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 and the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy of the International Labour Organization (ILO). 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.
In the year under review, the Board of Management appointed the Chief Sustainability Officer (CSO), who also heads the corporate Sustainability and Public Affairs function, as Group Human Rights Officer. In their function, the Group Human Rights Officer, who will report directly to the Board of Management, will be responsible for monitoring Covestro’s risk management processes related to human rights. Established in the year 2020, our cross-functional Human Rights Task Force supports the Group Human Rights Officer in fully integrating human rights requirements into our company’s activities. To ensure that we pursue a harmonized approach to managing human rights across the Group as a whole, in the reporting year designated individuals were nominated as caretakers in the business entities. They serve as points of contact for our employees on issues relating to human rights in connection with our activities.
The Task Force, under the leadership of the Group Human Rights Officer, has permanent members from the following corporate functions: Sustainability and Public Affairs, 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 employees also participate. The 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, preparing reports for 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.
Comprehensive Human Rights Due Diligence Process
Covestro has established a comprehensive due diligence process to safeguard human rights in our business 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 proposed European Union (EU) Corporate Due Diligence Directive.
This overarching management approach is a continual process comprising the six core elements described below.
Policy and Commitment
The principles of our human rights due diligence are delineated in various Corporate Commitments, Group 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, modern slavery, 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 our operating policies and procedures and is published on our website. By publishing this commitment, we state our clear expectation that our employees and business partners around the world conduct themselves in accordance with these principles.
The starting point for our 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. 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 the year 2019. Between those analyses, relevant information obtained from internal and external sources, such as from Covestro’s grievance mechanism, is taken into account by the Human Rights Task Force. No grievances were reported in the year 2021 that could have been analyzed in the human rights-related risks analysis conducted in the year 2022. The comprehensive and ongoing risk analysis covers all of Covestro’s own 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 prioritized for further management, depending on the severity of the potential human rights violation. In this process, potential human rights violations assigned the highest degree of severity, based on the scale, scope, and irremediability of the potential violation, 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 possible effects of our operations on the communities surrounding our sites, the potential impact of collecting and processing waste from our products, and the use of Covestro products in sensitive applications.
In the reporting year, the human rights risk owners at Covestro, who assumed responsibility for the human rights-related focal areas in the year 2021, prioritized the human rights-related risks for further management in the human rights management system.
In accordance with the risk-based approach recommended in the UN Guiding Principles, Covestro’s human rights risk owners assess the suitability of existing preventive measures where Covestro may cause, contribute to, or is directly linked to 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.
The cross-functional Human Rights Task Force provides regular information about human rights in the company and advises corporate functions on how to fully integrate the human rights requirements. In the year under review, the human rights requirements and Covestro’s human rights management approach were presented to, among others, the management bodies of all Covestro’s business entities. In addition, human rights-related training was given to the human rights caretakers in the business entities.
Appropriate qualitative and quantitative indicators along with internal and external sources are used to assess Covestro’s human rights measures and to review their effectiveness in preventing negative impacts on human rights. In the year 2022, the selected corporate functions reported on a monthly basis to the Human Rights Task Force on the implemented measures and their effectiveness. The effectiveness of measures and indicators was assessed in the reporting year.
Covestro expressly encourages reporting of suspected human rights violations in the Group as well as at suppliers’ companies. We use a whistleblower tool for reporting violations in the supply chain, which consists of a worldwide hotline and an online tool. Covestro therefore enables employees and third parties to anonymously inform us of potential violations at our suppliers. We investigate potential cases of suspected human rights violations by following a defined process based on the involvement of potentially affected stakeholders. No confirmed cases of human rights violations were reported through the Group-wide grievance mechanism in fiscal 2022.
Every year, Covestro communicates its human rights activities to the public in its Group Management Report. Moreover, the Group Human Rights Officer and the Human Rights Task Force report 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. The Sustainability Committee of the Supervisory Board was also updated on the management system in the year under review.