Covestro is a signatory to the UN Global Compact charter and participates in the industry-led Responsible Care™ initiative and in global sustainability forums such as the World Business Council for Sustainable Development (WBCSD). We publish voluntary Corporate Commitments on important topics on our website, thus undertaking to comply with certain standards.
Human rights due diligence
Covestro is committed to respecting human rights on the basis of the United Nations Guiding Principles on Business and Human Rights. We advocate for compliance with the various national action plans and laws on human rights due diligence. In doing so, we clearly take responsibility as a company for respecting human rights in all of the Covestro Group’s activities, at subsidiaries and throughout global supply chains and value chains, as well as for guarding against violations of human rights.
The principles of our human rights due diligence are delineated in various Corporate Commitments, company regulations, and in our Supplier Code of Conduct. In these documents, we have specified key international conventions and principles as the basis of our conduct. We expect our employees and business partners around the world to conduct themselves in accordance with these principles.
A key component of our commitment is zero tolerance of child labor, forced labor, and human trafficking. In the reporting year, we once again made a public statement on slavery and human trafficking (“Corporate Commitment against Slavery and Human Trafficking”) to underline our position.
Human rights due diligence is carried out using Covestro’s management systems and has been integrated into these for a long time now for aspects such as safety, product stewardship, compliance, and personnel policy.
Covestro also regards compliance with sustainability standards within the supply chain as a fundamental factor in value creation and a lever for minimizing risks. In our Supplier Code of Conduct, we therefore require suppliers to protect the human rights of their employees and treat them with dignity and respect. We monitor their compliance with human rights standards through detailed supplier sustainability assessments and audits.
To address the growing importance of human rights due diligence inside and outside the company, we established a cross-departmental Human Rights Task Force in the reporting year so as to fully integrate human rights requirements into our management systems.
The comprehensive management approach is based on the UN’s Guiding Principles on Business and Human Rights, the core elements of the German national action plan, and the French law on human rights due diligence. We regularly monitor other national and international laws and legislative initiatives such as the German Supply Chain Act and the EU law on supply chain due diligence.
The Task Force is managed by the Sustainability corporate function and is composed of permanent members from the corporate functions of Health, Safety, Environment, Energy, and Quality (HSEQ); Procurement; Human Resources; Law; and Compliance as well as an expanded group of quality management, business, and risk management experts. The human rights-related responsibilities of the Task Force include developing and implementing the comprehensive management approach, systematically assessing risks, prioritizing and monitoring the implementation of individual measures, reporting to the Board of Management, and communicating about this issue in general. The individual corporate functions are responsible for identifying and assessing risks, and developing and implementing specific measures based on the Task Force’s minimum requirements and best practice approaches, among other things. Measures are defined in consultation with the Task Force. In the reporting year, the corporate functions reported monthly to the Task Force about the measures implemented and their effectiveness.
The Human Rights Task Force presented the human rights due diligence approach and the status of this work to the Board of Management twice in the year under review. In addition, the priorities for the reporting year and the years 2021 to 2025 were determined. They are based on the human rights risk analysis carried out for the first time in the prior year, which is likewise underpinned by the aforementioned frameworks. As part of this analysis, material human rights risks and their possible occurrence in our value chains are identified and prioritized as a first step. Human rights risks are defined as any potential risk to those affected that could arise directly or indirectly from our business activity, the supply chain, or our products. Potentially affected persons could include Covestro’s own employees, contractors, suppliers, customers, or even neighboring communities. The risk analysis covered all our own production and distribution sites as well as the supply chain and the use phase of our products. The potential risks were identified, discussed, and prioritized with selected corporate functions based on the severity of a possible human rights violation and the extent of Covestro’s possible influence for purposes of further work on the matter. Potential human rights violations assigned the highest degree of severity always take top priority for us.
As a result, various human rights topics along the value chain were identified which the Task Force will prioritize in its five-year plan. An initial status-quo comparison of existing processes and structures likewise provided insight into the extent to which priority topics are already addressed and where there is room for improvement. In the reporting year, initial measures were implemented in the Procurement, Human Resources, and Export Control corporate functions, and the risk-based approach for priority topics at Covestro was refined.
