Material impacts, risks and opportunities in respect of "Own workforce" | |||||||
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Type | Description | Time horizon1 | Location2 | Financial effect | Policies | Actions | Targets |
Working conditions – health and safety | |||||||
Impact (potential negative) | Covestro causes a potential negative impact in own operations in case of violation of sufficient safety standards in the provision and maintenance of the workplace and work equipment. This can have a negative effect on physical and mental health (especially applicable in the areas of plant and process safety, transportation safety, and occupational health and safety). Affected stakeholders are employees. | S, M, L | 2 | HSEQ management system, Group “Occupational Health and Safety” policy | Workplace health management; integrated information management system (IIMS) | ||
Impact (potential negative) | Health impacts resulting from the handling of hazardous substances or from incidents in the company’s own operations or in traffic are very difficult to reverse. Affected stakeholders are local communities, own workers, and the environment (some substances/processes have greater potential for negative impacts than others). | S, M | 2 | HSEQ management system, Group “Occupational Health and Safety” policy | Workplace health management; integrated information management system (IIMS) | ||
Impact (actual negative) | Accidents and incidents occur in connection with our activities that have negative impacts on own workers (health and safety) and impacts on communities and the environment. Affected stakeholders are employees. | S, M | 2 | HSEQ management system, Group “Occupational Health and Safety” policy | Workplace health management; integrated information management system (IIMS) | ||
Risk | Working in the production facilities as well as working in the office can lead to injuries and absenteeism in own workforce, thereby increasing personnel costs. | M, L | 2 | Business performance, results of operations, financial position, cash flows | HSEQ management system, Group “Occupational Health and Safety” policy | Workplace health management; integrated information management system (IIMS) | |
Working conditions – adequate wages | |||||||
Impact (actual positive) | Covestro has an actual positive impact in own operations due to a comprehensive package that includes market-oriented compensation, benefits, individual development opportunities, and a good working environment with the aim of having a positive effect on workers, attracting and retaining engaged and qualified workers, and motivating them to achieve top performance. Affected stakeholders are employees. | S, M | 2 | “How Values Translate into Performance and Culture” Group policy | Comprehensive and transparent compensation package | ||
Equal treatment and opportunities for all – diversity | |||||||
Impact (potential negative) | In case of a non-diverse workforce and unequal treatment affecting workforce engagement, overall satisfaction, and potentially health, Covestro contributes to a potential negative impact on workers. Affected stakeholders are employees and persons in vulnerable situations. | S, M | 2 | “Fairness and Respect in the Workplace” policy and local versions | Web-based training; employee networks and diversity bodies | Targets for the percentage of women in the first two management levels below the Board of Management | |
Equal treatment and opportunities for all and gender equality and equal pay for equal work | |||||||
Impact (potential negative) | Every worker has the right to equal pay for equal work. Covestro causes potential negative impacts, if it does not maintain a compensation system or existing systems are not aimed at wage equality, there are no or only inadequate measures to eliminate pay disparity, there is no analysis of the gender pay gap, or cases where workers feel unfairly treated are not investigated or explained. Affected stakeholders are employees and persons in vulnerable situations. | S, M, L | 2 | “How Values Translate into Performance and Culture” Group policy | Salary comparison analyses, comprehensive and transparent compensation package | ||
Other work-related rights – child labor | |||||||
Impact (potential negative) | Mothers and children are entitled to special care and assistance. All children, whether born in or out of wedlock, enjoy the same social protection. Covestro is associated with potential negative impacts on the rights of children if it makes use of child labor in its operations (i.e., has individuals work for it who are younger than 15 years old). Affected stakeholders are (potentially underage) workers. | S, M, L | 2 | Corporate commitment to respect human rights | Company’s internal structures (e.g., Human Rights Office), roles, and over-arching management approach | ||
Other work-related rights – forced labor | |||||||
Impact (potential negative) | Under the Universal Declaration of Human Rights, no one must be held in slavery or servitude. Potentially negative impacts on human rights would arise if Covestro were to use forced labor in its own operations through, e.g., involuntary overtime, housing on site with restrictions on leaving the site after working hours, workers that do not understand the language of the contract. Affected stakeholders are persons in vulnerable situations and own workers. | S, M, L | 2 | Corporate commitment to respect human rights | Company’s internal structures (e.g., Human Rights Office), roles, and overarching management approach | ||
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.”
Covestro’s strategic alignment with climate neutrality and the circular economy has positive impacts on its employees. As a result, Covestro products that are aligned to the sustainability strategy are increasingly appreciated by our customers in the market and may therefore result in competitive advantages for Covestro. Competitive advantages safeguard jobs and have the potential to create new jobs in the future. We therefore consider there to be no relevant negative impacts at present arising from Covestro’s strategic alignment, e.g., to achieve climate neutrality and a circular economy. To prepare employees for the gradual shift toward sustainability, a range of different courses and programs on the topic of sustainability have been prepared as part of the global “Expedition C” training initiative. This training offering prepares employees for the transformation, including on this key topic, and enables them to be actively involved in this process, as internal expert knowledge is passed on and dialog promoted on the matter.
