Turn Change Into Opportunity - Embrace Sustainability

Integrated Sustainability Report 2021

Continental AG

Continental develops pioneering technologies and services for sustainable and connected mobility of people and their goods. Founded in 1871, the technology company offers safe, efficient, intelligent and affordable solutions for vehicles, machines, traffic and transportation. In 2021, Continental generated sales of €33.8 billion and currently employs more than 190,000 people in 58 countries and markets.

www.continental.com

Development of Strategic Performance Indicators

2020

2021

continuing and

continuing

discontinued

Group Sustainability Scorecard

operations

operations

Carbon neutrality1

Direct CO2 emissions (Scope 1) in millions of metric tons of CO2

0.822

0.784, 5

Indirect CO2 emissions (Scope 2) in millions of metric tons of CO23

0.232

0.214

Total own CO2 emissions (Scope 1 and 2) in millions of metric tons of CO2

1.052

0.994

Emission-free mobility and industries

Allocated zero-tailpipe-emission vehicles business in € millions6, 7

986

826

Allocated low-carbon business beyond zero-tailpipe-emission vehicles business in € millions €8

6

n. a.

Allocated business with emission-free mobility and industry und Industrie in € millions

991

n. a.

Circular economy

Waste recycling quota in %9

812

814

Responsible value chain

Number of available, valid supplier self-assessment questionnaires (as at Dec. 31)10

631

696

Good working conditions

OUR BASICS Live Sustainable Engagement index in %11, 12

80

82

Sickness rate in %13, 14

3.7

3.5

Unforced fluctuation rate in %14, 15

7

4.6

Green and safe factories

Environmental protection management system certifications (ISO 14001)

Employee coverage quota (as at Dec. 31) in %16

76

82

Energy management system certifications (ISO 50001)

Employee coverage quota (as at Dec. 31) in %16

40

51

Occupational safety and health management system certifications (ISO 45001 or similar) Employee coverage quota (as at Dec. 31) in %16

62

69

Accident rate (number of accidents per million working hours)17, 18

2.6

2.9

Benchmark in quality

Quality management system certifications (ISO 9001 or similar) Employee coverage quota (as at Dec. 31) in %16

84

91

New field quality events (as at Dec. 31)19

36

18

Sustainable management practice

Gender diversity - share of female executives and senior executives (as at Dec. 31) in %

17.8

16.1

Innovation and digitalization

Research and development expenses (net) in € millions

2,586.8

3,381.8

in % of sales

7.7

9.0

  • 1 Definitions in accordance with the GHG Protocol. Scope 1 includes emissions from the burning of fossil fuels as part of Continental's own processes, and Scope 2 includes emissions from purchased electricity, steam and heat. CO2 emission factors correspond to CO2 equivalents (CO2e).

  • 2 Contains a small amount of imputed data for parts of the Continental Group that did not report data directly.

  • 3 Calculated using the market-based calculation method of the GHG Protocol. Where contract-specific emission factors were not available, the standard emission factors from Defra (September 2020) were used.

  • 4 Includes the relevant production and research and development locations.

  • 5 CO2 emissions from fleet consumption for company cars (leased vehicles) are only partially and not systematically included.

  • 6 Definition: allocated business with zero-tailpipe-emission vehicles comprises all business with products for vehicles transporting goods and people that count as taxonomy-eligible low-carbon technologies for transport under the delegated regulation (2021/2800) for climate change mitigation and adaptation of the Taxonomy Regulation (2020/852).

  • 7 The business can be allocated via the vehicle manufacturer, the vehicle platform or the product specification, for example. The data includes both pure business and attributable business, such as in the case of combined vehicle platforms. For the Tires, ContiTech and Contract Manufacturing business areas, the sales reported at the end of the year were included. For Contract Manufacturing, this was based on an estimation by the customer Vitesco Technologies. In the case of the Automotive Technologies group sector, a calculation was carried out for passenger cars and light commercial vehicles using internal, vehicle-specific planning data for sales and external data for production quantities, and for medium and heavy commercial vehicles this was based on the relevant customer portfolio.

  • 8 Definition: allocated low-carbon business beyond business with zero-tailpipe-emission vehicles measures business that enables our customers to significantly contribute to climate change mitigation and is considered Taxon-omy-eligible under the delegated regulation (2021/2800) for climate change mitigation and adaptation of the Taxonomy Regulation (2020/852), excluding low-carbon technologies for transport.

  • 9 Definition: proportion of waste that has been sent for material recycling, thermal recovery or any other form of recycling or reuse.

  • 10 Based on the self-assessment questionnaires via the sustainability platforms EcoVadis and NQC by suppliers selected for this process.

  • 11 Definition: employee agreement on topics relating to sustainable engagement in the employee survey OUR BASICS Live.

  • 12 This is based on the responses of 47,472 participants (PY: 4,918 participants) as a representative random sample of Continental's group sectors and countries.

  • 13 Definition: sickness-related absence relative to contractual worktime.

  • 14 Excluding leasing personnel (i.e. permanent staff only).

  • 15 Definition: voluntary departure of employees from the company relative to the average number of employees.

