This Annual Report may contain certain forward-looking statements based on current assumptions and forecasts made by the management of Covestro AG. 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 Group and the estimates given here. These factors include those discussed in Covestro’s public quarterly statements and reports, which are available on our website www.covestro.com. The Group assumes no liability whatsoever to update such forward-looking statements or to conform them to future events or developments.
Combined Management Report of the Covestro Group and Covestro AG
The combined management report for 2019 pertains to both the Covestro Group and Covestro AG. The presentation of the business performance as well as the position of and the forecast for key data pertain to the Covestro Group, except where otherwise indicated. Information that applies to Covestro AG only is identified accordingly. In the Report on Economic Position, the information disclosed pursuant to the German Commercial Code (HGB) with regard to Covestro AG is provided in a separate section. In addition, the nonfinancial statement pursuant to Section 315b HGB is an integrated part of the Group Management Report. A nonfinancial statement for Covestro AG does not have to be provided at this time.
Covestro reports comprehensively and transparently about topics important from the Company’s perspective and for our stakeholders. We measure our sustainability performance using financial indicators as well as key nonfinancial indicators published in the Group Management Report. Our objective here is to underscore how closely linked environmental and societal factors are with responsible corporate governance and the long-term success of our business.
The Group Management Report and the supplementary sustainability information together comprise our annual sustainability reporting. This report covers the period from January 1 to December 31, 2020.
The Covestro Group’s nonfinancial statement in accordance with Sections 315b and 315c in conjunction with Sections 289c through 289e of the German Commercial Code (HGB) is integrated into 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, the due diligence processes followed, as well as the outcomes of these strategies. Nonfinancial performance indicators are reported only when these are important to the Covestro Group.
As an integral part of the Group Management Report, the nonfinancial statement was audited with reasonable assurance by our auditor, KPMG AG Wirtschaftsprüfungsgesellschaft. The supplementary sustainability information specifically identified as such additionally contributes to the transparency of our reporting, which meets the requirements of the “Core” option of the Global Reporting Initiative’s (GRI) Sustainability Reporting Standards (SRS). The supplementary sustainability information that is not part of our statutory annual reporting was subjected to a separate review with limited assurance pursuant to the International Standard on Assurance Engagements (ISAE) 3000 by KPMG AG Wirtschaftsprüfungsgesellschaft.
In this report we highlight the content aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). An overview of this information immediately precedes the GRI Index.
Alternative performance measures
Throughout its financial reporting, Covestro uses alternative performance measures (APMs) to assess the business performance of the Group. These are not defined in the International Financial Reporting Standards (IFRSs). These non-IFRS indicators should be considered a supplement to, not a replacement for, the performance measures determined in accordance with IFRSs. The alternative performance measures of relevance to the Covestro Group include earnings before interest, taxes, depreciation, and amortization (EBITDA), return on capital employed (ROCE), free operating cash flow (FOCF), and net financial debt. The calculation methods for the APMs may vary from those of other companies, thus limiting the extent of the overall comparability. These alternative performance measures should not be viewed in isolation or employed as an alternative to the financial indicators determined in accordance with IFRSs and presented in the consolidated financial statements for purposes of assessing Covestro’s net assets, financial position, and results of operations.
We consider equal treatment to be important. To ensure better readability, this report avoids gender-specific wordings. All terms should be taken to apply equally to all genders.
Percentage deviations are only calculated and reported if they are no more than 100%. Larger deviations are reported as >100%, >200%, etc. If a deviation changes from positive to negative or vice versa, or if it is greater than 1,000%, this is shown by a period.
As the indicators in this Report are stated in accordance with commercial rounding principles, totals and percentages may not always be exact.
The publication of this Annual Report does not comply with the legally required uniform electronic reporting format pursuant to Section 328, Paragraph 1, Sentence 4 HGB. A report in this format has been submitted to the operator of the electronic Federal Gazette in Germany and is accessible via the website www.unternehmensregister.de.
This Annual Report was published on February 23, 2021. It is available in German and English. Only the German version is binding.