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 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 Plastic Tax, microplastics and bio-based feedstock.

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. As per 1 January 2022 this function will become a direct report to the CEO. The Sustainability & Public Affairs organisation leads Borealis’ commitment to sustainability by enabling and supporting the implementation of 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, implement a sustainability roadmap and support its execution 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 assesses and guides sustainability projects, activities and Group Position Papers, 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.

Sustainability Materiality Assessment

The Group’s first Sustainability Materiality Assessment was carried out in 2013, followed by a refresh in 2019. Seventeen sustainability aspects were assessed, according to their importance to Borealis’ stakeholders and their impact on the Group, society and the environment. The assessment will be repeated at three-yearly intervals, with the next assessment planned for 2022.

As a result of the assessment carried out in 2019, Borealis developed a Sustainability Materiality Matrix (Figure 3) based on four levels of response:

• Focus: core issues for Borealis
• Monitor: important sustainability issues to monitor
• Local: issues that are to be managed at local level
• Licence to operate: issues that are considered necessary for the Group to manage on a day-to-day basis

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 is one of the focus areas in Borealis’ current sustainability framework and is the most highly rated topic in terms of Borealis’ impact on climate change and the importance to all stakeholders.
2. Circular Economy is one of the main drivers transforming plastics and chemicals industry business models and increasing their sustainability. It provides Borealis with opportunities to differentiate itself from other companies in the industry.
3. Plastic Waste & Management is an issue of utmost importance for Borealis, at both corporate and operational level. Proactive engagement by Borealis reaffirms its commitment to zero plastics leakage into the environment.
4. Product Sustainability 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 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 “licence to operate” are integrated into Borealis’ corporate culture and processes. The table below provides the link between the material topics, the respective chapter in this report, and the sustainability aspects according to the ‘Nachhaltigkeitsund Diversitätsverbesserungsgesetz’ (NaDiVeG), the Austrian law on non-financial reporting based on the respective European Non-Financial Reporting Directive.

Overview of Material Topics

1)Non-financial matters according to NaDiVeG

Sustainability Strategy

The 2019 materiality 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.

During Q4 2021, Borealis started a process to update its Group and Sustainability Strategies. The process will be completed Q1 2022, with launch planned for Q1 2022.

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 environment and care for the health and safety of its products, employees and communities. For related targets and achievements, see the respective chapters in this report.

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 Polyolefins 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 Fertilizers, 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.

A set of sustainability-related KPIs was integrated into the Bonus Incentive Plan (where a sustainability KPI is one of ten KPIs on the Group scorecard) and the Long Term Incentive Plan.

EcoVadis Sustainability Performance Assessment

In 2014, Borealis voluntarily began to participate in the EcoVadis annual sustainability assessment. EcoVadis is a platform that uses one of the most accepted methodologies for assessing a company’s sustainability. In 2021, Borealis achieved a rating in the highest category, Platinum, for the first time, placing the Group in the top 1% of all industry peers who participated during the year.

Borealis’ Stakeholder Engagement

Stakeholder engagement is imperative to Borealis’ business and the development of its sustainability strategy. Regular engagement with a broad range of stakeholders ensures that Borealis can address their concerns and expectations, and inform the Group’s materiality assessment, to ultimately better anticipate and respond to risks and opportunities.

Borealis’ business activities involve a diverse and complex range of stakeholders at a global, national and regional level. Mapping and prioritising Borealis’ stakeholders is a continuous and dynamic process. Based on its Group-level stakeholder mapping, Borealis has rolled out a stakeholder mapping process and a related issue and risk assessment in all of its major locations and at Group level over the past few years. The location-level management procedure was updated in 2020 to comply with the requirements of ISO 50001 and ISO 45001. At the same time, individual departments have carried out stakeholder mapping for specific market segments.

Borealis’ Stakeholder Groups

Borealis routinely identifies and prioritises its key external stakeholders, as defined by the procedures described above. After identifying all relevant stakeholders, they are ranked based on two parameters, namely the level of importance the social and environmental aspects have for them, and the influence they have on Borealis. The output is a stakeholder map that indicates the importance of the stakeholder to Borealis (low/medium/high).

• Academia and Science: R&D collaborations with leading universities, and participation in symposia, working groups and advisory committees.
• Customers: Face-to-face meetings, visits, surveys, trade fairs, conferences and product launch events.
• Employees and Works Councils: Regular evaluation and feedback from the line manager, Corporate Co-operation Council (CCC) dialogue platform, biennial employee survey, pulse checks, town hall meetings, the annual Executive Board tour to all locations, engagement walks and many other channels.
• Governments and Regulators: Different channels, such as face-to-face meetings and participation in workshops, both directly and via industry association.
• Investors and Capital Providers: Regular Bankers & Investors Days and participation in relevant treasury, funding and investor relations forums and associations.
• Local Communities: Ongoing dialogue through channels best suited to local needs, including face-to-face meetings, newsletters and Open Door Days.
• Media: Interaction via established channels, including media interviews and events, press releases and the news section of the Borealis website.
• Owners: Regular Supervisory Board meetings and owners’ controllers meetings, as well as individual face-to-face interactions at executive, project and expert level.
• NGOs and Society: Interaction through events, such as Open Door Days, face-to-face and round table discussions with representatives such as consumer and environmental associations, as well as participation in public consultations.
• Suppliers and Contractors: Formalised by the Borealis Supplier Relationship Management programme, face-to-face meetings, suppliers’ events and annual industry conventions.
• Value Chain Partners: Face-to-face meetings, customer events, industry conferences, industry associations, EverMinds™ platform.
• Industry and Trade Associations: Active membership and leadership positions in numerous national, regional, European and international associations.

Other Focus Areas

To drive sustainability management to the next level, Borealis is progressing a set of activities covered in other chapters of this report. These include the climate roadmap 2050; the action plan to address the microplastics challenge; development of a third-party Operation Clean Sweep (OCS) audit and certification scheme; initiation of Project STOP’s expansion, to further prevent waste in Indonesia reaching the ocean; and launching the implementation of the EU Taxonomy reporting.

Outlook

In 2022, 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:

• refreshing the Materiality Assessment and Matrix and launching the updated Sustainability Strategy
• developing the Group’s approach to future non-financial reporting requirements, to ensure conformity with EU requirements and prepare to move from a combined to an integrated Annual Report
• introducing a long-term target for GHG emissions, scaling up Project STOP to reach 2 million people and driving circular economy solutions
• amplifying public affairs advocacy, to support the increase
• of recycled plastics in packaging, and implementing the EU Taxonomy
• as per 1 January 2022 the Sustainability and Public Affairs Function will become a direct report to the CEO.

Sustainability Risks

This overview summarises the potential non-financial risks of Borealis’ activities on sustainability matters (according tothe NaDiVeG) and the mitigation measures in place. The summary is structured by the Group’s material topics: