Development of Material Topic Areas

Carbon neutrality

Our ambition

As set out in our sustainability ambition, we strive for 100% carbon neutrality along our entire value chain (products, operations and supply) by 2050 at the latest, together with our partners along the value chain.

Of central importance for our ambition are the requirements and speed of transformation of our customers, industries and markets.

Concept

We have set ourselves the corporate target of achieving carbon neutrality throughout our production processes – in terms of Scope 1 and market-based Scope 2 CO2 emissions in accordance with the Greenhouse Gas (GHG) Protocol – by 2040. We aim to achieve this by means of three measures in particular:

• Switching our reported supply of energy to renewable energy, including through special electricity supply agreements and the purchase of energy attribute certificates.
• Implementing energy efficiency measures and using new technologies.
• Reviewing the neutralization of remaining emissions.

The corporate target of carbon neutrality throughout our production processes is managed by the Group Environmental and Climate Protection group function as part of the corporate roadmap for decarbonization. The group sectors are each responsible for the implementation of appropriate measures and must report on this internally on a regular basis.

Scope 1 and market-based Scope 2 CO2 emissions have also been part of the LTI plans for the members of the Executive Board and global managers since fiscal 2020. For more information, see the remuneration report on our website under Company/Executive Board.

In addition, we have identified various effective levers for achieving carbon neutrality beyond our own production processes and throughout the value chain (Scope 3 CO2 emissions in accordance with the GHG Protocol) by 2050 at the latest. These relate to the use phase of our products, coupled with the global shift toward emission-free mobility and industries, product design and the conversion of materials used to renewable and recycled materials, as well as generally a transition to circular processes. For more information on our concepts in this respect, see the sections on emission- free mobility and industries and circular economy in this combined non-financial statement. For example, it will be necessary to switch to green electricity along the supply chain. The Business Partner Code of Conduct was expanded accordingly with a view to carbon neutrality in the reporting year. The implementation of carbon neutrality throughout the value chain is managed in the individual group sectors, each of which is responsible for implementing appropriate measures. This is not only the responsibility of Continental, however, but also requires sustainability efforts on the part of customers, suppliers and other partners.

In order to support these efforts, we offer our customers the neutralization of our business carbon backpack through negative emissions from fiscal 2022, as part of our global program Net|Zero|Now. Carbon backpack refers to CO2 emissions produced along the value chain (Scope 1, 2 and 3), except for emissions related to the customer and product use. The offer focuses on business with zero-tailpipe-emission vehicles, but can now also be used for other business. Our measure announced in the 2020 annual report as “carbon neutrality of the allocated business with zero-tailpipe-emission vehicles” is thus developed further.

The Continental Group’s 2040 climate goal and 2050 ambition were reviewed by the Science Based Targets initiative (SBTi) in 2020. On the basis of the method used, the linear derivations for 2030 were validated and confirmed as being compliant with the Paris climate agreement. The derived absolute emission reductions for Scope 1 and Scope 2 are set to keep us on track for the 1.5°C pathway.

Results of the concept

Scope 1 and market-based Scope 2 CO2 emissions, i.e. own CO2 emissions, amounted to 1.05 million metric tons in fiscal 2021 (PY: 0.99 million metric tons including Vitesco Technologies). The increase is attributable to various causes, in particular higher energy consumption (e.g. as a result of uninterrupted production operations with the exception of pandemic-related stoppages) and the completion of data collection. This previously covered the relevant production and research and development locations and now for the first time also includes the rest of the – mostly smaller – locations within the Continental Group.

Following the switch to green electricity for reported energy consumption in fiscal 2020, Continental’s total CO2 emissions have been reduced by 70% compared with fiscal 2019, as this green electricity produces no CO2 emissions. Appropriate energy attribute certificates were purchased for the full volume of reported electricity consumption not already covered by other instruments (such as green electricity contracts). Due to national register processes, not all deletions of energy attribute certificates were available for small residual quantities at the time the report was prepared.

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.

