Company Name: Covestro
Award Category: ESG Performance
Company Size: Large Business Group
Environment
Climate Change:
In May 2020, Covestro announced its vision to be fully circular. In March 2022, the company proposed that it would achieve net-zero emissions within scope 1 and 2 by 2035 and will announce scope 3 targets by the end of this year.
In 2022, Covestro’s global greenhouse gas emissions were 4.7 million tons of CO2 equivalent, compared to 5.2 million tons in 2021.
E.g. The Covestro Integrated Site Shanghai(CISS) actively promotes all-round carbon reduction measures, such as:
developing more sustainable production processes. CISS achieved HDI residual recycling in 2022, reducing ~8,000 tons of CO2e/a.
continuing to expand the proportion of renewable energy use. In 2022, green electricity accounted for 36% of the total electricity consumption at CISS and will reach 50% this year.
expanding the use of alternative raw materials to produce low-carbon MDI, TDI and PC to support industry transformation. CISS has now achieved 15KT/a of high value mechanically recycled PC and another 25KT/a to be added in 2023.
Since 2022, Covestro has introduced sustainable component into its global performance indicators, which is measured by direct and indirect greenhouse gas emissions (scope 1 and 2).
Natural Resources and Energy:
Covestro's production sites have implemented the UTL KPI digital tool for energy management, utilizing modeling to quickly identify deviations and intelligently optimize the energy mix of electricity and steam.
By the end of last year, Covestro already obtained 12 percent of its global demand through electricity from renewable sources. Starting this year, CGN New Energy will provide 300 gigawatt hours of green electricity annually to CISS, covering 30% of its electricity demand. Starting this year, Covestro's Guangzhou and Foshan sites will be powered with 100 percent renewable electricity.
Covestro’s Shanghai site continues to develop energy-efficient processes. In 2022, the recycling of TDI residue was achieved, increasing the capacity by 10,000 tons/year and reducing CO2e emissions by 18,000 tons/year. Similarly, HDI residue recycling was implemented in 2022, resulting in a reduction of around 8,000 tons/year of CO2e emissions.
Covestro has replaced all shuttle buses in Shanghai with pure electric buses, resulting in an annual reduction of approximately 1.25 tons of particulate matter emissions. The Shanghai site has also adopted direct drinking water dispensers to replace traditional bottled water, leading to an annual saving of 15,000 water barrels.
Covestro includes its energy usage in its annual reports. For more information from the past year.
Prevention of Pollution:
From 2002 to 2022, CISS has invested over 160 million euros in environmental protection and sustainable development. The site allocates around 25 million euros annually for environmental operation and pollution control.
Covestro’s Shanghai site is equipped with waste management facilities, including waste storage areas, wastewater buffering tanks, hazardous waste warehouses, and a new hazardous waste digitization system to ensure continuous monitoring of waste to prevent environmental contamination. The site's recycling center collects valuable and harmless materials from both the factory and office waste, reusing them after proper categorization. To date, the cumulative amount of waste recycled and reused exceeds 25,000 tons, yielding benefits of over 40 million RMB.
Other Actions Taken for Environmental Protection:
We anticipate that the material sustainability topic of “Biodiversity” will gain in business relevance in the future. Contributing factors will be our commitment to a circular economy and environmental protection and the associated increase in the use of biobased raw materials. In connection with our alternative raw materials, we have begun to have sites certified under the ISCC PLUS system, with our Shanghai site obtaining this certification in 2021.
International Sustainability and Carbon Certification (ISCC) is a recognized system for the sustainability certification of biomass and bioenergy. The standard, which covers all stages of the value chain, is recognized worldwide. It is a supply chain standard and therefore also includes requirements for producers of these alternative raw materials.
To make more sustainable products easier to distinguish, last year Covestro introduced the suffix “CQ” (Circular Intelligence), which identifies products containing a minimum of 25 percent alternative raw materials.
