Covestro Group at a Glance – Climate Neutrality

Greenhouse Gas Emissions

Covestro calculates GHG emissions according to the internationally recognized standards of the GHG Protocol. Direct emissions, e.g., from burning fossil energy sources and from our production processes (Scope 1), as well as indirect emissions from the provision and use of energy produced outside the company (Scope 2) at all environmentally relevant sites, i.e., all production sites and relevant administrative sites with a significant impact on the environment, are included in the calculations. In addition to CO₂, Scope 1 emissions comprise all relevant GHGs, including nitrous oxide (N₂O), methane (CH₄), partly fluorinated hydrocarbons, and sulfur hexafluoride (SF₆).

Scope 2 emissions are reported using the location-based and market-based methods. Location-based emissions factors from generally accepted sources (e.g., International Energy Agency* [IEA] emissions factors) were used when calculating location-based Scope 2 GHG emissions. Market-based emissions factors were used when calculating market-based Scope 2 GHG emissions; where these were not available, location-based emissions factors were used. For Covestro, the market-based method is the leading calculation method for Scope 2 GHG emissions.

*International Energy Agency (IEA), document entitled “IEA Emission Factors 2022.” All rights to this document reserved to the IEA.

At Covestro, upstream and downstream GHG emissions data along the value chain (Scope 3 emissions) is determined for all sites and business activities that indirectly cause relevant GHG emissions according to the categories and methods of the GHG Protocol and the Guidance for Accounting & Reporting Corporate GHG Emissions in the Chemical Sector Value Chain by the World Business Council for Sustainable Development (WBCSD).

Covestro has been able to reduce specific GHG emissions (Scope 1 and Scope 2) since the year 2005. In the year 2021, Covestro had already reduced its specific GHG emissions by 53.9% compared with the base year of 2005, thus outperforming the previous sustainability target of halving specific GHG emissions at its main production sites. For this reason, new absolute reduction targets were published in March 2022 for reducing our Scope 1 and Scope 2 emissions at all environmentally relevant sites. Net zero Scope 1 and Scope 2 GHG emissions are to be attained at all environmentally relevant sites by the year 2035. On the way to meeting this target, the company plans to reduce direct and indirect GHG emissions by 60% compared with the base year of 2020, to 2.2 million metric tons of CO₂ equivalents by the year 2030. In addition, indirect GHG emissions from upstream and downstream processes in the value chain (Scope 3) are to be reduced further. A Scope 3 reduction target will be published in the year 2023.

Total Scope 1, Scope 2, and Scope 3 emissions amounted to 21.87 million metric tons of CO₂ equivalents in the reporting year (previous year: 27.26 million metric tons of CO₂ equivalents).

Covestro’s GHG emissions¹ along the value chain

Scope 1 and Scope 2 GHG Emissions

Absolute Scope 1 and Scope 2 GHG emissions at all environmentally relevant sites declined by 9.2% compared with the previous year. Direct GHG emissions increased by 1.3% and indirect GHG emissions contracted by 11.5%. This was mainly caused by the reduction in production activity and the resulting drop in energy demand, especially for electricity and steam. The associated emissions were also affected by changes in local emissions factors and the purchase of electricity from renewable sources. For example, the Shanghai (China) site met over 30% of its electricity demand from renewable sources in the year 2022, thus reducing its Scope 2 emissions from electricity. In total, this led to decrease in the calculated GHG volumes.

Scope 1 and Scope 2 GHG emissions¹ in the Group

million metric tons of CO₂ equivalents

In addition to absolute GHG emissions, we also continue to monitor changes in specific emissions at our main production sites*. Specific emissions are determined on the basis of direct emissions of 0.93 million metric tons of CO₂ equivalents and indirect emissions of 3.79 million metric tons of CO₂ equivalents, as well as a production volume** of 14.13 million metric tons. This means that in the year 2022 specific emissions stood at 0.3342 million metric tons of CO₂ equivalents per metric ton of product (previous year: 0.3338 metric tons of CO₂ equivalents per metric ton of product), similar to the prior-year level.

Scope 3 GHG Emissions

Upstream and downstream GHG emission data along the entire value chain (Scope 3) has been collected and reported at Covestro since the year 2021. All categories as defined in the GHG Protocol were reviewed for relevance in order to quantify all emissions associated with Covestro’s business activities as completely as possible. Out of the total of 15 categories, 9 are relevant for Covestro and we report the appropriate emission values for them. The basis for calculating the other indirect GHG emissions (Scope 3) are internal activity data and emission factors from commercially and publicly available sources, or sources recommended by the GHG Protocol. The emissions for each Scope 3 category are based on individual calculations, which are described in detail in our latest Carbon Disclosure Project (CDP) questionnaire. By continually improving the data basis and calculation methods used, we will further advance the accuracy of our Scope 3 emissions reporting on an ongoing basis.

The other indirect GHG emissions (Scope 3) represent 77.5% of the Group’s total GHG emissions (previous year: 80.1%).

Scope 3 emissions calculated in fiscal 2022 amounted to 16.95 million metric tons of CO₂ equivalents (previous year: 21.84 million metric tons of CO₂ equivalents). Most of our Scope 3 emissions are attributable to categories upstream in our value chain. Categories 1 “Purchased goods and services,” 12 “End-of-life treatment of sold products,” and 3 “Fuel- and energy-related activities” are the main contributors to our other indirect GHG emissions. Biogenic CO₂ emission equivalents stemming indirectly from the value chain totaled 118,659 metric tons of CO₂ equivalents (previous year: 99,052 metric tons of CO₂ equivalents) in the reporting period in absolute terms and are disclosed separately from the total volume of Scope 3 emissions in accordance with the GHG Protocol and the WBCSD. The 20% year-over-year rise in climate-neutral balanced biogenic emissions reflects the increased use of biobased raw materials.

Compared with the previous year, total Scope 3 emissions declined by 22% in fiscal 2022. This change is primarily attributable to the lower production volume, which has a direct effect on the two largest Scope 3 categories, 1 “Purchased goods and services” and 12 “End-of-life treatment of sold products.” Additional, sometimes opposing, effects were attributable to a further improvement in calculation methods, an adjustment to measures taken, and the increased use of supplier-specific emissions factors. The Scope 3 category 2, “Capital goods,” rose by 31% year-over-year. In the context of the spend-based calculation method in this category, this is mainly due to the sharp increase in material prices and inflation effects.

Composition of Scope 3 emissions categories¹

million metric tons of CO₂ equivalents