The EU Taxonomy Regulation (disclosures pursuant to Article 8 of Regulation (EU) 2020/852) is an instrument of the European Union under the European Green Deal and the Action Plan: Financing Sustainable Growth aimed at making Europe climate-neutral by the year 2050. The EU Taxonomy is intended to help direct investments to the economic activities needed to achieve climate neutrality.
The EU Taxonomy is a classification system that classifies economic activities as environmentally sustainable if specified screening criteria are met. An economic activity is deemed taxonomy-eligible if it can be assigned to one of the economic activities defined by the EU Taxonomy and can potentially contribute to achieving one of the following six environmental objectives:
A taxonomy-eligible economic activity can moreover be classified as taxonomy-aligned within the meaning of the EU Taxonomy, if it meets all of the additional requirements:
Commission Delegated Regulation (EU) 2026/73, which was adopted by the European Commission on July 4, 2025 and published in the Official Journal of the European Union on January 8, 2026, supplements the EU Taxonomy by adding simplification rules. They introduce thresholds for economic activities that enable companies to concentrate in the reporting on the activities that are material to their business model. The regulation allows companies voluntary early application for the 2025 reporting year. Covestro is making use of this option.
We report the share of our material Group-wide taxonomy-eligible turnover (sales), capital expenditure (CapEx), and operating expenditure (OpEx) for the “climate change mitigation” objective in accordance with the Regulation and the complementary delegated acts.
A large part of our portfolio and of our economic activities is not covered by the EU Taxonomy and can therefore not be reported as taxonomy-eligible, e.g., the manufacture of diisocyanates such as diphenylmethane diisocyanate, or MDI, toluylene diisocyanate, or TDI, which are required for processing into polyurethane. Nevertheless, Covestro makes a contribution to achieving a circular and climate-neutral economy that is not directly covered by the EU Taxonomy, e.g., through our bio-based aniline. Our objectives are reflected in particular in our vision of becoming fully circular, from which our Group’s Sustainable Future strategy and our sustainability targets – including a focus on our net-zero GHG emission targets – are derived. The review of sustainability in accordance with this vision and with our sustainability targets relates to Covestro’s entire product portfolio.
For further information, please refer to “Group Sustainability Statement.”
For further information, please refer to “Corporate Strategy – Group Strategy.”
For further information, please refer to “Company Profile.”
In order to calculate the financial metrics, we conducted a comprehensive analysis and assessment of our portfolio and business activities in connection with the requirements of the EU Taxonomy. As a result of the introduction of the thresholds, we can, unlike in the previous reporting year, report economic activities as non-material, if the accumulated value of these activities is below 10% of the denominator of the respective taxonomy KPI. After applying these thresholds, the following material activities could be identified at Group level, which fall under the environmental objective of “climate change mitigation”:
In this context, the following economic activities under the environmental objective of “climate change mitigation” were assessed as non-material: 3.10 “Manufacture of hydrogen,” 3.14 “Manufacture of organic basic chemicals,” 3.16 “Manufacture of nitric acid” in the “manufacturing” sector; 4.9 “Transmission and distribution of electricity,” 4.30 “High-efficiency co-generation of heat/cool and power from fossil gaseous fuels” in the “energy” sector; 6.5 “Transport by motorbikes, passenger cars and light commercial vehicles,” 6.8 “Inland freight water transport,” 6.10 “Sea and coastal freight water transport, vessels for port operations and auxiliary activities” in the “transport” sector; and 7.1 “Construction of new buildings,” 7.2 “Renovation of existing buildings,” and 7.7 “Acquisition and ownership of buildings” in the “construction and real estate” sector. Activities 3.3 “Demolition and wrecking of buildings and other structures,” and 3.4 “Maintenance of roads and motorways” in the “construction and real estate” sector were classified as non-material under the environmental objective of “transition to circular economy.”
Fundamentally, Covestro does not disclose any taxonomy-eligible activities under the environmental objective of “climate change adaptation.” This is because, firstly, double counting of economic activities already identified under the environmental objective of “climate change mitigation” is to be avoided and, secondly, our business model is primarily aimed at climate change mitigation in the activities covered by the taxonomy.
The material taxonomy-eligible activities identified could be classified as taxonomy-aligned if they meet all the requirements listed for attaining taxonomy alignment. That was examined accordingly.
In the year 2025, we checked again whether we make a substantial contribution to the material economic activities. Currently we are, however, unable to meet the stringent requirements for a substantial contribution. This is because, for example, it is not possible to meet the requirement of the EU Taxonomy to manufacture plastics in primary form fully from mechanically recycled plastic waste, due to the required quality standards of our products. In addition to the polymer, the products must be formulated with necessary additives, colorants, and other additional components in order to meet the defined performance requirements.
For an activity to qualify as a substantial contribution to one environmental objective, the EU Taxonomy requires that it does not cause significant harm to the five other environmental objectives. Since no substantial contribution of any of the material economic activities could be demonstrated to the environmental objective of “climate change mitigation” in relation to all three taxonomy KPIs, the requirement of doing no significant harm was not investigated further for the other five environmental objectives.
Article 18 of the Taxonomy Regulation sets out requirements for minimum safeguards with regard to human rights (including labor and consumer rights), corruption and bribery, science, technology, and innovation, as well as taxation and fair competition. There was no specific review of the minimum safeguards under the EU Taxonomy.
The requirements are in line with Covestro’s culture, which is founded on existing corporate commitments, on our Code of Conduct, on our Code of Conduct for Suppliers, and on various Group-wide regulations, and is an integral part of our everyday activities.
For further information, please refer to the “Governance – Statement on
Due Diligence.”
For further information, please refer to “ESRS S2: Workers in the Value Chain – Policies and Actions.”
For further information, please refer to “ESRS G1: Business Conduct – Policies, and Actions.”
We did not identify any material taxonomy-aligned economic activities in fiscal 2025. Since we can only provide evidence of taxonomy eligibility, the focus of determining the metrics is therefore on the taxonomy eligibility of the material economic activities rather than on taxonomy alignment.
We are required to report the share of turnover, capital expenditure (CapEx), and operating expenditure (OpEx) generated by taxonomy-eligible and (where verifiable) taxonomy-aligned activities.
To determine taxonomy-eligible turnover, we allocated the respective Covestro products to the activities and used the sales reported in the consolidated income statement for the reporting year as the basis for turnover. Applying the above thresholds, we determined the taxonomy-eligible turnover for activity 3.17 “Manufacture of plastics in primary form.” We analyzed the investment portfolio to determine the taxonomy-eligible CapEx. In this process, we include – as defined in the EU Taxonomy – investments in and acquisitions of property, plant and equipment and intangible assets, excluding acquired goodwill, as well as additions of right-of-use assets pursuant to IFRS 16, which we report in the Notes to the Consolidated Financial Statements in this Annual Report. As a result of the new thresholds, there is taxonomy-eligible CapEx for activity 3.13 “Manufacture of chlorine,” activity 3.17 “Manufacture of plastics in primary form,” and activity 6.2 “Freight rail transport.” For calculating taxonomy-eligible OpEx as defined in the Taxonomy Regulation, we use the Covestro Group’s expenditure on maintenance and repairs, renovations, research and development, and short-term leasing costs. The OpEx data determined in this way is gathered exclusively for taxonomy reporting. Taking account of the thresholds, we identified taxonomy-eligible OpEx for activity 3.17 “Manufacture of plastics in primary form.”
For further information, please refer to “Covestro Group Consolidated Income Statement.”
For further information, please refer to note 13.1 “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements.
For further information, please refer to note 13.2 “Property, Plant, and Equipment” in the Notes to the Consolidated Financial Statements.
The KPIs are determined with system support in established processes. The KPIs are mainly determined by allocating master data directly to the economic activities. In the case of CapEx and OpEx, this is unfortunately not always possible due to the complexity of the value flows. In these cases, the taxonomy-eligible shares are allocated on the basis of the taxonomy-eligible turnover determined for each economic activity. Validation steps are taken and the data is checked against the figures in the Group’s Consolidated Financial Statements to ensure the data is complete and correct. Controls in our Internal Control System are used to support the underlying systems and processes.
For further information, please refer to “Opportunities and Risks Report – Internal Control System.”
The activities from the acquisition of Pontacol, which are being integrated into the Solutions & Specialties segment, were fully included in the assessment of taxonomy eligibility; they were analyzed and assessed as not taxonomy-eligible for activity 3.17 – “Manufacture of plastics in primary form.”
There were no notable changes in the taxonomy KPIs compared to the previous reporting year.
