Conducting business responsibly

Company-wide Sustainability Management

Covestro aims to help protect the environment, conserve limited resources, advance society and create value, all by firmly integrating sustainability into the corporate strategy and management.

Moreover, Covestro underlines the significance of the topic of sustainability and its identity as a sustainably operating company through its membership in key sustainability initiatives and its voluntary commitment to apply the guidelines and principles of those initiatives. Upon gaining economic and legal autonomy in September 2015, Covestro immediately signed up to the and adopted its ten internationally recognized principles.

Strategic alignment

We would like to inspire innovation and drive growth – with profitable products and technologies that benefit society and reduce the impact on the environment. Similarly, we aim to serve our customers, society and the environment alike through our sustainability commitment, in accordance with our corporate vision of making the world a brighter place. Our Group-wide sustainability program approved in 2016 reflects these aspirations which are defined in ambitious nonfinancial targets to be achieved by 2025:

  • Our project portfolio for research and development is aligned with the UN Sustainable Development Goals. By 2025, 80% of project expenditures for research and development will go toward areas that contribute to reaching these goals.
  • 100% of our suppliers to comply with our sustainability requirements
  • Reduce specific greenhouse gas emissions by 50% from the 2005 baseline figures
  • Ten million people in underserved markets to benefit from our business solutions
  • Get the maximum benefit out of carbon. Increasing enables us to create more value with fewer carbon-based fossil resources. We work in a group of international organizations on projects such as developing a generally recognized method to evaluate carbon productivity and making it a tool for change.

Targets are also agreed for the (HSEQ) topics and regularly reviewed using defined performance indicators. For instance, we defined another sustainability target pertaining to energy efficiency: we will halve the 2005 level of energy consumption per metric ton of product produced by 2030. Using the results achieved, existing action plans and measures are dynamically adapted to enable further improvements.

Covestro strongly endorses the comprehensive and global approach of the UN Sustainable Development Goals. As the world’s leading supplier of high-tech polymer materials, we aim to make a significant contribution to mastering the greatest challenges of our time and finding suitable solutions.

Operational management

Our principles are anchored in internal Group policies. They provide concrete specifications on the important issues of value creation, sustainability, innovation, people, HSEQ and compliance. The six Group policies describe Covestro’s goal of developing solutions that create added value for all , promote sustainable development, drive innovation, motivate employees to implement our corporate vision, and create attractive jobs for talented employees. Moreover, we strive to continually improve our occupational safety and health, environmental performance, energy efficiency and quality activities while strictly adhering to all legal requirements as well as our more extensive voluntary commitments.

For more information, see subsection “Company policies and voluntary commitments” in the GRI Supplement

Binding, Group-wide directives that support meeting HSEQ targets are accessible to all employees in an internal Group database. Compliance with these directives is verified during annual internal audits. In addition, issues and action plans as well as target achievement are monitored in a management review. Global and local operating procedures for the relevant processes implement the Group policies and directives at the operational level. Binding ethical and legal principles are anchored in our Corporate Compliance Policy (Directive). This policy includes important guidelines on fair and respectful working conditions and on fighting corruption. Covestro has implemented a reporting process so that employees can report potential compliance violations anonymously. The contents of the Corporate Compliance Policy are conveyed regularly through targeted communication measures and employee training sessions.

See section “Compliance”

In addition to the intra-Group issues described above, social and societal matters are also of great significance to Covestro. We address our responsibility to society comprehensively through corporate citizenship, ongoing constructive dialog with authorities, neighbors and other people and organizations interested in Covestro. To this end, we maintain constant contact with authorities, operate neighborhood offices and conduct regular plant tours. Donations, support programs and specific partnerships are further expressions of Covestro’s active commitment to society.

The high standards of sustainability that we hold ourselves to also apply to our suppliers. We have developed a Code of Conduct that all suppliers must observe. This applies regardless of where they are headquartered, where they do business, or the scope or size of their respective services. Covestro3 is also a founding member of (TfS). The goal of this initiative is to standardize supplier assessments and audits worldwide while applying international standards.

Sustainability management and the integrated management system are an integral part of all functions and positions in the Group. The Sustainability Community and the HSEQ Community are the central coordinating bodies and comprise members of the Board of Management and managers from the central sustainability and HSEQ functions. All segments and the regions in which Covestro operates (, and ) are represented. They coordinate the relevant strategies and goals as well as update them on an ongoing basis. Committees are responsible for developing and setting goals and action plans. These in turn work closely with employees in key positions in the departments and business units which coordinate and monitor implementation.

3 Part of the Bayer Group when TfS was founded

Materiality matrix

The materiality analysis was updated in 2018. The following materiality matrix illustrates the result of the analysis.