Developing the people strategy is an iterative process that also draws on the results of discussions with workers’ representatives and findings from employee surveys.
The status of implementing the targets and ambitions under the people strategy is tracked at various levels, including with workers’ representatives in the usual information and participation processes. In Germany, this is done, for example, through the local and translocal codetermination bodies (e.g., local works councils, General Works Council, and Group Works Council, including their competent committees, as well as the (Group) Managerial Employees’ Committee) on various employee-related matters.
Own workers are made up of employees and non-employees. At Covestro, own workers mainly comprise employees who are employed in the operation of chemical production facilities and administrative departments. We always take the totality of all employees in all regions into account. By this we mean all temporary and permanent employees working for one of our consolidated companies. We do not count employees in vocational training, interns, and Board of Management members as part of the workforce because of their special employment relationship, nor do we include employees with an inactive employment contract or planned long-term periods of absence. The metrics specified are calculated according to the above definition and include the totality of all employees in all regions. The analysis of the definition of employee in all countries where Covestro operates showed that there are no material deviations from this definition.
Among the non-employees, we additionally use self-employed workers (contractors), who are mainly deployed for maintenance and repair work.
With regard to the topic of health and safety, the materiality assessment identified in the context of Covestro working conditions a risk of workplace accidents in production, which could lead to increased personnel costs for Covestro. Other than that, no operations or activities have been identified that are exposed to significant risk. In relation to child and forced labor, no specific divisions, countries or geographic areas in Covestro’s operations have been identified as being exposed to significant risk either.
The risk to health and safety identified as material is clearly integrated into the Covestro people strategy and positioned as a particularly important topic for the company.
According to the assessment, the identified negative impacts are neither widespread nor systemic. They would only be applicable in connection with individual incidents.
In the reporting year, Covestro was directly linked to actual incidents and accidents, causing negative impacts on own workers and non-employees (in terms of health and safety) and minor impacts on communities and the environment.
The analysis also identified activities that lead to positive impacts for employees: Adequate wages are an important element for Covestro to position itself as an attractive employer. Here Covestro aims to achieve positive retention with the company worldwide, at all employee levels, and to successfully compete for skilled workers and talent.
Covestro assesses for which groups of persons there is a greater risk with regard to child labor, forced labor, diversity, gender equality and equal pay for equal work, as well as health and safety. In the area of health and safety, Covestro continuously enhances its understanding of the potential hazards to its own workforce. Using the hazard assessment as a basis, possible sources of hazards at workplaces and the corresponding corrective actions are described, e.g., the handling of chemicals. Particular focus is placed on persons in vulnerable situations handling chemicals and machinery while working in the production environment, as there is naturally a higher risk of injury events in the production environment than in the administrative environment. Injuries in the working environment present a hazard to our own workforce and can result in worker absenteeism.
Groups of persons at greater risk in relation to child and forced labor are minors and lower-skilled workers. When considering the areas of diversity, equity, and equal pay for equal work, all employees are regarded as potentially at risk, irrespective of age, gender, origin, qualifications, medical condition, or other reasons for vulnerability.
The material impacts on employees identified for our undertaking have already been taken into due consideration in our strategy and business model, which follows our strategic priorities. No additional adjustment is therefore made to the strategy and business model.
These policies, which apply to all employees, are generally easily accessible and freely available on Covestro’s intranet. They were prepared after consultation with workers’ representatives.
Covestro’s strategic alignment with climate neutrality and the circular economy does not entail any amendments to existing policies.
Our integrated HSEQ management system documents Covestro’s standardized Group-wide approach to occupational safety and health management in Covestro’s “Health, Safety, Environment, Energy, and Quality” (HSEQ) policy – in combination with the Occupational Health and Safety policy. The main ambitions are:
The “Occupational Health and Safety” policy outlines a comprehensive process for monitoring and improving occupational health and safety performance based on the Plan-Do-Check-Act (PDCA) cycle, which forms the basis for continuous improvement in the areas of occupational health and safety. Both policies mentioned focus on instructions and safeguards to prevent workplace accidents, occupational illnesses, and psychosocial risks. They also underline the continuous improvement and global implementation of safety initiatives. The policies are applicable to all employees Group-wide. Responsibility for the policies is assigned to the Chief Technology Officer.
Our Group policies set out six principles that define how we should think and act. Building a value- and performance-based culture is one of these principles and is described in this section.
We value our employees and offer them transparent, fair, and competitive pay. We appreciate performance that stands for our targets and values and is delivered transparently. In order to recruit and retain the most qualified employees, we offer them a competitive base salary commensurate with their responsibilities as well as performance-related compensation components and additional benefits. We communicate transparently to our employees how their wages and salaries break down. Salaries at Covestro are determined regardless of gender, which means that equal work gets equal pay. The comprehensive and transparent package includes market-based compensation, benefits, individual development opportunities, and a good working environment. We thus exert a positive influence on working conditions and in turn greatly promote employee engagement, and this makes a significant contribution to our success.
The policy applies to all employees Group-wide, irrespective of gender. Responsibility for the policy lies with the Head of the corporate Human Resources function.