Alliance to End Plastic Waste
As a founding member of the Alliance to End Plastic Waste, Covestro is expanding its commitment against the uncontrolled disposal of plastic waste in the environment. This global network of companies strives to minimize, manage, and reuse plastic waste – and above all, prevent plastic waste from entering the environment. By the end of the year 2023, USD 1.5 billion (around €1.2 billion) is expected to have been provided for this purpose by the network. More than 50 companies from the chemical, plastic, consumer goods, and waste management sectors currently participate in this initiative.
For Covestro, the Alliance is a key component of the strategic Circular Economy program to close product loops worldwide. The Alliance identifies, invests in, and manages economically viable and sustainable waste collection and recycling solutions in cities with the support of strategic partners. Furthermore, the Alliance unlocks market opportunities for recycled materials and promotes the development of improved recycling processes and potential closed-loop products. These measures aim to transform unused and improperly disposed of plastic waste into sources of raw materials. The Alliance also advocates for sustainable consumer habits.
Besides the activities of the Alliance as a whole, its members’ activities are a key element in preventing plastic waste from entering the environment. In the year 2020, the Alliance compiled and assessed all activities in its first progress report. Covestro contributes to the Alliance not only financially, but also through the active participation of company experts and executives, including our CEO. Moreover, Covestro additionally contributes by pursuing 13 partnerships and our own projects that concentrate primarily on researching and developing new recycling methods, and identifying and setting up waste-based raw material streams. These include measures to reclaim and mechanically recycle polycarbonate water bottles in cooperation with mineral water supplier Nongfu Spring in Hangzhou (China) and recycling company Ausell in Shanghai (China). By the end of the year 2020, Covestro’s total contribution amounted to USD 8.2 million (€7.2 million).
Our inclusive business activities focus on the needs of underserved markets. With our collaborative approach, we ensure that we are offering scalable solutions that reach as many people as possible. We collaborate with customers as well as governmental and nongovernmental organizations to develop affordable solutions based on our technologies and products to benefit underserved populations and regions. Our employees focus on three regions (India, Southeast Asia, and East/South Africa) and work on improving the living conditions of disadvantaged and mostly low-income people by implementing new innovative solutions for affordable housing, food security, and water and sanitary facilities. In cooperation with partners, we develop affordable products based on our raw material technologies and tailored to user needs. One area of activity is post-harvest losses in the food industry in developing countries. Post-harvest losses are all losses that occur after the harvest (e.g., as a result of improper storage). They are an economic challenge particularly for smallholder farmers. Solar greenhouse dryers and cold storage, which are developed with industry partners within inclusive business, contribute substantially toward improving the financial situation of these farmers by reducing post-harvest losses. At the same time, innovative solutions help open up new markets for our company.
In the year 2020, we once again concentrated on collaboratively developing new, affordable solutions with partners who passed a due diligence review in advance. These solutions are financed by governmental and non-governmental organizations. Our work in consortia – always preceded by our standard due diligence process for new partners – also ensures that the relevant segments of the population ultimately profit from the jointly developed end products.
Our inclusive business goal
We want 10 million people in underserved markets to benefit from our solutions by the year 2025. The goal is to improve their standard of living primarily through affordable housing, sanitation, and food security.
2020: 1.1 million people
2019: 0.7 million people
In line with the United Nations Sustainable Development Goals (SDGs), Covestro is pursuing the goal of improving the lives of 10 million people in underserved developing and emerging countries by the year 2025. The Board of Management is informed annually about these global activities. By the year 2020, we reached more than 1.1 million people with inclusive business solutions (previous year: more than 0.7 million people). We arrive at this number for the installed solutions by considering the people who could potentially benefit from our projects as part of their work or daily lives based on local conditions. The beneficiaries include farmers and their families from projects involving post-harvest solutions, schoolchildren thanks to the construction of training centers and installation of drinking water systems in schools, and other people due to new jobs that are created during our projects or the installation of solutions. The data collected as part of a defined process is reviewed at local and global level and the processes are continuously refined. The data is collected with the help of participating governmental and nongovernmental organizations as well as third-party sources of data for determining average family sizes in the respective countries.
Our inclusive business activities were severely affected by the global coronavirus pandemic in the year 2020 due to measures such as worldwide travel restrictions. Our activities in Africa felt the impact in particular. For this reason, we were forced to delay initiatives including water supply projects until the year 2021. Pandemic-related measures in Asia, which also affected the post-harvest handling of agricultural products, triggered an unexpected glut of fruit and vegetables in Malaysia. In the reporting year, we worked with the Malaysia Fruit Farmers Association to support farmers with food preservation by providing training. In Kenya, partnerships with our customers also enabled us to manufacture over 230 mattresses using our donated precursors and deliver them to hospitals, where they can continue to be used even after the coronavirus pandemic.
The main focus in Africa was on drying agricultural products. In the reporting year, we were able to continue the partnership with Tshwane University of Technology in Pretoria (South Africa) announced in the previous year. The students at the university will work on various research projects that use solar greenhouse dryers with a focus on alternative methods for drying traditional African fruits. We also cooperated with the University to run two workshops on strategic financial management and corporate governance in the South African province of Venda Limpopo. When the drying systems are successfully commissioned, we will be able to help a total of 900 people, mostly smallholder farmers and their families.
On the Indian subcontinent, our inclusive business activities in the reporting year focused on food preservation, construction, and the water supply. For instance, solar food dryers and solar cold storage help smallholder farmers increase their income, particularly in rural areas. In cooperation with the Fecal Sludge Management and Toilet Program, we successfully demonstrated the advantages of systems for drying fecal sludge based on polycarbonate technology in Karnataka and Odisha. In Maharashtra and Telangana, we were also able to use prefabricated construction modules to contribute substantially to building sanitary facilities. As a result of the coronavirus pandemic, the Indian government has increasingly concentrated on the procurement processes of health centers, especially in rural areas. During the construction process, our contribution of prefabricated construction modules shortened the construction time and positively influenced the result.
In Southeast Asia, the inclusive business team further stepped up its activities over the prior year by working on various community projects in the year 2020. We were able to more actively involve women in Vietnam in post-harvest management through our partnership with the GREAT program, an initiative of the Australian Department of Foreign Affairs and Trade. This initiative taught its female participants various methods of increasing value to generate higher income.
Our involvement in the Coffee Innovation Fund in Vietnam, which is run by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, allowed us to work closely with Sau Nhung Coffee Production. With the help of solar greenhouse dryers, the coffee farmers there were able to reduce coffee bean loss and cut drying times while increasing drying efficiency. Improving the quality of their coffee beans enabled them to sell their harvests for up to three times the regular price.
Social engagement and dialogue
Social and societal matters are of great significance to Covestro. We address our responsibility to society through corporate citizenship as well as ongoing constructive dialogue with authorities, neighbors, individual stakeholders, and organizations interested in Covestro. More specifically, we maintain regular contact with authorities and operate neighborhood offices. Donations, support programs, and special partnerships are further expressions of Covestro’s active commitment to society. The particular areas of emphasis are determined in conjunction with the Board of Management. As a result of the coronavirus pandemic, Covestro donated IT equipment for virtual learning in addition to PPE such as masks. Due to the coronavirus pandemic, the plant tours (and participation in Currenta plant tours) that would have otherwise taken place regularly were not offered during the year under review.
In fiscal 2020, we worked as part of the THINC30 program in conjunction with our stakeholders in Pittsburgh, Pennsylvania (USA), mainly on partnerships and local initiatives relating to the SDGs for a more just, socially balanced, and sustainable society.
Access to education, technology, and a better life
Covestro wants to facilitate access to education, technology, and a better life, and help achieve the SDGs through its social engagement. As one of the world’s largest polymer companies, Covestro uses its position to work with different organizations in numerous regions around the world to advance projects for protecting the environment, improving the welfare of society, and stimulating the economy. The Sustainability corporate function supports Group-wide efforts to plan and implement cooperative efforts with partners and donation management in order to put an even greater emphasis on the SDGs.