Sustainability Statement – Social Matters

Health and Safety

For Covestro, safety is an essential foundation of its business activities. The continuous improvement of a safe work environment is a key component of our corporate responsibility and a topical focus of our human rights due diligence activities. Covestro adheres to the applicable standards, domestic regulations, and laws. These regulations aim to prevent injuries, equipment breakdowns, and transportation incidents, as well as preserve the health of our employees in the workplace and during work-related activities. This also applies to contractors who work for our company within the scope of operational activities. Detailed regulations and regular inspections contribute to this, as do safe production processes, plant and transports.

Actions

In the year under review, our employees were encouraged for the 15th time to take part in the CEO Safety & Health Award and submit suggestions for improving occupational health and safety. A proposal that involved preventing accidents by visualizing past incidents won first place in the internal vote. Condensed presentation and identifying what happened and where can increase safety awareness among employees.

Occupational Health and Safety

Covestro is committed to the well-being and health of its employees and offers a range of preventive education, counseling, and medical services. In Germany, we rely on cooperation with an external service provider that makes the various prevention services available to our employees in an app.

We have been recording our healthcare performance since 2022. An employee survey enables us to capture the needs of our employees and proactively support their health by implementing targeted measures.

• See “Designing Healthy Working Conditions and Work Models.”

Occupational Health and Safety Management

Our integrated Health, Safety, Environment, Energy, and Quality (HSEQ) management system is a major contributor to fulfilling our vision of an accident-free and health-appropriate workplace. Our external standard ISO 45001 and internal guidelines were reviewed by internal and external auditors in the reporting year. The ISO 45001-certified sites employ around 13,000 persons.

Our safety management activities take into account requirements and standards applicable Group-wide, and apply to all Covestro companies worldwide. To support of our goal of “zero accidents,” the health and safety of our employees are the focus of our safety and health management system, which we are continuously refining in line with our corporate culture. Here are some examples of the elements of our system:

Health and Safety

• See “Safety and Accident Prevention.”

An integrated information management system (IIMS) implemented throughout the Group exists for reporting and processing potential hazards, work-related accidents, illnesses and incidents. The IIMS makes it possible to identify trends in a timely manner so that corresponding short-term corrective and long-term improvement actions can be implemented if necessary. The company’s safety experts, supported by external expertise if needed, analyze the background circumstances and the impact. The results of the root cause analysis conducted after an incident occurs and the corrective actions taken are published throughout the Group in order to raise employees’ safety awareness. As a result, everybody can better assess comparable hazards and situations and proactively remedy them. Our Group-wide Health & Safety Day was held on September 21, 2023 under the banner of “See something, say something.”

Team Resource Management training to further increase safety awareness and safe conduct among our staff continued in the year 2023.

• See “Employees.”

Safety during transportation

We work continually toward maximum safety during transportation of our products. We report all incidents at all sites operated by Covestro worldwide in line with our internal directives. These are documented according to defined criteria such as quantity of loss of containment, material hazard class, degree of personal injury, and blocked transportation routes. In the case of certain dangerous goods quantities of five kilograms or more that have been spilled are recorded and categorized in accordance with our voluntary Commitment. Group-wide events on transportation safety are held at regular intervals. Here, corrective actions are developed and implemented based on actual incidents, and information is exchanged on tried-and-tested approaches.

Process and Plant Safety

We aim to ensure the safety of processes and plants in a way that avoids unacceptable risks to our employees, our neighbors, and the environment. We therefore conduct extensive, systematic safety assessments at regular intervals. The indicator for all Covestro Plants is the globally uniform indicator for the release of chemical substances due to the failure of the primary containment system (LoPC). It is integrated into the Group-wide reporting system IIMS.

Hazard Avoidance

Maintenance and inspections, as well as technical modifications often require work that is associated with potential hazards. Such jobs are performed individually or pooled and performed at one time during plant downtimes, which are planned well in advance. A work permit process is applied here. In addition to a precise description of the work to be performed, this includes a hazard assessment and a determination of the required safety and protective measures. All persons involved in the work are informed of these parameters and must confirm acknowledgement of this information by signing. The responsible plant, participating technical crews, and, if necessary, additional safety posts monitor adherence to the measures and safe work performance.

