Glossary

A

ADR/American Depositary Receipt

A depositary receipt issued by U.S. banks that documents ownership of a certain number of deposited shares of a foreign company and is traded on U.S. stock markets as representation of the original shares.

AktG/German Stock Corporation Act

Stipulates the legal provisions pertaining to German stock corporations.

APAC

Comprises all countries in the Asia and Pacific region.
C

Capital employed

Capital employed is the sum of noncurrent and current assets less non-interest-bearing liabilities such as trade accounts payable.

Carbon productivity

The value generated per carbon unit used (e.g., in the form of fossil raw materials such as coal, oil and natural gas). Measuring carbon productivity is intended to promote a sustainable and optimal use of carbon.

Circular economy

A regenerative economic system in which resource input, waste production, emissions, and energy consumption are minimized based on long-lasting and closed material and energy cycles.

Core volume growth

Core volume growth refers to the core products in the Performance Materials and Solutions & Specialties. It is calculated as the percentage change in externally sold volumes compared with the prior year. Covestro also takes advantage of business opportunities outside its core business, for example the sale of precursors and by-products such as hydrochloric acid, sodium hydroxide solution, and styrene. These transactions are not included in core volume growth.

Cost of capital for impairment testing

Weighted average cost of equity and debt that reflects the risk/return profile of the Covestro Group on the one hand and a specific capital structure of comparable companies (Covestro’s peer group) on the other. This cost of capital, which is primarily derived from capital market information, is used for impairment testing according to IFRSs.

COVeC approach

Covestro venture capital approach in which Covestro invests in start-ups with innovative products, solutions, or business models. Covestro aims to actively support these new companies wherever they offer value added.

Covestment

Stock participation program in which 99% of all employees worldwide can acquire Covestro shares at a discount.
D

GCGC/German Corporate Governance Code

A set of regulations compiled by the Government Commission on the German Corporate Governance Code in respect of responsible corporate governance, which contains recommendations and suggestions for the management and oversight of listed corporations in Germany

DRS/German Accounting Standards

Pronouncements of the German Accounting Standards Committee e. V., which substantiate the HGB requirements in reference to the application of the Group accounting principles.

Due diligence

Information on the processes for identifying, preventing, and mitigating the actual or possible negative impact on nonfinancial factors.
E

Earnings per share

Net income divided by the weighted average number of outstanding shares in the reporting period.

EBIT /earnings before interest and taxes

Income after income taxes plus financial result and income tax expense.

EBITDA /earnings before interest, taxes, depreciation and amortization

EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets.

EBITDA/earnings before interest, taxes, depreciation and amortization

EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets

EBIT/earnings before interest and taxes

Income after income taxes plus financial result and income tax expense

EcoVadis

Rating agency that evaluates the degree to which supplier business practices are aligned with sustainability principles.

EMLA

Comprises all countries in Europe, the Middle East, Africa and Latin America (excluding Mexico).

EURO STOXX 50

European stock index that reflects the share price performance of the 50 most important and highest revenue companies in Europe.
F

FOCF /free operating cash flow

Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets.

FOCF/free operating cash flow

Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets
G

GCGC/German Corporate Governance Code

A set of regulations compiled by the Government Commission on the German Corporate Governance Code in respect of responsible corporate governance, which contains recommendations and suggestions for the management and oversight of listed corporations in Germany.

GHG Protocol/ Greenhouse Gas Protocol

International accounting system for greenhouse gas emissions developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD).

GHG Protocol/Greenhouse Gas Protocol

International accounting system for greenhouse gas emissions developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD)

GPS/Global Product Strategy

Initiative of the International Council of Chemical Associations (ICCA) with the aim of anchoring uniform global standards for product safety in the chemical industry

GPS/Global Product Strategy

Initiative of the International Council of Chemical Associations (ICCA) with the aim of embedding uniform global standards for product safety in the chemical industry.

GRI/Global Reporting Initiative

Guidelines for the preparation of sustainability reports by companies, governments and non-governmental organizations (NGOs)

GRI/Global Reporting Initiative

Guidelines for the preparation of sustainability reports by companies, governments and non-governmental organizations (NGOs).
H

HDI /hexamethylediisocyanate

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems.

HDI/hexamethylediisocyanate

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems

HGB/German Commercial Code

Comprises the majority of German accounting legislation.

HSEQ/Health, safety, environment, energy, and quality

Health, safety, environment, energy, and quality.

HSEQ/Health, safety, environment, energy, and quality

Health, safety, environment, energy, and quality
I

IAS/Accounting Standards

International accounting standards as endorsed by the European Union respectively published by the IASB or the IFRS IC.

IASB/International Accounting Standards Board

The International Accounting Standards Board is an independent, private-sector body that develops and approves the International Financial Reporting Standards (IFRSs).

ICS /internal control system

Internal control system to ensure compliance with directives by means of technical and organizational rules.

ICS/internal control system

Internal control system to ensure compliance with directives by means of technical and organizational rules

IDW/Institut der Wirtschaftsprüfer in Deutschland e. V.

A professional association of German Public Auditors and German Public Audit Firms that represents the interests of its members and supports their work.

