Lanxess

Reference: page 88

LANXESS describes its two-tier governance structure under the German stock corporation system. The Supervisory Board comprises twelve members with equal numbers of stockholder and employee representatives (corporate codetermination under the 1976 Codetermination Act); members generally serve five-year terms, with the next employee representative elections in 2025. The Supervisory Board gender diversity ratio is 33% female / 67% male, meeting FuPoG I requirements, and the ratio of independent members is 100%. A qualification matrix sets out members' experience. The Board of Management has four members (gender ratio 25% female / 75% male), satisfying FuPoG II. The Board of Management monitors and manages all sustainability matters; a committee structure was established in 2021, including a central Sustainability Committee chaired by Matthias Zachert that steers all relevant issues including material IROs, with five sub-committees (Climate & Energy; Health, Safety & Environment; Value Chain Circularity & Product Stewardship; Social & Governance; Stakeholder Expectations and Reporting Standards) each headed by a Board of Management member.

Reference: page 91

LANXESS reports that the Board of Management and the Audit Committee of the Supervisory Board are notified about the material IROs, the implementation of ESG due diligence, and the results of resolved directives, actions, targets and parameters. This takes place at meetings of the Sustainability Committee, attended by all Board of Management members, which convenes once per quarter; relevant subcommittees and supporting experts are consulted as needed. The Audit Committee receives reports from the Board of Management. In fiscal year 2024, the focus was on material sustainability matters and IROs, addressed especially at the November 2024 meeting at which all material sustainability issues and IROs were also presented within the Audit Committee. The Board of Management and the Audit Committee dealt with all material IROs. Material IROs are already addressed in the sustainability strategy or elsewhere, such as the human resources strategy; for example, CO2 reduction and energy efficiency potential are considered in capital expenditure decisions and acquisition due diligence.

Reference: page 92

LANXESS integrates sustainability-related performance into Board of Management incentive schemes; such criteria are not taken into account in Supervisory Board compensation. The short-term Annual Performance Payment (APP) comprises a financial criterion (80%) and a non-financial criterion (20%); the non-financial criterion is currently the lost time injury frequency rate (LTIFR), where an LTIFR of 0.7-1.1 equals 100% target attainment. The long-term Long Term Incentive (LTI) combines the stock-based Long-Term Stock Performance Plan (LTSP, 60%) and the Sustainability Performance Plan (SPP, 40%), with the SPP measured against a CO2e emissions reduction criterion (Scope 1 and 2) over a four-year assessment period. For the 2021-2024 period, CO2e emissions amounted to 1,887 thousand metric tons, leading to 200% SPP target attainment. In fiscal year 2024 the sustainability-related share of total variable compensation expense for the Board of Management amounted to 72%.

Reference: page 95

LANXESS provides a statement on due diligence via a mapping table linking the core elements of the sustainability-related due diligence process to the relevant sections of the Sustainability Report. The table covers: (a) embedding due diligence in governance, strategy and business model (ESRS 2 GOV-2, GOV-3, SBM-3); (b) engaging with affected stakeholders in all key steps of the due diligence (ESRS 2 GOV-2, SBM-2, IRO-1 and various topical standards); (c) identifying and assessing negative impacts on people and the environment (ESRS 2 IRO-1, SBM-3 and disclosures in the topical ESRS); (d) taking actions to address those adverse impacts (e.g. E1-1, E1-3, E2-2, S1-4, S2-4, S4-4); and (e) tracking the effectiveness of these efforts and communicating (e.g. ESRS E1-4, E2-3, S1-5, S2-5, S4-5). The references point readers to where each due diligence element is addressed across the report.

Reference: page 95

LANXESS describes risk management and internal controls over sustainability reporting. Within the internal risk and control system, the process of preparing the Sustainability Report is subject to various control and plausibility checks, including the four-eyes principle. Qualitative information and quantitative data were systematically collected and documented. The process was monitored and controlled by the project team group and the Accounting and Corporate Controlling Group functions. The general principles, scope, main features and components of LANXESS's opportunity and risk management, and the applied internal management and control system, are described in the Opportunity and Risk Report and also apply to sustainability reporting. Sustainability-related risk assessments took place within the materiality assessment, with results described in the topic-standard chapters. Topic experts from the relevant specialist departments were largely responsible for risk identification, with involvement of business units and site managers; results were presented to the relevant subcommittees, the Sustainability Committee, the Audit Committee and the Corporate Risk Committee, with a report to the Board of Management by Internal Audit.

Reference: page 96

LANXESS is active in chemicals production. Sales falling under section 20.2 of Annex I of Regulation (EC) No. 1893/2006 amounted to about EUR 440 million in fiscal year 2024. The core of the business model, the chemical conversion of basic chemicals to specialty chemicals, is affected, but not called into question, by the IROs identified through the materiality assessment; it is not the business model that is affected but rather the "how", from raw material selection through production impacts to product use. All material topics are already addressed in the sustainability strategy or elsewhere, such as the human resources strategy. The primary objective of the sustainability strategy is to develop a climate-neutral product range in the long term, applying to all applications and customer groups worldwide, with climate-neutral production as one goal. The value chains are mainly based on basic chemicals produced from gas or oil. The portfolio divides into intermediates and products in final chemical form (additives or formulation components).

Reference: page 97

LANXESS describes dialogue with stakeholders as crucial for sound decisions. A stakeholder analysis comprises selecting relevant stakeholder groups and systematically identifying potential impacts through dialogue formats, coordinated with the Stakeholder Engagement & Reporting Standards subcommittee and confirmed within the Sustainability Committee; the Audit Committee was notified how stakeholder views were accounted for in the materiality assessment. The nine relevant stakeholder groups are: customers, media, residents/neighbors (communities), suppliers, capital market, politics, employees, NGOs, and nature (a "silent stakeholder"). Groups are assessed and prioritized on three criteria scored 1 to 5 (impacts of LANXESS on the group; impacts of the group on LANXESS; the group's information interest), with relevance set above a threshold of 7. Engagement uses various channels per group (e.g. trade fairs, roadshows, surveys, round tables). A stakeholder survey at the end of 2023/beginning of 2024 received feedback from around 1,000 stakeholders, with key interests in pollution management, efficient resource use and renewable energies.

Reference: page 100

LANXESS lists all material impacts, risks and opportunities (IROs) in a table, organized by topical ESRS standard. With the exception of I14 (TOC wastewater pollution), I65 (damage due to accidents), I66 (risk of injury due to accidents) and I67 (risk of long-term health damage from chemical exposure/direct contact), which are reported as company-specific disclosures, all material IROs are fully subject to ESRS disclosure requirements. The register spans IROs across ESRS E1 Climate change (e.g. I1/I2 greenhouse gas emissions Scope 1, 2 and 3; O5 increased demand for climate-friendly products; R6 physical climate risks), E2 Pollution, E3 Water and marine resources, E4 Biodiversity and ecosystems, E5 Resource use and circular economy, S1 Own workforce (e.g. I68 gender pay gap), S2 Workers in the value chain (e.g. I71 child labor, I72 forced labor), S4 Consumers and end-users (e.g. health risks due to SVHCs), and G1 Business conduct. Short- and medium-term material risks were accounted for in the risk-bearing capacity assessment. No year-on-year changes are reported due to the first-time materiality assessment.

