Glossary

A depositary receipt issued by U.S. banks that documents ownership of a certain number of deposited shares of a foreign company and is traded on U.S. stock markets as representation of the original shares

Regulates the legal provisions pertaining to German stock corporations

Comprises all countries in the Asia and Pacific region in which Covestro is active

Capital employed is the sum of noncurrent and current assets less non-interest-bearing liabilities such as trade accounts payable

The value generated per carbon unit used (e.g., in the form of fossil raw materials such as coal, oil and natural gas). Measuring carbon productivity is intended to promote a sustainable and optimal use of carbon.

A regenerative economic system in which resource input, waste production, emissions, and energy consumption are minimized based on long-lasting and closed material and energy cycles.

Core volume growth refers to the core products in the Polyurethanes, Polycarbonates and Coatings, Adhesives, Specialties segments. It is calculated as the percentage change in externally sold volumes compared with the prior year. Covestro also takes advantage of business opportunities outside its core business, for example the sale of precursors and by-products such as hydrochloric acid, sodium hydroxide solution and styrene. These transactions are not included in core volume growth.

Covestro venture capital approach in which Covestro invests in start-ups with innovative products, solutions, or business models. Covestro aims to actively support these new companies wherever they offer value added.

Stock participation program in which approximately 98% of all employees worldwide can acquire Covestro shares at a discount

A set of regulations compiled by the Government Commission on the German Corporate Governance Code in respect of responsible corporate governance, which contains recommendations and suggestions for the management and oversight of listed corporations in Germany

Pronouncements of the German Accounting Standards Committee e. V., which substantiate the HGB requirements in reference to the application of the Group accounting principles

Information on the processes for identifying, preventing, and mitigating the actual or possible negative impact on nonfinancial aspects.

Net income divided by the weighted average number of outstanding shares in the reporting period

EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets

Income after income taxes plus financial result and income tax expense

Rating agency that evaluates the degree to which suppliers’ business practices are aligned with sustainability principles.

Comprises all countries in Europe, the Middle East, Africa and Latin America (excluding Mexico) in which Covestro is active

European stock index that reflects the share price performance of the 50 most important and highest revenue companies in Europe.

Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets

International accounting system for greenhouse gas emissions developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD)

Initiative of the International Council of Chemical Associations (ICCA) with the aim of anchoring uniform global standards for product safety in the chemical industry

Guidelines for the preparation of sustainability reports by companies, governments and non-governmental organizations (NGOs)

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems

Comprises much of the German accounting legislation

Health, safety, environment, energy, and quality

International accounting standards as endorsed by the European Union respectively published by the IASB or the IFRS IC

The International Accounting Standards Board is an independent, private-sector body that develops and approves the International Financial Reporting Standards (IFRSs).

Internal control system to ensure compliance with directives by means of technical and organizational rules

A professional association of German Public Auditors and German Public Audit Firms that represents the interests of its members and supports their work

International accounting standards as endorsed by the European Union respectively published by the IASB or the IFRS IC

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems

International abbreviation for lesbian, gay, bisexual, trans, intersex, and queer people.

Leaks of chemicals in amounts above defined thresholds leaking from their primary containers, such as pipelines, pumps, tanks and drums

Lost time recordable incident rate

A materiality analysis enables companies to systematically identify the most important sustainability issues from the internal and external perspective.

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams

Region comprising the United States, Canada, and Mexico in which Covestro is active

Interest-bearing liabilities (excluding pension obligations) less liquid assets

Income after income taxes that is attributable to the shareholders

Operating result (EBIT) after imputed income taxes

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams

A chemical compound from the class of epoxies used in the production of polyurethanes

Prisma is a stock-based compensation program with a four-year performance period for senior executives and other managerial employees.

Covestro PSP is the Group’s short-term variable compensation system. It is based exclusively on the target attainment of the relevant Covestro performance indicators (core volume growth, FOCF, ROCE).

REACH stands for Registration, Evaluation, Authorisation, and Restriction of Chemicals. Regulation (EC) No. 1907/2006, which entered into force in 2007, standardizes EU chemicals law.

Initiative by the German Chemical Industry Association (VCI) aimed at continuously improving health, environmental protection and safety in its member states

Total number of recordable workplace accidents per 200,000 working hours

Ratio of operating result after imputed income taxes to the capital employed

The GHG Protocol distinguishes between direct emissions of greenhouse gases (Scope 1), emissions from the generation of externally purchased energy (Scope 2), and all other emissions arising in the value chain either before or after our business activities (Scope 3).

The 17 United Nations Sustainable Development Goals were ratified by all UN member states and entered into force on January 1, 2016. Their objective is to combat global poverty, protect the planet, and secure peace and prosperity for all.

Internal and external interest groups which are directly or indirectly impacted by the company’s corporate activities and/or may be so in the future

A sector index provided by STOXX. The STOXX Europe 600 is comprised of 600 companies across Europe.

The TCFD was formed by the Financial Stability Board to develop a uniform framework for reporting on climate-related opportunities and risks.

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams and coating systems

An initiative undertaken by various companies in the chemical industry to standardize supplier assessments globally in order to improve sustainability practices in the supply chain

The world’s largest responsible corporate governance initiative. The member companies undertake to implement ten universal principles and regularly document their progress.

The difference between the operating result after imputed income taxes and the cost of capital. A positive value contribution means that value has been created.

German chemical industry association

Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital

Covestro defines world-scale plants in terms of their permitted production capacity in kilotons per year:

• MDI plants from 400 kilotons per year
• Polyether polyol plants from 300 kilotons per year
• Polycarbonate plants from 240 kilotons per year
• HDI plants from 40 kilotons per year
• TDI plants from 300 kilotons per year