Covestro’s policy “Fairness and Respect at Work” establishes the framework for a fair and respectful working environment at Covestro and aims to prevent discrimination and harassment. A fair and respectful working environment is an essential prerequisite for our innovative performance and business success, and for diversity, equity, and inclusion. These principles are therefore embedded in Covestro’s Code of Conduct and form part of our commitment to safeguarding human rights, particularly with respect to fair working conditions. Based on the global directive, we understand harassment to mean unwanted, intimidating, insulting, or hostile behavior that creates a negative working environment, makes someone feel threatened, or negatively impacts a person’s work performance. “Bullying” and/or “mobbing” are forms of harassment.
In addition to the global policy, there are other statements of commitment, such as the inclusiveness agreement in Germany. The core elements of the policy are:
The policy, which applies to all employees, sets out responsibilities, minimum standards, and guidelines for local processes in Covestro companies. Covestro aims to achieve an inclusive work environment that is free of discrimination and to promote the corporate culture. Responsibility for the Group-wide policy lies with the Head of the corporate Human Resources function.
The Group-wide policy covers grounds for discrimination in terms of race, color, religion, sex (including pregnancy), national origin, age, disability, genetic information, veteran status, sexual orientation, gender identity/gender expression. In our respective local procedures, these grounds have been complemented by or adapted to national specifics.
Our corporate targets and ambitions, as well as the culture needed for diversity, equity, and inclusion are driven, among others, by our employee resource groups and diversity committees.
Since the year 2024, the entire workforce worldwide has been obliged to complete web-based training on fairness and respect at work. In this way, a common understanding is achieved of what we mean by discrimination and what behaviors will not be tolerated. The “Compliance Telegram” publishes reported and confirmed breaches of the principles governing fairness and respect. Our employees can use the company’s grievance mechanism to report instances of discrimination. The prevention and mitigation of discrimination forms part of our Code of Conduct.
Our corporate commitment to respect human rights (Human Rights Policy Statement) describes Covestro’s human rights strategy to exercise proper regard for its due diligence obligations. This corporate commitment is in line with the UN Guiding Principles on Business and Human Rights. Covestro considers that the Guiding Principles refer to the International Bill of Human Rights, which consist of the Universal Declaration of Human Rights and the two Covenants that implement it as well as the International Labour Organisation’s Declaration on Fundamental Rights and Principles at Work and the core conventions that underpin it. A further key component of our corporate commitment is the zero-tolerance policy on child labor, forced labor, modern slavery, and human trafficking. The principles contained in the corporate commitment to safeguard human rights apply to all employees. The corporate commitment has been approved by the entire Board of Management. Responsibility for this corporate commitment lies with our Chief Executive Officer.
Covestro has established a comprehensive due diligence process to safeguard human rights in our business activities. This is based on the UN Guiding Principles on Business and Human Rights and the Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises and is in accordance with applicable national laws on the human rights due diligence of companies.
The principles of our human rights due diligence are described in our Human Rights Policy Statement and in our own and our Supplier Code of Conduct. In these documents, we have specified key international conventions and principles as the basis of our conduct and our expectations of business partners worldwide. These documents are published either on Covestro’s website or on our internal intranet to ensure accessibility for the relevant stakeholders.
Covestro explicitly encourages reporting of suspected human rights abuses in the Group, as well as at our direct and indirect suppliers. If Covestro has directly caused a human rights violation, Covestro is committed to working quickly to stop or change the responsible business activities in order to end the violation. There were no indications of human rights abuses within the Covestro organization in the reporting year.
At Covestro, the views of employees are taken into account in decisions or activities aimed at managing the actual and potential impacts. A significant instrument adopted to achieve this is the company’s actively applied social partnership between management and employee representatives within the employee codetermination processes. In this way, the insights gained from discussions with workers’ representatives are likewise taken into account in the review and assessment of strategy and business model.
The processes for involving workers and workers’ representatives are rolled out at local level in accordance with legal requirements and within the bodies specially set up for this purpose. There are information and advisory processes in which constructive cooperation takes place on a basis of trust and with a focus on solutions. In Germany, these are, e.g., the Economic Committee and Joint Committee of the General Works Council.
A number of different ways of engaging workers exist at local level. For example, it should be noted that an event for all employees is organized at each individual site at least once a year (town hall meeting), including the option to submit individual questions. In addition, some sites hold round tables between the management teams and their employees from different levels in the hierarchy, offering the opportunity for communication across all levels.
By way of example, the processes for including the views of workers’ representatives applicable in Germany, the United States, and China – together making up approx. 70% of Covestro employees – are shown below:
The most senior role in Germany with responsibility for ensuring that the perspectives of workers’ representatives are taken into account is the Labor Director.
Covestro notifies the workers’ representatives on the Economic Committee of the undertaking’s business situation and outlook on an aggregate basis, as well as of key matters concerning its employees. The agenda of the Economic Committee is jointly agreed with proposed topics from the works council and the corporate Human Resources function.
There are a number of different discussion options, attended by various experts depending on the matter being discussed. Ad-hoc meetings are arranged on request. The German Economic Committee and Joint Committee meet at least ten times a year.
