Value chain and products

VALUE CHAIN AND PRODUCTS

Sustainability integrated into management of the innovation portfolio
Development of circular business models
Extension of the product range for mechanical and chemical recycling
Product stewardship: new regulatory challenges

Research, development & innovation

Strategy and management

Innovations play a key role in aligning Evonik systematically with sustainability and profitable growth. In this way, we are also helping our customers to achieve their own climate protection, circularity, and biodiversity objectives. Examples of our innovative contribution to a sustainable transformation are our membrane technologies and our lipid nanoparticles for modern mRNA vaccines.

Sustainability is integrated into the management of our innovation portfolio. The aim is to improve both our handprint and our footprint. Therefore, there are deliberate personnel overlaps between the research, development & innovation (RD&I) council and the sustainability council. We use strategic perspectives to allocate our research and development resources. These include an intensive sustainability assessment using the methodology that has become established for the sustainability analysis of our business. Idea to Profit (I2P®) is used to manage our R&D projects—from the idea through systematic development to profitable commercialization. In the reporting period, we included our Sustainability Focus Areas in this process for the first time.

Our innovative capability enables us to open up opportunities in new, future-oriented businesses in six innovation growth fields:

Sustainable Nutrition: establishing new products and services for sustainable nutrition of livestock and people.
Healthcare Solutions: developing new materials for implants, as components of cell culture media, and for custom-tailored, innovative drug formulations.
Advanced Food Ingredients: creating a portfolio of health-enhancing substances and nutritional supplements as a contribution to healthy nutrition.
Membranes: extending SEPURAN® technology for efficient gas separation to further applications.
Cosmetic Solutions: developing further products based on natural sources for cosmetics and sensorially optimized formulations for skincare products.
Additive Manufacturing: developing products and technologies for additive manufacturing.

Our aim is to generate additional sales of over €1 billion with these innovation growth fields by 2025. We are making good progress towards this. Our R&D activities are guided by our Research, Development & Innovation (RD&I) function. This comprises the R&D teams of the growth divisions, innovation management, Creavis, which is our business incubator and strategic research institute, and Evonik Venture Capital. The strategic framework for our R&D is set by the RD&I council, which also manages the targeted allocation of human and financial R&D resources. It is chaired by the member of the executive board responsible for chemicals and innovation. Other members are the chief innovation officer, the head of Corporate Strategy, and the heads of the divisions.

Creavis serves the Evonik Group as an innovation driver for resource-saving solutions with a perspective that goes beyond 2025. In this role, it develops transformative innovations beyond the product and market focus of the operational units. Creavis bundles its activities in three incubation clusters:

The Defossilation cluster helps industries become less dependent on fossil raw materials by developing high-growth solutions that make a contribution to the transition to a circular, climate-neutral economy.
The Life Sciences cluster focuses on novel concepts for resource-saving and sustainable food production for the world’s continuously growing population. Another focal area is preventing and curing diseases, especially as many people are living to an advanced age.
Solutions Beyond Chemistry fosters traceable, secure, and circular value chains based on domain knowledge and data-based solutions. These increase the transparency, effectiveness, and sustainability of industrial systems.

Our venture capital activities facilitate early insight into innovative technologies and business models. By collaborating with start-ups around the world, Evonik gains faster access to attractive future technologies and markets. The Evonik Group has made more than 50 investments since the establishment of Evonik Venture Capital in 2021. In May 2022, we set up a new Sustainability Tech Fund with a total investment volume of €150 million.

Global research network

RD&I has more than 40 locations worldwide and around 2,700 R&D employees. R&D expenses totaled €460 million in 2022. The ratio of R&D expenses to sales was 2.5 percent (2021: 3.1 percent). At present, our operational chemicals divisions account for around 82 percent of our R&D expenses, while Creavis accounts for about 15 percent. In the reporting period, some of our projects received funding from the European Union or the Federal Republic of Germany. In all, we received funding of around €5.2 million. Evonik has an extensive patent strategy to protect new products and processes. The value and quality of our patent portfolio have increased steadily in recent years. A total of 256 new patent applications were submitted in 2022, and we had around 24,000 patents and pending patents.

