GRI Index

2-7

Information on employees and other workers

Employees

Employees – Metrics

2-8

Workers who are not employees

Around the world, Covestro has about 300 temporary employees, corresponding to approximately 1.7% of our workforce. In addition, a number of people work for Covestro externally through contracts for work or service agreements. It is not possible to determine the precise number, since performance is defined via trades or in service-level agreements rather than by the number of people or the hours worked.

2-22

Statement from the most senior decision-maker

Foreword

2-23

Policy Commitments

Management – Corporate Policies

Management – Corporate Policies

Management – Corporate Commitments

The policies applicable throughout the Group have been approved by the Board of Management. Communications are conducted via the internet, intranet, and site-specific communication channels.

2-27

Compliance with laws and regulations

Opportunities and Risks Report – Opportunities and Risks

Business Conduct (Compliance) – Compliance Management System

In fiscal 2023, no significant administrative or court-ordered sanctions (fines, nonmonetary sanctions) for noncompliance with laws and regulations were reported through internal reporting.

2-28

Membership of associations

Circular Economy – Actions – Circular Economy Partnerships and Stakeholder and Value Chain Engagement

Product Stewardship

Sustainability – Sustainability Management – Stakeholder Dialogue

2-29

Approach to stakeholder engagement

Sustainability – Sustainability Management – Monitoring

Sustainability – Materiality Assessment – Materiality Assessment Process

Sustainability – Sustainability Management – Stakeholder Dialogue

2-30

Collective bargaining agreements

Employees – Working Conditions – Employee Compensation

Employees – Metrics – Compensation

3-3

Management Approach

Strategy – Group Strategy

Management – Management System

201-1

Direct economic value generated and distributed

Consolidated Financial Statements and Notes

3-3

Management Approach

Value Chain – Procurement

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Sustainability in Sourcing

Human Rights

Opportunities and Risks Report – Opportunities and Risks

204-1

Proportion of spending on local suppliers

Value Chain – Procurement

Since our locations in Germany, the United States and China cover most of our procurement volume, the sites located in these countries are referred to as main sites within the meaning of the GRI terminology. Local procurement is regarded as purchasing from suppliers located in the same country as the legal entity they supply.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Business Conduct (Compliance) – Compliance Management System

Management – Corporate Policies

205-1

Operations assessed for risks related to corruption

Business Conduct (Compliance) – Compliance Management System

Opportunities and Risks Report – Group-wide Opportunities and Risk Management

A risk analysis was conducted for every country/every company in the year 2022. Definition of location of operations as a legal entity.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Business Conduct (Compliance) – Compliance Management System

Opportunities and Risks Report – Group-wide Opportunities and Risk Management

Management – Corporate Policies

206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

No actions were reported through internal reporting in fiscal 2023.

3-3

Management Approach

Compliance – Tax Compliance

207-1

Approach to tax

Compliance – Tax Compliance

207-2

Tax governance, control, and risk management

Opportunities and Risks Report – Group-wide Opportunities and Risk Management

Compliance – Tax Compliance

207-3

Stakeholder engagement and management of concerns related to tax

Business Conduct (Compliance) – Compliance Management System

Compliance – Tax Compliance

207-4

Country-by-country reporting

A country-by-country report is not currently provided.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Climate Neutrality – Strategy

Climate Neutrality – Governance

Climate Neutrality – Policies

Climate Neutrality – Actions

Opportunities and Risks Report – Opportunities and Risks

Management – Corporate Policies

302-1

Energy consumption within the organization

Climate Neutrality – Metrics – Energy Usage

302-3

Energy intensity

Climate Neutrality – Metrics – Energy Usage

Climate Neutrality – Metrics – Energy Usage

302-4

Reduction of energy consumption

Climate Neutrality – Targets – Energy Usage

Climate Neutrality – Metrics – Energy Usage

In 2005, Covestro began to introduce a certified energy management system. This requires that we compare our performance with a designated base year, and that year was 2005.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Water Resources

Water Resources – Metrics

303-1

Interactions with water as a shared resource

Water Resources

Water Resources – Metrics

303-2

Management of water discharge-related impacts

Water Resources

Water Resources – Metrics

The standards to be applied are oriented to local laws.

303-3

Water withdrawal

Water Resources

Water Resources – Metrics

Water withdrawal is measured in m³ (cubic meters) since this is the more common approach to measurement. Here, 1 megaliter (ML) corresponds to 1,000 m³. Usage of other than fresh water <1,000 mg of total dissolved solids (TDS)/l: Pursuant to ISO 14046, Covestro uses no water from sea water sources, thus there is no figure for this in the water balance. At some facilities, it is possible that brackish water >1,000 mg TDS/l is used as cooling water. These amounts are included in the water balance and not reported separately. It can be returned to the water cycle without further treatment in line with the relevant official permits.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Climate Neutrality – Strategy

Climate Neutrality – Governance

Climate Neutrality – Policies

Climate Neutrality – Actions

Opportunities and Risks Report – Opportunities and Risks

305-1

Direct (Scope 1) GHG emissions

Climate Neutrality – Metrics – GHG Emissions

Biogenic CO₂ emissions are not reported because they are irrelevant.