IFRSs/ International Financial Reporting Standards

International accounting standards as endorsed by the European Union respectively published by the IASB or the IFRS IC.

IFRSs/International Financial Reporting Standards

International accounting standards as endorsed by the European Union respectively published by the IASB or the IFRS IC

IPDI /isophorone diisocyanate

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems.

IPDI/isophorone diisocyanate

A chemical compound from the class of aliphatic isocyanates, primarily used in polyurethane coating systems
L

LGBTIQ

International abbreviation for lesbian, gay, bisexual, trans, intersex, and queer people.

LoPC/Loss of Primary Containment

Leaks of chemicals in amounts above defined thresholds leaking from their primary containers, such as pipelines, pumps, tanks and drums.

LTRIR

Lost time recordable incident rate.

LTRIR/lost time recordable incident rate

Lost time recordable incident rate
M

Materiality analysis

A materiality analysis enables companies to systematically identify the most important sustainability issues from the internal and external perspective.

MDI /diphenylmethane diisocyanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams.

MDI/diphenylmethane diisocyanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams
N

NA

Region comprising Canada, Mexico, and the United States.

NAFTA

Region comprising the United States, Canada, and Mexico in which Covestro is active

Net financial debt

Interest-bearing liabilities (excluding pension obligations) less liquid assets.

Net income

Income after income taxes that is attributable to Covestro AG shareholders.

NOPAT /net operating profit after taxes

Operating result (EBIT) after imputed income taxes.

NOPAT/net operating profit after taxes

Operating result (EBIT) after imputed income taxes
P

PMDI/Polymeric diphenylmethane diisocyanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams.

PO /propylene oxide

A chemical compound from the class of epoxies used in the production of polyurethanes.

PO/propylene oxide

A chemical compound from the class of epoxies used in the production of polyurethanes

Prisma

Prisma is a stock-based compensation program with a four-year performance period for senior executives and other managerial employees.

PSP/Profit Sharing Plan

Covestro PSP is the Group’s short-term variable compensation system. It is based exclusively on the target attainment of the relevant Covestro performance indicators (core volume growth, FOCF, ROCE).
R

REACH Regulation

REACH stands for Registration, Evaluation, Authorisation, and Restriction of Chemicals. Regulation (EC) No. 1907/2006, which entered into force in 2007, standardizes EU chemicals law.

REACH Regulation

REACH stands for Registration, Evaluation, Authorisation, and Restriction of Chemicals. Regulation (EC) No. 1907/2006, which entered into force in 2007, standardizes EU chemicals law.

Responsible Care™ initiative

Initiative by the German Chemical Industry Association (VCI) aimed at continuously improving health, environmental protection and safety in its member states

Responsible Care™ initiative

Initiative by the German Chemical Industry Association (VCI) aimed at continuously improving health, environmental protection and safety in its member states.

RIR /recordable incident rate

Total number of recordable workplace accidents and illnesses per 200,000 working hours.

RIR/recordable incident rate

Total number of recordable workplace accidents per 200,000 working hours

ROCE /return on capital employed

Ratio of operating result after imputed income taxes to capital employed.

ROCE/return on capital employed

Ratio of operating result after imputed income taxes to the capital employed
S

Scope 1, Scope 2, Scope 3 emissions

The GHG Protocol distinguishes between direct emissions of greenhouse gases (Scope 1), emissions from the generation of externally purchased energy (Scope 2), and all other emissions arising in the value chain either before or after our business activities (Scope 3).

SDGs

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.

Stakeholders

Internal and external interest groups which are directly or indirectly impacted by the company’s corporate activities and/or may be so in the future.

STOXX Europe 600 Chemicals

A sector index provided by STOXX. The STOXX Europe 600 is comprised of 600 companies across Europe.
T

TCFD/Task Force on Climate-related Financial Disclosures

The TCFD was formed by the Financial Stability Board to develop a uniform framework for reporting on climate-related opportunities and risks.

TDI /toluene diisoycanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams and coating systems.

TDI /toluylene diisoycanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams and coating systems.

TDI/toluylene diisocyanate

A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams and coating systems

TfS/Together for Sustainability

An initiative undertaken by various companies in the chemical industry to standardize supplier assessments globally in order to improve sustainability practices in the supply chain.
U

UN Global Compact

The world’s largest responsible corporate governance initiative. The member companies undertake to implement ten universal principles and regularly document their progress.
V

Value contribution

The difference between the operating result after imputed income taxes and the cost of capital. A positive value contribution means that value has been created.

VCI/Verband der Chemischen Industrie

German chemical industry association.

VCI/Verband der Chemischen Industrie – German Chemical Industry Association

German chemical industry association
W

WACC /weighted average cost of capital

Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. Used for the internal measurement of the absolute value contribution.

WACC/weighted average cost of capital

Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital

World-scale plants

Covestro defines world-scale plants in terms of their permitted production capacity in kilotons per year:
  • MDI plants from 400 kilotons per year
  • Polyether polyol plants from 300 kilotons per year
  • Polycarbonate plants from 240 kilotons per year
  • HDI plants from 40 kilotons per year
  • TDI plants from 300 kilotons per year