Reference: page 101

LANXESS describes its process to identify and assess material impacts, risks and opportunities through a comprehensive double materiality assessment under the CSRD, conducted for the first time in 2023 and 2024 for FY2024 reporting, with annual reviews planned and a full update only in the event of material business changes. The approach was based on the ESRS 1 AR16 sustainability matters catalog plus industry- or company-specific amendments. For impact materiality, the assessment was conducted bottom-up across business units, Group functions and countries; impacts were classified as positive or negative, with negative impact severity composed of scale, scope and irremediability, then combined with likelihood (scale 0-5). Negative impacts were material at scores at or above 7.5 (maximum 15) and positive impacts at or above 5.0 (maximum 10). For financial materiality, opportunities and risks were drawn from the existing risk management system and assessed against EBITDA pre exceptionals, with a EUR 1 million threshold. Tools including the SAP ARIBA risk tool, EcoVadis and EcoVadis IQ+ were used to assess value chain IROs.

Reference: page 106

LANXESS provides the IRO-2 disclosure on the disclosure requirements in ESRS covered by its Sustainability Report. Earlier in the ESRS 2 section (under BP-1), an overview table maps the contents of the non-financial statement (NFS) to chapters in the combined management report, covering the business model, key non-financial performance indicators, environmental matters (ESRS E1 through E5), employee-related matters (ESRS S1, S2), social matters (ESRS S4), respect for human rights, and combating corruption and bribery (ESRS G1). The IRO-2 content index identifies which disclosure requirements across the ESRS are covered, directing readers to where the corresponding information can be found in the report. LANXESS voluntarily and fully applied the ESRS as the framework for its Sustainability Report for the reporting period January 1 through December 31, 2024.

Reference: page 129

LANXESS describes a transition plan structured around its "Climate Neutral 2040" strategy (Scope 1 and 2) and "Net Zero Value Chain 2050" strategy (Scope 3), set out in its "Climate" Background Paper referencing the TCFD, GHG Protocol, SBTi and Paris Agreement. The Scope 1 and 2 strategy rests on three defossilization levers: implementing climate protection projects with major reductions, decoupling growth from emissions, and strengthening process and technological innovations. The Scope 3 strategy uses three levers: sustainable raw materials, green logistics, and climate-neutral products. In the 2024 reporting year, LANXESS began further refining its climate strategy with a Climate Transition Plan, scheduled for completion in 2025, to optimize the sequence and type of actions, more accurately assess costs, optimize budget planning, and allocate budgets to individual defossilization levers. There were no individual actions in 2024 with significant (over EUR 3 million) capital or operating expenditures. Examples include converting Indian sites to biomass and solar (expected to cut 150,000 metric tons CO2e annually) and phasing out coal.

Reference: page 128

LANXESS's climate policies are implemented through internal directives. The "Recording and Reporting of HSE Performance Data and Performance Indicators within LANXESS" directive ensures systematic capture of reliable health, safety and environment data, including climate-change- and energy-relevant metrics, and was produced on the basis of the Global Reporting Initiative (GRI) 300. The "Systematic Energy Management" directive describes minimum standards for energy management and processes ensuring energy and economic efficiency, implementing the requirements of the ISO 50001:2018 standard. The "Environmental Protection Management" directive describes the environmental protection management system and minimum requirements, implementing ISO 14001, aimed at meeting statutory requirements, preventing environmental incidents and minimizing impacts. Through its "Climate" Background Paper, LANXESS defines its climate strategy and GHG management within the company and along the value chain, referencing the TCFD, GHG Protocol, SBTi, Paris Agreement, SDGs, ISO 50001 and ISCC, and describes net zero targets for Scope 1 and 2 by 2040 and Scope 3 by 2050. In its Corporate Policy directive, LANXESS commits to climate protection targets and decoupling organic growth from energy consumption.

Reference: page 129

LANXESS pursues actions under two strategies. For "Climate Neutral 2040" (Scope 1 and 2), three defossilization levers apply: (1) implement climate protection projects generating major reductions, such as phasing out coal and converting Indian production sites (e.g. Nagda, over 80% converted) to biomass and solar, expected to reduce 150,000 metric tons CO2e annually, plus coal-to-gas conversion at Leverkusen, Dormagen and Krefeld-Uerdingen via park operator Currenta; (2) decouple growth and emissions through energy efficiency, with carbon footprint as an investment criterion and Scope 1/2 reduction included in the Sustainability Performance Plan for Board variable compensation; (3) strengthen process and technological innovations such as waste heat recycling and equipment replacement. These aim to cut annual emissions to 220 thousand metric tons CO2e by 2040, with residual emissions offset. For "Net Zero Value Chain" (Scope 3), three further levers apply: sustainable raw materials, green logistics, and climate-neutral Scopeblue products. CO2e emissions were reduced by 3,726 thousand metric tons in affected categories versus base year 2021. No individual 2024 actions exceeded EUR 3 million in capital or operating expenditures.

Reference: page 132

LANXESS has established medium- and long-term climate targets for Scope 1 and 2 and Scope 3 emissions, oriented around SBTi requirements to ensure compliance with the Paris Agreement 1.5°C path. Targets were most recently validated by the SBTi at the end of 2023, using base year 2021 and the IPCC emission paths. For Scope 1 and 2 ("Climate Neutral 2040"), the portfolio-adjusted base value is approximately 2,200 thousand metric tons CO2e from 2021; the interim 2030 target is a 42% reduction to 1,300 thousand metric tons CO2e, and the 2040 target is 220 thousand metric tons CO2e, representing a 90% reduction, with the remaining 10% offset. For Scope 3 ("Net Zero Value Chain"), the portfolio-adjusted base value is approximately 14,745 thousand metric tons CO2e from 2021; the interim 2030 target is a 25% reduction to 11,000 thousand metric tons CO2e, and the 2050 target is 1,475 thousand metric tons CO2e, a 90% reduction. The 2030 Scope 3 target is based on a "well below 2°C" scenario and is not 1.5°C-compliant, but the 2050 target is. Base year data are updated at least every five years.

Reference: page 135

In 2024, LANXESS's total energy consumption related to own operations was 8,312,779 MWh. Total energy consumption from fossil sources was 7,270,199 MWh, comprising coal and coal products (29,885 MWh), crude oil and petroleum products (373,124 MWh), natural gas (2,236,977 MWh), and purchased/acquired electricity, heat, steam and cooling from fossil sources (4,630,213 MWh). The share of non-renewable sources in total energy consumption was 87.5%. Total energy consumption from nuclear sources was 117,051 MWh (1.4% share). Total energy consumption from renewable sources was 925,529 MWh, including fuel from renewable sources/biomass (820,989 MWh), purchased renewable electricity/heat/steam/cooling (104,072 MWh) and self-generated non-fuel renewable energy (468 MWh); the renewable share was 11.1%. Non-renewable energy production was 348,860 MWh and renewable energy production 468 MWh. Energy intensity in high climate impact sectors was 1,306 MWh per EUR million, with net revenue from high climate impact sectors of EUR 6,366 million. Energy data are stated in MWh; measurement methods are not externally validated.

