Sustainability Management

Introduction

Borealis’ Sustainability Ambition is “to create a world where there is no waste of resources, no emissions into the environment and no harm to society, while delivering prosperity to Borealis and our stakeholders”. To achieve this ambition and foster true sustainability throughout its business, Borealis takes responsible decisions based on a fact-driven evaluation of their positive or negative impact on the environment, people and the business. Improving its sustainability performance will enable the Group to contribute to more sustainable living, while also enhancing efficiency, reducing costs and mitigating long-term business risks. Embedding sustainability in the business is therefore considered a key success factor for Borealis and a priority for the Executive Board.

Organisational Structure

The Executive Board is Borealis’ highest governance body for sustainability. It:

• approves the Group’s overall sustainability and public affairs strategy;
• regularly reviews the strategy’s implementation and performance;
• provides guidance and decisions on major topics, such as Group operative plans, capital allocation and investments; and
• approves the Group’s position on key sustainability issues, such as the Circular Economy, Climate & Energy and Health & Safety.

The Executive Board has delegated the management of social, environmental and economic issues to senior leaders in their respective functions.

The Director of Sustainability & Public Affairs leads the development of the Group’s Sustainability Strategy and reports to the Vice President Strategy & Group Development, who in turn reports to the CEO. The Sustainability & Public Affairs organisation leads Borealis’ commitment to sustainability by driving and guiding the Sustainability Strategy throughout the Group and catalysing sustainability-related initiatives that create value for Borealis’ stakeholders. The team supports the leaders of key functions to develop sustainability-oriented strategies and implement a sustainability roadmap through capability building, expertise, consultancy and dedicated methodologies and tools.

The Sustainability Advisory Team (SAT) comprises senior management from key functions across the organisation. It meets regularly to review the Group’s progress against the sustainability roadmap and to assess and guide sustainability projects and activities prior to gaining approval from the Executive Board when necessary. The SAT also proposes new areas of involvement and ensures excellence and rigour in execution. In 2020, 13 Sustainability Flagship projects were identified as major contributors to Borealis’ sustainability journey.

As part of embedding sustainability capabilities in the business, Borealis engages senior and mid-level managers from across the organisation in a bespoke Business Sustainability course led by the IMD Business School. Since 2016, over 100 participants have been successfully certified, including 28 in 2020. Through this course, Borealis supports continuous learning across the organisation to enhance and deepen their understanding of important sustainability issues and projects, including the circular economy, materiality identification, marine littering, microplastics and design for recycling. Interactive webcasts on current and emerging sustainability issues are held with the Sustainability Alumni throughout the year, providing an effective tool for embedding sustainability within the functions.

Sustainability Strategy

In order to shape the Sustainability Strategy and contribute to the Group strategy review, in 2019 Borealis carried out its second Sustainability Materiality Assessment to identify current and evolving stakeholder concerns and priorities. The assessment will be repeated at three-yearly intervals.

The 2019 assessment confirmed that the three focus areas in the Sustainability Strategy, which are Health & Safety, the Circular Economy and Energy & Climate, are as relevant as ever and the Group is therefore further strengthening its efforts in these areas. Growth is seen as enabling prosperity for Borealis and its stakeholders, and supports implementation of the Group’s plans in the three focus areas. In January 2020, the Group launched a refreshed Sustainability Strategy, supporting its 2030 Strategy.

Borealis’ Strategic Sustainability Framework

Sustainability Targets

To ensure the realisation of the Group’s strategy and with its Sustainability Ambition clearly in mind, Borealis has set specific long-term goals to improve the circularity of plastics, protect the climate and care for the health and safety of our communities.