Our progress in 2022

In the reporting period, we drove forward many research projects with which we are making a contribution to the transition to sustainability and more efficient use of resources.

The new Home of Polyurethanes at our location in Istanbul (Turkey) strengthens our technical service for customers in Turkey and the whole of the Middle East and Africa. This laboratory facility and center of excellence play a key role in triggering the local development of new product solutions so we can unlock new business potential in this attractive region. The state-of-the-art facility offers customers digital analysis methods for polyurethane (PU) foam applications, technical service, and customized training opportunities.

In China, Evonik has launched a new portfolio of processing aids under the brand name TEGO® Surten E. These additives improve performance and efficiency in photovoltaic wafer cutting, which reduces the costly post-treatment required for cut wafers. This product series therefore extends our range of additives for renewable energy generation.

Evonik Venture Capital has invested in Laxxon Medical (New York, USA), a specialist in 3D screen printing technology for the manufacture of structured tablets that enable the controlled release of pharmaceutical active ingredients over a prolonged period of time. In addition, multiple ingredients can be combined in a single tablet, resulting in fewer tablets. Evonik polymers support the accurate release of the active ingredients contained in these new types of tablets. Another benefit of this technology is that the speed of printing is significantly faster than established 3D printing processes, allowing mass production. Improved drug delivery could generate opportunities for pharmaceutical companies to extend existing patents.

Evonik launched its Vecollan® recombinant collagen platform for medical device applications on a commercial scale in July 2022. This high-purity collagen is reproducible and therefore simplifies regulatory approval of medical devices. Vecollan® is produced without animal-derived starting products, but many of its properties are similar to human collagen. It is therefore suitable, among other things, for medical, pharmaceutical, and cell and tissue culture applications. The fermentation-based manufacturing process extends our portfolio of attractive system solutions for the medical device industry.

In September, we signed a letter of intent for a strategic cooperation with Pörner Group (Austria) and the Thai company Phichit Bio Power Co. Ltd., which will enable us to offer the tire industry the first bio-based ULTRASIL® derived from rice husk ash. Since it is produced mainly with green energy, this product can reduce the carbon footprint by 30 percent. In this way, Evonik is supporting its customers’ defossilation and circularity objectives.

In November 2022, we opened a new global center for lithium-ion batteries in Shanghai (China). Here we will be researching battery materials and supporting customers with battery prototyping. Joint development of test batteries enables us to test our materials in conditions that meet specific customer requirements, which speeds up the overall innovation process. More than 90 percent of lithium-ion battery producers are in Asia, and most of the leading producers are in China. With its new center in Shanghai, Evonik is well-prepared to provide high-performance solutions to support the expected growth in this region.

Circular Economy

Strategy and management

Circular economy means decoupling economic growth and the use of resources by returning valuable raw materials to the loop at the end of their useful life. Better use of resources and the circular economy are becoming increasingly important for Evonik in view of the growing shortage of raw materials and tight supply chains. That is also confirmed by our latest materiality analysis, where circular economy is ranked as one of the top 3 topics. Our activities aim to mitigate the inadequate availability of resources in the supply chain and our production processes. At the same time, circularity opens up new business opportunities and attractive growth potential for Evonik. That is shown, for example, by joint development with the Vita Group of an efficient process for recycling mattresses and the extension of our portfolio of additives for mechanical and chemical recycling.

In the reporting period, we continued to drive forward the circular economy and set a quantitative target for waste.

Global circular plastics program Our global circular plastics program brings together our group-wide activities in the area of circularity that address plastics throughout the value chain. The program comprises short- to mid-term projects with a clear focus on commercialization. Aspects addressed include

the use of circular raw materials,
the development of solutions for mechanical and chemical recycling technologies, and
the development of innovative business models that take account of the requirements of the circular economy.