For more information on carbon neutrality, including reporting on indirect CO2 emissions along the value chain (Scope 3 of the GHG Protocol), see the integrated sustainability report at www.continental-sustainability.com.

Emission-free mobility and industries

Our ambition

As set out in our sustainability ambition, we strive for 100% emission- free mobility and industry by 2050 at the latest, together with our partners along the value chain. “Emission-free” refers to zero emissions of greenhouse gases and nitrogen oxides (NOx), for example, but does not include harmless emissions such as water vapor, non-toxic biodegradable particulate emissions or minimal noise emissions.

Of central importance for our ambition are the requirements and speed of transformation of our customers, industries and markets.

Concept

Continental is shaping the transformation toward emission-free mobility and emission-free industries with customer-oriented solutions, such as for electric mobility, emission-free railway engineering, bicycles and wind turbines. In doing so, we rely both on new product developments and on the further development of our existing product portfolio.

The respective group sectors and business areas are responsible for implementing the sustainability ambition. To this end, relevant aspects have been and will continue to be incorporated in portfolio analyses, and are included in the strategy and business development processes for the group sectors and business areas.

For the implementation of our concept with respect to emissionfree mobility and industries., we record our allocated business with emission-free mobility and industries as a performance indicator. This consists of allocated business with zero-tailpipe-emission vehicles as well as allocated low-carbon business beyond business with zero-tailpipe-emission vehicles. Only all clearly allocated sales are recorded. In terms of vehicles, these include sales of tires, displays, sensors, electronic control units, artificial leather and hoses for emission-free passenger cars and trucks, as well as air springs for emission-free trains and trams; in terms of other business, they include sales of hoses for wind turbines or photovoltaic systems.

Results of the concept

In fiscal 2021, the allocated business with emission-free mobility and industries amounted to a total of €991 million (PY: n. a.). The allocated business with zero-tailpipe-emission vehicles accounted for the largest share at €986 million (PY: €826 million including Vitesco Technologies). Despite the absence of corresponding sales for Vitesco Technologies, business with emission-free mobility and industries therefore increased considerably in fiscal 2021. This is attributable in particular to the growing market success of electric mobility, since Continental’s products can now be found in many mass-produced models.

1 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).

2 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.

3 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 Taxonomy-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.

For more information on emission-free mobility and industries, see the integrated sustainability report at www.continental-sustainability.com.

Circular economy

Our ambition

As set out in our sustainability ambition, we strive for 100% closed resource and product cycles by 2050 at the latest, together with our partners along the value chain.

Of central importance for our ambition are the requirements and speed of transformation of our customers, industries and markets.

Concept

The switch to a circular economy is a profound and complex transformation process for Continental, which at the same time is highly relevant for the achievement of other sustainability ambitions of the company. The group sectors are responsible for implementing circularity, in particular with respect to product design, business models, material use and material procurement. They have each started to design and/or implement specific initiatives and projects that are aimed at improving circularity. Examples include the use of recycled materials, the reprocessing of products and the reduction or substitution of resource inputs.

With regard to operational waste management, as a further key component of the circular economy, we have set ourselves the corporate target of increasing the waste recycling quota to 95% by 2030. Waste recycling includes material recycling, thermal recovery or any other form of recycling or reuse.

The implementation of the corporate target is managed by the Group Environmental and Climate Protection group function as part of operational environmental management. For more information on the organization of operational environmental management, see the section on green and safe factories in this combined non-financial statement. The waste recycling quota has also been part of the LTI plans for the members of the Executive Board and global managers since fiscal 2020. For more information, see the remuneration report on our website under Company/Executive Board.

Results of the concept

The waste recycling quota was at 81% in fiscal 2021 (PY: 81% including Vitesco Technologies) and was therefore on a par with the previous year, despite the discontinued reporting of waste recycling from Vitesco Technologies. This is attributable primarily to the completion of data collection. This previously covered the relevant production and research and development locations and now for the first time also includes the rest of the – mostly smaller – locations within the Continental Group.