Reference: page 136

LANXESS reports gross Scope 1, 2, 3 and total GHG emissions in thousand metric tons CO2e, using the GHG Protocol Corporate Standards and operational/financial control. In 2024, combined gross Scope 1 and market-based Scope 2 emissions were 1,887 (base year 2021: 2,203; 2030 target 1,300; 2040 net zero/220). Gross Scope 1 emissions were 854 (base 939), with 45% from regulated emission trading schemes. Location-based Scope 2 was 1,296 (base 1,514) and market-based Scope 2 was 1,033 (base 1,264). Total indirect gross Scope 3 emissions were 10,372 (base 14,745; 2030 target 11,000; 2050 net zero/1,475), a 29.7% reduction since 2021; Category 1 (purchased goods and services) was 4,209 and Category 12 (end-of-life treatment) was 4,880, with 8% of Scope 3 based on primary data. Total GHG emissions were 12,522 location-based and 12,259 market-based. GHG intensity was 1,967 (location-based) and 1,926 (market-based) tons CO2e per EUR million. Biogenic Scope 1 emissions were 279 thousand metric tons CO2 and biogenic value-chain emissions 97 thousand metric tons CO2, disclosed separately. All seven GHGs are recorded using IPCC AR6 GWP factors over a 100-year horizon.

Reference: page 137

LANXESS is currently analyzing the potential and possibilities of carbon capture and storage (CCS) but does not presently participate in any such projects, particularly due to the complex situation in the compensation market. LANXESS is also not currently involved in any projects to purchase carbon credits (often referred to as CO2 certificates). In conformity with the rules of the SBTi, LANXESS will achieve the first at least 90% of CO2 reduction relative to the base year without carbon credits and will use these at most for the remaining 10% of the reduction. Because LANXESS does not currently use carbon credits and does not plan to amend this in the short term, it does not currently believe it is necessary to analyze the credibility of the various credits.

Reference: page 138

LANXESS applies internal carbon pricing through a carbon shadow price in the internal assessment of major capital expenditure projects (such as carbon reduction and energy efficiency measures) and M&A projects within a structured process, assessing both the base case and alternative scenarios, directly affecting the economic viability of capital expenditures. The carbon shadow price pertains to Scope 1 and Scope 2 emissions worldwide for all units and activities; 100% of Scope 1 and Scope 2 emissions are covered, while Scope 3 emissions are not covered. It is proposed by Energy Procurement, approved by the Board of Management and communicated by Corporate Controlling during the annual target setting process. The E.U. Emissions Trading System (ETS) price and carbon taxes are accounted for equally. The internal shadow price is determined from estimated energy purchases and set with regional and time differences, accounting for the IEA's Net Zero Emissions (NZE) by 2050 scenario; scenarios of EUR 0 and EUR 150 per metric ton and IEA NZE-2050 prices are calculated. The metric is not externally validated but was assessed within S&P's Corporate Sustainability Analysis and by the CDP.

Reference: page 143

LANXESS describes its pollution-related policies. General information on policies pursuant to ESRS 2.65 is in section G1-1 of the ESRS G1 Business Conduct chapter. The "LANXESS Corporate Policy" reaffirms the commitment to continuously reducing emissions to air, water and soil and protecting the environment, with the highest responsibility held by the Board of Management. Internal directives include the "Environmental Protection Management" directive (focused on meeting legal requirements, avoiding environmental incidents in wastewater, exhaust air, emissions and waste, minimizing damage, and improving environmental performance), the "Recording and Reporting HSE Performance Data & Performance Indicators within LANXESS" directive, the "Product Safety Management at LANXESS" directive, and the "Central Product Surveillance" directive. These reference agreements such as the Montreal Protocol, the Rotterdam Convention (PIC), the Stockholm Convention on POPs, the Responsible Care Global Charter and the ICCA Global Product Strategy. Background Papers covering "Value Chain Responsibility," "Product Portfolio" and "Water" address management approaches for air, water and soil pollution and reference the UN Global Compact and SDGs.

Reference: page 145

LANXESS describes actions and resources related to pollution. The LANXESS Product Sustainability Monitor is the strategic management tool used to align the portfolio with sustainability, intended to have a positive effect on impacts I22 and I24. Started in 2016 and continuously developed, it divides the portfolio into five categories: energizer, performer, transitioner, 2024-2026 roadmap and phase-out. There were no individual actions in the 2024 financial year with significant (greater than 3 million euros) capital or operating expenditures. On water treatment, LANXESS equipped its first mobile water treatment plant with its Lewatit TP 108 DW ion exchange resin, in operation since May 2024 and planned for at least two years, to increase water quality and reduce drinking water contamination, particularly for reducing PFAS in circulation. During the two-year pilot project LANXESS provides advice and support, records performance data and supports optimization, with initial results expected after the first few months. There were no individual water-treatment actions in 2024 with significant (greater than 3 million euros) expenditures.

Reference: page 146

LANXESS monitors policy and action effectiveness by regularly measuring environmental indicators on pollution of water and air and critical substances. Two targets are detailed. The first is reducing specific Total Organic Carbon (TOC) by 2% per year until 2025, measured in kilograms per thousand euros of net sales, with the base year continually updated to the previous year (2023 base value: 0.13 kg/thousand euros). Key assumptions are efficiency gains, continuous improvements in production standards and the economic situation; the target is voluntary and not legally binding. For the reporting period the specific TOC value was 0.14 kilograms/thousand euros, so the target was not achieved. The second target is reducing emissions of non-methane volatile organic compounds (NMVOCs) by 25% by 2025 compared with base year 2015 (baseline 5.4 thousand metric tons), measured in absolute thousand metric tons. This target is also voluntary and not legally binding; for the financial year this resulted in a reduction of 88.9% compared to the base year. Additional roadmap targets for substances of concern are described in the ESRS S4 chapter.

Reference: page 147

LANXESS reports pollution of air, water and soil. For the first time this year, reporting is guided by Regulation (EC) No 166/2006 (PRTR), in particular Annex II, which lists potential pollutants; the list was provided to all sites worldwide for consistent data collection. Sites identify relevant pollutants and release points (air, water, soil), then record and report total annual emissions per pollutant, which are combined at Group level and compared with Annex II limits, with values exceeding limits included in Group reporting. As this is the first year of reporting, no historical reference figures are available. Emissions are measured at facility level under approved, facility-specific measurement plans defining sampling locations, frequency and extrapolation methods, and may be measured, calculated or estimated. Reported 2024 quantities (in kg) include carbon dioxide 597,083,780; chlorides 126,256,070; carbon monoxide 1,262,270; total organic carbon 600,343 (water); nitrogen oxide 290,570; total nitrogen 231,774; particulate matter (PM10) 69,081; total phosphorous 25,940; and halogenated organic compounds (AOX) 12,236. An asterisk indicates parameters and media that do not trigger an Annex II reporting requirement.

Reference: page 148

LANXESS reports substances of concern (SoC) and substances of very high concern (SVHC) by main hazard class for 2024 (in metric tons). It carries products and raw materials containing such substances and uses ECHA's harmonized data sources, including the SVHC list and Annex VI of the CLP Regulation, for reporting. Amounts are distinguished between purchased, produced and sold; purchased substances are recorded in ERP systems, while produced and sold amounts are analyzed using substance compositions from SAP EHS and processed in SAP BW. Total substances of concern amounted to 2,437,974 tons (810,116 procured; 1,158,638 generated; 469,220 that left facilities, of which 37 as emissions and 465,537 as products). Total substances of very high concern amounted to 190,167 tons (41,264 procured; 87,964 generated; 60,939 that left facilities, of which 2 as emissions and 60,799 as products). For emissions, a comparison was made with emissions registered in the PRTR, supplemented by a global site survey; results were consolidated and reported separately by SoCs and SVHCs. The parameters are not validated by external bodies.

Reference: page 153

LANXESS's policies on water apply to all sites, including production sites in water stress areas. The "LANXESS Corporate Policy" reflects a responsible approach to water use, recognizes the right to water and sanitation as a fundamental human right, and commits the company to working with stakeholders, particularly through local water stewardship programs. The basis for recording environmental indicators is the "Recording and Reporting HSE Performance Data & Performance Indicators within LANXESS" directive, which describes processes for collecting data on water withdrawal, water discharge and related parameters, and documents target achievement. Protection of water resources is regulated within the "Environmental Protection Management" directive, which sets minimum process requirements for handling contaminated and uncontaminated wastewater and stipulates that wastewater specifications and associated limits must be monitored. The "Water" Background Paper describes LANXESS's three-step water program; the first two steps relate to own operations while step three also addresses the value chain. The water stewardship framework is based on the Alliance for Water Stewardship (AWS) standards.

Reference: page 153

LANXESS conducts a water risk analysis to estimate site-specific water risks, with current and future water stress and water withdrawal rates as the most important benchmarks. For fiscal year 2024, four locations were identified as water risk sites: Jhagadia and Nagda (India), Latina (Italy) and Qingdao (China), all affected by extremely high water stress. A reassessment of sites using the water risk analysis is planned in 2025 due to the update of the Aqueduct Water Risk Atlas. The water stewardship program (step 2 of the water program) targets water risk sites using the LANXESS water stewardship framework, addressing water quality, quantity, the WASH situation, best practices and water costs. LANXESS achieved its target of introducing site-specific water stewardship programs by the end of 2023 and aims to reassess these activities by 2028; a kickoff, gap analysis and site-specific action plans are planned for 2025. LANXESS plans to implement the WASH Pledge actions (WASH4Work) at its own production sites by 2028, with an initial gap analysis scheduled for fiscal year 2025. There were no individual actions in the 2024 financial year with significant (greater than EUR 3 million) capital or operating expenditures.

Reference: page 155

LANXESS has set Group-level water targets that are voluntary and not legally binding. The first target is to reduce the Group's specific water consumption by 2% per year, measured in cubic meters per thousand euros of net sales using the previous year as baseline, with no intermediate targets or milestones defined. LANXESS did not achieve its target of reducing specific water consumption by at least 2% in fiscal year 2024. The second target is a 9% absolute reduction of water withdrawal at water stress and water risk sites by 2028 (base year 2019), measured in absolute cubic meters; the 2019 baseline value for water withdrawal was 5.7 million m3. Absolute water withdrawal for the financial year reduced by 43.9% at water risk sites compared with the base year 2019. The third target is to reassess the water stewardship programs at water risk sites by 2028; it is relative, covers 100% of the four water risk sites, and has a base year of 2024 with a base value of 0 reassessments. A fourth target is to implement the WASH Pledge actions by 2028 (WASH4Work). Targets were approved by the relevant heads of the business units and the whole Board of Management. A separate target on annual 2% reduction of specific total organic carbon (TOC) is reported under ESRS E2 Pollution rather than E3.

Reference: page 157

For fiscal year 2024, LANXESS reported total water consumption of 10,565,594 m3, with water consumption in water risk areas incl. water stress areas of 1,290,351 m3. Recycled and reused water was 303,444,399 m3, and water intensity was 1,660 m3 per million euros of net sales. Total water withdrawals were 167,668,095 m3, of which 3,198,825 m3 were in water risk areas incl. water stress areas and 164,469,270 m3 outside those areas. Total water discharges were 158,489,588 m3. LANXESS uses an electronic data-entry system to record key water data worldwide, collecting information quarterly or annually and distinguishing between measured, calculated and estimated values. In line with the ESRS definition based on the GRI, total water consumption comprises the difference between water withdrawal (including purchased steam) and water discharge (including once-through cooling water) and water supplied to third parties. Water consumption in water stress areas incl. water risk areas is calculated for sites classified as high or extremely high water stress according to the World Resources Institute Aqueduct tool (as of 2023); ten water stress sites were identified in the 2024 financial year. Closed-circuit cooling water volumes are regarded as reused water.

Reference: page 164

LANXESS does not present a standalone biodiversity transition plan; instead it integrates the key drivers of biodiversity loss—climate change, pollution, water and resource use—into its overall management approach (cross-referenced to E4 SBM-3, E4-2 and E4-3). The company states this addresses the interlinked challenges of ecological conservation, strengthens its ability to meet sustainability objectives, increases resilience of global value chains and contributes to community well-being. Its biodiversity efforts are aligned with the Sustainable Development Goals, particularly SDG 14 (life below water) and SDG 15 (life on land). LANXESS uses its Product Sustainability Monitor to align its portfolio with sustainability goals and the WWF Biodiversity Risk Filter to analyze site proximity to vulnerable areas, with results used for monitoring and reporting to track biodiversity changes. The “Biodiversity” Background Paper describes the management approach and is guided by frameworks such as the Kunming-Montreal Global Biodiversity Framework and the EU Biodiversity Strategy for 2030. As this is the first year IROs were collected under double materiality, no comparison with the previous financial year is possible.

Reference: page 164

LANXESS addresses its biodiversity-relevant impacts by integrating the key drivers of biodiversity loss—climate change, pollution, water and resource use—into its management approach. Its efforts are aligned with SDG 14 (life below water) and SDG 15 (life on land). The company uses the LANXESS Product Sustainability Monitor to align its portfolio with sustainability goals and emphasizes action on climate change, pollution, water and resource use and protection of biodiversity at production sites; it uses the WWF Biodiversity Risk Filter to analyze the proximity of sites to vulnerable areas, with results used for monitoring and reporting. The “Biodiversity” Background Paper reinforces its commitment to responsible stewardship of ecosystems along the value chain and explains associated management approaches. The paper is guided by global and regional frameworks such as the Kunming-Montreal Global Biodiversity Framework and the EU Biodiversity Strategy for 2030, and uses tools such as ENCORE and the WWF Risk Filter to assess dependencies and impacts. It considers climate change, freshwater-use change, sea-use change and pollution the main categories, with no current focus on specific actions regarding land use and deforestation. LANXESS combines its biodiversity strategy with social matters, for example using Lewatit resins to ensure clean water.

Reference: page 165

LANXESS monitors its dependencies and impacts on biodiversity, addressing the upstream value chain through active supplier management and the downstream value chain through product responsibility. Because the identified impacts largely fall under other environmental standards, the company provides cross-references rather than detailing E4-specific actions: Impacts I34, I35 to ESRS E1 Climate Change; Impacts I37, I38, I40, I41 to ESRS E2 Pollution; Impact I39 to ESRS E3 Water and Marine Resources; and Impact I42 to ESRS E5 Resource Use and Circular Economy. On sourcing bio-based raw materials, LANXESS promotes low-carbon solutions to reduce Scope 3.1 emissions, including transition from fossil to bio-based, recycled or power-to-X materials, and works with suppliers to ensure biomass is renewable, does not compete with food production and does not cause biodiversity loss or deforestation, using ISCC+ certification. On product-related impact, the company invested in developing the antioxidant Vulkanox 4060 as a safer alternative to 6PPD—offering improved biodegradability, reduced toxicity to aquatic life and improved durability—and initiated phase-out of the old product under a “sustainability by design” approach.

Reference: page 166

LANXESS states that it did not set any biodiversity-specific targets or initiate any biodiversity-specific actions in the 2024 financial year. However, the company reports that it has set targets for its primary environmental impacts and initiated actions that are already included in the other environmental standards (cross-referenced to ESRS E1 Climate Change, ESRS E2 Pollution, ESRS E3 Water and Marine Resources, and ESRS E5 Resource Use and Circular Economy), and considers that it thereby already comprehensively addresses its impact on biodiversity elsewhere. LANXESS notes that its Biodiversity Background Paper is updated annually to take account of the material impacts on biodiversity and to present progress.

Reference: page 167

To identify sites near protected areas or Key Biodiversity Areas, all global production sites were analyzed using the WWF Biodiversity Risk Filter (WWF BRF). Sites with a high or very high risk in the “Key Biodiversity Areas” and “Protected Areas” categories were evaluated separately using a geoinformation system and protected-area data sets, applying a three-kilometer buffer zone to check for overlaps; protected areas corresponding to IUCN categories I–IV were included (category IV included where overlap exceeded one square kilometer). The metric was not externally validated, is reviewed annually, and its disclosure is voluntary and not required by law. Globally, seven production sites with a total area of 103.95 ha were identified near protected areas (IUCN categories I–IV). The condition of these areas was analyzed using the WWF Risk Filter: a very low risk for Krefeld-Uerdingen; low risk for Baxenden, Bergkamen, Dormagen, Leverkusen and Mannheim; and a medium risk for Sydney. Identified sites and protected areas include Baxenden (West Pennine Moors), Bergkamen, Dormagen, Krefeld-Uerdingen, Leverkusen, Mannheim (Horreninsel) and Sydney (Newington, category Ia). LANXESS refrains from using biodiversity offsets, concentrating on direct site-specific actions, and has no relevant metrics relating to land-use change.

Reference: page 172

LANXESS states that all general information on its policies under ESRS 2.65 is provided in the "G1-1 Corporate Culture and Business Conduct Policies" section of the ESRS G1 chapter. It notes its policies do not yet cover topics such as prioritizing waste prevention and minimization over waste treatment. The highest-level "LANXESS Corporate Policy" addresses the circular economy, requiring the reduction of waste, promotion of waste recycling and avoidance of hazardous waste emissions as far as possible, and affirms support for the transition to a sustainable, resource-efficient, climate-neutral and circular economy, with particular focus on the use of secondary (circular) or renewable raw materials. The "Procurement of Goods and Services in the LANXESS Group" directive guides upstream procurement, calling for sustainable procurement, assessment of environmentally friendly material alternatives, reduction of resource and energy consumption, consideration of logistics impacts, and environmentally friendly disposal of materials no longer required. It does not include specific requirements on waste. The "Environmental Protection Management" directive focuses on safe waste disposal, prevention and reduction. The "Recording and Reporting HSE Performance Data & Performance Indicators within LANXESS" directive is the basis for recording environmental indicators, with waste indicators covering recovery operations and disposal. The Background Paper "Value Chain Responsibility" sets out related management approaches.

Reference: page 175

LANXESS describes actions to transform its value creation system into a resource-efficient and climate-neutral society, dividing the path to climate-neutral and circular products into three partially overlapping action areas: carbon footprint (cradle-to-gate), sustainable raw materials and recyclability. It focuses on ensuring the recyclability of all products and sourcing sustainable raw materials originating from recycling, plant-based or renewable energy; since 2022 a calculation tool monitors the proportion of bio-based, circular, renewable and recycled raw materials. New Scopeblue products are cited, including Lewatit S 1567 Scopeblue (using styrene from renewable or waste-based feedstocks such as tall oil fatty acids, replacing more than 90% of fossil raw materials and reducing the carbon footprint by up to 76%) and UltraPure 1296 MD PLUS for semiconductor production. Under "Optimizing material flows," LANXESS reuses by-products as raw materials in neighboring plants to create closed loops, with examples at Bergkamen (a publicly funded research project launched in 2024, expected complete in 2027) and Krefeld-Uerdingen (Inorganic Pigments iron oxide recovery via the Laux process, launched 2022 and ongoing, returning up to 75% of iron produced to the raw material cycle). There were no individual actions in 2024 with significant (over EUR 3 million) capital or operating expenditures. LANXESS is also a founding member of the BDI Circular Economy initiative.

Reference: page 176

In the 2024 financial year, LANXESS defined concrete waste targets for the first time. The targets were set voluntarily and are not tied to legal requirements. The first target is a 10% reduction of total waste in absolute terms by 2030 compared with base year 2021, which had a baseline of 207.9 thousand metric tons; this relative target is based on the upper levels of the waste hierarchy and focuses on prevention and reduction, covering all waste categories reported under incineration, landfilling, recycling or other disposal methods. The second is a 50% reduction of total landfilled waste by 2030 compared with base year 2021, when 50.8 thousand metric tons was landfilled, measured in metric tons and based on the waste hierarchy. The third is implementation of an expanded waste management system at 100% of own production sites by 2028, with 2024 as the base year at 0% coverage and 100% coverage targeted for 2028; it covers all levels of the waste hierarchy (prevention, reduction, recycling and disposal). No intermediate targets or milestones were defined. LANXESS also targets a 30% reduction of Scope 3.1 emissions by 2030 (base year 2021). Relevant stakeholders, particularly business units, were involved, and targets were adopted by the Board of Management via the Health, Safety & Environment subcommittee and the Sustainability Committee. Because targets were first published in 2024, no disclosures on changes and progress in 2024 were yet possible.

Reference: page 177

LANXESS divides its raw materials into organic and inorganic raw materials. Organic raw materials originate from natural sources such as plants, animals and microorganisms and are obtained through agriculture, harvesting and biotechnological processes, including essential oils, natural fibers and bio-based and petroleum-based chemicals. Inorganic raw materials come from minerals, ores and chemical compounds obtained through mining, quarrying and synthetic production methods, including metals, salts and industrial chemicals. In fiscal year 2024, LANXESS procured a total of 3,408,311 metric tons of raw materials. Of this amount, 12,120 metric tons (0.36% of the total) was classifiable as biodegradable, sustainable material. In addition, within the procured amounts, a total of 136,000 metric tons of secondary scrap was used for production in the Inorganic Pigments business unit. A resource inflows table reports secondary reused or recycled components of 136,000 metric tons, representing 4% of total raw materials, while secondary intermediary products and secondary materials are both reported as 0 (0%).

Reference: page 178

LANXESS describes the methodology for resource outflows. It has developed an internal tool for calculating raw material Scope 3 emissions, used to track and report all raw materials purchased from suppliers, with the main aim of managing the product carbon footprint (PCF) of procured raw materials and classifying them as organic, circular or renewable to avoid overlaps or double counting. The tool uses primary data where an actual PCF figure is available from suppliers; otherwise purchased items and quantities are compared with third-party databases (for example Gabi or Carbon Minds) to calculate a PCF. The calculation method and tool calculations are certified by TUV Rheinland. PTSE HSEQ created the LANXESS Product Sustainability Monitor as a strategic management tool to systemically evaluate and improve the product portfolio's sustainability performance; only products with very low or low environmental impact contributing to at least one sustainable development goal are approved in the pre-selection process for the Scopeblue label. LANXESS promotes the circular economy through recyclable products, chemical recycling and additives such as Baynox, Bayferrox 303T and Aktiplast 79, which give materials a longer life, improve recyclability and enable their return to cycles. Waste indicator data for 2024 is also reported in this section (see E5-5-Waste).

Reference: page 178

LANXESS reports waste indicators for 2024 split by EU, Non-EU and total. The total amount of waste was 722.9 thousand metric tons (EU 138.7, Non-EU 584.2). Total hazardous waste was 644.7 thousand metric tons (EU 109.6, Non-EU 535.1) and total non-hazardous waste was 78.2 thousand metric tons (EU 29.1, Non-EU 49.1). For hazardous waste, 19.0 thousand metric tons was diverted before disposal (all recycling; EU 10.2, Non-EU 8.8), with no preparation for reuse and 0.0 from other recovery operations; 625.7 thousand metric tons was destined for disposal, comprising incineration 77.2, landfilling 11.5, other disposal operations 537.0; radioactive waste was nil. For non-hazardous waste, 21.7 thousand metric tons was diverted before disposal (all recycling; EU 8.5, Non-EU 13.2), and 56.5 thousand metric tons was destined for disposal, comprising incineration 16.3, landfilling 21.4 and other disposal operations 18.8. LANXESS notes its waste is largely aqueous waste or waste from chemical processes such as filtration residues, salts and solvents, generated continuously, and divides waste into material recovery (preparation for reuse, recycling, other recovery operations) and waste treatment (incineration, landfilling, other disposal), each subdivided into hazardous and non-hazardous. The hazardous/non-hazardous distinction follows national/regional legislation; in the EU it is governed by the European Waste Framework Directive. Most data are direct measurements based on disposal company invoices, and waste data is audited by public institutions in various countries.

Reference: page 189

LANXESS, with 12,338 employees worldwide, sets out its commitments in the "LANXESS Corporate Policy" covering working conditions, safety, health and diversity. The "Declaration of Principles on Respect for Human Rights and Related Environmental Standards" commits the Group to respecting human rights, including prohibition of child and forced labor, slavery and human trafficking, occupational health and safety, fair remuneration, freedom of association, right to collective bargaining and protection against discrimination. It is reviewed at least annually, overseen by the Board of Management, publicly available, and based on the UN Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, ILO Declaration, UN Global Compact, the ICCA Responsible Care Global Charter and UN Women's Empowerment Principles. The Group-wide Code of Conduct requires integrity and compliance. The HR directive "Working Conditions and Equal Treatment of Employees" (adopted 2024) regulates working time, minimum age, diversity, equal opportunities and inclusion (including persons with disabilities), and specifies discriminatory bases such as race, ethnic origin, skin color, gender, sexual orientation, gender identity, disability, age, religion, political opinion and national or social origin. Further policies cover process and plant safety, occupational health and safety management, flexible working (Xwork), and the Business Partner Code of Conduct.

Reference: page 191

LANXESS collects employee perspectives through initiatives, measures and working groups tailored to topics, engaging via employee representative bodies, the quarterly information meeting (QIM), site visits and works meetings, where employees can participate in person or online. In Germany there is a representative body for persons with severe disabilities. The global women's network WInX, sponsored by the Labor Director, engages with women, and U.S. network groups such as X-arise (Against Racial Injustice and Social Exclusion) help capture views of potentially vulnerable or marginalized employee groups. Dialogue with employees and their representatives, used for information, consultation or co-determination, occurs several times a month in Germany, quarterly across Europe, annually at the Europe Forum, as required in India and China, and as required or monthly in the USA and Canada. For co-determination topics such as the FORWARD! action plan or IT agreements, agreements are concluded with workers' representatives and published via the Xdirect document management system. Effectiveness of dialogue is measured primarily by the extent to which agreements are reached in a focused and timely manner; new agreements were concluded in 2024.

Reference: page 192

LANXESS operates an internal control system with monitoring activities and audits from Group Internal Audit and areas with special compliance responsibilities. The Compliance department is available to employees and external persons where violations or complaints are suspected. The external whistleblower platform "SpeakUp" (speakupfeedback.eu) allows employees and external persons to submit information anonymously if desired, by telephone or online, around the clock, in over 70 languages, with information sent to Compliance in encrypted form. Reports may concern misconduct, breaches of law, internationally recognized basic principles, LANXESS directives such as the Code of Conduct, human rights, occupational health and safety or plant safety, and may also concern suspected violations by direct or indirect business partners. Incoming grievances are processed by the Compliance department, if necessary with relevant specialist departments. The "LANXESS Complaints Procedure" provides further information and is available on the website. Employees and their workers' representatives have access to at least one of these channels.

Reference: page 192

LANXESS has taken actions to prevent or mitigate material negative impacts and create positive impacts on its workforce. Under the FORWARD! action plan (introduced 2023), around 870 jobs are to be cut worldwide, with over 90% cut by end of 2024 and the remainder mainly pension-related departures in 2025-2026; a hiring freeze in Europe continued, with only business-critical positions filled. The downsizing was closely coordinated with workers' representatives and done in a socially responsible manner. Immediate 2024 cost measures included postponing the global salary adjustment, canceling the demography payment for collectively-agreed employees in Germany (negotiated and approved with workers' representatives in 2023), reducing the IPP to 50%, and significantly reducing the APP worldwide. Other actions include diversity and inclusion measures, working conditions and benefits, occupational health and safety measures (Xact safety initiative), and personnel development. The Group decided in late 2024 to introduce AI-based skills management software (rollout 2025-2026) to improve recruitment, career paths, personalized learning and succession planning. Gender pay gap impacts are addressed through compensation and benefits and diversity and inclusion measures.

Reference: page 202

Stakeholders were indirectly involved in target agreements on gender diversity, training and voluntary turnover. HR subject matter experts, familiar with the interests of stakeholders including employees, society, legislators and NGOs, proposed targets that were reviewed and approved by the head of HR and ultimately the Board of Management. For occupational safety targets (LTIFR/RIR), the Sustainability subcommittee responsible for HSEQ topics, including representatives from various Group functions and business units, adopted the proposals, with final approval by the Board of Management. Progress toward all targets is assessed at least once a year and reported to the Board of Management, with detailed analyses informing further measures. Key targets include increasing the proportion of women at the first and second management levels below the Board of Management to 25% and 28% respectively by June 30, 2027; 30% women in management by 2030; retaining at least 80% of apprentices in Germany; keeping the voluntary turnover rate below 4.5% until end of 2026; and reducing LTIFR by more than half by end of 2025 versus 2016 (LTIFR 2.0), with absolute LTIFR maximum 0.9 and RIR maximum 0.7.