We regard intensive examination of our own value chains and the corresponding partnerships as an important key to supporting the transformation to circular forms of economy. Overall, we expect the global circular plastics program to generate additional sales of more than €350 million p.a. by 2030.

Our contribution to the circular economy along the value chain

Upstream
The procurement of circular raw materials is important to leverage our own footprint and, especially, to reduce scope 3 emissions. Therefore, we aim to increase the use of alternative raw materials in the manufacture of our products. This may include recycled secondary raw materials derived from fossil and bio-based waste, bio-based primary raw materials, or CO₂-based raw materials. We are endeavoring to increase the proportion of renewable raw materials. That includes examining technical, economic, ecological, and social aspects. One ongoing challenge is the limited availability of circular raw materials due to regional fluctuations in supply.

Gate to Gate
We generate 84 percent of our sales outside Germany. That highlights the global alignment of our business. We have production facilities in 27 countries and are therefore close to our markets and our customers. Our largest production sites—Marl, Wesseling, and Rheinfelden (Germany), Antwerp (Belgium), Mobile (Alabama, USA), Shanghai (China) and Singapore—have integrated technology platforms, most of which are used by several business lines. This results in valuable economies of scale and integrated use of our material flows. Continuous process optimization and the efficient use of resources have always been very important in our production activities.

We strive to reduce and recycle the packaging used for our products. Measures include reducing the thickness of the body steel drums, reducing the weight of the plastic liners used in intermediate bulk containers (IBC), and reducing the grammage of paper sacks. We are stepping up the reuse of packaging. Initial pilot projects with end-customers have been defined to set up a system to return certain rigid types of packaging. By increasing the use of re-usable systems to secure loads, we are also reducing the use of shrink-wrap film and therefore the amount of plastic waste for our customers. Together with end-customers such as automotive manufacturers, we are establishing a circular system for pallets. For applications where there is high turnover of pallets, we have switched to a pool system that uses plastic pallets. We are constantly endeavoring to increase the proportion of recyclable packaging. For categories of packaging where recycling rates are low, increasing the rates is held back by regulatory or technical barriers. We are addressing this in collaboration with representatives of the packaging industry, with the German chemical industry association VCI, and with our customers.

Downstream
Evonik also offers solutions that support circularity during the use of products and at the end of their life cycle. For example, our additives increase the durability of our customers’ products and therefore make a contribution to saving resources. Furthermore, our additives improve mechanical and chemical recycling processes and recyclates. Evonik provides an extensive range of additives for mechanical recycling. In this way, we help our partners optimize the efficiency and quality of their processes.

For example, with our surfactants, printing inks can be washed out of used plastics faster, reducing the ink residues in recycled plastics. Moreover, after the washing process, less water remains on the plastic, saving time and energy in the drying process. Our additives also minimize odor and improve the processability and mechanical properties of recyclates. As a result, the yields of secondary materials are increased. We are also involved in a joint project with BMW and other companies along the value chain that aims to increase the proportion of recyclates that can be used in automotive components.

Since 2021, we have been partnering with Wildplastic, a start-up that supports countries with inadequate waste management systems in the collection of plastic waste from nature by providing fair payment. The recycled plastics are used, for example, in high-quality garbage bags. As well as additives for cleaning and reprocessing, we offer Wildplastic an extensive network and thus support the creation of jobs in the relevant countries.

Our products and technologies enable the recycling of used tires at the end of the life cycle for reuse in high-quality applications, thus avoiding incineration. Our partners reduce their ecological footprint by using tire granulates instead of fossil-based bitumen in road surfaces. As well as reducing traffic noise (low-noise asphalt) and cutting fuel consumption by cars, this greatly increases the service life of the road surface, reduces maintenance, and makes the surface recyclable.