In the United States, responsibility for including the views of workers’ representatives lies with a team comprising the Site Director and internal experts specializing in cooperation with trade unions.
Covestro is legally required to discuss any topics concerning working conditions with the workers’ representatives. The workers’ representatives raise topics for discussion at the ad-hoc meetings and negotiate possible solutions and/or improvements
The most senior role in China with this responsibility for including the views of workers’ representatives is the General Manager of the Covestro company, together with the Site Director and Head of HR.
At the annual conference, which is consultative by nature, the corporate Human Resources function informs attendees of the undertaking’s business situation and aggregated outlook, and any important workforce-related matters.
The trade union representatives discuss government guidelines with Covestro management and provide an overview of the general mood or demands of the company’s employees. These discussions are held on an ad-hoc basis, as required.
At global level, Covestro deploys three key instruments to engage its employees. Firstly, a “We Are 1” global town hall meeting with the Board of Management is convened once a year, where questions and feedback presented by the company’s employees to the Board of Management beforehand and at the meeting are centrally recorded. We also conduct the Group-wide employee survey, ENGAGE, three times a year. All findings from these surveys are centrally consolidated and then shared electronically with the entire workforce by the Chief Executive Officer three times a year. Our people development approach plays a particularly important role, as it provides for regular discussions between management and individual employees, thus facilitating dialog, good leadership behavior, and transparency.
There is no global framework agreement with employee representatives on child and forced labor, since there are local corporate commitments at company level.
Given the importance of engaging employees (e.g., in town hall meetings), Covestro annually invests the corresponding financial and human resources from various corporate functions, such as Communications, Human Resources, and Information Technology (IT), so that the specified instruments and programs can be planned, implemented, and enhanced.
Covestro has implemented a number of steps to gain insight into the perspectives of its own workers who may be particularly vulnerable to impacts or marginalized. The relevant actions are as follows:
Inviting employee feedback and effectiveness monitoring
The effectiveness of interaction with employees within the company can be ascertained from the engagement values, which are collated three times a year in the ENGAGE employee survey. Employee engagement is a metric calculating the degree of engagement, motivation, and emotional connection of employees with Covestro.
Feedback from employees obtained in the ENGAGE survey is recorded via an advanced technology platform, enabling each individual management employee to view the relevant findings for their own team, once at least five team members have completed the survey. Covestro provides employees with feedback at various levels on how the ENGAGE findings have had an impact on decision-making. Based on best practice, the ENGAGE results are primarily shared by managers at team level and actions are then defined that reflect any need identified. At corporate governance level, feedback on how decision-making has been impacted is published globally on the intranet at reasonable intervals: One such impact was the introduction of a global further training initiative, “Expedition C,” which prepares all employees for transformational topics, and, in turn, enables them to be actively involved in the process. In the context of “Expedition C,” internal experts share knowledge and tools and promote dialog and discussion.
The engagement values collated during the ENGAGE employee survey have consistently remained at a high level since July 2023 and lie significantly above cross-industry benchmarks, providing the company with a positive signal and feedback from its employees.
Lessons and potential improvements are obtained from sources such as the above-mentioned ENGAGE employee survey and the Idea Management platform. Findings from the employee survey and the resulting action areas in Germany are presented to and discussed with the workers’ representatives.
The insight gained from the ENGAGE survey is useful, particularly for three of the impacts identified in the materiality assessment. Not only are questions on health and wellbeing included under “Health and Safety,” but also, the survey generates insight into questions relating to the material impact of “Diversity.” In addition, the survey has questions on equal treatment and opportunities with a focus on equal and fair pay as well as transparent processes for allocation to pay grades and promotion.
Our grievance mechanism defines the way in which the issues raised and addressed are tracked and monitored. To regularly check whether the channels we provide are effective and employee interests are sufficiently taken into account, we use specific findings from the ENGAGE survey in response to the following survey question: “If I were to experience serious misconduct at work, I am confident that suitable actions would be taken.” The positive survey responses to this question show that Covestro’s employees have faith in the company on this point, as the values remain at a high level and are above cross-industry benchmarks.
Employees have the opportunity, in the ENGAGE employee survey and via the whistleblower hotline, to communicate negative impacts and are in this way directly involved in remedial action.
For further information about the channels to raise concerns and needs; grievance mechanisms; processes to handle grievances; quality control to check how the issues raised are handled; and means by which the effectiveness of grievance mechanisms and channels is checked, please refer to “ESRS G1: Business Conduct.”
The following overview of action plans and resources describes Covestro’s approach to preventing or mitigating material negative impacts on employees. Adjustments are made on a continuous basis as required.
Covestro has not identified any material opportunities and therefore no need to develop actions relating to opportunities arises.
Insufficient safety standards in the provision and maintenance of the workplace and work equipment can have a negative impact on the physical and mental health of employees. Covestro takes a wide range of suitable countermeasures to prevent this. The following have proved successful: Continuous monitoring of accident rates, cause-effect analyses, the organization of Safety Days, awareness campaigns, and health management policies and network structures to ensure alignment with local needs. Two key components of workplace health management are also applied: firstly, environmental prevention, with the aim of creating health-promoting working conditions and work environments and secondly, a further behavioral prevention component, with the aim of strengthening the individual health resources and potential of employees.