Reference: page 203

Data is drawn from the global LANXESS HR reporting system, showing headcount at December 31 and, unless otherwise noted, referring to the core workforce (active employment relationship and permanent contract). By gender, permanent headcount comprises 9,666 male and 2,672 female employees (0 other, 0 not specified) for a total of 12,338. The largest countries are Germany (6,724 employees) and the U.S. (1,871). Including temporary employees, the total is 13,272 (2,839 female, 10,433 male): 12,338 permanent and 934 temporary, with 0 employees on non-guaranteed working hours. By region, permanent employees total 6,724 in Germany, 2,797 in the Americas, 1,633 in APAC and 1,184 in EMEA (excluding Germany). Fluctuation in 2024 was 1,178 departures, a rate of 9.5%; overall turnover is higher than previous years due to FORWARD! job cuts. The number of departures aggregates all departures in the year, and total turnover was based on the average number of employees across the four quarterly financial statements. The voluntary turnover rate (turnover based on resignations) was 3.6%, below the target of less than 4.5%.

Reference: page 204

LANXESS reports collective bargaining coverage and social dialogue for employees in the EEA (for countries with more than 50 employees representing more than 10% of total employees). For collective bargaining coverage, Germany falls in the 80-100% band while the U.S. falls in the 0-19% band. For workplace representation (social dialogue, EEA only), Germany falls in the 80-100% band. There is also workers' representation at European level (European Forum), based on relevant internal agreements with workers' representatives. The analyses refer to the company's core workforce (employees with an active employment relationship and permanent contract), which the company states provides more informative value and historical comparability with previously published data. Elsewhere the statement notes that collective agreements on remuneration cover more than half of LANXESS employees worldwide.

Reference: page 204

Diversity metrics by age group, referring to the core workforce (active employment relationship and permanent contract), show employees under 30 at 1,351 (11%), aged 30-49 at 5,956 (48%), and 50 or older at 5,031 (41%), totaling 12,338 (100%). On gender diversity in management, at top management level (first and second management levels below the Board of Management) there were 60 female and 163 male employees, with women representing 27.0% and men 73.0%. The proportion of women at the first level below the Board of Management was 24.4% (2023: 23.1%) and at the second level 27.5% (2023: 28.4%); the Board of Management included one woman. The proportion of women in management overall was 26.1% (unchanged from 2023). The average age of employees at LANXESS is currently 45.

Reference: page 204

LANXESS offers all employees worldwide adequate wages in line with locally applicable benchmarks. ESRS defines an adequate wage as one that provides for the satisfaction of the needs of workers and their family in the light of national economic and social conditions. The annual salary as at December 31, 2024 was used to assess adequate wages and, depending on the benchmark, was calculated based on weekly working hours and 52 weeks per year, either to an hourly wage or a full-time monthly salary. A subsequent review was conducted to ensure all values exceeded the locally applicable minimum reference thresholds. Employees from two companies whose compensation data is not available in the global system, as well as employees on international assignments, were not included in the analysis due to their special compensation packages; these employees make up less than 1% of the workforce.

Reference: page 205

100% of employees are covered by the company's health and safety management system, in accordance with legal requirements and/or recognized standards or guidelines (based on headcount analysis). There were no fatalities in the company's own workforce due to work-related injuries or work-related illnesses, and in 2024 there were no fatal accidents worldwide. The Recordable Incident Rate (RIR) records work-related accidents reportable under OSHA regulations (per 200,000 working hours); in the reporting year there were 66 recordable work-related incidents, a rate of 0.5. Recordable incidents under OSHA were 94 in 2022, 80 in 2023 and 66 in 2024. The LTIFR (lost time injury frequency rate), the ratio of occupational accidents with days lost to hours worked expressed per million hours, was 0.6 in 2024 based on 16 incidents with days lost (incidents leading to time lost: 17 in 2022, 16 in 2023, 16 in 2024). The LTIFR and RIR key figures take into account all sites in which LANXESS holds an investment stake of at least 50%.

Reference: page 205

The gender pay gap at LANXESS worldwide, defined as the percentage difference between the average income of female and male employees relative to the average male employee income, is 3.9%, considering all remuneration components across all employee groups. The total remuneration of the highest-paid employee is 56 times the median remuneration of all employees worldwide, excluding the highest-paid individual. Total remuneration figures were calculated using the annual salary as of December 31, 2024, supplemented by short-term bonus payments made in 2024, long-term bonus payments granted in 2024 at fair value, and an estimated premium for benefits in kind and retirement benefits (less than 10% of total remuneration); shift allowances were estimated and converted to an hourly wage. Employees from two companies whose compensation data is not in the global system, and employees on international assignments, were excluded (less than 1% of the workforce). The methodology has been adapted to ESRS requirements, so this year's figure is not comparable with previous years; the company notes including shift allowances can distort results since the majority of production employees are men, though allowances are based on working-time model and not gender.

Reference: page 208

As a globally active specialty chemicals company, LANXESS recognizes its responsibility to safeguard people and the environment throughout its value chain. Its policies align with international conventions including the UN Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the UN Global Compact, the SDGs, the Responsible Care Global Charter, the UN Women's Empowerment Principles, and several environmental conventions (Minamata, Stockholm/POPs, Basel). These principles apply to all employees and business partners and are set out in Group-wide directives. The "LANXESS Corporate Policy" lays out principles of responsible business operations and sustainable development. The "Code of Conduct" includes unambiguous instructions on respect for human rights, and respect for human rights is a binding element in the global "Procurement of Goods and Services in the LANXESS Group" directive for supplier selection and development. Commitments are summarized in the policy "Statement on Respect for Human Rights and Related Environmental Standards," published on the website. The "Business Partner Code of Conduct" addresses prevention of child or forced labor, human trafficking, violence or discrimination, and occupational health and safety, applying to direct suppliers, customers, sales partners and service providers.

Reference: page 209

LANXESS implements various ongoing procedures to engage with workers along its value chains. In addition to direct communication, such as through employees in the Global Procurement & Logistics Group function, LANXESS incorporates external data sources through its involvement in the Together for Sustainability (TfS) initiative, a global initiative by chemical companies that supports and coordinates assessment of sustainability performance across the chemical industry and its supply chains, with results provided to all TfS members. The TfS sustainability assessment is incorporated into the strategy process, which must be applied to every contract negotiation or renewal with a purchasing volume above EUR 5 million (the XCORE process); a similar SCORE process applies to volumes between EUR 1 million and EUR 5 million or over EUR 250,000 in regions outside Europe. With an average EcoVadis sustainability score of 57.8 points, LANXESS suppliers are above the EcoVadis benchmark of 47.7 points. LANXESS also offers direct communication channels by providing a global SpeakUp hotline and access to the central compliance helpdesk for workers along its value chains.

Reference: page 210

All LANXESS employees, as well as workers of suppliers and customers within the value chain, have access to various channels to report concerns or grievances. The global whistleblowing hotline "SpeakUp" is available 24/7 throughout the year and supports over 70 languages. Reports can be submitted to the LANXESS Compliance Helpdesk via the website, or individuals can directly contact Global Procurement & Logistics or purchasing staff in their respective countries. Information on these reporting channels is freely accessible and actively communicated to employees, customers, suppliers and other partners, including through the "Business Partner Code of Conduct," which is included in all supplier contracts. LANXESS has included regulations in its "Code of Conduct" to protect whistleblowers from retaliation when a report is made in good faith. Grievances or indications of violations, particularly those related to human rights abuses in the value chain, are received by the LANXESS Compliance Department and processed through a coordinated procedure following the "LANXESS Complaints Procedure" rules. The SpeakUp platform and the established procedure are reviewed at least once a year, or as needed, to ensure they are functional and effective.

