Innovation as a driver of greater sustainability in line with our corporate vision of becoming fully circular is a core element of our Group strategy and an integral part of our identity. It is also a key driver in the digital transformation, thus enabling access to the associated potential. We encourage all employees to promote innovation at Covestro. The aim is to maintain and reinforce our position in the global arena by developing new products, refining established ones, and optimizing manufacturing and processing procedures.
By managing innovation across functions throughout the Group, we ensure that our ongoing and planned activities and projects satisfy the needs of our user industries and consumer markets.
At Covestro, innovation is driven by the business entities and by the corporate GIS and Process Technology functions.
The Sustainability & Innovation Governance Body (SI GoB), a Group-wide steering committee chaired by the CEO, integrates and coordinates our innovation activities.
In fiscal 2025, our total R&D expenditure amounted to €342 million (previous year: €392 million). This mainly went toward developing new application solutions for our products and optimizing products and process technologies. As of December 31, 2025, 1,302 people* (previous year: 1,336) were employed in research and development worldwide, most of them at the three major R&D sites in Leverkusen (Germany), Pittsburgh, Pennsylvania (United States), and Shanghai (China).
AI drives measurable enterprise value and strengthens our competitive position: The strategic integration of artificial intelligence strengthens Covestro’s position as an innovative player in the chemical industry. Through the interaction of human and artificial intelligence, we transcend existing limits of capacity, speed, and complexity – with a direct impact on our EBITDA in different areas, such as procurement, production, sales, and finance.
Tangible business success: AI-optimized liquidity management reduced interest cost by several million euros in fiscal 2025. Since June 2024, an entire production line in Dormagen (Germany) has been working fully autonomously – from production planning to the provision of finished products. Building on this success, we expanded the rollout of AI to other production sites, e.g., in Germany, Spain, China, and the United States. In addition, pioneering teams in Asia and Europe developed innovative AI solutions in sales with global rollout potential: assistants for preparing and analyzing interactions with customers as well as for systematically identifying new business opportunities.
CoVA, the virtual colleague: The Covestro Virtual Assistant (CoVA) is available to all employees with access to company terminals. As from this reporting year, teams in all corporate functions can create, share, and use assistants for individually configurable applications, without any programming expertise whatsoever. Supplemented by the AI-based creation of images, diagrams, presentations, and expanded web searches, CoVA is becoming a central virtual team partner. In this context, CoVA decides intelligently which assistance or capabilities are a perfect match for a specific request. These add-ons mark an important milestone in our AI strategy and make AI even more accessible and flexible in day-to-day work.
Development of strategic skills: Our AI Academy trains Covestro employees in various functions and regions to become domain-specific AI experts. Around 100 employees are already taking an active part. In addition to following a 12-month curriculum, they work on concrete AI applications in their specific areas. This decentralized expertise turns AI innovation into a strategic resource and gives us a head start on the competition.
The cooperation of human and artificial intelligence sustainably strengthens Covestro’s competitive position and accelerates the transformation toward becoming fully circular.
AI-based innovation in R&D: In research and development, we have made significant progress with the use of artificial intelligence to improve our R&D capabilities. We have successfully implemented AI technologies to speed up our simulation processes by combining machine learning with established computer chemistry. These approaches have cut computing time while maintaining high accuracy at the same time, and this enables the simulation of larger models and allows our researchers to investigate more material combinations and process conditions in shorter timeframes. Examples include simulations of nanostructured catalysts for chemically recycling mixed plastic waste as part of the joint development work with our partner BioBTX B.V., Groningen (Netherlands) as well as the calculation of enzymatic chemical transformations.
Strategic partnerships for advanced chemistry: We have established a strategic partnership with Advanced Chemistry Development Inc. (known as ACD/Labs), Toronto (Canada) to jointly research and drive AI-based property prediction models for chemicals, creating potential paths for future industrial applications.
Knowledge management through specialized language models: We have additionally used specialized language models to improve access to Covestro’s internal knowledge base. These models allow researchers to retrieve relevant information quickly from our comprehensive documentation, historical data, and research findings.
