Sustainable Corporate Strategy

Evonik embarked on the next phase of its strategic business transformation in 2022. As part of Next Generation Evonik, sustainability is becoming an integral element of important core processes such as portfolio and innovation management, production and technology, and human resources work. This strategic integration paves the way for us to meet our promise to be an enabler of sustainability in a wide range of markets and areas of life.

Therefore, we set ourselves ambitious new sustainability targets in the reporting period. These relate, for example, to the transformation of our portfolio and the continuation of our climate strategy for the period 2021 through 2030, in keeping with our commitment to the Science Based Targets initiative (SBTi).

The transformation requirements at EVONIK

In view of the transformation requirements made on our business activities, we draw a distinction between market-driven, location-based, and human resources influences. In line with this, our Sustainable Corporate Strategy is focused on three core processes: Next Generation Solutions (market perspective), Next Generation Technologies (asset perspective), and Next Generation Culture (human resources perspective). Between 2021 and 2030, we aim to invest more than €3 billion in the growth of our Next Generation Solutions, in other words, products and solutions whose sustainability profile is above or even significantly above the market reference level. In the same period, we intend to invest €700 million in Next Generation Technologies. These are, in particular, measures at production plants and infrastructure that are geared to our goal of further reducing our CO₂ emissions. The aim of Next Generation Culture is to establish sustainability firmly at all levels of the human resources process—from recruiting through training and continuing professional development to incentive systems and ideas management.

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Through our Sustainable Corporate Strategy, we address the UN Sustainable Development Goals (SDGs) of particular relevance for Evonik. This strategy comprises the following elements:

• Giving sustainability a firm place in our market proposition and purpose

• Integrating sustainability into our strategic management process

• Increasing the proportion of attractive growth businesses in our portfolio with a clear focus on sustainability

• Foresighted resource management with ambitious environmental targets, including systematically considering the impact of our business along the value chain and on the SDGs

• Selective improvement of our sustainability reporting

SUSTAINABILITY ANALYSIS OF THE BUSINESS

The sustainability analysis of our business is the key tool for the strategic management and ongoing development of our portfolio. The methodology is based on the chemical industry standard for portfolio analysis. The extensive evaluation of these sustainability signals in all three dimensions of sustainability—economic, ecological, and social—gives us insights for the foresighted management of individual products and entire business areas. The results of the analysis are used in our strategic management process.

CLIMATE TARGETS 2021 - 2030

In 2022, Evonik committed to the Science Based Target initiative (SBTi). SBTi is a partnership of CDP, United Nations Global Compact, World Resources Institute and World Wide Fund for Nature.

In the year under review, SBTi successfully validated the emission reduction targets submitted by Evonik. In doing so, SBTi confirmed that the level of ambition of the Scope 1 and Scope 2 targets is suitable for helping to reduce global warming to well below 2° C. Our overarching Scope 1 and Scope 2 target envisages a 25 percent reduction in the corresponding emissions between 2021 and 2030.

In addition, Evonik has committed itself to reducing all other Scope 3 emissions from all upstream categories and the downstream category "Transportation and Distribution" by 11.07 percent over the same period.

Evonik is involved in national and international competency networks in the area of sustainability. The organizational units inform the executive board about new insights and relevant content. This is how we integrate the necessary sustainability expertise into the group. We are a member of the World Business Council for Sustainable Development (WBCSD) and are committed to its Vision 2050. Furthermore, we collaborate with econsense—Forum for Sustainable Development of German Business—, Chemie³, the sustainability initiative of the German chemical industry, and the global GRI Community.

As a member of the UN Global Compact, we have given an undertaking that, within our sphere of influence, we will actively respect and promote labor rights and human rights, protect people and the environment, and fight against corruption. In addition, we make a contribution to achieving the United Nations 17 Sustainable Development Goals (SDGs). To this end, we have identified the SDGs that are most relevant for the Evonik Group. In addition, Evonik is one of the six founding members of the Together for Sustainability (TfS) initiative, which aims to increase transparency in the supply chain through collaboration.

MATERIALITY ANALYSIS ACTIVITIES IN 2024

Since conducting the materiality assessment in 2022, the ESRS have evolved, with interim standards published in November 2022 and June 2023. The final version of the ESRS was published on July 31, 2023. They are supplemented by further implementation guidance documents and FAQs from EFRAG. Our 2022 materiality assessment was already based on the principle of double materiality, which remained the basis for the 2024 materiality assessment. In the course of the 2023 and 2024 updates, we critically examined whether our approach was in line with the requirements of the final version of the ESRS.

We performed the following review steps to ensure that our materiality assessment complies with the ESRS. Among other things, we carried out a gap analysis in 2023 to ensure that our IROs covered all the sustainability matters specified in the ESRS, including the underlying sub- and sub-sub-topics. As part of the 2024 update, we again examined our IROs from process step two in greater detail and expanded these to include whether they have an impact on people and the environment (inside-out) and/or on Evonik’s development, performance, and position (outside-in). We additionally assessed whether the respective impact could potentially result in a short-, medium-, or long-term 1 opportunity or risk with a financial impact on Evonik. Furthermore, we examined our IROs along the value chain and classified them according to whether their focus was upstream, gate-to-gate, or downstream. 

We also looked closely at all IROs that were below the defined thresholds. This allowed us to verify that no IRO with a very high level of severity in one of the characteristics—scale, scope, or remediability—was omitted. In the case of negative impacts, we supplemented information as to whether they are potential or are already occurring. We reviewed last year’s classification of positive IROs and, based on our current understanding, made some changes on a case-by-case basis. We similarly added information as to whether the IROs on the consolidated long list were identified using a top-down or bottom-up approach, or a combination of the two. In addition, we assigned our IROs to the ESRS ESG logic and to the individual topical standards.

We are convinced that only companies that act responsibly, enjoy people’s trust, and are open to continuous improvement  can be successful in the long term. That includes listening  very carefully to the concerns of our stakeholders.

We actively seek interaction so we can respond rapidly to key future trends, global developments, and changing market requirements. Stakeholders are individuals or groups that influence Evonik’s decisions and activities and/or are influenced by them. We use the following criteria to define and prioritize our stakeholder groups:

• Type of influence (direct, indirect)
• Impact cluster (e.g., business, financial market)
• Characterization (e.g., suppliers, employees, customers).

The Chart below shows the stakeholder groups of relevance for Evonik and their influence on our company:

DIALOGUES WITH OUR STAKEHOLDERS

Our dialogue with stakeholders is a continuous process—both in the operating business and at group level—and includes a wide range of topics and events. The chart “Communication channels for stakeholder engagement” provides an overview of the main communication channels we use for this.

Each year, our dialogue with stakeholders takes place through a wide range of topics and events. Our executive board plays an active role in stakeholder engagement by attending events such as our annual shareholders’ meeting, investor meetings, site visits, and townhall meetings. We share the insights gained within the company. These flow into the relevant processes, such as the sustainability analysis of our business and the materiality assessment. Our approach to engaging with our stakeholders includes involving the Evonik regions. In general, we take care to achieve the widest possible coverage of operational, political, social, and community perspectives, and also regularly hold a stakeholder conference.

You find more information concerning our stakeholder dialogues in 2024 in our Financial and Sustainability Report: