Human Rights

Human rights are the foundation of Covestro’s social responsibility efforts. We are committed to respecting and safeguarding human rights on the basis of the United Nations (UN) Guiding Principles on Business and Human Rights. In various working groups in industry associations, Covestro advocates for compliance with various national action plans and laws on corporate human rights due diligence. As a company, we clearly take responsibility for respecting human rights in all of the Covestro Group’s activities and throughout global supply chains and value chains, as well as for guarding against violations of human rights.

Our cross-departmental Human Rights Task Force, which was established in the year 2020, is responsible for fully integrating human rights requirements into our company’s activities. The overarching management approach is based on the UN’s Guiding Principles on Business and Human Rights, the core elements of the German Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains, which will enter into force in 2023, and the French law on human rights due diligence. We regularly monitor other national and international laws and legislative initiatives such as the planned European Union (EU) law on corporate due diligence in supply chains.

The Task Force works under the leadership of the corporate Sustainability & Public Affairs function and has permanent members from the following corporate functions: Group Health, Safety and Environment, Group Procurement, Human Resources, Law, and Intellectual Property & Compliance. A broader group of professionals from Quality Management, individual business entities, along with risk management experts also participate. 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, planning and conducting trainings, reporting to the Board of Management, and communicating about this issue in general. The individual corporate functions are responsible for, among other things, identifying and assessing risks and developing measures. These measures are designed and implemented in the segments and corporate functions in consultation with the Task Force. In the reporting year, Covestro anchored the responsibilities for individual human rights focal areas in the company. A handbook was developed in the reporting year to support the corporate functions in applying a risk-based approach for managing high-priority human rights issues. It describes in detail the responsibilities of the employees assigned to human rights issues and serves as general guidance for analyzing risks and determining appropriate measures.

Comprehensive Human Rights Due Diligence Process

Covestro has established a comprehensive due diligence process to safeguard human rights in our business activities. This overarching management approach is a continual process comprising the six core elements described below. We have defined responsibilities, frequency, processes and tasks, and the required communication as well as the monitoring approach for each of these core elements.

Human rights due diligence process

Policy and Commitment

The principles of our human rights due diligence are delineated in various Corporate Commitments, corporate 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. A key component of our commitment is zero tolerance toward 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. Our corporate commitment to safeguarding human rights is an integral part of Covestro’s operating policies and procedures. It states our clear expectation that our employees and business partners around the world conduct themselves in accordance with these principles.

Risk Analysis

The starting point for human rights due diligence is a risk analysis that identifies and assesses actual or potential negative impacts on human rights that Covestro could cause either directly or indirectly as a result of its business activities, value chain, or products. Potentially affected persons could include Covestro’s own employees, contractors, suppliers, customers, consumers, or even neighboring communities. Covestro conducts a comprehensive risk analysis every three to four years. The last one was in fiscal 2019. Between those analyses, relevant information obtained from internal and external sources is taken into account by the Task Force. The comprehensive and ongoing risk analysis covers all of Covestro’s production and distribution sites, the supply chain, as well as the use phase and end-of-life of our products.

The comprehensive risk analysis first identifies all potential human rights risks. The potential risks are then discussed with selected business entities and corporate functions and are prioritized for further management, depending on the severity of the potential human rights violation. Potential human rights violations assigned the highest degree of severity always take top priority for us. The human rights focal areas we have identified primarily relate to working conditions and health effects on workers and contractors at Covestro’s sites and in the supply chain. Other identified focal areas include the potential impact of collecting and processing waste from our products, export controls, and the possible effects of our operations on the communities surrounding our sites.

Measures

In accordance with the risk-based approach recommended in the UN’s guidelines, we assess the suitability of our existing measures in the identified high-priority categories for preventing or mitigating negative impacts on human rights. Many measures in the areas of health and safety, product stewardship, compliance, human resources, and sustainable supplier management have long been integrated at Covestro and aim to prevent or mitigate negative human rights impacts.

In the year under review, additional measures were implemented in the corporate Human Resources function to demonstrate that we prevent child and forced labor in our facilities. In the area of export control, identified measures were realized and the relevant employees trained.

Effectiveness Monitoring

Appropriate qualitative and quantitative indicators along with internal and external sources are used to assess Covestro’s human rights measures to review their effectiveness in preventing negative impacts on human rights. In the year 2021, the selected corporate functions and segments reported on a monthly basis to the Human Rights Task Force on the implemented measures and their effectiveness.

Grievance Mechanism

Covestro expressly encourages reporting of possible human rights violations in the Group as well as at suppliers’ companies. We use a whistleblower tool for reporting violations in the supply chain since October 2021, which consists of a worldwide hotline and an online tool. Covestro therefore enables employees and third parties to anonymously inform us of potential incidents at our suppliers. We follow a defined process to investigate potential human rights violations and include any findings in future risk analyses.

Reporting

Every year, Covestro communicates its human rights activities to the public in its annual report. Moreover, the Task Force reports regularly (no less than once a year) to the Board of Management on the status of human rights due diligence and the systematic integration of these requirements into Covestro’s management systems.