Baxter's Approach

How nations, companies and individuals respond to global sustainability challenges such as climate change, natural resource scarcity, corruption, unequal access to healthcare and educational opportunities will significantly impact life in the 21st century and beyond. Stakeholders will judge Baxter's performance increasingly by how the company helps to address these global challenges. Baxter's actions demonstrate its leadership, values and commitment.

At Baxter, sustainability means creating lasting social, environmental and economic value by addressing the needs of the company’s wide-ranging stakeholder base. Baxter’s sustainability initiatives support the company’s mission to apply innovative science in the development of medical products and specialty therapies that save and sustain patients' lives.

Sustainability is inherently broad. Baxter's efforts cover a wide range of areas, as reflected by the structure and contents of this report:

• Sustainability at Baxter - Using financial and other resources wisely to benefit company stakeholders and address key sustainability issues;
• Governance, Ethics and Compliance - Operating in a sound and ethical manner and complying with the law wherever Baxter operates; promoting ethical sales and marketing practices globally;
• Employees - Providing a rewarding, inclusive and diverse workplace;
• Environment, Health and Safety - Continually improving the company's environmental performance, generating related financial benefits, and maintaining a safe and healthy workplace;
• Product Responsibility - Ensuring product quality and patient safety, and improving the sustainability performance of Baxter's products and packaging throughout the life cycle;
• Supply Chain - Working with suppliers to improve their social and environmental performance;
• Access to Healthcare - Expanding access to healthcare, including for people at the "base of the pyramid"¹ and for those impacted by natural disasters;
• Community Support - Contributing to communities in need worldwide, with a focus on education and the environment; and supporting employee volunteerism and giving;
• Public Policy - Working with lawmakers, governments and policymakers worldwide to improve patient access to critical therapies and address other key issues.

Complementing these activities, Baxter also recognizes the importance of having clear priorities to focus its efforts and direct its initiatives. The company has nine sustainability priorities with corresponding goals for 2015, divided into three broad categories: Our People, Our Operations and Products, and Our World. See Priorities and Goals for detail.

Managing Sustainability

Baxter's executive-level Sustainability Steering Committee leads the company's efforts to accelerate and integrate sustainability into its current activities and long-term strategic planning process. The committee's role is to:

• Assess global challenges and opportunities associated with sustainability;
• Increase Baxter's knowledge of sustainability and benchmark other companies that demonstrate leadership and innovation in this area;
• Define, update and oversee Baxter's sustainability strategy;
• Track progress on the company’s sustainability priorities and goals, drive organizational accountability and recognize accomplishments;
• Establish performance objectives, evaluate and address resource needs and help implement sustainability initiatives;
• Provide sustainability progress updates to senior management;
• Identify and determine how to best address emerging issues;
• Guide and inform Baxter's sustainability reporting;
• Solicit stakeholder feedback and review stakeholder inquiries as appropriate; and
• Recommend actions to continually enhance Baxter's sustainability program.

The committee's executive sponsor is Baxter's vice president, Manufacturing. The company's vice president of Environment, Health and Safety serves as committee chair. The committee includes senior representatives from the company's BioScience, Medical Products, Corporate Communications, Ethics and Compliance, Finance, Human Resources, Manufacturing, Research and Development, and Supply Chain organizations.

Committee members sponsor Baxter's sustainability priorities. Each sponsor is accountable for developing goals and achieving progress in his or her respective area, and leads a global, multi-functional team to implement related initiatives. The committee meets quarterly to review progress and to discuss how to address performance gaps. These meetings often feature outside sustainability experts to contribute independent input and perspectives. Additional groups interact and provide input to the committee as needed.

How Sustainability Strengthens Baxter's Business

Baxter’s sustainability initiatives create business value, from attracting and retaining key talent, engaging employees, and reducing operating expense, to ensuring market access, developing new markets, meeting stakeholder expectations, and enhancing Baxter's reputation.

In 2011, 77% of employees worldwide indicated that Baxter's sustainability programs were important to them in the company’s employee engagement survey. The Sustainability Steering Committee uses this data to evaluate how sustainability engages employees and contributes to a satisfying work environment. Baxter will conduct its next employee engagement survey in 2013.

See more detail in Business Value.

History in Sustainability

Baxter’s commitment to sustainability spans decades. The company established its first formal environmental program and policy in 1977. Since then, milestones have included:

• Establishing The Baxter International Foundation in 1986;
• Taking steps to reduce use of packaging materials, decrease water consumption and waste generation, and conserve energy since 1988;
• Publishing the company’s first formal ethics manual in 1989;
• Introducing Baxter’s first work/life benefit program in 1991;
• Establishing the Corporate Responsibility Office to oversee the company’s ethics and compliance practices in 1993;
• Developing Baxter’s Global Business Practice Standards for Suppliers in 2001;
• Establishing Baxter’s Product Sustainability Review process in 2002; and
• Establishing the company’s Sustainability Steering Committee in 2007.

1	The term "base of the pyramid" refers to the approximately 4 billion people who each live on less than $1,500 annually and have limited access to the healthcare market.