305-2

Energy indirect (Scope 2) GHG emissions

Climate Neutrality – Metrics – GHG Emissions

305-3

Other indirect (Scope 3) GHG emissions

Climate Neutrality – Metrics – GHG Emissions

305-4

GHG emissions intensity

Climate Neutrality – Metrics – GHG Emissions

Disclosure as CO₂ equivalent of specific GHG. Emissions of sulfur hexafluoride (SF6) have been recorded.

305-5

Reduction of GHG emissions

Climate Neutrality – Targets – GHG Emissions

Greenhouse gas emissions are reported separately for Scopes 1 and 2. When considering GHG reductions, the specific greenhouse gas emissions are calculated using the total emissions for Scope 1 and Scope 2 because otherwise any shifts between the categories would lessen the informative value of the results.

305-7

Nitrogen oxides (NO_X), sulfur oxides (SO_X), and other significant air emissions

Environmental Impact of Own Operations – Metrics – Emissions into the Air

Reporting focuses on significant air emissions; persistent organic pollutants (POPs) and hazardous organic pollutants (HAPs) are not reported. Air emissions are generally measured directly at the source of the emission or are calculated from the stoichiometric determination of the formula mass.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Circular Economy – Strategy

Circular Economy – Waste and Recycling

Circular Economy – Metrics

306-1

Waste generation and significant waste-related impacts

Circular Economy – Waste and Recycling

Circular Economy – Metrics

306-2

Management of significant waste-related impacts

Circular Economy – Waste and Recycling

Circular Economy – Metrics

306-3

Waste generated

Circular Economy – Metrics

306-5

Waste diverted from disposal

Circular Economy – Metrics

The distinction of hazardous and non-hazardous waste is only drawn for landfill waste; no differentiation is made for other disposal methods.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Sustainability in Sourcing

Opportunities and Risks Report – Opportunities and Risks

308-2

Negative environmental impacts in the supply chain and actions taken

Sustainability in Sourcing – Policies and Actions

Sustainability in Sourcing – Targets and Metrics

Sustainability in Sourcing – Targets and Metrics – Detailed Results of the Supplier Evaluations

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Employees – Strategy

Employees – Working Conditions

Employees – Diversity, Equity, and Inclusion

Opportunities and Risks Report – Opportunities and Risks

Management – Corporate Policies

401-1

New employee hires and employee turnover

Employees – Metrics – New Hires and Attritions

In fiscal 2023, the gender distribution of new hires and the attrition rate was broken down into male and female, as the company was not aware of any employees with other gender identities. Reference is made in the footnote to the small number of employees who did not state their gender. If this should change, the tables will be adjusted accordingly in future.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Integrated Management System for Health, Safety, Environment, Energy, and Quality

Employees – Working Conditions

Health and Safety

Opportunities and Risks Report – Opportunities and Risks

Management – Corporate Policies

403-1

Occupational health and safety management system

Integrated Management System for Health, Safety, Environment, Energy, and Quality

Health and Safety – Health and Safety of Our Workforce

A list of the legal requirements has been dispensed with. The integrated management system for occupational health and safety covers all our employees across the Group and in some cases also our contractors, regardless of the type of work environment or activity performed.

403-2

Hazard identification, risk assessment, and incident investigation

Health and Safety – Health and Safety of Our Workforce

Business Conduct (Compliance) – Compliance Management System

Every employee, contractor or – as appropriate – visitor must comply with the applicable occupational safety procedures, rules, and relevant protective measures. Employees are authorized to withdraw from work situations that seem to them to represent a direct and serious threat to their lives or health. They are obligated to report such situations to their supervisors immediately. Employees may not be sanctioned for such actions.

403-3

Occupational health services

Employees – Working Conditions – Designing Healthy Working Conditions and Work Models

Health and Safety – Health and Safety of Our Workforce

Depending on site-specific local circumstances, there are dedicated occupational health staff or occupational health services are provided in conjunction with external parties. A country-specific description of the functions of the occupational health services has been dispensed with.

