processes used to synthesize them are generally intricate, multistep, batch chemical operations often requiring multiple solvent changes between process steps and rigorous cleaning between batches. As a result, our direct environmental footprint is significantly impacted by solvent emissions and spent solvent wastes. Some of our newer products are being developed using biological processes that require significant amounts of very pure water. Consequently, understanding and reducing our environmental impacts related to water is also a focus of our efforts.

Although manufacturing represents the majority of our direct environmental footprint and is a significant focus area, our environmental initiatives also address other aspects of our operations, from how we operate our business offices through how we conduct our research and development to how we market our products.

After the merger, a crossfunctional team was established to develop environmental goals for the new Merck. They reviewed the environmental footprint of the new company and emerging environmental and stakeholder issues in order to identify material issues. This process resulted in a suite of goals for key activities that will drive improvements in air, water, waste, and packaging. With few noted exceptions, these goals apply to Merck-owned operations, which is where we feel we need to initially focus.