For more information, see subsection “Material sustainability issues” in the GRI Supplement

Materiality Matrix 2018

Materiality Matrix 2018 (graphic)

1 Innovative products, business models, and process developments making circular material flows resource-efficient and economically viable, incl. biobased approaches

2 Biobased alternatives to products produced from fossil resources without taking into consideration the associated changes in resource efficiency

As part of the assessment of material topics, expectations and requirements of our key stakeholders were once again reviewed this year and considered accordingly in our sustainability program. Our external stakeholders evaluate the company not only in terms of financial and legal aspects but also with regard to behavior in line with sustainable and ethical principles. The stakeholders are our business partners, with whom we work closely on a daily basis; financial market participants, who judge our performance; regulators, with whom we discuss changes in our company and in the legal framework within which we operate; and societal , whose acceptance and interest in the company is necessary for us. The materiality matrix visualizes the sustainability topics of key importance to Covestro and external stakeholders. 

For more information, see section 5, subsection “Stakeholder dialog” in the GRI Supplement

This year, some sustainability issues and their definitions were refined, e.g. by summarizing topics or separating out particular aspects. During this process, the topic of key importance “Innovative solutions for addressing climate change” was updated to include content from the topic “Adapting to climate change,” and the title was changed accordingly. The titles of the key topics “Inclusive business” (previously: “Partnering for scalable solutions”), “Business ethics, human rights and transparency” (previously: “Business ethics and transparency”), “Sustainability in the supply chain” (previously: “Sustainable procurement”), and “Occupational health and safety” (previously: “Occupational health and safety in operations”) were defined more precisely to better align them with the individual sub-topics they encompass. The topics “Biobased plastics/resources” and “Political and social acceptance” were added based on the results of external interviews and the in-house consultation with experts. Compared to the previous year, “Inclusive business” was classified as being somewhat less relevant. Going forward, the topics with high or very high relevance for Covestro and the stakeholders overall will become more important and will be more heavily integrated into our strategic and commercial business focus. These sustainability topics are also the basis for selecting the main aspects and indicators as required for the core reporting.

Sustainability reporting

Our reporting is in accordance with recognized sustainability reporting standards. We report on fundamental topics and nonfinancial performance indicators pursuant to Section 315 (3) of the (HGB) in our Group Management Report and supplement this information with additional content, which is additionally required in accordance with the GRI standards. Furthermore, as a member of the UN Global Compact, we submitted a corresponding progress report in May 2018.

For more information, see section “About this Report” in the GRI Supplement

Nonfinancial Group statement

We publish the nonfinancial Group statement pursuant to Sections 315b and 315c in conjunction with Sections 289c through 289e HGB as an integrated part of the Group Management Report. The respective sections include the strategies we pursue in addressing environmental, labor and social issues as well as protecting human rights and fighting corruption and bribery, including the processes followed and measures implemented, as well as the outcomes of these strategies.

We applied the Global Reporting Initiative (GRI) standards as a framework for preparing the nonfinancial Group statement.

Topics relevant to the nonfinancial Group statement are identified on the basis of the results of the materiality matrix in an internal process and in consideration of their significance and implementation within the company. The following table provides an overview of the key sustainability topics with an eye to the relevant aspects and contains references to the specific sections in the Group Management Report.

In order to identify and address current developments and sustainability-related opportunities and risks at an early stage, we also review whether there are any new findings relevant to opportunity and risk management.

As an integral part of the Group Management Report, the Group’s nonfinancial statement was audited with reasonable assurance by the auditor, KPMG AG Wirtschaftsprüfungsgesellschaft. The results provided by the external providers EcoVadis SAS and Together for Sustainability AISBL (TfS) were not subject to this audit.

 

 

 

 

 

Key topics of the Group’s nonfinancial statement (HGB)

 

Relevant aspects in accordance with the Group’s Nonfinancial Statement (HGB)

 

Section reference in the Group Management Report

Innovative solutions that contribute to the UN Sustainable Development Goals

 

Environmental matters, social matters

 

Section “Innovation”,
Section “Integrated Management System for Occupational Health, Safety, Environmental Protection and Quality”

Environmentally efficient operations

 

Environmental matters

 

Section “Environmental Protection”,
Section “Integrated Management System for Occupational Health, Safety, Environmental Protection and Quality”

Occupational health and safety

 

Employee matters

 

Section “Safety”,
Section “Integrated Management System for Occupational Health, Safety, Environmental Protection and Quality”

Employer attractiveness

 

Employee matters

 

Section “Employees”

Product stewardship

 

Social matters

 

Section “Product Stewardship”

Social engagement

 

Social matters

 

Section “Company-wide Sustainability Management”

Inclusive business

 

Social matters

 

Section “Innovation”

Sustainability in the supply chain

 

Respect for human rights

 

Section “Sustainability in Supplier Management”,
Section “Compliance”

Business ethics, human rights and transparency

 

Fighting corruption and bribery, Respect for human rights

 

Section “Employees”,
Section “Sustainability in Supplier Management”,
Section “Opportunities and Risks Report”,
Section “Compliance”

Stakeholder dialog

We work closely with our stakeholders in a collaborative manner. After all, they evaluate the company not only in terms of legal aspects, but also with regard to our adherence to sustainable and ethical principles. To identify crucial sustainability issues, we continually analyze the interests, expectations and requirements of our key stakeholders (materiality analysis) and incorporate them into our target program.