Chemical recycling is a solution for plastic waste streams that cannot be recycled eco-efficiently using mechanical or technical processes. That applies, on the one hand, to mixed, heavily contaminated or colored thermoplastics and, on the other, to duroplasts that cannot be melted. To achieve this, Evonik makes additives, adsorbents, catalysts, and process know-how available to its partners. We therefore facilitate chemical recycling of plastics residues that would otherwise be incinerated or disposed of in landfills. We have developed chemical recycling processes to regain the basic components of polyurethanes for use in the production of new polyurethanes. With our expertise in catalysts and process technology, we are making a key contribution to this. Similarly, our catalysts and process technologies enable recycling of PET packaging and colored PET plastics, which are not suitable for mechanical recycling, at the end of their life cycle.

In the case of heavily blended or contaminated plastics streams, we help avoid incineration by enabling their use in the production of pyrolysis oils. In this technology, plastics streams are converted into a pyrolysis oil at a high temperature without air. This can be used as a substitute for fossil naphtha in crackers, providing the basic ingredients for the synthesis of polymers. This technology is currently still at the pilot stage. To help meet the ecological and economic requirements on an industrial scale as well, we have increased our product offerings for the production of pyrolysis oils. We supply adsorbents and catalysts for the separation of contaminants and purification as well as additives that enable the processing of pyrolysis oils at low temperatures. Our SiYPro™ additives help our partners make their production processes safer and more robust. Another way of ensuring the circularity of heavily contaminated or mixed plastics streams is the production of synthesis gas. For this too, we are developing cleaning technologies such as adsorbents.

Evonik technologies are also used in the design for recycling approach. One example is a binder for heat-sealing applications (DEGALAN®), which allows the production of yogurt pots from a single material, so the pot and lid can be recycled together. Previously, yogurt pots had to be disposed of by incineration because of the aluminum lid. Together with a partner, at the K 2022 trade show for the plastics and rubber industry in Düsseldorf (Germany), we presented a concept for a monomaterial car seat produced by 3D printing: Substituting polyamide 12 for all materials used to produce seats, for example, plastics, metals, foams, and textiles, facilitates cost-efficient and ecological mechanical recycling. The concept should inspire other product designers to reduce the range of materials used. Moreover, new business models such as leasing could make such concepts viable in more price-sensitive markets.

Durable products with good usability reduce the resources and waste that would otherwise be consumed or generated in maintenance or the production of replacements. Building protection additives are a good example: They enhance the stability and appearance of concrete structures that are exposed to weathering and environmental influences.

Alternative circular solutions are needed for products and ingredients that are difficult or impossible to collect and recycle because of their properties or application. Evonik’s answers include, for example, fully biodegradable biosurfactants derived entirely from renewable raw materials.

Efficient use of scarce resources

Alternative and renewable raw materials

Evonik uses a wide range of raw materials in the production of its products. Like technical goods and services, they are sourced from a variety of suppliers. Production inputs decreased from 8.3 million metric tons in 2021 to 7.7 million metric tons in 2022. Production output was 8.8 million metric tons. Evonik replaces CO₂eq-intensive raw materials with alternatives wherever this is possible and competitive.

In its production processes, Evonik uses dextrose and saccharose, mainly as substrates in the fermentative production of amino acids. Natural fats and oils and their derivatives are used to produce precursors for the cosmetics, detergents, and cleaning agents industries and in technical processing aids. Renewable raw materials are classed as critical raw materials for procurement purposes, especially with a view to reliability of supply. Consequently, they are subject to a special examination.

We are endeavoring to increase the proportion of renewable raw materials. That includes examining technical, economic, ecological, and social aspects. In 2022, the proportion of renewable raw materials increased to 11.1 of production inputs (2021: 9.7 percent).

Palm oil

Evonik mainly uses palm oil, palm kernel oil, and their derivatives to produce ingredients for the cosmetics, detergents, and cleaning agents industry (Care Solutions business line) and to produce polymers used to improve the viscosity index and reduce the pour point of lubricants (Oil Additives business line). Our annual requirements are around 95,000 metric tons. We are critical of the establishment of new palm oil plantations and the associated land use. Therefore, we pay special attention to the ecological and sociopolitical developments relating to this market.

For many years, Evonik has supported the use of sustainable palm oil in the supply chain. The focus here is on internationally recognized certification standards. Evonik has been a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2010. In our annual RSPO progress report, we outline our activities and targets to foster sustainable palm oil production. In keeping with our commitment to ensuring the responsible use of palm oil, we actively network with NGOs, customers, and other stakeholders in the value chain. Evonik has drawn up recommendations for sustainable procurement and use of palm oil, palm kernel oil, and their derivatives to raise the awareness of our employees on how to take a responsible approach to these substances. We have published these recommendations on our website. Specific strategies, targets, and measures are defined by the operational management teams in the Care Solutions and Oil Additives business lines.

Evonik plans to use only RSPO-certified palm oil and palm kernel oil in its products by 2025. In addition to the sharp price rise, significant regional fluctuations in the supply of certified derivatives are challenging as this entails uncertainty in meeting demand. The preconditions for achieving our target are therefore the availability of the necessary raw materials and commercial feasibility on the global market.

Sustainable palm oil production: collaboration with WWF and Beiersdorf extended.
Progressive deforestation to establish new palm oil plantations is a major challenge. In view of this, Care Solutions has developed additional supply chain criteria with its customers. We expect further progress here to come from a joint project with the WWF and Beiersdorf. This partnership aims to strengthen sustainable development in the Malaysian region of Tabin in Sabah on the island of Borneo. This program takes a three-pronged approach—protect, produce, restore. The aim is to encourage the sustainable production of palm oil and other agricultural produce and stop deforestation. By 2025, a total of 20,000 hectares farmed by small- and mid-sized growers should be certified as conforming to the RSPO. In addition, a political framework is to be created for sustainable agriculture and forestry. The three partners have also pledged to protect the wildlife habitat in Tabin and to set up at least one ecological corridor allowing wild animals to migrate to other habitats. Moreover, the aim is to stabilize the population of threatened and endangered species, such as rare Borneo elephants and orangutans.

In the reporting period, Evonik extended its collaboration with WWF and Beiersdorf to a further project on Borneo, in the Indonesian Province of West Kalimantan. The aim is to certify 200 independent palm oil producers with a total of 300 hectares of land as RSPO-compliant. The goal is to give these smallholders direct market access to a palm oil mill by 2026. This is an important building block for Beiersdorf and Evonik in their commitment to sustainability along the entire supply chain for palm (kernel) oil derivatives

Product Stewardship

Strategy and management

Product stewardship is a vital precondition for our business. It is our “license to operate.” That includes evaluating the environmental and health risks of Evonik products and minimizing them where possible.

As well as complying with all statutory requirements such as the European chemicals regulation REACH and the Globally Harmonized System of Classification and Labelling of Chemicals (GHS), product stewardship at Evonik includes voluntary commitments that go beyond these regulations. The key elements of our product stewardship have also been defined in a product policy. To supplement this, a group-wide standard defines how these commitments are to be implemented within Evonik, together with control mechanisms to monitor their observance. We have been committed for many years to the international Responsible Care® initiative and the Responsible Care Global Charter of the International Council of Chemical Associations (ICCA), which includes the global product strategy (GPS).

Implementation of the REACH regulation and quality of dossiers

Under REACH, all substances produced, imported, or placed on the market in the EU in quantities of more than 1 metric ton p.a. have to be registered. Evonik supports the aim of protecting health and the environment in the handling of chemicals. To implement the complex REACH requirements, we maintain a close dialogue with our suppliers and customers, as well as with industry associations and authorities.

