Circular Economy

Limited natural resources and advancing climate change are two key drivers of the circular economy. For Covestro, the circular economy primarily means finding efficient solutions so that products and materials are returned to the value cycle at the end of their use phase – as a whole, in the form of polymers or in molecular form. In this way, we aim to create new value from products and materials. We take a holistic approach so that implementing circularity also reduces our resource consumption and greenhouse gas emissions. In addition to developing new processes, we therefore strongly promote the concept of circularity by taking this principle into account when designing products, purchasing materials, generating and using energy and raw materials, and developing new business models. Specifically, this means that materials such as plastics do not end up as waste, but instead continue to be used, for example, in multi-use systems. Plastics in recycled form can also be put to a completely new use. One example is the production of a polycarbonate based on a recyclate made from used polycarbonate water bottles that is used in the electronics industry in laptops, copiers, printers and similar applications.

For us, however, the circular economy does not end with recycling and reusing our own products and materials. We also develop processes and solutions for recycling materials such as solid waste and waste gases generated during production processes.

The transformation of an economy that, to date, is primarily oriented toward linear business models into a circular economy provides enormous opportunities for Covestro, for example through the development of new technologies, partnerships and business models. Alongside these opportunities, we are also keeping an eye on the circular economy’s potential for disruption of the entire value chain. Against this backdrop, Covestro launched the global Circular Economy strategy program in early 2019. The first step was the development of strategic recommendations for the further implementation of the circular economy at Covestro by various Group functions and in all divisions. We established global teams for this purpose throughout the Group and conducted workshops in China, Europe and the United States. Based on the recommendations from the Circular Economy strategy program, the Board of Management decided to move forward with Covestro’s strategic orientation in this area with an initial focus on the following elements:

• Specifically considering used plastic products as a possible source of raw materials in addition to other alternative sources such as CO₂ and biomass
• Developing innovative and resource-efficient processes for converting used plastics into feedstock for industrial production
• Actively promoting a way of doing business aligned with circularity by advancing existing and initiating new partnerships and business models along the entire value chain

Moreover, Covestro undertook additional initiatives to further develop and implement the circular economy within the Group. For instance, we launched an internal Start-up Challenge in which Covestro employees were called on to develop global ideas for sustainable product solutions. Out of 234 ideas submitted, all six finalists fell in the circular economy category.

Covestro also joined the PUReSmart research consortium, which began its work in 2019. Along with various value chain partners, Covestro is researching ways to improve the recycling of polyurethane plastics. Our common goal is to develop a circular product cycle for these materials. In 2019, Covestro also became a member of the Consortium for a Circular Carbon Economy in North Rhine-Westphalia. This consortium works intensively on researching the interconnection of the waste, chemicals and energy sectors in North Rhine-Westphalia in order to create new chemical products from locally available raw material resources. Along with industry partners, Covestro launched another initiative as part of the Circularise PLASTICS project in the year under review. The key question of this project is investigating how blockchain technologies can contribute to transparency and traceability in plastics recycling.

In China, we further expanded our portfolio of recycled polycarbonate products in 2019. Using a mechanical recycling process, we already produce more than ten different types of polymer granules and polymer blends for the Asian market. These products contain 20% to 50% recycled materials and are mainly used in the consumer electronics industry.

As part of a partnership with customers in the United States, polyurethane foams from our research and development activities that would otherwise have to be disposed of as waste are obtained and recycled. Moreover, we entered into a research partnership with the non-profit organization Mattress Recycling Council in California (United States) in which we intend to improve and expand mattress recycling in the United States.

Covestro is currently evaluating various options at different levels for measuring and accounting for circularity. In 2019, we continued to pursue an approach to carbon productivity to extract the maximum benefit from carbon. The approach aims to make the disconnection of value creation from the use of fossil resources measurable. Circularity can contribute to this goal through the multiple reuse of the carbon contained in products. In principle, this methodology can be applied at the product, company and economy levels. Currently, we are evaluating whether this could also be a suitable indicator for measuring the implementation of circularity in companies, in individual sectors or in economies as a whole. We commissioned an external study on this topic and hope to obtain further insight as a result.

In addition, we have worked on accounting issues relating to the circular economy in the chemical industry and our production processes as part of our Circular Economy strategy program. Among other things, we concentrated on the mass balance approach to enable allocation of secondary raw materials used to the individual products. We advocate the development of suitable processes that allow for transparent accounting for the recycled portion of material and product flows.

At the social policy level, Covestro is involved in Circular Economy Initiative Deutschland (CEID), which receives public-sector support and is spearheaded by the National Academy of Science and Engineering (acatech). CEID is working on developing a common vision of Germany’s path to a future-proof circular economy. Covestro is a member of the steering committee and actively participates in working groups for circular business models and battery and packaging cycles.

At the European level, Covestro is a signatory to the Circular Plastics Alliance declaration and will support the common goal aiming for European business to use at least 10 million metric tons of recycled plastics annually by 2025.

In China, we engaged in the discussion on the circular economy at various levels. Covestro is a member of the China Plastics Reuse and Recycling Association (CPRRA) and also active in the China Circular Economy Association (CCEA). We additionally participated in cooperative bilateral events in China on the circular economy, such as the 6th Sino-German Environment Forum on the topic of circular economies for plastics.

At the international level, Covestro participates in the Alliance to End Plastic Waste (AEPW) network.

In fiscal 2020, Covestro will define additional steps and conditions for the company in order to structurally and technologically advance its focus on the circular economy.