If, despite the above actions, employees are harmed, the company ensures that all necessary steps for the care, treatment, and recuperation of the individual concerned are taken so that they can regain their health and fitness for work. A network of various local resources – such as first-aiders, medical officers, and medical services – are available, each adapted to local requirements. Accident metrics are globally consolidated. There is no centralized global system for recording the use of local resources.
For the specific case that incidents have negative impacts on employees and non-employees as well as on surrounding communities and the environment, Covestro has established emergency systems at its sites, including, e.g., through trained emergency personnel.
The internal company HSEQ management system is built on the basis of the PDCA cycle, thus ensuring continuous improvement through regular reviews and feedback loops.
Incidents occurring at our sites are reported in accordance with Group-wide rules in the integrated information management system (IIMS) , electronically recorded, classified in terms of their impact, and processed using root cause analyses. The results obtained are communicated Group-wide monthly so that any recurrence, even at different sites, can be prevented as far as possible. Negative impacts are also examined on a business-specific basis in safety assessments, and then remedial actions are defined in assessment reports and subsequently implemented. This is how negative impacts are mitigated or prevented.
Our integrated management system always also takes external developments and requirements into account to mitigate material risks for employees. Covestro takes actions to mitigate material risks for employees and tracks their effectiveness.
A key element of Covestro’s approach is the active involvement of its employees. The undertaking promotes the participation of workers in safety actions and encourages an open communication culture. This is supported through various initiatives, such as employee involvement in regular safety inspections and the successful completion of training sessions.
Preventive actions play a central role in Covestro’s safety policy. These include:
Continuous improvement is a further cornerstone of safety management at Covestro. By regularly reviewing and making adjustments to safety measures, it is possible to ensure that the system always stays up to date and can respond effectively to changing conditions.
The health and safety procedure, which entered into force in the reporting year for all Covestro AG companies, underscores the undertaking’s long-term commitment to the health and safety of its workers. It applies to all work-related activities and encompasses own workers, contractors, and visitors to company premises.
Covestro achieves the actual positive impact of adequate wages by means of a comprehensive and transparent package, meeting important parameters such as market-based compensation, benefits, individual development opportunities, and a good working environment. Covestro has numerous tools and regulations to ensure adequate wages.
Specific actions are salary comparison analyses, an annual feasibility review of regular pay increases for non-payscale employees, and internal rules governing working time. Moreover, central works agreements are entered into with workers’ representatives following a collective bargaining process; these agreements may result in salary adjustments for payscale employees.
The package of measures referred to above is another way in which the potentially negative impact caused by a lack of equal treatment and opportunities is systematically addressed.
Issues such as a non-diverse workforce, harassment, or unequal treatment can affect the engagement, general satisfaction, and health of employees. Covestro has therefore implemented two actions for its worldwide organization. Firstly, globally mandatory web-based training on fairness and respect in the workplace for all workers worldwide. The web-based training is available worldwide and rolled out across the entire Group. Secondly, Covestro consistently promotes its employee resource groups and diversity committees (DEI councils) around the world.
Covestro undertakes to avoid potentially negative impacts of child and forced labor. The company therefore adopts a zero tolerance policy toward child and forced labor, and has also translated this commitment into action with its whistleblower system, enabling potential breaches to be reported.
Covestro has successfully implemented internal structures, roles, and statements of commitment in the area of human rights. The Head of Group Quality within the Group Innovation & Sustainability function has been appointed as Group Human Rights Officer. This role reports directly to the Board of Management and is responsible for monitoring Covestro’s human rights risk management processes. Furthermore, Covestro adopts a cross-management due diligence approach. Its Corporate Commitment within the Human Rights Policy Statement and Code of Conduct plays a particularly important role.
An example of its actions in this matter is the preventive measures that Covestro has integrated into its global recruitment process, such as a verification to check the age of applicants based on proof of age and a legal verification to check whether the applicant is legally allowed to work in the country in which they are to be employed.
As described in “Impact Management,” material risks in connection with our workers are integrated into our Group-wide risk management.
In relation to health and safety, we regularly determine accident rates and use them to review the effectiveness of our actions.
Covestro’s zero tolerance policy in relation to child and forced labor is also reflected in the actual compliance statistics, where these types of incidents are recorded. No tracking is carried out as there are no such incidents.
As for equity and inclusion, completion of the mandatory web-based training is monitored by the system, with an escalation mechanism to manager level if anyone fails to complete the training, despite reminders to do so. The progress/effectiveness of the web-based training can in future be tracked by examining responses from the ENGAGE employee survey, which contains nine questions that could provide insight into this topic.
The effectiveness of our actions in the area of adequate wages is mainly tracked and assessed through regular salary comparison analyses. We also use external data on minimum and living wages, which we obtain from a non-profit organization to ascertain the global adequacy of our employees’ compensation. This comprehensive approach enables us to provide fair and competitive wages, in line with market standards as well as our social responsibility obligations.
