| Material Impacts, Risks and Opportunities in Respect of "Business Conduct" | |||||||
|---|---|---|---|---|---|---|---|
| Type | Description | Time horizon1 | Location2 | Financial effect | Policies | Actions | Targets |
| Corporate culture | |||||||
| Impact (actual positive) | Covestro's compliance culture is built on ethical principles and a sense of responsibility, formalized in the Code of Conduct for own employees. Through integrating legal and regulatory requirements into operations, Covestro contributes to an actual positive impact by increasing enterprise value and safeguarding reputation. This culture is strengthened when managers serve as excellent role models (setting the tone from the top) and maintaining zero tolerance toward compliance breaches. | S, M, L | 2 | Code of Conduct | Compliance management system | ||
| Protection of whistle-blowers | |||||||
| Impact (potential positive) | Through its ethical sourcing policies and transparency measures, Covestro creates a safe environment for whistleblowers to report unethical activities related to procurement. Through these practices, Covestro contributes to a potential positive impact in the upstream value chain. | S, M, L | 1 | ESRS S2: Supplier Code of Conduct | Global compliance SpeakUp! Line (hotline and online form); raise awareness, educate, and share specific skills | ||
| Impact (actual positive) | Through its global compliance hotline and online tool (SpeakUp! Line), Covestro provides confidential and anonymous reporting channels to report suspected illegal or unethical conduct. Through these mechanisms and additional internal reporting channels, including local Compliance Officers, Covestro causes an actual positive impact. | S, M, L | 2 | Code of Conduct | Global compliance SpeakUp! Line (hotline and online form); raise awareness, educate, and share specific skills | ||
| Opportunity | Employees and third parties feel confident raising concerns about suspected or observed illegal and unethical conduct, helping to prevent issues or minimize the consequences of such actions. | S, M, L | 2 | Business development, financial position | Code of Conduct | Global compliance SpeakUp! Line (hotline and online form); raise awareness, educate, and share specific skills | |
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.”
Our corporate conduct is characterized by a sense of responsibility as well as ethical principles. Compliance with legal and regulatory requirements is integral to our operations. It is only in this manner that we can sustainably increase the company’s enterprise value and safeguard our reputation.
In its Code of Conduct, Covestro has specified a Group-wide code of conduct that mandates fundamental principles and rules for all own workers. Our Code of Conduct includes commitments to comply with the applicable competition law, on integrity in business transactions, on the principle of sustainability and product stewardship, on data protection, on compliance with export and insider trading law, on the separation of professional and private interests, on proper record keeping and transparent financial reporting, as well as on fair, respectful working conditions, free from discrimination. The protection of whistleblowers is likewise embedded in the Code of Conduct, which also provides information on how to report concerns anonymously.
Our expectations from suppliers in relation to Covestro’s values are laid down in the Supplier Code of Conduct. These requirements apply within the company as well as to all interactions with external partners and the general public.
For further information, please refer to “ESRS S2: Workers in the Value Chain.”
The Code of Conduct and the Supplier Code of Conduct have been published both on the intranet and on our website, which means that they are accessible for Covestro’s entire value chain. In addition, the Code of Conduct is part of an information package distributed to new employees when they are hired. We communicate the Supplier Code of Conduct to our suppliers, and we have integrated it into the electronic ordering system.
For further information, please refer to: www.covestro.com/en/sustainability/documents-and-downloads/policies-and-commitments
For further information, please refer to “ESRS S2: Workers in the Value Chain.”
Covestro is aware that employees will likely embrace and exhibit integrity if managers are excellent role models. The Board of Management states very clearly in its Code of Conduct for all staff that, above and beyond any legal requirements, Covestro elects not to conduct any business activities that would violate our rules and that management staff is prohibited from instructing employees otherwise. In this way, management continuously fosters our compliance culture by, for example, regularly drawing employees’ attention to compliance topics and their significance to the company.
