Sustainability Management

Introduction

Borealis is committed to building a prosperous and sustainable future for all, by placing sustainability at the core of everything it does. This is expressed clearly in the Group’s purpose statement “Re-inventing essentials for sustainable living”, a spirit shared across the OMV Group of companies.

Improving Borealis’ sustainability performance will enable the Group to achieve its purpose, while at the same time ensuring growth and building on Borealis’ robust foundations of safety, people and culture, innovation and technology, and performance excellence.

Governance

Sustainability is an integral part of the Borealis Group Strategy. The Executive Board is Borealis’ highest governance body for sustainability. The Executive Board has delegated the routine management of social, environmental and economic issues to senior leaders in their respective functions and business divisions.

Borealis’ Sustainability Function is led by the Director Sustainability & Public Affairs, who reports to the CEO. The Function leads the development of the Group’s Sustainability Strategy and supports Borealis’ leaders with developing sustainability-driven roadmaps and activities, and implementing them through capability building, expertise, consultancy and dedicated methodologies and tools. For key topics, such as energy and climate or microplastics, the Group has established committees or issue teams.

Each Group function reports on sustainability topics to the respective Executive Board member, including progress with activity implementation and related targets, seeking approval of budget and activity plans, as well as key concerns, risks and opportunities.

Stakeholder Engagement

As a responsible company that aims to lead the transformation towards circularity and climate neutrality, Borealis creates constructive and respectful dialogues with internal and external stakeholders. This is essential for achieving its vision and implementing its Group Strategy 2030, including its related sustainability goals.

Borealis therefore places great importance on regular exchanges with stakeholders, to learn about their views and concerns, listen to their expectations of Borealis, and communicate about the Group’s activities in a transparent and informed manner. This helps Borealis to mitigate potential risks or leverage opportunities for cooperation in a timely way and to reflect the insights in the Group’s materiality assessment.

Results from the Materiality Assessment 2019

1) Due to its great importance for Borealis and the preliminary results of the materiality analysis according to CSRD and ESRS requirements, Health & Safety has been included as a core focus area. Further details can be found in sub-chapter Determining Material Sustainability Topics.

Borealis’ business activities and sustainability issues involve a diverse and complex range of stakeholders at global, regional and national levels, with different interests and concerns. The Group therefore uses a broad range of engagement channels, driven by Borealis’ respective functional departments.

Mapping and prioritizing Borealis’ stakeholders is a continuous and dynamic process. Borealis regularly runs stakeholder mapping and related issue, risk and opportunity assessments at Group level and at its major locations. The Borealis Management System details the processes for the Group’s materiality and stakeholder assessments and its community-related issue and risk management. These processes were updated in 2020 to comply with the requirements of ISO 50001 and ISO 45001.

At Group level, stakeholder mapping and engagement is the responsibility of the respective business areas, such as Procurement, People & Culture, Innovation and Public Affairs. At a local level, this is the responsibility of location leaders.

Determining Material Sustainability Topics

To integrate stakeholder views and concerns and develop its sustainability roadmap, Borealis conducts sustainability materiality assessments, in compliance with the legal requirements related to the disclosure of non-financial information in Austria (Nachhaltigkeits und Diversitätsverbesserungsgesetz; NaDiVeG), as well as Global Reporting Initiative (GRI) Standards.

Borealis carried out its first systematic assessment of this kind in 2013, followed by a refresh in 2019 which mainly reconfirmed the previous results.

In the 2019 materiality assessment, 17 sustainability aspects that are relevant for the chemical industry were assessed to understand their economic, environmental and social impact (both on Borealis and by Borealis). Relevant internal and external stakeholder groups were interviewed or assessed via desktop research, including customers, suppliers, brand owners, employees, non-governmental organizations, regulators and investors. The assessment was conducted with an external consultant, to maintain an objective and independent view.

The following four materiality topics were identified as the most important to Borealis and its stakeholders, and were subsequently acknowledged by the Executive Board and defined as “Core focus areas for sustainability acceleration:”

1. Climate Change: This is the most highly rated topic, in terms of Borealis’ impact on climate change and its importance to all stakeholders.
2. Circular Economy: This 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: This is an issue of high 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 and Product Safety: These are key drivers for developing and improving the sustainability of Borealis’ products, to minimize stress on the environment and protect public health.

In addition, although not identified as material topics, Borealis designated three topics as “monitor elements” (further important topics). These are sustainability topics that the Group wants to monitor and continuously improve:

1. Responsible Sourcing: This is key to ensuring suppliers adhere to Borealis’ ethical standards and supply sustainable raw materials and renewable energy, as well as to the Group’s ability to accelerate the transformation towards a circular economy and carbon neutrality.
2. Innovation Management: Innovation is at the heart of Borealis, providing the Group 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.
3. Digital Transformation: Increasing digitalization will be a transformational enabler for Borealis to deliver its strategy to 2030. Digitalization will increase productivity, improve the customer experience and, in particular, accelerate the transformation towards a circular economy and CO₂ neutrality for the Group.
   

Air quality and water management were identified as “local issues” which require attention at an operational level, in conjunction with national authorities, laws and regulations, while all the topics categorized under “license to operate” are fully integrated into Borealis’ corporate culture and management processes and do not require specific additional focus at Group level.

Borealis planned to conduct a follow-up materiality assessment in 2022. However, this was postponed until 2023 due to the need to prioritize the development of the new Group Strategy. This enabled OMV Group to initiate a Group-wide materiality assessment project in mid-2023 across OMV, OMV Petrom and Borealis, according to CSRD and ESRS requirements. The preliminary results do not show any significant differences to the currently reported material topics, with the exception of Health & Safety, which is expected to become material. The materiality assessment is due to be finalized in Q1 2024.

In the interim, Borealis has cross-referenced the material topics from the 2019 assessment with the required topics in the GRI 2021 Oil & Gas Sector standard, due to the relevance for the parent company, and ensured all the corresponding requirements have been included in this report. Due to its great importance for Borealis and the preliminary results of the materiality analysis according to CSRD and ESRS requirements, Health & Safety has been included as a core focus area. The list of material topics has been expanded accordingly.

In addition to reporting on material topics in this report, Borealis also discloses further important topics. This information is needed to provide a full picture.

Overview of Material Topics

This overview provides the link between the material topics, the respective chapters in this report, the principles of the UN Global Compact (UNGC) and the sustainability aspects according to the Nachhaltigkeits und Diversitätsverbesserungsgesetz (NaDiVeG), the Austrian law on non-financial reporting based on the European Non-Financial Reporting Directive.

Sustainability Framework and Targets

Following the 2019 materiality assessment, Borealis built its Sustainability Framework around three focus areas: Health & Safety, Circular Economy and Energy & Climate. The fourth pillar, Growth, is seen as enabling prosperity for Borealis and society and supports implementation of the Group’s plans in the three focus areas. To ensure the realization of the Group’s strategy and its sustainability ambitions, Borealis has set the following long-term goals, in addition to the goals it defined and communicated earlier.

Borealis’ Strategic Sustainability Framework

1) From 5.1 mn metric tons in 2019 including the nitrogen business. The divestment process for the Borealis nitrogen business which comprises fertilizers, technical nitrogen, and melamine was concluded in July 2023. Scope 1 are direct GHG emissions that occur at the source and are controlled by Borealis. Scope 2 are GHG emissions stemming from the generation of energy purchased by the company.

Greenhouse Gas Emissions Goals

Borealis aims to reduce its Scope 1 and Scope 2 emissions from 5.1 million metric tons (base year 2019) to less than 2 million metric tons by 2030. The emission reduction portfolio includes increased use of electricity from renewable sources throughout the decade, as well as carbon capture projects, which will come on stream in the second half of this decade. The reduction target also includes the divestment of Borealis’ fertilizers, technical nitrogen products and melamine business, which was completed in 2023. In 2023, Borealis emitted 2.2 million metric tons of GHG emissions (Scope 1 and Scope 2 market based).

Circular Economy Goals

In 2023, Borealis processed around 116,300 metric tons of circular feedstock in Europe. By 2025, Borealis is targeting a capacity increase of circular product solutions to 600,000 ¹⁾ metric tons. These include recycled and renewable polymers and chemicals, as well as renewable hydrocarbons. By 2030, the capacity of circular products and solutions is set to reach 1.8 ¹⁾ million metric tons globally, turning today’s plastic waste into a valuable resource to be reused. Moving from a linear towards a circular economy will also significantly reduce the Group’s Scope 3 ²⁾ greenhouse gas emissions.

^{1) Global capacities including non-consolidated Joint Ventures (Borouge). This target is under review. // 2) Scope 3 are indirect GHG emissions that are a consequence of company activities but occur from sources outside or not controlled by the company.}

Energy Consumption Goals

In 2023, around 38% of the electricity Borealis used in its own operations was derived from renewable energy sources, such as wind and solar power. By 2025, the share of renewables in the electricity mix will increase to 40%. By 2030, 100% of the electricity used in Borealis’ operations will be of renewable origin. Furthermore, Borealis sees the energy-efficiency-first principle as a cornerstone in achieving its climate strategy. The defined energy ambition is to implement 10% energy savings of the consumption of 2015 by 2030.

Environmental goals

The Group aims to achieve zero non-emergency flaring, and continues to strive towards zero loss of plastic pellets from its operations.

Health & Safety Goals

Borealis will continue to work towards its targets of achieving zero work-related and process safety incidents or accidents. In addition, the Group strives to proactively substitute substances of concern.