As a basis for the assessment of which actions are required and appropriate to respond to actual or potential negative impacts for workers, Covestro uses the results of the ENGAGE employee survey, which is conducted three times a year, e.g., relating to the topics of “Health and safety” and “Diversity.” Responsibility lies with the corresponding manager to address and assess the issues within the team, and then define the necessary actions.
To ensure that its own corporate practices do not cause or contribute to material negative impacts on employees, Covestro again uses the employee survey ENGAGE as an early warning system. On average, approx. 25,000 individual comments in free text are submitted per survey worldwide. These comments are then analyzed by topic using artificial intelligence, so that important sensitive feedback can be detected and addressed at an early stage.
Covestro provides personnel, structural, process, and financial resources for managing the material impacts. They also comprise personnel resources such as the corresponding global and local expert functions covering the topics of “Health and Safety,” “Adequate Wages,” “Diversity,” “Gender Equality and Equal Pay for Equal Work,” “Child Labor,” and “Forced Labor.” Structural resources are also made available, such as the creation and support of internal employee resource groups and process structures within the company for developing and implementing action plans, which are backed up with the financial resources needed.
Terminating Business Relationships
Every business decision at Covestro, such as the termination of business relationships and the impact this would have on workers, is taken by considering the benefits and drawbacks for the company as a whole. Wherever possible, decisions with longer-term consequences also take account of aspects of how the potential negative impacts of such decisions are mitigated. Where necessary, employee representatives are additionally involved and invited to take part to protect their participation rights.
In the context of our company, targets are set as part of a strategy. The people strategy at Covestro forms the foundation for managing employee-related matters, including material impacts and risks for workers. All matters identified as material have been embedded there and defined as priorities. Some of the targets and ambitions under the people strategy are defined as time-bound and measurable targets.
As for “Diversity,” Covestro is committed, among other things, to gender equality worldwide. This is also reflected in the “Fairness and Respect in the Workplace” policy. The Board of Management has set targets for the percentage of women in the first two management levels below the Board of Management. The targets were set based on the Act Supplementing and Amending the Law on Equal Participation of Women and Men in Leadership Positions in the Private and Public Sectors (FüPoG II). Covestro uses data from the global personnel management system to record the employees at the level directly below the Board of Management and the employees with management responsibilities directly below them.
As of June 30, 2022, the proportion of women at Covestro AG was 0% at the first management level below the Board of Management and 26% at the second management level below the Board of Management. In the Covestro Group, the proportion was 24% at each level. The new targets for the year 2027 are as follows:
Covestro AG:
Covestro Group:
The Board of Management was involved in the process of defining the targets, and monitors the trend in the figures on a regular basis – at least once a year. When vacant positions are filled, target attainment remains constantly in focus. Since the new targets were set, Covestro has already managed to increase its proportion of women.
The targets for Covestro AG refer to positions in Germany, while the targets for the Covestro Group apply worldwide. These actions form part of Covestro’s broader efforts to create a sustainable and inclusive working environment and promote equality in executive positions.
Covestro will continue to carefully monitor progress in achieving these targets and ambitions and make adjustments where necessary to ensure that its endeavors to promote gender diversity in leadership positions are successful.
There are currently no targets for the matter of “Adequate Wages.” However, we continuously use externally provided data on adequate wages on an annual basis, which can be used to derive possible action areas. There is no need to take any action at present since adequate wages are guaranteed everywhere.
No targets and ambitions are currently available for “Gender Equality and Equal Pay for Equal Work.” We perform the legally required calculation of the unadjusted gender pay gap. In addition, internal analyses are conducted in which we eliminate the influence of the variables of country, internal contract level, length of service on particular contract level, or professional group.
Similarly, we have not defined any time-bound and measurable targets for the matters of “Health and Safety,” “Child Labor,” or “Forced Labor.” The effectiveness of our policies and actions relating to the material impacts and risks of these matters is nevertheless tracked as part of our ambitions; a brief description follows.
For the matter of “Health and Safety,” Covestro has established a comprehensive and ambitious occupational health and safety program that is deeply rooted in the corporate culture and strategy. Covestro’s foremost occupational health vision is clearly defined: “zero incidents.” This applies Group-wide to all Covestro companies and covers both workers and self-employed workers (contractors). Specific indicators are defined each year within the scope of the “HSEQ Operations Objectives” and discussed with the Chief Technology Officer. Similar requirements are specified at local operational level; they are not disclosed separately in this report.
Covestro adopts a number of different methods and assumptions to measure and monitor progress. Work-related injuries and illnesses are recorded in accordance with the definitions laid down in Regulation (EU) 2023/2772 Annex II Table 2, while an integrated Information management system (IIMS) is used to record hazards, accidents, and incidents. In addition to the above actions, internal and external audits and health surveys are performed on a regular basis.
To measure its performance, Covestro also uses specific indicators, such as the recordable incident rate (RIR) for workplace accidents. Progress and challenges ahead are published each year in the Group Sustainability Statement, including an analysis of trends and significant changes in corporate performance.