Our Supplier Code of Conduct has positive impacts on our supply chain as we require our suppliers to maintain ethical standards such as fair working conditions. If there are contraventions by suppliers of the Supplier Code of Conduct among our suppliers, the affected individuals as well as all other stakeholders have the opportunity to report them via our SpeakUp! Line. The SpeakUp! Line helps us detect compliance misconduct, such as corruption and bribery, at an early stage.
A local Compliance Officer has also been appointed for each country in which Covestro has employees. This person serves as a local point of contact for employees on all questions regarding legally and ethically correct conduct in business situations.
We want to utilize our compliance management system in order to:
In establishing the Compliance Management System (CMS), we applied the internationally recognized framework for internal control systems of the Committee of the Sponsoring Organizations of the Treadway Commission (COSO). The design, appropriateness, and implementation as well as the effectiveness of the CMS were confirmed without qualifications in the reporting year in accordance with Auditing Standard 980 of the Institute of Public Auditors in Germany (IDW) for the sub-areas of antitrust law, anti-corruption, and export control.
We have taken steps to meet our targets, including implementing an internal control system to ensure compliance rules are followed.
For further information, please refer to “Group-wide Opportunity and Risk Management – Internal Control System to Ensure Compliance.”
Covestro expressly encourages its employees to openly address any doubts about proper conduct in business situations and to solicit advice. Information on the different reporting channels can be found on the intranet. Covestro has established a global compliance SpeakUp! Line (hotline and online form), which is operated by external service providers.
For further information, please refer to: www.covestro.com/en/company/management/compliance
This allow employees and third parties to confidentially and anonymously report suspected illegal or unethical conduct related to Covestro or its suppliers. These actions protect persons in vulnerable situations, workers in the value chain, and own workers. By creating an environment of trust, we encourage employees and third parties to voice any concerns, and this contributes to preventing and minimizing misconduct.
Suspected human rights abuses in the supply chain can also be reported via Covestro’s grievance mechanism. We regard as human rights abuses any violations of international standards such as the United Nations (UN) Universal Declaration of Human Rights, the Declaration of Principles of the International Labour Organization, and the UN Guiding Principles on Business and Human Rights. Cases of potential human rights abuses are investigated according to a set procedure, which is based on the involvement of (potentially) affected stakeholders. To enhance the transparency of how reported complaints are handled, an operating procedure for the Group’s grievance mechanism is published on our website.
We have laid down important basic principles for our actions in the “Compliance” policy, which is applicable throughout the Group. The principles laid down in this policy must be adhered to by all own workers worldwide. The framework for action is provided in the directive. For example, there is one directive on the topic for performing compliance investigations, including whistle-blower protection. it implements the requirements of Directive (EU) 2019/1937. The following principles apply when conducting an internal compliance investigation: protection of the whistleblower, confidentiality, the rights of those affected, the independence of the compliance organization, and the lawfulness of all investigative measures. All suspected cases are recorded in a central database. Confirmed violations are evaluated, and organizational, disciplinary, or legal measures are taken if necessary. In the concluding phase of an investigation, the person who made the report is notified of its outcome.
On the basis of these actions we are creating an environment of trust where persons in vulnerable situations, workers in the value chain, and own workers can feel safe. This increases the readiness to raise concerns about suspected or observed illegal and unethical conduct, prevent non-compliant conduct, or minimize the consequences of such actions. The effectiveness of the hotline is reviewed annually by the Global Compliance Office. In addition, workers can also report any compliance incidents to their supervisors or to the Compliance organization.
Compliance incidents are regularly reported by the Chief Compliance Officer to the Supervisory Board, the Board of Management, and the business entities’ management teams. Moreover, a current overview of incidents, including additional information on various aspects and developments related to this topic, is published in a monthly Compliance Telegram on the intranet. This ensures a high degree of transparency for all workers
Training is a key instrument to raise awareness and share specific skills for ensuring compliant behavior. All new employees are required to complete general compliance training on the Code of Conduct. In addition, the risk owners of the compliance organization have developed a targeted training program; attendance of its regular training events is mandatory for defined risk groups. Global web-based training, which includes information on possible reporting channels, is part of this program.
For further information on the Board of Management and Supervisory Board, please refer to “Corporate Governance – Declaration on Corporate Governance.”