Social
HR Development and Engagement:
Covestro is dedicated to creating a safer working environment for its employees, with the heads of its Health, Safety, Environment, and Quality departments reporting directly to the Board of Management.
Covestro regularly conducts activities and training sessions to enhance employee safety awareness. For instance, in 2022, Covestro China held the global Safety Day event themed "Safety is in Your Hands." This year, the office located in Shanghai Crystal Plaza initiated a space optimization project that preserved facilities promoting employee well-being, such as yoga rooms and nursing rooms.
Covestro not only provides routine annual health check-ups but also enhances employee awareness of personal health through various ways. In June of this year, a special lecture on "Interpreting Health Check Reports" was successfully conducted, with nearly 1,100 employees participating.
Mental health is also a key focus for Covestro. Diverse union activities and EAP channels are available. This year, the company's travel plans have resumed, aiming to provide employees with a brief respite after busy work, thereby increasing cohesion and happiness.
Diversity, Equity and Inclusion:
At Covestro, Diversity, equity, and inclusion (DEI) are key components of its corporate culture.
As of Jul. 2023, Covestro China has 38% women in leadership positions, which is quite competitive comparing with the industry benchmark and that of Covestro worldwide.
This July, Covestro China initiated again the DEI APAC week, two regional sessions and five local sessions were held. Taking the chance, the APAC team also launched a two-weeks DEI quiz and DEI self-exploration program with a package of five learning courses on its internal social platform. All of these help the APAC colleagues better understand the DEI basics and consequently turn the knowledge into their daily practice.
Innovation is deep in Covestro’s DNA and it can be reflected in DEI too. This year, Covestro chaired its first Covestro Gentlemen’s Day on August 3rd, while the colleagues who registered for the event experienced the “Happiness Course” lead by Covestro Happiness Club, and were able to discuss and interact with each other around the topic.
Covestro has been awarded as the "Diversity, Equity and Inclusion (DEI)" Leader in the European Union Chamber of Commerce in China 2023 Sustainable Business Awards for its outstanding practices and achievements in promoting the culture of Diversity, Equity and Inclusion (DEI).
Product Liability:
Covestro attaches great importance to innovation and insists on defending and enforcing its own intellectual property rights. In 2022, Covestro won its first patent defense case in China, successfully defending the company's commercial interests. The case was an invention patent infringement case involving a coating raw material.
At Covestro, product management entails a comprehensive evaluation of health, safety, and sustainability. We employs Life Cycle Assessment (LCA) technology to assess the environmental impacts of its products. The LCA calculation method used in our new product's Environmental Footprint Cloud Management System received certification from TÜV Rheinland in June this year.
Covestro continues to invest in sustainable growth opportunities. Earlier this year, it announced plans to construct its largest thermoplastic polyurethane production site in Zhuhai, Guangdong. In addition, three new factories at our Shanghai site are to become operational already within this year, better meeting the growing demand from customers for more sustainable products and solutions.
Supply Chain:
Covestro has set the goal of having 100% of its suppliers with regular purchasing volumes of more than 1 million euro comply with our sustainability requirements by 2025. By the end of 2022, 80% of this target had been achieved.
As a member of the "Together for Sustainability" (TfS) initiative, Covestro is committed to building a sustainable supply chain. To explore a new model of supply chain decarbonization, Covestro initiated green logistics pilot program with partners in China in CIIE 2022. The program has passed testing as proof-of-concept and is now moving towards next phase. We will strengthen the Partnering & Eco-system through up-scaling, and gradually replace diesel trucks with new energy vehicles in the selected scenarios like the transport from our Shanghai site to nearby warehouses. Therefore, Covestro can provide customers with the optimal TCO (total cost of ownership) and more sustainable "Shuttling+" solutions.
In addition, starting this year, Covestro will commercialize the implementation of circular pallets gradually, thus further materializing the opportunity of carbon reduction.