The integrated information management system (IIMS) plays a key role in recording and analyzing incidents and near-accidents. Regular internal and external audits of the management system, annual health surveys to determine potential for improvements, and ongoing employee training and actions to increase employees’ awareness complete the scope of this comprehensive approach.
Covestro has established a zero tolerance policy for the matters of “Child Labor” and “Forced Labor.” The zero tolerance policy toward child labor, forced labor, modern slavery, and human trafficking is documented in the global corporate commitment to the UK Modern Slavery Act Statement. Potential violations of this policy would be identified and assessed on the basis of information submitted through the grievance mechanism. For this reason, specific requirements under the zero tolerance policy are not listed separately in this report. The prevention of child and forced labor forms part of our commitment to compliant conduct and is one of our compliance objectives and ambitions.
As of December 31, 2024, Covestro had 18,021 employees worldwide. The following gender representation was present in the workforce:
Employees1 broken down by gender in the year 2024 | |
---|---|
HC | |
Women | 4,256 |
Men | 13,757 |
Diverse2 | – |
Not provided | 8 |
Total | 18,021 |
1 Number of employees is determined on the basis of the head count (HC) as of December 31, 2024 Number of employees in full-time equivalents (FTE) amounted to 17,503 (previous year: 17,516). Part-time employees are included on a pro-rated basis in line with their contractual working hours. Board of Management members, employees in vocational training, and interns are not included in this metric because of their special employment relationship.
2 “Other” comprises all specified third gender options. This data is not available in all countries in which Covestro operates due to legal circumstances in these countries.
In three countries, Covestro employed over 10% of the total workforce in each case as of the reporting date.
Employees1 broken down by country in in the 2024 | |
---|---|
HC | |
Germany | 7,635 |
China | 2,778 |
USA | 2,511 |
1 Number of employees is determined on the basis of the head count (HC) as of December 31, 2024 Board of Management members, employees in vocational training, and interns are not included in this metric because of their special employment relationship.
The majority of employees were under a permanent contract with Covestro as of the reporting date.
Employees1 broken down by employment status in the year 2024 | |||||
---|---|---|---|---|---|
Women | Men | Diverse2 | Not provided | Total | |
HC | HC | HC | HC | HC | |
Own workforce with permanent contracts | 4,165 | 13,566 | – | 8 | 17,739 |
Own workforce with temporary contracts | 91 | 191 | – | – | 282 |
Own workforce without guaranteed working hours | – | – | – | – | – |
1 Number of employees is determined on the basis of the head count (HC) as of December 31, 2024, based on the groups of employees and genders stored in the global personnel management system. Board of Management members, employees in vocational training, and interns are not included in this metric because of their special employment relationship.
Temporary employment contracts are often entered into to provide cover for longer-term absences, e.g., as a result of parental leave or due to other temporary staff limitations. There are also country-specific temporary early retirement schemes that fall under this type of employment relationship.
A total of 1,127 employees worldwide left the Group in the reporting year. This translated into an employee turnover of 6.2%.
The specified data is based on the employee master data entered in our global personnel management system as of the balance sheet date. This data is maintained by the local HR departments and is therefore in line with local regulations. The head count (HC) was reported in all metrics.
The specified metrics cover all temporary and permanent employees working for one of the consolidated companies. Board of Management members, employees in vocational training and interns are not included because of their special employment relationship, nor are employees with an inactive employment contract or planned long-term periods of absence.
The number of employees who have left the company is based on the number of actual employees leaving the company due to employee- and employer-initiated terminations, the end of fixed-term contracts, retirements, and deaths and whose exit has been recorded in the appropriate process of our global personnel management system. This figure was compared with the average number of employees to determine the employee turnover figure. The average number of employees is calculated from the 12 month-end figures of the reporting year.
The most representative metric for this in the financial statements is the average number of full-time employees (FTEs).
In accordance with ESRS 1 Appendix C, Covestro applies the phased-in disclosure requirements on the characteristics of non-employee workers in the undertaking’s own workforce in the first year of preparing the Group Sustainability Statement. According to this expedient, the disclosures specified may be omitted in the first year.
Based on the requirements set out in the corporate governance statement, gender representation in the first and second management levels of the Group as of December 31, 2024 is as follows:
Employees broken down by gender1 and management level in the year 2024 | |||||
---|---|---|---|---|---|
Women | Men | Total | |||
HC | % | HC | % | HC | |
Proportion in management level 12 |
7 | 25 | 21 | 75 | 28 |
Proportion in management level 23 |
40 | 23 | 131 | 77 | 171 |
1 No employees who identify with other gender options were represented at the management levels disclosed.
2 Direct reports to the Board of Management with management responsibilities as of December 31, 2024.
3 Direct reports to management level 1 with management responsibilities as of December 31, 2024.
In Covestro’s global workforce, there are 1,994 persons under the age of 30 years, 10,309 persons in the 30 to 50 years age group, and 5,718 employees over the age of 50 years.
Adequate wages are an important element for Covestro to position itself as an attractive employer. Our target is therefore to achieve positive retention with the company worldwide, at all employee levels, and to successfully compete for skilled employees and talent.
