As climate change intensifies, resource constraints tighten, and stakeholder focus on ESG (Environmental, Social, and Governance) performance grows, how companies balance economic goals with environmental and social responsibilities has become a key measure of their long-term competitiveness. However, the path to sustainable development is challenging, with companies facing multi-dimensional tests ranging from the complexity of value chain emissions reduction to communication difficulties amid "greenhushing," and the balance between technological innovation and commercial returns.

Recently, a dialogue was held with Dr. Petra Wicklandt, Chief Sustainability Officer of Merck Group, decoding how this over-350-year-old technology company integrates sustainability into its commercial DNA. From green decisions at the R&D source to breakthroughs in decarbonization, from AI-enabled innovation to exploring circular economy models, Dr. Wicklandt's insights comprehensively present the strategic thinking and practical pathways of multinational corporations in the wave of sustainable development, confirming the trend of deep integration between sustainability and business competitiveness.

Sustainable decisions at the R&D stage represent the lowest-cost green investment. Dr. Wicklandt outlined three core reasons for Merck's pursuit of sustainability. First, she emphasized the company's unique long-term perspective. As a family-owned business with 70% of shares still held by the family and over 350 years of history, Merck thinks in generational terms rather than quarterly cycles. Its owners and management aim to ensure the company's continued success for the next 350 years. She noted that sustainability is inherently about long-term vision—current investments in areas like decarbonization may not yield immediate returns but will ultimately prove beneficial.

She also mentioned that investing in sustainability helps build trust with key stakeholders like investors, customers, and employees. A significant portion of the company's capital comes from ESG-focused investors who scrutinize sustainability targets; employees increasingly demand sustainability efforts; and customers view the company's emissions as part of their own Scope 3 emissions—failure to decarbonize could risk reputation and client loss. By investing in sustainability, the company mitigates these risks while enhancing operational resilience.

The second reason Dr. Wicklandt elaborated is the direct positive financial impact of integrating sustainability into innovation. Responding to customer demand for sustainable solutions, Merck is systematically transforming its product portfolio to reduce environmental footprints and hazardous chemical use. She introduced Merck's "Umbrella Project," a plan embedding sustainability standards into the lengthy R&D cycle. In healthcare, for example, it takes about ten years from initial research to product launch, meaning today's decisions will have consequences a decade later.

Merck has set sustainability targets for its three business sectors—Healthcare, Electronics, and Life Sciences—with specific goals for each development phase. In healthcare, patient diversity is an evaluation criterion in early clinical trials, while later stages focus on product carbon footprints. At each key decision point, projects must meet corresponding scoring criteria, ensuring sustainability is embedded in final products.

Dr. Wicklandt acknowledged that customers rarely pay a premium solely for sustainability. However, she explained that deep integration of sustainability and innovation from the start—developing products that are effective, safe, high-quality, and with superior environmental footprints—creates competitive advantage. She observed that such products are increasingly favored in European tenders over less sustainable alternatives. While Merck also works to improve existing products, this is more challenging and costly, partly because customers must be convinced to pay for upgrades. The optimal solution remains incorporating sustainability considerations from the earliest innovation stages.

The third reason, according to Dr. Wicklandt, is that global challenges like decarbonization can only be solved collectively; no single company or country can tackle them alone. Based on this belief, the company sets goals for collaborative sustainable business impact. She noted that Merck's total greenhouse gas emissions (including Scope 3) account for only about 0.01% of global emissions, a very small share. Nevertheless, Merck remains committed to contributing its part, as global efforts cannot succeed without commitment and action from all businesses and nations.

Greenhushing is not retreat; corporate sustainability strategies are translating into market advantages. Discussing headwinds for sustainability practices, Dr. Wicklandt noted media focus often centers on "ESG backlash." She observed this has spurred a "greenhushing" trend, where companies no longer loudly publicize their actual sustainability measures—contrasting with the earlier "greenwashing" era where contributions were sometimes exaggerated. She views this adjustment as positive, as overstated claims ultimately harm collective progress.

She cited recent research introducing the "green purchasing paradox." While media narratives suggest declining ESG importance, she believes this will change—customers continue buying sustainable products. Global research shows consumers purchase more sustainable products annually. This explains why most companies stick to sustainability targets: they recognize customer demand persists.

Dr. Wicklandt returned to her earlier point that sustainability creates competitive advantage through innovation. She provided two examples illustrating this in practice. The first involves PFAS (per- and polyfluoroalkyl substances), persistent compounds crucial for high-tech materials manufacturing. Regulators, investors, and consumers (especially in Europe) are increasingly concerned about PFAS's environmental and health impacts, leading to restrictions. In response, Merck's Electronics sector developed a PFAS-free alternative for a key chip manufacturing step, with several functionally equivalent alternatives in development. Customers eagerly await these, aware that PFAS use may soon be restricted. This shows that the so-called "ESG backlash" misses the point—companies with sustainable innovation capabilities gain real market advantages.

Her second example comes from drug development. While certain animal testing remains necessary for drug safety and efficacy, this doesn't mean animals must suffer. Historically, animal studies were the only option, but alternatives now exist and are being promoted to reduce animal use where possible. For instance, a cross-industry project called the "European Innovative Health Initiative" (IHI) uses AI to predict control group results in animal studies, eliminating the need for those animals. More specifically, she described replacing animal-based potency tests for biologic batch release—long required by regulators—with cell-based tests. These new methods are not only more ethical but also more efficient, cheaper, and reliable than the animal tests they replace. This fully demonstrates that sustainability and business interests are entirely compatible.