Data governance and infrastructure: Data quality and availability remain important for our digital transformation in R&D. Since the launch of the Data Office in July 2024, we have scaled up and professionalized our approach to data governance and quality. The initial applications focus on important datasets such as SAP PLM and laboratory master data for substances and methods. We also have a cloud-based data mesh – an approach in which data is not collected centrally, but under the responsibility of the competent departments themselves, who make it available like products – as the basis for a central R&D data hub that makes research data more accessible while ensuring compliance and security at the same time. By managing the data owner landscape, standardizing structures, and introducing automated validation, we are improving the reliability and usability of our data to facilitate better decisions and faster innovations.
Under its circular economy strategy, Covestro made significant progress on innovative recycling technologies in the year 2025. After almost two years of construction, a new research facility for smart pyrolysis came on stream at the phosgenation technology center in Dormagen (Germany). This miniplant enables Covestro-specific recycling experiments to be conducted for the company’s own products. Moreover, an innovative chemical recycling process has been developed for Vulkollan® materials. For this project, Covestro has begun to build a pilot plant at the Leverkusen (Germany) site.
Increasing energy efficiency remains a key component on our road to climate-neutral production. At our site in Dormagen (Germany), a modern reactor for hot phosgene generation came on stream in March 2025, which uses waste heat from production processes to generate steam for production steps further down the line. This allows CO2 emissions to be reduced by up to 22,000 metric tons a year. This initiative contributes to Covestro’s ambitious plan to reach net-zero production by the year 2035.
Another milestone in our climate strategy is the successful implementation of the NAUCI (Nitric Acid Unit Climate Initiative) projects at the sites in Baytown (United States) and Shanghai (China) in November and December 2024. Initial operating data from fiscal 2025 confirms the effectiveness of this technology: Around 120,000 metric tons of CO₂ equivalents and around 160 metric tons of nitrogen oxides were saved in Shanghai (China) in fiscal 2025 compared to the prior-year period. At the site in Baytown (United States), annual emissions of CO₂ equivalents were cut by around 80,000 metric tons, and in addition, nitrogen oxide emissions were reduced by around 30 metric tons a year. These results underscore the significant contribution that the NAUCI projects are making to meeting our net-zero targets.
As part of our global digital transformation in production processes, we have driven the implementation of the Covestro Monitoring Platform (CMP) and the Advanced Process Control (APC) concepts under a global roll-out plan. CMP increases plant availability, while APC systems maximize output and cut operating costs. APC systems increase the level of automation and CMP allows unusual conditions to be detected early and countermeasures to be initiated. These complementary technologies, including the use of AI technologies, are another step toward realizing our vision of autonomous production facilities.
In our Performance Materials and Solutions & Specialties segments, product innovations are under way for a number of industries, in particular our main customer industries. Current examples of our product innovations can be found in our Solution Center.
For further information, please refer to: www.solutions.covestro.com/en
For further information, please refer to “Sustainable Solutions.”
By collaborating with external strategic partners in industry and business, Covestro aims to increase the efficiency and effectiveness of its research and innovation activities. Alliances and collaboration in large, publicly funded consortia characterize our partnerships with research facilities and universities as well as with companies along the value chain.
In fiscal 2025, we continued to collaborate with our established strategic, academic partners, e.g., Tongji University in Shanghai (China), CMU in Pittsburgh, Pennsylvania (United States), and the CAT Catalytic Center at RWTH Aachen University (Germany); here it was agreed to extend the successful collaboration until the end of 2031. In addition, in the year 2025, we strengthened our strategic academic partnership with Fudan University, Shanghai (China). The jointly operated research center is working on more sustainable polymer solutions in close proximity to the market. Furthermore, we are working with established partners along the value chain, e.g., Google, and in major consortia such as LUCRA, CORNERSTONE, and UNITED CIRCLES.
CIRCULAR FOAM, the joint EU project coordinated by Covestro, was successfully completed in the year 2025. Together with 26 partners from nine countries, the consortium developed significant solutions toward closing the material cycle for rigid polyurethane from refrigerators and buildings. The findings pave the way for the Europe-wide implementation of sustainable recycling procedures for insulating materials.