403-4

Worker participation, consultation, and communication on occupational health and safety

Employees – Working Conditions – Designing Healthy Working Conditions and Work Models

Health and Safety – Health and Safety of Our Workforce

Depending on legal requirements, some sites have formal employer-employee committees for occupational health and safety that hold regular meetings. In Germany, for instance, this is the occupational safety and health committee as legally required by Section 11 of the Act on Occupational Physicians, Safety Engineers and Other Occupational Safety Specialists (AsiG). All sites are networked in corresponding regional HSE communities. A country-specific list and a description of the committees has been dispensed with.

403-5

Worker training on occupational health and safety

Health and Safety

Our employees receive the applicable statutorily required training as well as further training that exceeds these requirements depending on the individual circumstances at our sites. Our contractors receive site-specific safety instructions.

403-6

Promotion of worker health

Employees – Working Conditions – Designing Healthy Working Conditions and Work Models

Health and Safety – Health and Safety of Our Workforce

Voluntary services for the promotion and maintenance of health are made available only to Covestro employees.

403-7

Prevention and mitigation of occupational health and safety impacts directly linked by business relationships

Integrated Management System for Health, Safety, Environment, Energy, and Quality

Health and Safety

Sustainability in Sourcing

403-9

Work-related injuries

Health and Safety – Health and Safety of Our Workforce

Health and Safety – Metrics

We record the most important types and frequency of work-related injuries for all employee groups according to the ASTM standard E2920-14, “Severe Incidents and Fatalities” (A. deaths, B. life-changing/life-altering cases, C. other).

3-3

Management Approach

Employees – Working Conditions – Employee Training and Continuing Development

Opportunities and Risks Report – Opportunities and Risks

Management – Corporate Policies

404-2

Programs for upgrading employee skills and transition assistance programs

Employees – Working Conditions – Employer Attractiveness

Employees – Working Conditions – Employee Training and Continuing Development

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Employees – Diversity, Equity, and Inclusion

Opportunities and Risks Report – Opportunities and Risks

405-1

Diversity of governance bodies and employees

Declaration on Corporate Governance – Composition, Duties, and Activities of the Board of Management and Supervisory Board

Employees – Metrics – Diversity and Internationality

At the end of the year, the Supervisory Board consisted of six women (50%) and six men (50%). The age structure is as follows: 0% are 30–50 years old, and 100% are over 50. Membership in a minority is not recorded for legal reasons. In fiscal 2023, the gender distribution of employees was broken down into male and female, as the company was not aware of any employees with other gender identities. Reference is made in the footnote to the small number of employees who did not state their gender. If this should change, the tables will be adjusted accordingly in future.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Employees – Strategy

Business Conduct (Compliance) – Compliance Management System

Opportunities and Risks Report – Opportunities and Risks

406-1

Incidents of discrimination and corrective actions taken

For confidentiality reasons, we do not disclose the type and scope of the incidents reported.

3-3

Management Approach

Human Rights

Employees – Strategy – Corporate Values and Corporate Culture

Business Conduct (Compliance) – Compliance Management System

407-1

Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

Employees – Strategy – Corporate Values and Corporate Culture

In fiscal 2023, no cases were reported using formal grievance mechanisms. There was no high risk for the sites in the year 2023, as the local heads of Human Resources and the local managing directors are required by internal rules to maintain a regular exchange of information with unions and employee representatives.

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Sustainability in Sourcing

Opportunities and Risks Report – Opportunities and Risks

414-2

Negative social impacts in the supply chain and actions taken

Sustainability in Sourcing – Policies and Actions

Sustainability in Sourcing – Targets and Metrics

Sustainability in Sourcing – Targets and Metrics – Detailed Results of the Supplier Evaluations

3-3

Management Approach

Management – Corporate Policies

Management – Corporate Commitments

Sustainability – Sustainability at Covestro – Stakeholder Dialogue

415-1

Political contributions

Management – Corporate Policies

Management – Corporate Commitments

3-3

Management Approach

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Integrated Management System for Health, Safety, Environment, Energy, and Quality

Product Stewardship

Business Conduct (Compliance) – Compliance Management System

Opportunities and Risks Report – Opportunities and Risks

Management – Corporate Policies

416-2

Incidents of non-compliance concerning the health and safety impacts of products and services

Product Stewardship

No significant incidents were reported through internal reporting in fiscal 2023.

3-3

Management Approach

Value Chain – Marketing and Sales

Sustainability – Materiality Assessment – Material Sustainability Topics in Fiscal 2023

Product Stewardship

Management – Corporate Policies

417-1

Requirements for product and service information and labeling

Integrated Management System for Health, Safety, Environment, Energy, and Quality

Product Stewardship

Business Conduct (Compliance) – Compliance Management System

Opportunities and Risks Report – Opportunities and Risks

417-2

Incidents of non-compliance concerning product and service information and labeling

Product Stewardship

No significant incidents were reported through internal reporting in fiscal 2023.