Address by Werner Baumann
Chairman of the Board of Management
Conference Call for investors and media
(Please check against delivery)
Ladies and gentlemen,
I want to begin by reaffirming that we are fully committed to settling the Roundup™ litigation, and to mitigating both the current and potential future risks that it presents for the company.
As we have addressed many times over nearly a year now, we have made substantial progress in settling the vast majority of current litigation with hundreds of law firms. While we are still open to settling the remainder of existing claims on appropriate terms, we are going to reassess this going forward.
The second piece of our settlement was the class plan designed to help manage and resolve potential future claims. Working with class counsel, we made significant changes to address concerns raised last year by Judge Chhabria. But unfortunately based on his recent order, it is clear that the court will not approve the plan without significant additional changes. And these significant changes are not in Bayer’s interest.
All along, our goal when it comes to potential future litigation has been to mitigate the risk. We believe that the class plan submitted in the MDL was the fairest and most efficient way to do this, but it is by no means the only way.
So today we want to talk about an alternative five-point plan of legal and commercial actions that we will take and that we believe can achieve a level of risk mitigation from future litigation that is comparable to what we hoped to achieve with the national class plan in the MDL.
First, we will create and promote a new website with scientific studies relevant to Roundup’s™ safety and take steps to request that EPA approve corresponding language on Roundup labels.
o Whether the EPA ultimately approves the label addition, we will be creating and maintaining this website in keeping with our commitment to transparency.
o The purpose of this website is to provide purchasers with access to the significant body of science on the safety of glyphosate so that they are empowered to make informed decisions on the products they use.
o We also will promote this website to all purchasers so they are aware of this resource.
Second, we remain committed to the Roundup™ brand in the U.S. residential lawn and garden market and will immediately engage with our partners to discuss the appropriate future path, including the future of glyphosate-based products for this market or the opportunities for alternative active ingredients that will continue to meet the needs of consumers, which has been trusted by consumers for decades.
o None of these discussions will affect the availability of glyphosate-based products in markets for professional and agricultural users.
o Indeed, we know that that farmers continue to rely on Roundup™ containing glyphosate to deliver crops to market and practice sustainable farming by reducing soil tillage, soil erosion and carbon emissions.
o Regulators around the world continue to conclude that glyphosate-based Roundup™ products can be used safely and are not carcinogenic, and we are just as confident in their safety. Just last week, the U.S. Environmental Protection Agency (EPA) filed a brief with the U.S. Court of Appeals for the 9th Circuit in which it affirmed once again that glyphosate ‘poses no human-health risks of concern.’
Third, we are exploring alternative solutions to manage potential future claims. We’ll provide further details on what this could entail as they become available.
o One element of these solutions will be the creation of an independent scientific advisory panel that would evaluate the safety of glyphosate-based Roundup™ products with a focus on the issues that have been central in this litigation.
o Importantly, the panel would be comprised of independent science experts.
o The findings of this advisory panel would be released publicly and on Bayer’s Roundup™ reference page, which I referenced a moment ago.
o This approach reinforces our commitment to transparency, as well as our steadfast belief in scientific rigor and our confidence in the safety of glyphosate.
As a fourth point, we will reassess ongoing efforts to settle existing claims. We will continue to be open to settlement discussions for existing claims, provided claimants meet the qualifications.
o This effort to resolve claims amicably is a step the company is taking in good faith to bring an end to the litigation and liability risk, but it will regularly reassess whether this approach continues to serve the company’s best interests.
o We have been executing on this effort since announcing the comprehensive Roundup™ litigation resolution in June 2020 and most recently reported that the vast majority of these, approximately 96,000 claims, have been finalized, are in the final stages of resolution or involve claims that are not eligible.
And finally, the appeals of the Hardeman and Pilliod cases will continue through the legal process and can also help manage future liability risk. We also now have an additional case on appeal, Carson, that raises the same fundamental preemption issue -- whether state law warning claims conflict with U.S. federal law.
o We are confident in the strength of our legal arguments, and a favorable decision by the U.S. Supreme Court by mid-2022 on cross-cutting issues like federal preemption or expert evidence would significantly reduce future liability risk.
Before we open the line to questions, I want to say a few words about the financial impact of our announcement.
o Because there were front-loaded costs in the class plan that we will not incur, we expect that these developments actually improve cash flow in the short term this year and next.
o Last, at this point in time we are not making any change in the $2 billion provision we took in connection with the class plan. But we will continue to review the amount of the provision diligently in the course of our quarterly financial closings as the long-term liability risks from this litigation will depend on a number of factors including the outcome at the U.S. Supreme Court. We will continue to assess this risk as we move ahead.
Now, let me open the line to your questions. Joining me for the QA are Wolfgang Nickl, our chief financial officer; Bill Dodero, our global head of litigation; and Liam Condon, President of our Crop Sciences division.
We will now open up the line for questions.
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.