Thinking and implementing sustainability holistically with the Sustainable Business Value approach

Sustainable Business Value determines the impact of Merck’s products on society. Here, the company has used the assessment on cultured meat, and subsequently found health benefits for people and planet

Awareness of sustainability issues is continuing to gain momentum across the globe. This is a positive development as sustainability impacts everyone.

Corporate sustainability efforts are playing an increasingly vital role for consumers, employees, investors, governments, and other stakeholders. Sustainable action is therefore indispensable for the future success of companies. It is also being strongly demanded in the EU through the ‘Green Deal’, which will provide great opportunities for companies by creating markets for clean and healthy technologies and products.

As a global science and technology company, sustainability is an essential part of Merck’s corporate strategy. The aim is to harmonize ecological, social, and business aspects. The company wants to be economically successful and create a positive value contribution for society through its business activities, the aim being to avoid consequential social costs.

To determine the value contribution to sustainability, Merck has developed the ‘Sustainable Business Value’ (SBV). This business value approach was developed together with the Boston Consulting Group based on its Total Societal Impact (TSI) concept. The SBV method enables Merck to determine the impact of its products in a uniform manner. It is used to calculate both positive and negative impacts of the company’s activities.

Positives and negatives

The focus of such a calculation is primarily on three dimensions.

The environmental dimension includes all emissions, resources, water use, as well as the impact of waste through various recycling routes. During the production of goods, there are potential negative impacts on the environment that can be offset through energy and resource efficiency. The customer benefit dimension quantifies the (usually positive) impacts of products on end users, such as increased health or safety. The socio-economic dimension includes the value created for society by the company’s own employment as well as by collaborating with and contracting suppliers. This quantifies both individual (via net income) and societal prosperity (via taxes).

SBV promotes an assessment that is based primarily on the consideration of benefits and harms for society, customers, and the environment. The entire value chain, including its suppliers and consumers, is considered. The insights gained from the calculated data help the company to align its business in a sustainable and future-oriented way.

Alternative food production

Here’s an example. Despite global and local campaigns encouraging the public to consume less meat, demand is growing in line with the rising world population. Yet meat production poses one of the biggest problems for sustainable and climate-friendly global nutrition. A not inconsiderable share of man-made greenhouse gas emissions is attributed to the breeding of livestock (~14%, according to The FAO of the UN). This is slightly more than the entire global transport sector.

Besides vegan products, ‘cultured’ or ‘cultivated’ meat is a real alternative. Using biopsies, stem cells are taken from the muscle tissue of animals, which then divide and multiply again and again in a cell culture. In the next step, they differentiate into the desired muscle, fat or other cells. Using a variety of technologies, the resulting ‘biomass’ can be given a solid structure to produce a steak, fish fillet or similar.

A few years ago, this was still a distant utopia. With the first products commercially available in Singapore and also cell-cultivated chicken from UPSIDE and GOOD Meat in the USA, the goal is becoming real. Studies predict that, in 2030, cultured meat will account for 10% of the total meat market, with impressive growth rates of around 40% annually from 2025 (AT Kearney). The ‘clean meat burger’ will soon be a matter of course.

Merck’s contribution is not that of a player producing and selling cultured meat to consumers. Its focus is on innovative technologies and solutions that will enable its scalable, economical, and safe production. An important example is the development of sustainable and efficient cell culture media of non-animal origin. This goes hand in hand with Merck’s ambition to integrate sustainability even more strongly into its business activities.

That is why Merck has reviewed its cultured meat activities and their impact using the SBV method. Excerpts from this and the impact on the environment and consumers are described below. The scenario adopted was the year 2030, in which a significant cultured meat market, which Merck supplies with cell cultures, is already established.

Environmental gains

In the environmental aspect, Merck paid particular attention to the issue of greenhouse gases. On the one hand, it analyzed its own consumption and, based on life-cycle assessment studies (CE Delft), the total consumption along the value chain. It is both encouraging and impressive to see how the generation of GHGs can be reduced when switching to the biotechnological process. Beef can be reduced to around 90% of its greenhouse gases (GHGs). With additional consideration of standardized values for, for example, defined damage costs of 1t of a CO2 equivalent gas (assumption 1t CO2eq corresponds to €180 [Federal Environment Agency]), societal consequential costs can be calculated from these as monetary values. A similar approach can be taken for water and other wastes. In doing so, Merck has determined both the entire value chain and its partial contribution.

Antibiotic resistance

Merck also examined the product or consumer benefit in comparison with conventional meat. In principle, meat helps to meet people’s protein and iron requirements. But there are many dangers lurking. The increasing use of antibiotics is leading to resistance, which is also raising health concerns in humans.

However, this effect is still difficult to quantify. Zoonoses, that is infections transmitted from animals to humans, are quantifiable.

Their group includes the most prominent causative agents, namely Salmonella and Campylobacter bacteria, which can be clearly attributed to the consumption of meat. Merck has focused SBV to these most common infections. Also considering a high number of unreported cases, it determined infection figures from western industrialized countries. It is estimated that, in 2030, about 12 million people in the USA and the EU will contract Campylobacter or Salmonella due to meat consumption. This could be avoided through the sterile biotechnological process of producing cultured meat. There are recognizable advantages to switching from conventional to cultured meat. Considering a switch rate that Merck can influence through its market share, almost 250,000 consumers in western industrialized countries could no longer be affected by Campylobacter or Salmonella in 2030. Assuming such infections are usually associated with an average of just under five days of illness, the change in consumption will lead to a healthier and more productive population, hence a positive effect on gross national product per capita.

Using the SBV method, Merck can quantitatively describe that cultured meat poses fewer health risks than conventional meat. Furthermore, global warming and additionally land consumption can be reduced greatly. Conventional meat production also produces significant amounts of waste that must be disposed of.

In perspective, cultured meat can be produced with special tailored nutritional profiles, such as adding healthier fats such as Omega-3 fatty acids, vitamins, or other nutrients.

With the implementation of SBV, we are at the beginning. It provides insight into how well a product addresses social needs and thus fulfils its purpose. That’s why Merck wants to incorporate the new perspective into business decisions and directions in the future. These arguments are also vital for maintaining the social license to operate.

Using the SBV method, Merck can quantitatively describe that cultured meat poses fewer health risks than conventional meat. Furthermore, global warming and additionally land consumption can be reduced greatly

The global financial market is also a driver of impact measurement. Sustainability-oriented investors want to be able to assess the positive and negative impacts to which companies contribute with their (future) activities. In the medium term, uniform, standardized solutions will be necessary. SBV is a suitable tool for this and the case study on cultured meat is a case in point.

For more information about Merck's solutions for the cell-cultivated meat sector, please click here