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

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

3 Includes the relevant production and research and development locations.

For more information on the circular economy, see the integrated sustainability report at www.continental-sustainability.com.

Responsible value chain

Our ambition

As set out in our sustainability ambition, we strive for 100% responsible sourcing and business partnerships by 2050 at the latest, together with our partners along the value chain.

Our understanding of a responsible value chain thus refers to our supply chain and customer relationships and to our own locations.

Of central importance for our ambition are the requirements and speed of transformation of our customers, industries and markets.

Concept

In our Business Partner Code of Conduct, which was most recently updated in fiscal 2021, we define the fundamental requirements, among others for our suppliers, and for their suppliers, including with regard to human rights, working conditions, environmental protection, conflict minerals and anti-corruption. Violations of our regulations can also be reported via the Compliance & Anti-Corruption Hotline, which is available around the clock and worldwide. In the event that violations of our binding regulations are identified, we demand improvements and reserve the right to terminate the business relationship. For suppliers of natural rubber, our sourcing policy for sustainable natural rubber additionally applies.

Before even establishing a business relationship, we screen potential suppliers by means of self-assessments as well as local audits, which may also include sustainability topics (such as fire protection and occupational safety). We assess selected suppliers with the help of self-assessment questionnaires, which we collect via the generally accepted sustainability platforms for our industries, EcoVadis and NQC, and the amount of which we assess at a corporate level on an annual basis.

We continue to develop our approach for the responsible value chain further in dialog with external stakeholders and support the development of industry-wide standards, for example through our active participation in industry dialog with the German government on human rights in the automotive industry and through the Global Platform for Sustainable Natural Rubber (GPSNR).

Responsible sourcing is the responsibility of the relevant purchasing organizations, which are established at Continental by group sector and product group, for example, with teams in the various countries. A corporate purchasing network regularly deals with responsible sourcing topics as well. The Group Quality group function coordinates the management of conflict minerals, including the corresponding reporting processes.

More information on the implementation of a responsible value chain with regard to our own locations can be found in the following sections on good working conditions and green and safe factories.

In the reporting year, under the leadership of the Group Sustainability group function, a corporate project was launched for the implementation of the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG), which will enter into force in 2023.

Results of the concept

With regard to the sourcing of sustainable natural rubber, the piloted approaches for traceability have been further expanded upon as part of the Rubberway project and collaboration with the German Society for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ) in Indonesia.

As at December 31, 2021, 631 valid supplier self-assessment questionnaires were available via the two sustainability platforms EcoVadis and NQC (PY: 696 including Vitesco Technologies). This corresponds to a completion rate of 53% of suppliers selected for this process (PY: 59% including Vitesco Technologies). The decline in the number of available valid self-assessment questionnaires and the lower completion rate are due in particular to a large number of self-assessment questionnaires completed by suppliers that have expired and need to be renewed, and, to a lesser extent, to the spinoff of Vitesco Technologies.

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

We present further performance indicators for the implementation of a responsible value chain with regard to our own locations in the sections on good working conditions as well as green and safe factories in this combined non-financial statement.

For more information on the responsible value chain, see the integrated sustainability report at www.continental-sustainability.com.

Good working conditions

Our ambition

As set out in our sustainability ambition, we provide inspiring, healthy and fair working conditions.

Concept

The Continental Group’s Code of Conduct sets out the cornerstones for good working conditions as the basis of our global collaboration, including respect for human rights and fair working conditions. Employees regularly receive training on the Code of Conduct.

Our HR strategy is geared toward meeting staffing requirements in terms of both quantity and quality. The two HR strategy initiatives “Industrialize Best Fit” and “Enable Transformation” are therefore focused on efficiently and effectively bringing together the right people and positions and shaping the digital and technological transformation and cultural shift toward new forms of collaboration. Workforce planning, the search for, diagnostic selection and development of talent (in particular in the areas of software and IT), the promotion of employee diversity and lifelong learning, the further development of the management culture and the flexibilization of working hours are therefore essential action fields of strategic HR work.