Reference: page 211

LANXESS carries out human rights risk analyses on an annual and ad hoc basis across the Group to ensure compliance with human rights due diligence obligations, taking full account of the German Act on Corporate Due Diligence in Supply Chains. The annual risk analysis first performs an abstract risk analysis of direct suppliers using a supplier risk management system drawing on external data sources, followed by a more detailed analysis of remaining suppliers. Outcomes may involve obtaining voluntary information, site visits, or on-site audits by Global Procurement & Logistics. Where a direct supplier has violated, or imminently threatens to violate, a human rights-related or environmental obligation, LANXESS takes appropriate remedial action without delay, agreed with the supplier and followed up. The supplier screening process is laid down in the "Procurement of Goods and Services in the LANXESS Group" directive; only suppliers who accept the "Business Partner Code of Conduct" or comparable standards are selected. The "ProTrain" program trains strategic buyers. A Group-wide IT system draws on more than 600,000 data sources to build supplier risk profiles; by the end of 2024, over 26,000 suppliers were integrated. In fiscal year 2024, LANXESS carried out 20 supplier site visits, which revealed no serious violations of the IROs.

Reference: page 215

LANXESS's products are an elementary part of its customers' products, and living up to customers' and their customers' expectations is described as of utmost importance. The "Product Portfolio" Background Paper lays out the company's obligation, processes and targets to improve the sustainability performance of the product portfolio, substitute critical products and develop safe alternatives. Annual monitoring takes place under the direction of the head of the Value Chain Circularity & Product Stewardship sub-committee. The Background Paper applies to the entire Group and its own operations, is relevant to business units and Group functions as well as external stakeholders such as customers, suppliers and NGOs, and is publicly available on the website. The "Product Safety Management at LANXESS" directive stipulates how product stewardship is implemented throughout the Group and is accessible via the Xdirect document management system. Heads of business units or legal entities are responsible for implementing and ensuring compliance with legal regulations and internal guidelines on product safety. LANXESS is committed to monitoring and assessing potential risks to human health and the environment from its products, regulated in the "Central Product Surveillance" directive, with the Production, Technology, Safety & Environment Group function recording and evaluating hazard information.

Reference: page 216

As described, all of LANXESS's customers are industrial companies, and its products are processed by production employees from the chemical industry. The company's downstream value chain is complex and multifaceted. Due to the large number of intermediary companies and products, direct communication with consumers and end-users is not possible. For this reason, LANXESS does not have general processes in place for direct cooperation with consumers and end-users.

Reference: page 216

Processes to remediate negative impacts and channels for consumers and end-users to raise concerns are addressed jointly with S4-2. Because all of LANXESS's customers are industrial companies and the downstream value chain is complex with a large number of intermediaries, direct communication with consumers and end-users is not possible, and LANXESS does not have general processes in place for direct cooperation with consumers and end-users. Safety data sheets are used to communicate with the users of its products (provided even for non-hazardous products as part of a voluntary self-commitment), and product stewardship actions such as assessing possible health and safety risks and providing up-to-date safety information can prevent accidents, injuries and illnesses. No human rights violations have been reported.

Reference: page 216

Constant improvement of product safety is part of LANXESS's product stewardship. To ensure safe handling, LANXESS provides product safety data sheets, including, on a voluntary basis, for non-hazardous products. Key actions take the form of the 2021–2023 and 2024–2026 product roadmaps. Action plans for chemical end products containing substances of very high concern (SVHCs) were developed under the 2021–2023 roadmap; LANXESS intends to develop sustainable alternatives by 2030, and where impossible the products will be taken off the market by 2026 without replacement. Based on reference year 2021, LANXESS plans to stop marketing 21% of sales generated with 2021–2023 roadmap products by 2026 and offer non-critical alternatives for a further 69% by 2030; the remaining 10% are only used under controlled and safe conditions. Implemented substitution examples include Vulkanox 4020/6PPD (replaced by CCPD), BAYOWET C4 (discontinued end 2023), Bis(2,6-diisopropylphenyl)carbodiimide in Stabaxol I (replaced by Stabaxol L), imidazolidin-2-thione, and azodicarbonamides. LANXESS maintains dialogue with NGOs such as ChemSec and has halved its critical substances on the SIN list over three years. Actions are coordinated by four HSEQ employees within the Production, Technology, Safety & Environment Group function. In fiscal year 2024 there was no single action with significant (over EUR 3 million) capital or operational expenditure.

Reference: page 218

The development of a sustainable product portfolio meets the expectations of LANXESS's stakeholders, whose targets for eliminating critical substances and developing safe alternatives are based on the outcomes of stakeholder discussions and round tables. LANXESS sets two quantitative targets. First, implementation of the action plans from the 2021–2023 product roadmap: a 90% measure of sales of phase-out products (EUR m) by 2030 (or 2026 if no substitutes can be developed), with base year 2024 and the base value being Product Sustainability Monitor sales from phase-out products in 2024. Second, development of action plans for the 2024–2026 product roadmap: 100% of completed action plans by target year 2026, with base year 2023 and the base value being the number of products from the 2024–2026 product roadmap. Both targets engage stakeholders through the Sustainability Committee, and achievement is documented in the LANXESS Product Sustainability Monitor. Targets were defined based on reliable scientific data, substituting products with at least one SVHC property (carcinogenic, mutagenic or reprotoxic cat. 1A/1B; PBT; vPvB; or comparable substances of high concern). No targets have been set in relation to financial risks, and no targets can be set for positive impacts as none were identified in the materiality assessment.

Reference: page 221

LANXESS's corporate culture is based on five central values: respect, ownership, trust, professionalism and integrity, which apply to all employees and are set out in the "Code of Conduct." The "Working at LANXESS" Background Paper comprises actions and mechanisms that promote values, such as the performance dialog. LANXESS commits to internationally recognized principles including the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the UN Convention against Corruption, and expects business partners to comply. The Board of Management is responsible for the "Code of Conduct" and, in signing it, commits to adhering to the regulations. The "LANXESS Corporate Policy" lays down principles of responsible conduct, must be reviewed at least every three years, and applies to all employees worldwide. The Code requires all employees to behave lawfully and with integrity, covering topics such as human rights, antitrust law, anti-corruption, bribery, data protection, occupational, product and plant safety, and environmental protection. A global compliance management system (CMS) is defined in the "LANXESS Compliance Management System" Group directive, including an anti-corruption standard. The global compliance organization comprises the Group Compliance Officer, the Compliance Group function, regional Compliance Officers and local Compliance Officers. The Compliance Helpdesk and global whistleblowing platform "SpeakUp" (available in 70 languages) allow anonymous reporting, processed under the "Complaints Procedure" in line with the German Whistleblower Protection Act. In the financial year, LANXESS recorded more than 6,000 participations in compliance training sessions worldwide. The actions do not require significant capital or operational expenditure.