SUSTAINABILITY ANALYSIS OF OUR BUSINESS 2.0
The sustainability analysis of our business plays an important role in establishing sustainability in our strategic management process. The methodology is based on the chemical industry standard for portfolio analysis. The signal categories examined in this process will facilitate continuous review and development in the future using the EU-wide classification system (taxonomy) for sustainable business activity.
The extensive evaluation of these sustainability signals gives us additional insights for the foresighted management of individual products and entire business areas. We are currently integrating the conclusions drawn from this analysis into our strategy process to allow integrated management using both financial and nonfinancial indicators. We expect this to further improve the assessment of alternative courses of action, investment decisions, and the allocation of funds in our planning and portfolio management processes. For the first time, stakeholder requirements - grouped in the signal category “sustainability ambitions along the value
chain” - can now be integrated directly into the planning process. The findings will be taken into account in the future in the regular review of our materiality analysis.
The market signals identified as being significant for Evonik form the heart of our sustainability analysis. These include, for example, anticipated regulatory trends, environmental and social performance compared to alternative solutions, and sustainability ambitions in our markets. All market signals are based on the World Business Council for Sustainable Development’s framework for portfolio sustainability assessments (PSA), which Evonik was involved in developing from the outset. One special feature of this approach is the differentiated assessment of the relevant products in specific product-application-region combinations (PARCs). For each PARC, we identify the benefits of using the product and will gradually be quantifying these in greater detail.
In 2019, as a first step, Product - Application - Region - Combinations (PARCs) were defined.
Then, the PARCS were prioritized by for example sales. The prioritization and selection were undertaken by our operating units on the basis of their significance for sustainability and the business.
The PARCs were examined using various signal categories. These categories include, for example, expected regulatory trends, relative ecological and social sustainability performance—such as energy and water savings, reductions in CO2 emissions—and contribution to the SDGs.
The findings are used in a structured overall evaluation of the sustainability performance of our businesses, resulting in allocation to the performance category Leader (A++), Driver (A+), Performer (B), Transitioner (C-), or Challenged (C--) 1 on the basis of the PARCs analyzed.
The results will be considered in our Strategic Management Process.
RESULTS OF THE 2020 ANALYSIS
The assessment of all the PARCs analyzed is used in a structured overall evaluation of the sustainability performance of our portfolio, resulting in allocation to the performance categories Leader (A++), Driver (A+), Performer (B), Transitioner (C-), or Challenged (C--).
Until the end of 2020 analyzed 326 PARCS covering Evonik's entire chemical sales in 2019.
The principal conclusions are:
- Evonik generates 90 percent of sales with products and solutions whose sustainability performance is at least in line with the market reference (leader, driver, or performer category).
- Evonik generates 35 percent of sales with products and solutions with a clearly positive sustainability profile that is above or even well above the market reference level (leader and driver categories). These are our Next Generation Solutions.
Targets for 2021 and beyond
Our goal for the coming years is that Next Generation Solutions should continue to account for at least 35 percent of our portfolio.The holistic examination and assessment of our products and solutions throughout their entire life cycle, taking into account all three sustainability dimensions - economic, ecological, and
social - supports our corporate purpose: Leading beyond chemistry to improve life, today and tomorrow.
Life cycle assessments
Life cycle assessments are a focal area of our sustainability analysis. The high expertise and extensive operational networking of our internal life cycle management group plays an important part in continually enhancing knowledge of the impact of our business activities. A broad spectrum of life cycle assessments is used for this. In the future, we intend to use the findings for selective improvements such as more product-oriented measures to reduce our carbon footprint or improve water management at our sites worldwide.