We are tackling the impact of our Transformation 2019–2029 structural program, which among other things is associated with the transformation in mobility and is likely to change up to 23,000 jobs worldwide, with targeted training measures for the employees affected. New career prospects and employment opportunities are to be opened up on the internal as well as the external employment markets.

Those responsible for HR are the HR functions at Continental Group, group sector, business area and country level, which work together in a global network. A special network of country coordinators for labor relations is also part of this organization.

We measure the success of HR work against the OUR BASICS Live Sustainable Engagement index, which is calculated on the basis of the annual employee survey. The index measures employee agreement on topics such as whether they personally back the company values and whether they are proud to work for Continental. Other performance indicators we consult are the sickness rate and the unforced fluctuation rate. The sickness rate measures sickness-related absence relative to contractual work time, and the unforced fluctuation rate measures the voluntary departure of employees from the company relative to the average number of employees.

The OUR BASICS Live Sustainable Engagement index has also been part of the LTI plans for the members of the Executive Board and global managers since fiscal 2020. The sickness rate is also part of this, although only for the plans launched in fiscal 2020. For more information, see the remuneration report on our website under Company/Executive Board.

Results of the concept

In fiscal 2021, the Sustainable Engagement index was 80% (PY: 82% including Vitesco Technologies) and therefore fell short of the previous year.

The sickness rate was up compared with the previous year at 3.7% (PY: 3.5% including Vitesco Technologies). For the unforced fluctuation rate, we recorded an increase to 7.0% (PY: 4.6% including Vitesco Technologies), which applies to all regions to varying degrees.

Information about personnel expenses in fiscal 2021 (i.e. wages and salaries, social security contributions and pension and post-employment benefit costs) can be found in Note 10 of the notes to the consolidated statement of income on page 150 of this annual report. Employee benefits such as pensions, post-employment benefits and long-term bonus payments are broken down in Note 30 of the notes to the consolidated statement of financial position on page 173.

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

2 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. The participation rate was 75% (PY: 68%).

3 Definition: sickness-related absence relative to contractual work time.

4 Excluding leasing personnel (i.e. permanent staff only).

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

For more information on good working conditions, see the integrated sustainability report at www.continental-sustainability.com.

Green and safe factories

Our ambition

As set out in our sustainability ambition, we conduct our business processes in a safe and responsible manner based on systematic management and protecting people and the environment.

Concept

Our company policy for environment, safety and health protection (ESH) defines corporate-wide guidelines for green and safe factories. On this basis, we pursue ESH targets for the Continental Group as a whole: all persons in our company are to be protected against accidents and work-related sickness, and their health is to be actively promoted. CO2 emissions, energy use, water consumption and waste generation at the locations are to be reduced, and the waste recycling quota and energy efficiency at the locations increased.

Local management systems drive forward the implementation of these guidelines. The concrete organizational and technical requirements can be found in the relevant ESH management manuals for the group sectors. Many locations have additionally undergone external certification audits. The extent of these certifications are assessed on an annual basis as to how many employees they cover with respect to environmental management, energy management, and occupational safety and health management systems. The accident rate – the number of accidents per million working hours – is used as an effectiveness indicator for occupational safety and health management. The accident rate has also been part of the LTI plans for the members of the Executive Board and global managers since fiscal 2020. For more information, see the remuneration report on our website under Company/Executive Board.

The Group Environmental and Climate Protection and Group Safety and Health group functions are responsible for the related strategic, corporate-wide ESH management process, and are supplemented by corresponding functions in the individual group sectors. Local operational environment, safety and health protection is the responsibility of the locations and is coordinated by local ESH managers in each case.

Results of the concept

As at December 31, 2021, the majority of our employees throughout the Continental Group were covered by certified management systems. The environmental management system certification covered 76% of employees (PY: 82% including Vitesco Technologies), the energy management system certification covered 40% of employees (PY: 51% including Vitesco Technologies), and the occupational safety and health management system certification covered 62% of employees (PY: 69% including Vitesco Technologies). The lower year-on-year quotas are attributable in particular to the spin-off of Vitesco Technologies.

