| Material impacts, risks and opportunities in respect of "Sustainable Solutions" | ||||||
|---|---|---|---|---|---|---|
| Type | Description | Time horizon1 | Location2 | Policies | Actions | Targets |
| Sustainable Solutions | ||||||
| Impact (potential positive) | Covestro contributes to a potential positive impact on environmental sustainability in the downstream value chain, e.g. climate change, as its continuous focus on developing applications with sustainability contributions (e.g., insulation in construction, light weight solutions in automotive, wind energy, and water-based coatings and adhesives) promotes eco-friendly innovations. Affected stakeholders are customers, end-consumers, persons in vulnerable situations, and nature. | M, L | 3 | R&D Sustainability Assessment Policy | R&D Sustainability Assessment Policy | Updating of our sustainable R&D-based innovation portfolio |
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.”
A sustainable product portfolio plays a key role for us in implementing our Sustainable Future strategy. The continued expansion of such a portfolio is supported by our research- and development-based innovation portfolio. Support will go particularly to product innovations that contribute to the SDGs and drive sustainable development, taking account of our circular and climate neutrality goals.
For further information, please refer to: www.solutions.covestro.com/en
At the same time, we enhanced our Portfolio Sustainability Assessment (PSA) methodology to assess also the sustainability of our existing products, especially in relation to the circular economy and climate neutrality, and to align our product portfolio even more closely in this direction, while taking legal requirements into account. We also report on how and the extent to which our activities are associated with economic activities which qualify as environmentally sustainable economic activities under the European Union’s Taxonomy Regulation.
Covestro is building a future-proof and sustainable product portfolio using the Portfolio Sustainability Assessment (PSA) based on the methodology developed by the World Business Council for Sustainable Development (WBCSD). This process entails identifying changes in the regulatory and market environment early on with the help of the PSA and considering these as part of the decision-making processes. The results of the PSA are to be integrated in decisions about the product portfolio and in relation to corporate governance. In the reporting year, the method was finalized and piloted internally in collaboration with external consultants and also reviewed by an external expert. It is planned to implement the PSA method in a gradual process. The roadmap for this is being developed with a clear focus on digitalization. To drive the development of our circular product portfolio, we want, in the long term, to offer all products in a climate-neutral version that pursues the principles of the circular economy. Our Circular Intelligence (CQ) solutions are based on alternative raw materials and sources of energy as well as chemical recycling; they currently contain at least 25% alternative or recycled raw materials.
It goes without saying that our products can only be sustainable if handling them is safe for people and the environment. For this reason, our product portfolio, too, reflects product stewardship requirements. Our activities in this area are part of the integrated HSEQ management system to ensure that our requirements and standards are met.
While the business entities managed their product portfolios independently in the reporting year, the Sustainability & Innovation Governance Body (SI GoB), dealt with such matters as progress in revising the sustainability assessment methodology for our product portfolio.
At Covestro, we aim to find answers to global challenges such as climate change, increasing urbanization and mobility, as well as population growth. We endeavor to integrate sustainability into the center of our research and development (R&D) activities by aligning our assessment processes for the R&D project portfolio with the United Nations Sustainable Development Goals (SDGs). This alignment enables us to identify, investigate, and test unconventional and innovative approaches at an early stage. In this way, our R&D results are contributing to meeting the SDGs. Covestro has defined the R&D Sustainability Assessment Policy to steer the R&D project portfolio toward making a positive contribution to sustainability. This R&D assessment with regard to the UN Sustainable Development Goals is a global process. Stakeholders affected in this process are employees, in particular innovation project managers and corresponding steering committees. In addition, we comply with the Three Ps principle (people, planet, and profit) and ensure that R&D decisions support at least two of these aspects without doing harm to any of them, while aiming to maximize economic, ecological, and societal value.
Covestro’s policy for sustainable solutions comprises product and application, process and technology innovation projects that ensure a positive environmental impact in the value chain by concentrating on the development of applications that contribute to sustainability – such as the development of an impact damper structure from a thermoplastic material for e-mobility, especially battery electric vehicles, in order to protect the battery in the case on an accident and in this way contribute to traffic safety.
For Covestro, an essential pillar of sustainable solutions is to ensure that our product portfolio is recyclable. To this end, Covestro is currently conducting research in over 20 R&D projects on specific recycling solutions for our products, especially in the area of chemical recycling.
The Head of Group Innovation and Sustainability, who reports directly to the Board of Management, is responsible for implementing this policy in consultation with the business entities and the Sustainability & Innovation Governance Body (SI GoB).
When assessing our projects, we only consider projects that make an additional contribution to meeting the SDGs when measuring our progress. We have implemented the R&D Sustainability Assessment Policy as part of the existing innovation process; it measures what the projects have added to quantify this additional contribution. As part of this process, each R&D project is assessed on the basis of internal expert interviews. Specific questions are used to assess the impacts of a project and its outcomes on all 17 SDGs. Only those projects are considered that are assessed significantly better than the benchmark system from the perspective of SDG impacts. The benchmark system must be an established technology, defined as a technology with a market penetration of more than 5%. If the intended solution from the perspective of SDG impacts is significantly better than the benchmark system, the impact is assessed as “positive drive.” The assessment involves continuously performed actions.
In accordance with our sustainability targets, we aim to continuously enhance our sustainable R&D-based innovation portfolio. Specifically, by the year 2025, 80% of project costs for research and development are to be allocated to areas that contribute to meeting the United Nations Sustainable Development Goals. The assessment is mandatory for projects covered by the R&D Sustainability Assessment Policy; neither the assessment nor the metric has been modified. This is a qualitative assessment where data on the end product or on the technologies is not yet available for conclusive scientific evidence in the early phase of the stage-gate process. The target is reviewed annually, based on actual project costs and the result of assessing the project. This target is a global target that comprises product and application, process, and technology innovation projects. The target for the metric has been set by the Board of Management with a focus on internal stakeholders. External stakeholders were not included. Since it is a forward-looking target, we have not defined a base year for comparison. In addition, the contribution is based on the qualitative assessment and the project costs.
In the reporting year, we saw the metric improve to 54% (previous year: 52%). This corresponds to project costs of €45.3 million (previous year: €39.8 million) for research and development; they are allocated to areas that contribute to meeting the United Nations Sustainable Development Goals.