Metrics

Safety and Accident Prevention

We evaluate safety events according to criteria defined by us, also with regard to their potential impact, which could have led to a major event (High Potential Event, HPE) under different conditions. Events classified as HPEs are treated similarly to events that have actually occurred and require detailed root cause analysis and communication. Further promoting safety awareness among employees is essential for minimizing dangerous situations during day-to-day operations. Over the long term, we want to prevent all workplace accidents and occupational illnesses. For this reason, we regularly analyze the accident data by site as well as by region and type of accident. The fluctuations observed indicate to us the structural differences that are discussed in analyzing and determining measures to be taken with the sites and segments, and adapted to local requirements.

One focus of accident was mechanical work, especially hand accidents. To counter this trend, we rolled out “hand safety” throughout the Group as a particular focus area, as we had already done in the third quarter of 2022. To avoid serious incidents, we rely on what we call “life savers.” These set out in detail the safety concepts to be observed for certain activities. These “life savers” were again explained to employees as part of a Group-wide HSE campaign called “Do you know all 10?”

To focus special attention on process-related accidents, we began classifying our accidents into three categories in the year under review: “Accidents related to work processes,” “Everyday accidents,” and “Illnesses.”

Process-related Accidents (Absolute Numbers)

We process recordable workplace accidents and illnesses involving employees and contractors as part of the recordable incident rate (RIR) and lost time recordable incident rate (LTRIR), with reference to Standard 1904 issued by the U.S. Occupational Safety and Health Administration (OSHA). The RIR is calculated as a ratio of the total number of recordable workplace accidents and illnesses to hours worked (standardized to 200,000 working hours per year). The LTRIR is calculated as a ratio of lost time in days to the same hours worked figure. We calculate the number of hours worked by our employees based on the number of employees in the Group and multiply this figure at country level by the average working hours in the member states of the Organisation for Economic Co-operation and Development (OECD) or the International Labour Organization (ILO). If no OECD or ILO data is available, then we use the average number of hours worked at Group level.

The number of hours worked by our contractors’ employees is calculated using a methodology that includes various categories for recording working hours, broken down by electronic and manual timekeeping, or working hours are recorded on the basis of supplier invoices. The figure can also be calculated based on valid assumptions (estimates). The numbers of hours for November and December of the reporting year were estimated on the basis of valid assumptions. At sites with fewer than 50 Covestro employees, no contractor working hours are counted, so these are not included in the incident rates calculation. We apply controls and other measures at the global level as well as individual site level to prevent possible errors in calculating contractor working hours. As a result of the methods used, the reported data may vary from the actual data by <5%.

In the year 2023, we recorded 32.2 million total hours worked (THW) for our employees (previous year: 33.1 million THW) and 15.8 million THW were recorded for our contractors (previous year: 17.5 million THW) were reported. This results in the following data according to OSHA:

In the reporting year, the number of workplace accidents involving our employees went down by 19 to 50 (previous year: 69), reducing our employees’ RIR by 0.11 points. The number of accidents involving employees of our contractors also went down by 12 to 24 (previous year: 36), reducing the RIR of our contractors’ employees by 0.11 points.

Loss of Primary Containment

Covestro applies the German Chemical Industry Association’s (Verband der Chemischen Industrie, VCI) guidelines on documenting plant safety performance indicators. The reporting criteria are thus aligned with the updated and globally harmonized definition by the International Council of Chemical Associations (ICCA). An LoPC event is defined as

• the release of chemicals classified according to the Globally Harmonized System of Classification and Labeling of Chemicals (GHS) exceeding the defined quantity thresholds within one hour,
• the injury of a Covestro or contractor employee due to product leakage or energy release, which must be reported according to OSHA criteria,
• the release of energy (e.g., fire, explosion) that leads to damage with direct costs totalling more than €2,500, and
• an evacuation officially declared outside the plant.

We use the LoPC incident rate (LoPC IR) to determine the number of LoPC incidents per 200,000 TWH per year by Covestro employees and contractors. We applied these internationally harmonized volume thresholds at Covestro so that our statistics would be comparable within the chemical industry and the benchmark. Due to very low quantity thresholds, even smaller LoPC events are systematically recorded and investigated. In the reporting year, our LoPC IR was 0.74 (previous year: 0.57).

Every LoPC incident as well as minor and near-miss incidents are carefully analyzed to determine their causes, and the results and corrective actions taken are publicized throughout the Group. The criteria (e.g., lower thresholds or nonhazardous substance releases) were selected so that even releases of substances or energy that have no impact on employees, neighbors, or the environment are systematically recorded. This contributes to maintaining the integrity of our facilities. The global exchange of experiences relevant to safety is intended to help maintain the existing high standard of procedural and plant safety within the company. Globally binding standard processes and their uniform implementation also contribute to this effort.