Our Goals for Health & Safety remains constant and resolute:

• Zero work-related incidents or accidents
• Zero harmful substances in our products according to REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals)

Our Goals for the Circular Economy for 2025 are:

• 350,000 tonnes of recycled polyolefin delivered annually for the production of second-generation products
• 100% of consumer products being recyclable, reusable or with renewable content

Our Goals for Energy & Climate for 2030 are:

• 50% of electricity consumption from renewable sources
• 20% energy efficiency improvements (compared to 2015)
• Zero non-emergency flaring

In line with the Group’s 2030 Strategy and the sustainability focus areas, Borealis is now focusing on contributing to seven of the United Nations SDGs. The following SDGs will be supported by our actions in each of the focus areas:

Circular Economy

• SDG 12: Responsible Consumption and Production
• SDG 14: Life Below Water

Energy & Climate

• SDG 7: Affordable and Clean Energy
• SDG 13: Climate Action

Health & Safety

• SDG 3: Good Health and Well-Being
• SDG 6: Clean Water and Sanitation

Growth

• SDG 17: Partnership for the Goals

Finally, the Group will also support SDG 17 (partnership for the goals) in its overarching pursuit of growth, highlighting the importance of cooperation as a prerequisite for sustainable value creation through all the focus areas.

In 2020, a Sustainability KPI was added to the Group Performance Scorecard, reinforcing the importance of sustainability performance to Borealis’ successful development and growth. For the Polyolefin and Hydrocarbons & Energy businesses, the sustainability KPI considers process safety incidents (including fires), flaring, energy efficiency, CO2 emissions and the share of recycled waste in relation to total waste. For Fertilizer, Melamine and Technical Nitrogen Products, the KPI considers process safety incidents (including fires), release of N2O, energy efficiency, CO2 emissions and the share of recycled waste in relation to total waste.

Sustainability Materiality Assessment

The Sustainability Materiality Assessment carried out in 2019 assessed 17 aspects, according to their importance to Borealis’ stakeholders and their impact on the Group, society and the environment. The process was supported by an external consultancy. Through this process, Borealis determined the material aspects for its business.

As a result of the assessment, Borealis developed a Sustainability Materiality Matrix ( → Figure Sustainability Materiality Matrix), based on four levels of response:

• Focus: core issues for Borealis
• Monitor: important sustainability issues to monitor
• Local: issues that are to be managed on a local level
• License to operate: issues that are considered necessary for the Group

The following four topics were identified as the most important to Borealis and its stakeholders, and are defined as “Core focus areas for acceleration”.

1. Climate Change: this aspect is one of the must-win battles in Borealis’ current sustainability framework and is the most highly rated topic in terms of the impact of Borealis on climate change and the importance to all stakeholders.
2. Circular Economy: this aspect is one of the main drivers of sustainability in the plastics and chemicals industry. It provides Borealis with opportunities to differentiate itself from other companies in the industry.
3. Plastic Waste & Management: this aspect is of utmost importance for Borealis, at both corporate and operational level. Proactive engagement by Borealis reaffirms its commitment to zero plastics leakage.
4. Product Sustainability: this aspect is a key driver for developing and improving Borealis’ products to minimise stress on the environment and protect public health.

Sustainability Materiality Matrix

In addition to the four core focus areas for acceleration, four topics have been designated as “monitor elements”. These are important sustainability topics for Borealis, which the Group must monitor and continuously improve:

1. Responsible Sourcing: this aspect is important to ensure responsible sourcing and refers to the initial stages of product development, namely raw material sourcing.
2. Innovation Management: this aspect provides Borealis with opportunities to further differentiate itself from its industry peers, in respect of technological capabilities and research and development investments that lead to innovative and sustainable solutions for both products and processes.
3. Product Safety: this aspect is important for Borealis to ensure the environmental and social impacts of its products, predominantly based on life cycle assessments and the precautionary principle.
4. Digital Transformation: this aspect is an emerging topic and closely linked to IT and data security.

Air quality and water management were identified as local issues which require attention at an operational level, in conjunction with local authorities, laws and regulations, while all the topics categorised under “License to operate” are integrated into Borealis’ corporate culture and processes.

Figure Overview of Material Topics demonstrates the connection between the material topics, the respective chapter in this report, and the sustainability matters according to the Nachhaltigkeits- und Diversitätsverbesserungsgesetz (NaDiVeG), the Austrian law on non-financial reporting.