As well as the continued need to register substances, the priorities are the evaluation of dossiers and substances, and on restriction and authorization. Evonik itself is not presently affected by authorizations. We compare the substance lists published by the authorities with our own portfolio to identify as early as possible whether any of our substances are affected so we can take suitable action where necessary. We maintain close contact with our customers on this. Our reviews also cover the raw materials we purchase. Where substances are categorized as being of very high concern, for example, if they are on the REACH list of potential candidates, we discuss the steps to be taken with our suppliers or look for alternatives. We have set up email addresses for all REACH-related inquiries from customers and suppliers to ensure they receive timely and full replies.

The Globally Harmonized System (GHS)
The GHS established by the United Nations classifies dangerous goods and substances for labeling on packaging and in safety data sheets. The GHS is still not applied uniformly around the world. We have therefore set up an in-house database to gather information on progress, changes, and national requirements for internal communication. Evonik implements the GHS/CLP requirements in all countries where they apply.

Our chemicals management systems
We evaluate all substances placed on the market (> 1 metric ton p.a.). Particularly dangerous substances are included from lower amounts. That allows a soundly based assessment of the risks. Where necessary, restrictions are placed on certain usage patterns or, in extreme cases, a complete ban is issued on use in certain products.

Evonik evaluates its substances using its own chemicals management system (CMS). This system supports us in global evaluation of our substances. The content of the CMS has been harmonized with the GPS requirements of the International Council of Chemical Associations (ICCA) and the REACH requirements. By the end of 2023, we want to include and evaluate all substances that have been added through acquisitions since 2017.

As an extension of the CMS, our Chemicals Management SystemPLUS is used for products containing more than 0.1 percent substances of very high concern. Our aim is to reduce or replace these wherever possible. The precondition for this is a detailed analysis so that we can derive suitable action to bring about a further reduction in the possible negative effects on people and the environment. Around 2 percent of our products currently meet the criteria for evaluation on the basis of CMSPLUS. Since 2017, further substances that are within the scope of CMSPLUS have been added to our portfolio through acquisitions. We aim to include and evaluate these products by the end of 2023.

The European Green Deal published by the EU Commission sets out a timetable for Europe to become climate-neutral by 2050. One element in the zero-pollution target is the chemicals strategy for sustainability (CSS), which will have far-reaching consequences for the chemical industry and its value chain. Based on an internal examination and the economic analysis of the potential impacts of the CSS published by Cefic, we are engaging actively in the debate with decision-makers at national and European level through industry associations.

Green Deal: the main regulatory challenges for Evonik

Amendment of the REACH Regulation, including more restrictive provisions
Amendment of the Classification, Labeling, and Packaging (CLP) Regulation
More stringent requirements as a result of the planned Ecodesign for Sustainable Products Regulation (ESPR)
Tightening of the Industrial Emissions Directive (IED)
Introduction of a Safe and Sustainable by Design (SSbD) guideline
Implementation of the EU Taxonomy Regulation
Tightening of the Packaging Regulation

Evonik supports the goals of the Green Deal. In this context, we are campaigning for the proposed changes to be made circumspectly, to safeguard planning reliability and retain REACH as the central regulatory instrument for chemicals. That includes playing an active role in consultations and in both phases of Cefic’s analysis of the economic impacts. We are also drawing the EU Commission’s attention to the threat to our industry of a shortage of certain classified substances or substance groups.

Evonik sees the more restrictive regulations that could result from the revision of REACH as particularly critical: the generic risk approach, registration of polymers, the extensive data requirements to identify substances with endocrine disruptors and persistent properties, and the mixture assessment factor (MAF).

Under the generic risk approach, the exposure data required for a sound scientific assessment would be disregarded. The plan is to base restrictions or bans solely on hazard properties. This approach is to be stepped up not only for end-consumer products but also for commercial users.