Community Engagement:
Covestro has been committed to taking more social responsibility to advocate sustainable development. One of the most important ways to put our sustainability ideas into practice is to go to the community to promote environmental protection. On April 22nd of this year, Covestro successfully held the “Covestro Little Earth Guardian” environmental science popularization activity in cooperation with Crystal Plaza and the Covestro Volunteer Association located in Pudong Qiantan, Shanghai. The event went into the community to disseminate cutting-edge knowledge in the field of circular economy. On the day of the event, there were not only science popularization lectures but also fun activities such as coffee grounds bonsai and marine protection-themed picture book reading, which attracted hundreds of young people to participate in the interaction. After the event, Covestro also awarded “Little Earth Guardians” certificates to children who participated in the event, encouraging them to continue to practice environmental protection concepts in their daily lives.
Corporate Governance
Governance Organizational and Mechanism:
Covestro also has a Group’s top-level governance body on ESG issues that handles the circular economy strategy, with the CEO serving as the chairman and other members consisting of senior management from various business entities and functional departments.
The company’s low-carbon-related management organization evaluates the progress and effectiveness of its low-carbon management work at a frequency higher than the average of once a month. In case of internal and external risks related to climate issues, the risk management community led by Covestro’s internal risk management personnel and multiple risk management committees will provide reports and incorporate risks into the company’s risk management (CRM) for evaluation.
Covestro manages its business with an ethical and responsible attitude, complying with the legal and regulatory requirements of the countries/regions where it operates. The compliance committee, chaired by the CEO, holds meetings several times a year. The compliance committee is the highest decision-making body for compliance issues in the company.
Innovation Sustainability:
For example, Covestro actively develops and invests in various innovative recycling technologies because we believe that comprehensive recycling helps achieve climate neutrality as well as environmental protection. Among them, mechanical recycling (MCR) of polycarbonate has become an important part of the company’s recycling strategy. This year, Covestro’s first MCR line dedicated to producing high-quality polycarbonate with the capacity of over 25,000 tons/year of mechanically recycled content will be completed at our Shanghai site. The company has also officially announced the successful development of a polycarbonate chemical recycling technology to further promote its recycling process capabilities.
In addition to what was mentioned above, since 2022, Covestro has introduced sustainable component into its global performance indicators, which is measured by direct and indirect greenhouse gas emissions (scope 1 and 2).
Extra Points
ESG / Sustainability / CSR reports, e.g.:
Covestro publishes its Sustainability report annually.
ESG rating, e.g. EcoVadis, MSCI:
Covestro has consistently performed well in the ESG field, and the table below shows the company's ESG ratings for 2022/2023.
ESG Verification or Certification:
With its pioneering and innovation in green and low-carbon manufacturing, Covestro was named 2022 Shanghai Outstanding Case of Green and Low-Carbon Development for Foreign-Invested Enterprises.
In 2018, Covestro Shanghai Integrated Site was granted the National Green Factory certificate by the Ministry of Industry and Information Technology, the first of its kind in the Shanghai Chemical Industry Park.
Responsive to or engaged in ESG Initiatives / Standards / Goals:
Covestro is an active member of industry associations and platforms that promote the circular economy. In addition to being a member of the TfS initiative mentioned above, we are also a member of the Alliance to End Plastic Waste (AEPW) and the Petrochemical Specialised Committee of the China Circular Economy Association. At the beginning of this year, the company officially entered the “Sinopec+” platform built by Sinopec.
Other ESG related awards, e.g. TOP ESG Employer:
Covestro’s booth at CIIE has received Carbon Neutral Certification from CEC(The China Environmental United Certification Center ) for two consecutive year.
In 2022, Covestro was awarded the Low Carbon Emission Prize at the inaugural "Future·ESG" Awards by KPMG China.
Covestro's "Cloud-based Environmental Footprint Management Platform for Product Lifecycle Assessment" calculates the environmental footprint of products through cloud-native solutions, which can accurately locate the source of emissions, track the emissions of products, and effectively improve the "green transparency" of its products. The project has been successfully selected as one of the first batches of carbon management pilot projects in the industrial and communication industry in Shanghai in 2023.
