Preface from Werner Wenning and Dr. Wolfgang Plischke

Ladies and Gentlemen,

Werner Wenning, CEO (left) and Dr. Wolfgang Plischke, Member of the Board of Management, responsible for Innovation, Technology and Environment

Werner Wenning, Chairman of the Board of Management (left) and Dr. Wolfgang Plischke, Member
of the Board of Management, responsible for Innovation, Technology and Environment

The issue of climate protection is at the very top of the international agenda, as was underlined when the Nobel Peace Prize was awarded to the Intergovernmental Panel on Climate Change (IPCC) and Al Gore. Climate change is a reality and there is no getting away from that. That’s why we at Bayer appreciate the intense dialog on climate protection. Indeed, we have long been committed to tackling this ecological and economic challenge.

While we realize that we share the responsibility for greenhouse gas emissions, we are also part of the solution. After all, our products are already helping to save energy and conserve resources in a whole range of different ways, and we have achieved a great deal in our drive to make our facilities more climate-friendly.

But we are not going to rest on our laurels – we want to do even more to drive progress forward. As a socially responsible company, Bayer is committed to playing an active role in overcoming one of the biggest challenges of our time. It is for this reason that we are currently initiating our Group-wide Bayer Climate Program, which is designed to run for several years. It is based on our new “Bayer Policy on Climate Change”.

This program incorporates a whole range of integrated measures designed to help protect our climate and cope with climate change. The key principle of the program is to harmonize commercial success with environmental protection and the needs of society.

We have therefore set ourselves ambitious new targets for reducing greenhouse gas emissions between 2005 and 2020. For example, our Bayer MaterialScience subgroup aims to cut its worldwide specific CO₂emissions for every metric ton of products it sells by 25 percent. Absolute emissions from the less energy-intensive subgroups, Bayer CropScience and Bayer HealthCare, are also to be cut by 15 and five percent, respectively.

The innovative “Bayer Climate Check” is one of four so-called lighthouse projects with which we aim to achieve these ambitious targets. This project, which is designed to help optimize production processes, involves investigating the energy efficiency of 100 production facilities throughout the world. We will systematically review the supply chain preceding production and include raw materials, energy sources and forms as well as logistics in our survey. The Climate Check will also enable us to further develop the ecological assessment of major new investments with regard to climatic factors. We expect this approach to deliver a five- to ten-percent reduction in direct and indirect greenhouse gas emissions.

We have also set aside EUR 1 billion in our budgets for investment in climate-relevant R&D and projects between 2008 and 2010.

The use of polyurethane as an insulation material is central to this strategy. When used to insulate buildings, this material can help save 70 times the energy used to manufacture it.

This brings us to another of our lighthouse projects – the “Bayer EcoCommercial Building”. This is a concept for zero-emission office and industrial buildings that can be built in all the Earth’s climate zones. Integrated construction methods and materials – including various Bayer materials – are central to this project. Work on the first building to be constructed as part of the concept is set to begin in 2008 in New Delhi, India.

There is no question that biofuels – i.e. plant-based fuels that cut emissions and help ease pressure on resources – will become increasingly important in the future. Canola is one of the most important raw materials for these fuels, and Bayer CropScience is the current global market leader in canola hybrid seeds. High-yield canola seeds from our subgroup help to boost crop yields by around 20 percent compared to conventional hybrid varieties.

However, we are also addressing the consequences of climate change. Bayer CropScience, for example, is currently working to develop more stress-tolerant plants that can deliver good yields even under extreme conditions such as heat and drought.

As you can see, we are a competent partner for innovative solutions which help to address the consequences of climate change. In addition to our own research, we also will foster scientific innovations. For example, our new Bayer Science and Education Foundation initiated the Bayer Climate Award. The award, worth EUR 50,000, will be presented to scientists who develop pioneering solutions. The Foundation’s grant program, known as “Bayer Climate Fellows”, will also help committed students attend climate protection seminars by providing financial support of up to EUR 5,000.

Of course, the success of our Bayer Climate Program depends very much on our staff’s support. We deem it essential to involve our employees in these activities. Everyone of us can contribute to climate protection, be it at work or when travelling, communicating or driving. Even if these are minor contributions, they will create awareness for climate change.

For example, we want to cut down on business flights, which will be replaced by making greater use of the latest conferencing technology. We also want to cut emissions caused by company vehicles by 20 percent between 2007 and 2012. This goal is also valid for the Group’s Board vehicles. We will set incentives for the use of cars low in CO₂emissions – first in Germany and then abroad. In the same way as climate change is caused by a range of individual factors, success is also the sum of a whole host of actions.

Ladies and Gentlemen, you can see that we do all we can to help protect our climate. Our united approach in tackling the challenges that lie ahead is the ideal opportunity to put our Mission Statement into practice – “Bayer: Science For A Better Life”.

Werner Wenning                                         Dr. Wolfgang Plischke
_{Chairman of the Board of Management          Member of the Board of Management of Bayer AG,
of Bayer AG                                                     r}_{esponsible for Innovation, Technology and Environment}