For more information, see subsection “Stakeholder dialog” in the GRI Supplement

 

 

 

 

 

 

 

Partners

 

Financial market participants

 

Regulators

 

Social interest groups

Customers

 

Investors and creditors

 

Authorities

 

Media and the public

Suppliers

 

Rating agencies

 

Legislators

 

Neighboring communities

Employees

 

Analysts

 

Politicians and opinion leaders

 

Nongovernmental organizations

Associations

 

 

 

 

 

 

Scientific community

 

 

 

 

 

 

As a company, Covestro is part of society and public life. Continuous dialog with our stakeholders is therefore particularly important to us.

An open exchange is the foundation for mutual understanding and social acceptance of our entrepreneurial decisions. At the same time, these conversations provide us with new inspiration and crucial input. We therefore engage in an ongoing dialog with our stakeholders.

We maintain a regular exchange with authorities, ministries, politicians and important opinion leaders regarding regulatory matters at the local, regional, national and international levels because, in essence, these groups design the framework conditions within which our company operates. The dialog takes place by way of contributions to public consultations, involvement in specialized workshops, association activities and targeted meetings with political opinion leaders. Covestro has defined clear and binding rules for involvement in the political sphere in its code of conduct for responsible lobbying.

At our sites around the world, we pay close attention to the impact our activities have on the directly neighboring communities and on society in general and take this into account in making operational and strategic decisions. This includes an active, open and constructive dialog allowing Covestro to be recognized as a reliable and trustworthy partner that takes its social responsibility seriously.

The dialog with neighbors, the public and nongovernmental organizations (NGOs) is initiated on an ad hoc basis. In doing so, we adhere to national and local guidelines, often even exceeding them. In the case of investment projects, the neighboring community is actively informed and involved. In the United States, for instance, the dialog takes place through community advisory panels (CAPs). These panels meet regularly with local governments and/or neighborhood representatives to learn about current issues. In Germany, the Chempark neighborhood offices are used to communicate with neighbors. We engage in an active dialog with social interest groups particularly when new facilities are planned, built and commissioned.

Dialog with our partners is very important to us. You will find additional information on our ongoing dialog with customers, suppliers, employees, industry associations and scientific institutions in sections “Group Structure and Business Model,” “Innovation,” “Employees” and “Sustainability in Supplier Management.”

We also conduct intensive dialog with capital markets. You can also read more about this topic in section “Declaration on Corporate Governance” in the Group Management Report.

Social engagement

As a global enterprise, we are aware of our social responsibility. We demonstrate responsibility for our decisions and our actions, for our products and services, toward our customers and investors, and toward the environment and the society in which we live. We are committed to compliance with all applicable tax laws. Furthermore, we feel committed to the principle that, in each case, our tax payments in all of the countries where we operate are in line with the value we create there. We also want to increase access to education, technology and a better life. In doing so, we are using our social engagement as a catalyst to rapidly reach the UN Sustainable Development Goals, which aspire to create a world characterized by greater justice, resilience and well-being for humans and the planet by 2030. As one of the world’s largest polymer companies, Covestro would like to use its position to work with different organizations in numerous regions in the world to advance projects for protecting the environment, improving the welfare of society and stimulating the economy. To achieve this, a central unit in the company supports Group-wide efforts to plan and implement cooperative efforts with partners and award donations in order to work toward reaching the UN sustainability goals. Donations are allocated on the basis of an annual financial planning that is approved by the Board of Management and implemented in accordance with a Group directive.

UN Global Compact
The world’s largest responsible corporate governance initiative. The member companies undertake to implement ten universal principles and regularly document their progress.
Carbon Productivity
The value generated per carbon unit used (e.g. in the form of fossil raw materials such as coal, oil and natural gas). Measuring carbon productivity is intended to promote a sustainable and optimal use of carbon.
HSEQ/health, safety, environment, quality
Health, safety, environment and quality
Stakeholders
Internal and external interest groups which are directly or indirectly impacted by the company’s corporate activities and/or may be so in the future
TfS/Together for Sustainability
An initiative undertaken by various companies in the chemical industry to standardize supplier assessments globally in order to improve sustainability practices in the supply chain
HSEQ/health, safety, environment, quality
Health, safety, environment and quality
EMLA
Comprises all countries in Europe, the Middle East, Africa and Latin America (excluding Mexico) in which Covestro is active
NAFTA
Region comprising the United States, Canada and Mexico in which Covestro is active
APAC
Comprises all countries in the Asia and Pacific region in which Covestro is active
Stakeholders
Internal and external interest groups which are directly or indirectly impacted by the company’s corporate activities and/or may be so in the future
GRI/Global Reporting Initiative
Guidelines for the preparation of sustainability reports by companies, governments and non-governmental organizations (NGOs)
HGB/German Commercial Code
Comprises much of the German accounting legislation
Due diligence
Investigation and analysis of a company, especially in respect of its economic, legal, tax and financial position