Foreword

Sustainable growth benefiting both company and society

Werner Wenning, Chairman of the Board of Management of Bayer AG

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Werner Wenning, Chairman of the Board of Management of Bayer AG

Dear Readers,
Our company is looking back on the most successful year in its history. After what had already been a very good previous year, in 2007 we were once again able to achieve significantly increased sales and profitability, as well as to exceed our performance targets. We have also had an outstandingly successful start to 2008.

However, we do not want to measure ourselves solely in terms of our business figures, but also in terms of how we are meeting our corporate responsibilities. In our Mission Statement, we pledge our commitment to combining our technical and commercial expertise with a responsibility to work for the benefit of people and to contribute to improving the quality of life. To this end, our activities adhere to the principles of sustainable development, principles that we have implemented in corporate directives and management systems, building on our commitment to the 10 principles of the United Nations Global Compact.

We believe that growth and sustainability are inextricably linked, an approach that is also applicable for one of the dominant topics from the past year – tackling climate change. Bayer has been committed to climate protection for many years. In 2007, for the third time in a row, Bayer was once again the only European company in its industry to be included in the Climate Disclosure Leadership Index. We will continue to expand our commitment to the climate in the future: In our Group-wide Bayer Climate Program, which we introduced in 2007, we set ourselves ambitious goals for the further reduction of co2 emissions through 2020. In accordance with our slogan “Bayer: Science For A Better Life,” we intend to develop new solutions for protecting the climate and tackling climate change. Hence, this global challenge offers highly attractive opportunities for our products and technologies. In the first three years of the program alone, we are making €1 billion available for climate-related research and investment.

We have also continued our proven commitment in other areas. For example, the issue of legal compliance and corporate responsibility continues to be the highest priority for us. This is demonstrated not least by our Group-wide communications campaign regarding anti-corruption and compliance, which we launched in 2007. With our “Bayer Human Rights Position,” which we communicated throughout the company in 2007, we are strengthening our commitment to compliance with internationally recognized principles in the areas of human rights and working conditions.

In the area of worldwide medical care, we are engaging in a broad coalition consisting of international organizations, governments, companies and non-governmental organizations to work towards all people having access to medicines and to create the basic preconditions for sustainable health care in all countries.

Our cooperation in the development of such conditions is also an important concern for us in other areas. Bayer is committed to protecting the environment and consumers and participates actively at national and international level in the development of effective strategies and regulations. We are committed to product stewardship for our products and support the E.U. chemicals policy (REACH), the aim of which is to improve production and consumer safety, as well as environmental protection, throughout the entire product chain. To this end, the Group’s Board of Management in 2007 adopted an internal Group Directive entitled “reach Implementation. Implementation of the reach Regulation in the Bayer Group.”

With a number of additional projects in the areas of education and research, environment and nature, health and social affairs, and sports and culture, we once again demonstrated in 2007 that we take our role as a corporate citizen seriously. With our Bayer Foundations, our cooperation with international organizations such as the United Nations Environment Programme (UNEP) and our commitment to social affairs at our sites worldwide, we are presenting ourselves as a reliable community partner.

The Bayer Sustainable Development Report 2006 received recognition on a number of occasions, most recently when Bayer was a winner in 2007 of an award in the “Transparency and Credibility” category from the online service provider “CorporateRegister.com,” the world’s largest register of sustainable development reports. We are delighted to have received such recognition. It further strengthens our efforts to provide stockholders, employees, analysts and the public with transparent and comprehensive information regarding our sustainability activities.