Overview of Material Topics

Sustainability Flagship Projects

In 2020, Borealis defined on 13 Sustainability Flagship Projects. These are initiatives that support the Group’s strategy and Borealis’ sustainability journey, and have clear objectives and milestones for 2020. This increases the visibility of real and winning sustainability initiatives supported/championed by Borealis’ top management. With that approach, the business units integrate sustainability into their own strategies.

The Sustainability Flagship highlights of 2020 were:

• Lifesaving rules and behavioural initiatives
• REACH Dossier update
• Circular Economy Solutions Strategic Initiatives
• Project STOP
• Operation Clean Sweep
• Public Affairs Advocacy Strategy
• Sustainable Finance
• CO2 Roadmap
• TCFD Reporting
• Gender Diversity and Inclusion
• Together for Sustainability
• Sustainability Compass
• COVID-19 Initiatives

A thorough review of the Sustainability Flagship Projects is carried out at each year end. Continued and new Flagship Projects will be identified and their progress monitored, with reviews by the Sustainability Advisory Team.

Sustainability of the Product Portfolio: The Sustainability Compass

Borealis established a method to assess the sustainability of its product portfolio, called the Portfolio Sustainability Compass. Borealis based its approach on the WBCSD (World Business Council for Sustainable Development) chemical industry methodology for portfolio sustainability assessments. Approximately 80% of the polyolefin product portfolio has been assessed so far and in 2020, the assessment covered 25% of the total portfolio. Every product innovation is assessed by the compass in various stages of product development.

Products are grouped into three segments, based on clearly identified sustainability criteria.

• “Trailblazers” are at the forefront of sustainability, providing a meaningful and enduring contribution to society. Examples include the Group’s top technology products within the automotive and energy sector, which are making cars lightweight and safe, enabling renewable energy to be transported with minimum loss and allowing electric vehicles to become a mass reality.
• “Pacemakers” are the standards, with benefits commonly known to society. These include components of appliances and furniture as well as hygienic fibres.
• “Drifters” are products that are only compliant and will be challenged by sustainabilty improvement needs. These include films used in unnecessary packaging and other solutions that overburden the waste system.

In addition to assessing the existing portfolio, the assessment tool is used to differentiate the innovation pipeline and new projects with high sustainability factors. The Portfolio Sustainability Compass is therefore a key instrument in developing solutions that deliver sustainable benefits to society.

Responsible Sourcing

In 2014, Borealis voluntarily began to participate at the annual sustainability assessment of EcoVadis, a platform that uses one of the most accepted methodologies for assessing a company’s sustainability. In 2020, Borealis was awarded its fourth consecutive Gold Status for its EcoVadis Scorecard, placing the Group in the top 5% of all industry peers who participated during the year.

Borealis is a member of the Together for Sustainability initiative, which aims to improve the sustainability standards of the supply chain of chemical companies. In addition, Borealis has a Code of Business Conduct for Suppliers, which requires them to have ethical employment and business practices, and high standards of health, safety and environmental performance.

Outlook

In 2021, Borealis will continue to reinforce its commitment to supporting the sustainable development of the Group and the industry. In addition to ongoing initiatives, Borealis will further enhance the implementation of its Sustainability

Strategy by:

• aligning its sustainability and government relations activities with OMV;
• introducing a long-term target for emissions;
• reporting according to the GHG protocol, including Scope 3 emissions;
• disclosing to CDP supply chain for the first time;
• embedding TCFD into enterprise risk management (ERM) processes;
• introducing regular tracking and reporting on local and Group social engagement activities;
• scaling up Project STOP and mobilising a Circular Economy Solutions Manager to Indonesia;
• expanding the Growing Talent initiative to develop a curriculum on sustainability of plastics aimed at young people;
• amplifying public affairs advocacy to support the increase of recycled plastics in packaging; and
• continuing to implement initiatives that address the ongoing threat of COVID-19.

Sustainability Risks

This overview summarises the potential non-financial risks and mitigation measures of Borealis’ activities on sustainability matters (according to the NaDiVeG), structured by the Group’s material topics: