Covestro Group at a Glance – Circular Economy and Climate Neutrality

Strategy, Management, and Implementation

A key component of Covestro’s Group strategy is the aim to become fully circular. This helps us address the environment-related sustainability aspects of our activities in particular. For us as a carbon- and energy-intensive company, our circularity strategy covers all of our commitments in this regard, particularly including our aim of achieving climate neutrality.

In moving toward a , Covestro strives to provide solutions with a lower carbon footprint than conventional production so that products and materials are returned to the value creation cycle at the end of their life cycle – as a whole, in the form of polymers, or in molecular or other chemical forms. Using other renewable sources of carbon and increasingly deploying renewable energy in production are supplementary measures Covestro will take to establish circularity in the company and achieve climate neutrality. In accordance with the Intergovernmental Panel on Climate Change (IPCC) and the United Nations Framework Convention on Climate Change (UNFCCC), we understand and support climate neutrality as society’s collective goal of attaining net zero greenhouse gas (GHG) emissions by the year 2050 in the sense that they are equal to or lower than the emissions removed by the planet through natural absorption. For Covestro, this means reaching net zero emissions in its own operations and in energy procurement, while working on solutions to reduce emissions along the value chain. In addition to reducing emissions, this includes a shift toward nonfossil biogenic CO2 sources, the use of technical and natural sinks, or compensatory measures to balance residual emissions.

In the reporting year, Covestro took additional steps to further advance efforts toward “becoming fully circular” in line with our corporate vision. All our activities aim to close carbon and material loops, and thus achieve climate neutrality in the company itself and in upstream and downstream stages of the value chain as well as reduce resource use and shrink our environmental footprint.

For Covestro, becoming fully circular also includes a seamless transition to climate neutrality. Covestro has been able to continually reduce specific energy usage by 40.2% since fiscal 2005 and therefore decrease the associated specific GHG emissions (Scope 1 and Scope 2). It goes without saying that the energy used to put in place a circular economy should not result in higher greenhouse gas emissions. Renewable energy plays a key role in this regard.

For the first time, we are supplementing our climate reporting for fiscal 2021 with a separate report published on our website aligned with the recommendations of the (TCFD).



Our circular economy activities are making a critical contribution. We investigated and evaluated various indicators and measurement methods for circularity during the reporting year and will build on this to develop a system for Covestro.

We intend to create more value sustainably and increase our carbon productivity by continually using fewer carbon-based fossil resources, taking a regenerative approach, and closing material loops. The goal is to decouple our value-generating activities from nonrenewable and noncircular raw materials such as fossil carbon.

Our global Circular Economy strategy program is our contribution to promoting a circular economy. We updated our focal areas in the strategy program as a result of the restructuring of the Group and continuous implementation of circularity in the company. Moreover, Covestro launched a global climate program in the reporting year led by the head of the Sustainability & Public Affairs corporate function (Chief Sustainability Officer). This program aims to build on the existing system for recording greenhouse gas emissions (Scope 1 and Scope 2) to coordinate a shift by our production facilities toward climate neutrality. In fiscal 2022, we therefore plan to develop climate targets along with interim targets. The first step is to focus on quantitative targets for Scope 1 and . The effects of future recycling technologies and new circular loops on greenhouse gases will also be considered. The second step will be to additionally include all relevant Scope 3 emissions and assign quantitative targets.

The segments and corporate functions are responsible for implementing the Group’s vision. Global teams from various corporate functions drive implementation in line with the strategy program with a focus on topics such as developing circular business solutions, marketing circular solutions, transforming the product portfolio, sourcing renewable energy and raw materials, circular R&D, and site transformation. Their findings and recommendations are used to further develop the strategic circular economy action plan and the associated targets. Also contributing to this effort are other areas of focus covering advocacy, collaboration, employee engagement, and responsible business practices. Key guidance and questions regarding the circular economy strategy are handled by the Group’s top-level governance body on environmental, social and governance (ESG) issues. This strategy program is sponsored by Covestro’s Chief Executive Officer (CEO).

Circular economy
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.
TCFD/Task Force on Climate-related Financial Disclosures
The TCFD was formed by the Financial Stability Board to develop a uniform framework for reporting on climate-related opportunities and risks.
Carbon productivity
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.
Scope 1, Scope 2, Scope 3 emissions
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).
Circular economy
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.