Adequate wages are therefore paid to all employees of Covestro. When paying our employees, we exceed the minimum wage level legally applicable in the respective countries and pay at least a living wage, which is reviewed and set worldwide by the non-profit organization Wage Indicator Foundation on a yearly basis.
The integrated management system for health and safety applies to all employees Group-wide. In the year 2024, we recorded the following ESRS data relating to employees and self-employed workers:
Work-related accidents1 | ||
---|---|---|
2023 | 2024 | |
Number of recordable work-related accidents | ||
in relation to own workforce2 | 50 | 52 |
in relation to contractor employees3 | 24 | 17 |
Rate of recordable work-related accidents (Recordable incident rate, RIR) |
||
in relation to own workforce2 | 1.55 | 1.70 |
in relation to contractor employees3 | 1.50 | 1.00 |
Number of recordable accidents at work in connection with lost days | ||
in relation to own workforce2 | 32 | 34 |
in relation to contractor employees3 | 16 | 14 |
Rate of recordable accidents at work in connection with lost days (Lost time recordable incident rate, LTRIR) | ||
in relation to own workforce2 | 1.00 | 1.10 |
in relation to contractor employees3 | 1.00 | 0.80 |
Number of days lost to work-related injuries, ill health and fatalities | ||
in relation to own workforce2 | 795 | 521 |
in relation to contractor employees3 | 506 | 168 |
Number of fatalities as result of work-related injuries and work-related ill health on undertaking's sites | ||
in relation to own workforce2 | 0 | 0 |
in relation to contractor employees3 | 0 | 0 |
Numberof cases of recordable work-related ill health4 | ||
in relation to own workforce2 | 5 | 6 |
in relation to contractor employees3 | 0 | 0 |
1 Includes work-related accidents and illnesses taking into account all fully consolidated companies, provided that they are part of the consolidation scope.
2 Own workers, excluding self-employed workers (contractors), including interns, employees in vocational training.
3 Self-employed workers (contractors): individuals engaged by Covestro whose accidents occurred on one of our company premises.
4 The notified illnesses are those known to the company; the records may not be complete due to legal restrictions.
In its occupational health reporting, Covestro distinguishes between work-related ill health and recognized occupational diseases. Incidents of work-related ill health that have identifiable causes and can be influenced by current occupational health measures are included in our recordable incident rate (RIR). Occupational diseases resulting from long-term exposure that cannot be influenced directly by ongoing safety measures are not included in the RIR. This approach guarantees that our reporting is consistent and enables more accurate presentation of our current performance in the area of occupational health and safety.
In the reporting year, the number of workplace accidents involving our employees went up by 2 to 52 (previous year: 50), raising our employees’ recordable incident rate (RIR) according to ESRSs by 0.15 points. The number of accidents involving self-employed workers (contractors) went down by 7 to 17 (previous year: 24), reducing the RIR of our self-employed workers (contractors) by 0.50 points.
We undertake to provide transparent information about our gender pay gap and pay disparity. The disclosure is aimed at giving an insight into the extent of any potential pay gap between women and men among our employees and using it as a basis to develop appropriate actions for continuous convergence.
We believe in equal pay for equal work and therefore strive for transparency in our pay structure. The gender pay gap, defined exclusively as the difference in average earnings between our female and male employees and expressed as a percentage of the average earnings of male employees, amounts to 6.0%.
When disclosing the gender pay gaps, we submit detailed contextual information on the methodologies used to calculate the data. Our data was collected taking into account the different types of employment and the countries in which we operate. It was captured by means of standardized queries of compensation data from our payroll systems. This allows us to get a better understanding of the gender pay gaps and their causes and to develop appropriate actions.
The data collected was initially analyzed without adjustments (unadjusted gender pay gap), as currently required by ESRS S1.16. In reality, the unadjusted metric is impacted by different factors, such as type of work, hierarchy level, professional experience, and different histories of employment or geographies. Internal analyses in which we have eliminated the influence of the variables of country, internal contract level, length of service on particular contract level, and professional group indicate that the pay gap is significantly smaller if these factors are taken into account.
In relation to compensation, we disclose the ratio of the total annual compensation of our highest-paid individual to the median of total annual compensation of all employees. This ratio stands at 58.9.
Covestro defines human rights abuses as actions breaching international standards such as the United Nations (UN) Universal Declaration of Human Rights, the Declaration of Principles of the International Labour Organisation, and the UN Guiding Principles on Business and Human Rights.
We received zero complaints relating to child and forced labor through the internal grievance mechanism. No grievances were received by the National Contact Points for Responsible Business Conduct under the OECD Guidelines for Multinational Enterprises.
The fines, penalties, and compensation payments for these incidents and complaints relating to child and forced labor amounted to zero in total.
All suspected cases are recorded in a central database and evaluated for the reporting year. The evaluation is carried out on the basis of confirmed cases categorized as “Discrimination” as well as the total number of confirmed and unconfirmed cases categorized as “Labor rights.”
There were no concrete indications of human rights abuses within the Covestro organization in the reporting year.