ESRS E4: Biodiversity and Ecosystems

Impacts, Risks, and Opportunities

¹ Time horizon broken down into short-term (S), medium-term (M), and long-term (L).

² Location within the value chain divided into upstream value chain (1), own operations (2), and downstream value chain (3).
For further information, please refer to “Impact, Risk and Opportunity Management.”
For further information, please refer to “Strategy – Interests and Views of Stakeholders.”
For further information on the policies, actions, and targets listed in the table, please refer to “ESRS E1: Climate Change,” “ESRS E2: Pollution,” and “ESRS S2: Workers in the Value Chain.”

Policies and Actions

The impacts identified as material in relation to biodiversity and ecosystems refer to the matter of climate change (ESRS E1) and pollution (ESRS E2). That is why the policies and actions are embedded in the corresponding subject matters (ESRS E1 and E2) and there are no specific policies and actions for biodiversity and ecosystems.

Our sustainability targets for reaching net-zero GHG emissions for Scope -1 and Scope -2 emissions by the year 2035 and for Scope -3 emissions by the year 2050 are contributing to limiting the negative impacts of climate change on biodiversity and ecosystems.

The impacts and dependencies relating to biodiversity near our production sites were assessed and the analysis revealed emissions of toxic soil and water pollutants as the only potentially significant impact. The environmental impacts associated with our business activities are an integral part of our integrated Health, Safety, Environment, Energy and Quality (HSEQ) management system, which means that the impacts described above are addressed there. The integrated management system consists of various Group policies that form a holistic, integrated approach to cover all material environmental and other aspects. Each year we analyze and evaluate the effects of our activities on the environment. From our environmental performance assessment, we derive measures to reduce and minimize environmental impacts. Global process and workflow descriptions help us implement these measures throughout the Group. Adherence to processes and workflows is continuously reviewed through regularly conducted internal audits, annual self-assessments, and external certifications. The insights we gain from these measures are incorporated into our annual management review. Every process is thus subject to continuous monitoring and is updated as required.
On this basis, Covestro will continue to examine the resilience of its strategy and economic activities in relation to biodiversity and ecosystems, especially in relation to climate change (ESRS E1) and pollution (ESRS E2), since these impacts were identified as material. These impacts affect Covestro’s own operations and its upstream and downstream value chains.

For further details about the respective policies and actions, please refer to sections “ESRS E1: Climate Change” and “ESRS E2: Pollution.”

For further information, please refer to “ESRS E1: Climate Change.”

For further information, please refer to “ESRS E2: Pollution.”

Targets

We have currently not set ourselves any specific targets for biodiversity and ecosystems in accordance with the target definition of the ESRS, because the materiality arises due to the impacts of climate change and pollution. The relevant matters are addressed in the sections below.

For further information, please refer to “ESRS E1: Climate Change.”

For further information, please refer to “ESRS E2: Pollution.”

Metrics

The analysis of the proximity of Covestro production sites to biodiversity-sensitive areas (BSAs) was conducted by an external service provider and not validated by any additional external body. It used firstly the exact geo-coordinates of the Covestro sites and secondly various datasets that contain the respective BSAs. Specifically, these were the Natura –2000– areas, a network of nature protection areas in the territory of the European Union, the World Heritage Sites, landmarks and areas that enjoy legal protection on the basis of a UNESCO-administered international convention, as well as the Key Biodiversity Areas, a list of the most important places in the world for species and their habitats. A geographical information system was used to determine the distance of all sites to the surrounding BSAs. In a first step, only areas at a distance of less than ten kilometers were taken into account. In a second step, these BSAs were examined more closely and broken down into three categories: land, sea, and rivers. The differences in the way different areas are examined is due to the fact that the ranges of the potential impacts on the BSAs differ, depending on which of the three categories they fall into. Since the impacts on land are the most limited, the BSAs for the “land” category were considered within a distance of one kilometer or less. For BSAs in the sea, a larger radius of five kilometers was considered. The largest range of impacts can occur if BSAs are downstream from a site. Here a radius of ten kilometers was taken into account. All areas meeting these conditions were added to the list of nearby BSAs. No Covestro site is within close proximity (< 10 km) of a natural or mixed World Heritage Site.

A total of nine production sites are close to Natura –2000– areas.

A total of ten production sites are close to key biodiversity areas (KBAs). A total of 16 sites are close to Natura –2000– areas and KBAs. The total land area occupied by these sites is 800 hectares.

The tables below list the sites by ecological status of the areas concerned. All sites are close to Natura –2000– areas or KBAs, with the exception of the site in Qingdao, which is located within a KBA. To determine the ecological status of the areas, the biodiversity intactness was measured using the abundance-based Biodiversity Intactness Index (BII) and the richness-based BII. The abundance-based BII looks at the total number of animals and plants of the different species, while the richness-based BII looks at the number of different species. Both indices are measured on a scale from 0% to 100%, they were last determined in the year 2019.

For further information, please refer to: https://data.nhm.ac.uk/dataset/global-maps-of-biodiversity-intactness-index-sanchez-ortiz-et-al-2019-biorxiv

ESRS E4 Biodiversity and Ecosystems in principle also provides for qualitative and quantitative disclosures on anticipated financial effects of material risks and opportunities in connection with biodiversity and ecosystems. In accordance with ESRS 1 Appendix C, Covestro applies the phased-in disclosure requirements in the first year of preparing the Group Sustainability Statement. There is accordingly no need to make the specified disclosures in the first year.