  • 16 Valid certifications and concluded recertification processes were counted, as well as ongoing recertification processes, if the achievement of recertification was considered highly probable.

  • 17 Definition: number of accidents during working hours per million paid working hours. Counted from more than one lost day, i.e. with at least one lost day beyond the day of the accident.

  • 18 Excluding leasing personnel (i.e. permanent staff only) and way-to-work accidents.

  • 19 Definition: a field quality event is a risk-minimizing measure for a product manufactured and/or sold by Continental based on a safety-related defect and/or non-compliance with regulations that was initiated by Continental, a customer and/or an authority.

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Content

Letter from the Executive Board .............................................................................. 5

Information on Reporting .......................................................................................... 6

Corporate Profile ........................................................................................................... 8

Structure of the Continental Group .......................................................................................................................... 8

Strategy of the Continental Group ......................................................................................................................... 12

Sustainability Management in the Continental Group ...................................................................................... 14

Development of Material Sustainability Topic Areas ..................................... 16

Carbon Neutrality ....................................................................................................................................................... 16

Emission-free Mobility and Industries ................................................................................................................... 22

Circular Economy ........................................................................................................................................................ 24

Responsible Value Chain ........................................................................................................................................... 26

Innovation and Digitalization .................................................................................................................................. 29

Green and Safe Factories .......................................................................................................................................... 33

Long-term Value Creation ......................................................................................................................................... 36

Good Working Conditions ......................................................................................................................................... 58

Benchmark in Quality ................................................................................................................................................ 78

Safe Mobility ................................................................................................................................................................. 80

Sustainable Management Practice ......................................................................................................................... 81

Corporate Citizenship ............................................................................................................................................. 117

Risks and Opportunities ........................................................................................ 118

Risk and Opportunity Management and Internal Control System .............................................................. 118

Material Risks ............................................................................................................................................................ 120

Material Opportunities ........................................................................................................................................... 127

Statement on Overall Risk and Opportunities Situation ................................................................................ 128

Notes ............................................................................................................................ 129

Information in Accordance with the EU Taxonomy Regulation ................................................................... 129

Performance Indicator Index ................................................................................................................................ 131

GRI Index .................................................................................................................................................................... 134

UN Global Compact Index ...................................................................................................................................... 139

SDG Index ................................................................................................................................................................... 140

TCFD Index ................................................................................................................................................................. 141

SASB Index ................................................................................................................................................................. 142

Key Memberships ..................................................................................................................................................... 143

Ratings and Rankings .............................................................................................................................................. 144

Independent Auditor's Reports ............................................................................................................................ 145

Continental AG2021 Integrated Sustainability ReportLetter from the Executive Board

Letter from the Executive Board

Sustainability is transforming our society - globally, comprehen-sively and with increasing speed. This means that many certain-ties and structures are undergoing change. Already, sustainability is leading to tectonic shifts in the global economy, with far-reach-ing social effects. This makes sustainability a fundamental para-digm for companies - and so far there is a clear consensus. How-ever, it is not yet possible for us to speak of a true consensus. Col-lective approval means that public discourse has shifted from "IF" to "HOW." Even so, a transition period of at least a decade lies be-fore us, and its shaping is characterized above all by uncertainty.

In the course of this development, sustainability will move into the core of every business model. Indeed, it is becoming a business in its own right. On the one hand, implementing global sustainability goals leads to transformation costs. These must be divided as fairly as possible along the value chain. On the other hand, sustainable products and technologies offer significant commercial potential as de-mand and interest in them is rapidly growing among consumers, customers and policymakers. It is important to set the course for this now. Because sustainability is neither a purely ecological or social issue, nor a niche topic. Instead, it will play a decisive role in determin-ing companies like Continental's future (commercial) success.

The compass we are using for this transformation is our sustainability ambition, which we introduced in 2020 and interlinked closely with our corporate strategy. In the "consistent use of opportunities" strategic pillar, the idea of "living sustainability" is explicitly referred to - a clear message that we must accept this transformation and actively shape it. This attitude illustrates our commitment to the strong and visionary focus areas of our ambition, as well as our wish to achieve them by 2050 at the latest together with our partners along the value chain:

  • 100% carbon neutrality,

  • 100% emission-free mobility and industries,

  • 100% closed resource and product cycles, and

  • 100% responsible procurement and business partnerships.

The speed at which we can achieve these goals will be influenced by the transformation speeds of our customers and markets worldwide. Our aim is to be able to accommodate these different speeds. Increased and closer cooperation and communication are required to en-sure that all the links in the value chain can join together. We can only build up a sustainable economic system when politicians, society, the financial sector and companies come together.

This means leaving the "feel-good" corner, vacating the silos and getting into active shaping. Only by working together, can we make the economic transformation toward sustainability a success. Our integrated sustainability report will show you where we are on this journey.

We look forward to your questions and suggestions. And now, on behalf of the entire Executive Board and all our employees, I wish you an exciting and informative read.

With warm regards,

Dr. Ariane Reinhart

Group Human Relations, Director of Labor Relations, Group Sustainability

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Continental AG published this content on 19 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2022 16:59:31 UTC.