Annual Report 2023

Sustainable Solutions

Strategy, Management, and Implementation

A sustainable product portfolio plays a key role for us in implementing our Sustainable Future strategy. The continued expansion of such a portfolio is supported by our research- and development-based innovation portfolio. In accordance with our sustainability goals, 80% of project costs for research and development are to be allocated to areas that contribute to reaching the United Nations Sustainable Development Goals (SDGs) by the year 2025. Support will go particularly to product innovations whose contribution to the SDGs drives sustainable development, taking account of our circular and climate neutrality goals.

At the same time, we are revising our methodology to assess also the sustainability of our existing products, especially in relation to the circular economy and climate neutrality, and are aligning our product portfolio even more closely in this direction, while taking legal requirements into account. We also report on how and the extent to which our activities are associated with economic activities which qualify as environmentally sustainable economic activities under the European Union’s Taxonomy Regulation.

It goes without saying that our products can only be sustainable if handling them is safe for people and the environment. For this reason, our product portfolio, too, reflects product stewardship requirements. Our activities in this area are part of the integrated HSEQ management system to ensure that our requirements and standards are met.

While the business entities managed their product portfolios independently in the reporting year, the ESG Governance Body on environmental, social and governance (ESG) issues and its successor, the Sustainability & Innovation Governance Body (SI GOB), dealt with such matters as progress in revising the sustainability assessment methodology for our product portfolio.

Sustainable Products

Our work is focused on aligning our product portfolio even more closely with sustainability and circular economy targets. Covestro is building a future-proof, innovative, and sustainable product portfolio using the Portfolio Sustainability Assessment (PSA) based on the methodology developed by the World Business Council for Sustainable Development (WBCSD). This process entails identifying changes in the regulatory and market environment early on with the help of the PSA and considering these as part of the decision-making processes. The results of the PSA are to be integrated in decisions about the product portfolio and in relation to corporate governance. The findings of the pilot project on the evaluation method conducted in the year 2021 were used in the reporting year to further optimize the method in collaboration with an external provider and, for example, to integrate more deeply aspects of the circular economy, climate neutrality, and impact on society. The remaining stages of the pilot and the external review of the methodology are expected to be completed in fiscal 2024. The majority of our new products are already aligned with the SDGs. To drive the development of our circular product portfolio, we want, in the long term, to offer all products in a climate-neutral version that pursues the principles of the circular economy. Our Circular Intelligence (CQ) solutions are based on alternative raw materials and sources of energy as well as chemical recycling; they currently contain at least 25% alternative or recycled raw materials.

Sustainable R&D-Based Innovation Portfolio

Covestro already brings sustainable solutions to the market and, going forward, aims to develop products that are even more closely aligned with the SDGs and will in turn lead to more sustainable solutions at our customers. Attaining this goal means continually changing over our product range to sustainable solutions. For instance, in R&D we have already begun our pursuit of a much more sustainable project portfolio. This focus enables us to identify, research, and test unconventional and unique approaches early on, thus contributing to meeting the SDGs with our R&D products and technologies.


Icon of test tube (graphic)



of project expenditure

2022: 51%

2021: 54%

We want our R&D project portfolio to be aligned with the SDGs. By the year 2025, 80% of project expenditures for research and development are expected to be used in areas that contribute to reaching these goals.

To measure our ambitious goal of spending 80% of project expenditures on R&D in areas that contribute to reaching the SDGs, we are setting high standards for evaluating our projects. That is why we only consider projects that make an additional contribution to the SDGs when measuring our progress. We have implemented a Group-wide assessment process as part of the existing innovation process; it measures what the projects have added to quantify this additional contribution. This involves subjecting all R&D projects to an assessment based on internal interviews with experts in which we ask specific questions to evaluate the impact of a project and its results on all 17 SDGs. Only projects adding specifically measurable value to the SDGs over and above that of solutions currently on the market are included. This assessment matrix was again applied to Covestro’s R&D portfolio in the reporting year 2023. In this portfolio, 52% and therefore €40 million (previous year: 51% and €39 million) of R&D project expenditure exceeds our defined threshold.

Circular Economy
A renewable economic system in which resource input, waste production, emissions, and energy consumption are minimized based on long-lasting and closed material and energy cycles.
Climate Neutrality
A state in which human activities have no net impact on the climate system.
HSEQ/Health, Safety, Environment, Energy, and Quality
A commonly used abbreviation for health, safety, environment, energy, and quality.
The 17 United Nations Sustainable Development Goals were ratified by all UN member states and entered into force on January 1, 2016. Their objective is to combat global poverty, protect the planet, and secure peace and prosperity for all.

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