Global strategy, local深耕: Multinationals implement sustainability in China. Dr. Wicklandt observed Chinese consumers' sustainability awareness rising significantly. Citing a November 2024 Innova Market Insights study, she noted 70% of Chinese consumers are aware of climate change, with 30% having deeper understanding and 36% taking active personal actions.

On regulation, she pointed out Europe leads with initiatives like the European Green Deal, though this sometimes leads to cumbersome processes. Europe has clear transparency requirements; Merck just released its second sustainability report under the Corporate Sustainability Reporting Directive (CSRD), having published such reports for 20 years. She mentioned China will require listed companies to issue sustainability reports starting 2026, indicating strong adoption of sustainable disclosure there. Dr. Wicklandt believes China actually surpasses Europe in some areas, notably the astonishing adoption rate of electric vehicles, with 16 million new EVs produced in China in 2025.

She endorsed China's "dual carbon" goals—peak carbon emissions by 2030 and carbon neutrality by 2060—and suggested China might achieve these early, as global firms including Merck incorporate their Chinese operations into decarbonization strategies. Since 2020, Merck reduced global Scope 1 and 2 emissions by 50%, with similar progress in China. She emphasized Merck's initiatives in China fully align with its global sustainability strategy.

Dr. Wicklandt cited examples of Merck's sustainable innovation in China. In Life Sciences, Merck sells over 16,000 "green products" popular in China, with enhanced sustainable performance and strong demand; the goal is to increase this to 30,000 by 2030. In Electronics, sustainable display materials are used in building facades and EVs—applications specific to the Chinese market. In Healthcare, optimized packaging for assisted reproductive pre-filled injection pens reduced package size by 40%, using recyclable materials, cutting transport needs and emissions by 33%.

She detailed energy-saving and emission-reduction efforts at Merck's seven production sites in China, including significant investment in solar power and renewable electricity purchases. Through partnerships with Envision Energy and China Resources, 80% of purchased electricity for Merck's Chinese factories now comes from renewables. Smart manufacturing upgrades, like AI-monitored cooling systems at Merck's Nantong pharmaceutical and life science plants, achieved 20% energy savings. Merck also trains suppliers on emission reduction and maintains academic collaborations with universities.

Finally, Dr. Wicklandt highlighted Merck's community education activities in China through the "Spark Scientists" program. In 2025, over 150 company volunteers participated, providing science course training for primary and secondary students covering healthcare, life sciences, electronics, and digital themes. The program has benefited over 60,000 students in northwestern China. She stressed that Merck's sustainability strategy is not Europe-specific but a global strategy implemented worldwide, including in China.

The toughest challenge: Emissions reduction in the value chain. Dr. Wicklandt pointed out Scope 3 emissions—indirect emissions from the value chain—are among the most significant challenges any company faces. She emphasized that, unlike direct emissions, these are beyond a company's direct control, making cross-boundary collaboration essential. To address this, Merck established global and local supplier engagement programs in China, focusing on training suppliers on implementing emission reduction measures for products Merck purchases. Merck set clear targets here, categorizing its 60,000 suppliers by emission levels to prioritize efforts. "We found about 1,000 suppliers account for 80% of our Scope 3 emissions," she said, "We have now approached all these suppliers to help them implement reduction plans."

However, Dr. Wicklandt acknowledged inherent difficulties. "If our suppliers say they're not interested in reducing emissions, the challenge is significant," she admitted. In healthcare, this is particularly complex—changing suppliers requires new stability studies and regulatory approval, a lengthy, costly process. "In a highly regulated environment, switching suppliers isn't always easy," she added, explaining why reducing Scope 3 emissions remains arduous.

On progress, Dr. Wicklandt shared, "Merck has already met its target of reducing Scope 1 and 2 emissions by 50% by 2030. For Scope 3, decarbonization is on track, achieving half the required reduction from the 2020 baseline. We have five years until end-2030 to meet the Scope 3 target," she noted, "But indeed, our influence here is less direct than with our own emissions."

Four trends shaping the era: AI, cybersecurity, demographics, and the circular economy. Looking ahead, Dr. Wicklandt identified AI, cybersecurity, demographic changes, and the circular economy as key trends shaping the times.

Discussing AI applications, Dr. Wicklandt highlighted its ubiquitous role internally. AI is used to enhance sustainability, such as optimizing energy efficiency at headquarters data centers, and is deeply integrated into drug discovery, where Merck collaborates with partners to search for next-generation compounds using AI.

Furthermore, Dr. Wicklandt stated AI plays a major role in reducing operational costs through smart manufacturing initiatives aimed at automating and optimizing end-to-end processes. She noted Merck's dual role in AI: they both use AI in their work and serve the AI industry itself, as its Electronics sector develops specialty materials for manufacturing next-generation, more energy-efficient chips that power AI. When advancing AI and digital solutions, cybersecurity must always be considered to ensure enterprise resilience.

On demographic changes, Dr. Wicklandt pointed out that an aging population will inevitably increase demand for drugs treating age-related diseases. She cited Merck's Type 2 diabetes drug as a typical product serving this demographic. In China, the company also runs patient education programs promoting lifestyle changes—like proper diet and exercise—to prevent Type 2 diabetes, often lifestyle-induced.

Regarding the circular economy, Dr. Wicklandt clarified this concept goes beyond simple recycling to encompass comprehensive systemic thinking. For example, in its European Healthcare business, Merck collects and reuses self-injection devices from patients. More innovatively, in Electronics, the company is piloting new business models aligned with "sharing economy" principles. Beyond selling solvents for chemical processes, Merck offers a leasing alternative, allowing customers to return them after use for reuse. This model revolutionizes waste management and reshapes customer relationships.