The EU Commission has been instructed to review and implement the requirements for polymer registration under REACH. The regulatory procedure process currently under discussion is likely to be divided into two phases. The first would be a notification phase to compile data on all polymers in the EU market. The second step would be to clustering of the polymers, including subsequent data generation. On this basis, up to 70 percent of polymers on the EU market would be subject to mandatory registration with corresponding data requirements. From an industrial perspective, the costs and work involved would have to be reasonable.

The CSS extends the data requirements for endocrine disruptors, including restrictions and possibly bans on consumer applications. Endocrine disruptors are either natural or chemical substances that disrupt or alter the regulation of the hormone system and can cause lasting damage.

The MAF relates to the introduction of an additional safety factor for the assessment of possible combined and synergistic effects. The EU Commission is calling for a generic MAF for all applications. That could result in the discontinuation of applications that are currently considered to be safe. Evonik advocates for the use of a targeted MAF.

The planned amendments to the CLP regulation also contain some critical aspects. For example, endocrine disruptors, PBT/vPvB, and PMT/vPvM are to be introduced as new hazard classes. PBTs are substances with persistent, bioaccumulative, or toxic properties. PMTs are substances with persistent, mobile, and toxic properties. The introduction would be within the scope of the CLP (EU), without prior consultation at UN level (GHS). In addition, from an industrial viewpoint, endocrine disruptors are a mechanism of action, not an endpoint. What is more, the mobility criteria are inadequately defined. The EU’s chemicals strategy aims to define substances that meet these criteria as substances of very high concern (SVHC) and regulate them as such through the CLP regulation.

The proposed Ecodesign for Sustainable Products Regulation (ESPR) sets out performance and information requirements for almost all product categories. These include, among others, durability, recycling, and resource efficiency. In Evonik’s view, the planned information requirements for the digital product passport are unnecessarily extensive because they require the disclosure of product information that relates to the protection of intellectual property. Moreover, there certain substances of concern (SoC) could be subject to regulation in addition to the REACH regulation.

The EU Commission also aims to tighten the Industrial Emissions Directive (IED). It wants to introduce an environmental management system comprising a chemicals management system including an assessment of the risks to health and the environment. The plan is to make the environmental management system obligatory for operators, although it differs from established environmental management systems such as ISO 14001 and ISO 50001.

Safe and Sustainable by Design (SSbD) is a new concept to evaluate the safety and sustainability of products in the innovation phase. SSbD is currently being developed and is being monitored both by industrial associations and by Evonik in close interdisciplinary exchange between product stewardship, innovation, and sustainability. It is initially planned as a guideline rather than legislation but will probably have implications for our product portfolio.

With regard to the implementation of the EU taxonomy, Evonik still sees a significant need for discussion on the “do no significant harm” (DNSH) criteria for the environmental objective pollution prevention and control because, in some respects, these go well beyond the REACH regulation and are not defined sufficiently clearly. The delegated act on this environmental objective has not yet been published.

The EU Commission is planning to replace the Packaging and Packaging Waste Directive with a regulation. Here too, Evonik sees a danger that certain substances could be subject to regulation in addition to the provisions of the REACH regulation. The development of these proposals is being monitored both by industrial associations and internally at Evonik.

Aspects of product stewardship in the value chain are also examined as part of the sustainability analysis of our business. The focus here is on safeguarding our product portfolio by substituting dangerous substances in the supply chain. At the same time, we are working on alternative solutions for dangerous products. In the reporting period, we identified and evaluated various product stewardship signals in the context of the sustainability analysis of our business. Signal categories 1 and 2 specifically relate to critical substances and regulatory trends. We place great emphasis on the timely identification of market signals beyond regulations that have been adopted or are in force. PARCs with a negative rating—sales classified as transitioner or challenged—only account for a small proportion of our portfolio. We want to keep the proportion of sales generated with challenged products low on a long-term basis.