The KPIs below were calculated according to the abovementioned methods:
| Proportion of turnover, CapEx and OpEx from products or services associated with taxonomy-eligible or taxonomy-aligned economic activities – disclosure covering year 2025 (summary KPIs) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| KPI | Total | Proportion of taxonomy-eligible activities | Taxonomy-aligned activities | Proportion of taxonomy-aligned activities | Breakdown by environmental objectives of taxonomy-aligned activities | Proportion of enabling activities | Proportion of transitional activities | Not assessed activities considered non-material | Taxonomy-aligned activities in previous financial year (2024) | Proportion of taxonomy-aligned activities in previous financial year (2024) | |||||
| Climate Change Mitigation | Climate Change Adaptation | Water | Circular Economy | Pollution | Biodiversity | ||||||||||
| € million | % | € million | % | % | % | % | % | % | % | % | % | % | € million | % | |
| Turnover | 12,942 | 36.3 | – | – | – | – | – | – | – | – | – | – | 1.3 | – | – |
| CapEx | 1,049 | 27.2 | – | – | – | – | – | – | – | – | – | – | 5.6 | – | – |
| OpEx | 1,252 | 25.6 | – | – | – | – | – | – | – | – | – | – | 4.9 | – | – |
| Proportion of turnover from products or services associated with taxonomy-eligible or taxonomy-aligned economic activities – disclosure covering year 2025 (activity breakdown) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Economic activities | Code | Taxonomy-eligible turnover | Taxonomy-aligned turnover | Taxonomy-aligned turnover | Environmental objective of taxonomy-aligned activities | Enabling activity | Transitional activity | Proportion of taxonomy-aligned in taxonomy-eligible | |||||
| Climate Change Mitigation | Climate Change Adaptation | Water | Circular Economy | Pollution | Biodiversity | ||||||||
| % | € million | % | % | % | % | % | % | % | E1 | T1 | % | ||
| Manufacture of plastics in primary form | CCM 3.17 | 36.3 | – | – | – | – | – | – | – | – | – | – | – |
| Sum of alignment per objective | – | – | – | – | – | – | |||||||
| Total KPI - Turnover | 36.3 | – | – | – | – | – | – | – | – | – | – | – | |
1 E – Enabling activity (where applicable); T – Transitional activity (where applicable).
| Proportion of CapEx from products or services associated with taxonomy-eligible or taxonomy-aligned economic activities – disclosure covering year 2025 (activity breakdown) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Economic activities | Code | Taxonomy-eligible CapEx | Taxonomy-aligned CapEx | Taxonomy-aligned CapEx | Environmental objective of taxonomy-aligned activities | Enabling activity | Transitional activity | Proportion of taxonomy-aligned in taxonomy-eligible | |||||
| Climate Change Mitigation | Climate Change Adaptation | Water | Circular Economy | Pollution | Biodiversity | ||||||||
| % | € million | % | % | % | % | % | % | % | E1 | T1 | % | ||
| Manufacture of chlorine | CCM 3.13 | 4.6 | – | – | – | – | – | – | – | – | – | – | – |
| Manufacture of plastics in primary form | CCM 3.17 | 15.2 | – | – | – | – | – | – | – | – | – | – | – |
| Freight rail transport | CCM 6.2 | 7.4 | – | – | – | – | – | – | – | – | – | – | – |
| Sum of alignment per objective | – | – | – | – | – | - | |||||||
| Total KPI - Capex | 27.2 | – | – | – | – | – | – | – | – | – | – | – | |
1 E – Enabling activity (where applicable); T – Transitional activity (where applicable).
|
Proportion of OpEx from products or services associated with taxonomy-eligible or taxonomy-aligned economic activities – disclosure covering year 2025 (activity breakdown) |
|||||||||||||
| Economic activities | Code | Taxonomy-eligible OpEx | Taxonomy-aligned OpEx | Taxonomy-aligned OpEx | Environmental objective of taxonomy-aligned activities | Enabling activity | Transitional activity | Proportion of taxonomy-aligned in taxonomy-eligible | |||||
| Climate Change Mitigation | Climate Change Adaptation | Water | Circular Economy | Pollution | Biodiversity | ||||||||
| % | € million | % | % | % | % | % | % | % | E1 | T1 | % | ||
| Manufacture of plastics in primary form | CCM 3.17 | 25.6 | – | – | – | – | – | – | – | – | – | – | – |
| Sum of alignment per objective | – | – | – | – | – | – | |||||||
| Total KPI - Opex | 25.6 | – | – | – | – | – | – | – | – | – | – | – | |
1 E – Enabling activity (where applicable); T – Transitional activity (where applicable).