The accident rate declined to 2.6 accidents per million working hours in fiscal 2021 (PY: 2.9 accidents per million working hours including Vitesco Technologies). The decline in the accident rate is attributable to various effects, including the success of an occupational safety program in the ContiTech group sector.

In order to address the impact of the COVID-19 pandemic and facilitate safe production, the existing corporate-wide pandemic preparedness plan (“pandemic plan”) was once again applied in fiscal 2021. The crisis teams set up at corporate and country level remained active. Continental’s own mask production was continued, and psychosocial counseling for mental health continued to be offered in certain countries.

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

2 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.

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

For more information on green and safe factories, see the integrated sustainability report at www.continental-sustainability.com.

Benchmark in quality

Our ambition

As set out in our sustainability ambition, we are recognized by our customers and society as being a benchmark in quality by ensuring safe and sustainable products.

Concept

The decisive factor in becoming a benchmark in quality is a quality-oriented company culture. Our quality policy sets out guidelines for product and process quality at Continental. Product recalls, product liability claims and proceedings as a result of quality defects represent a business risk that we want to avoid due to the resulting losses of sales, costs, and loss of customer and market acceptance. The report on risks and opportunities containing more information about this can be found starting on page 85 of this annual report.

Local management systems drive forward the implementation of these guidelines. The concrete organizational and technical requirements can be found in the relevant quality management manuals for the group sectors. Many locations have additionally undergone external certification audits. The extent of these certifications is assessed on an annual basis as to how many employees they cover with respect to quality management systems. The number of new field quality events is used as an effectiveness indicator for our quality management. A field quality event is a risk-minimizing measure for a product manufactured and/or sold by Continental on the basis of a safety-related defect and/or non-compliance with regulations that was initiated by Continental, a customer and/or an authority.

The Group Quality group function as well as the quality functions at various levels in the Continental Group, which work together in a global network, are responsible for the strategic, corporate-wide quality management process.

Results of the concept

As at December 31, 2021, the majority of our employees throughout the Continental Group, namely 84%, were covered by certified quality management systems (PY: 91% including Vitesco Technologies). The year-on-year decline in the quota is attributable in particular to the spin-off of Vitesco Technologies.

Thirty-six new field quality events were identified (PY: 18 including Vitesco Technologies). The rise in events is attributable to increased regulatory requirements.

Information about the scope of warranty and product liability claims in fiscal 2021 can be found in Note 38 of the other disclosures in the notes to the consolidated financial statements, on pages 204 and 205.

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

2 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.

For more information on benchmark in quality, see the integrated sustainability report at www.continental-sustainability.com.

Sustainable management practice

Our ambition

As set out in our sustainability ambition, we implement effective management processes, fair business practices and responsible corporate governance with a balanced view of different perspectives.

Concept

To prevent corruption and antitrust violations in particular, the Executive Board has established the global compliance organization together with the Compliance group function and regional subfunctions. This structure is supplemented by compliance coordinators in the countries and at the locations. The fundamental principles of compliance management are set out in the corporatewide compliance handbook. Continental has a compliance management system, which is based on a comprehensive analysis of potential compliance risks, in particular for the core areas of antitrust law and corruption prevention. We set up a new ombudsman’s office in fiscal 2021.

As a further cornerstone for sustainable management practice, we are committed to promoting employee diversity, which we understand as internationality, a balanced gender ratio, and a range of experiences and age categories. We have set ourselves the corporatewide target of increasing the share of female executives and senior executives to 25% by 2025. We intend to achieve this in particular by promoting cultural change in the organization through the expansion of women’s networks and the holding of diversity workshops and specific events. Gender diversity – the share of female executives and senior executives – has also been part of the LTI plans for the members of the Executive Board and global managers since fiscal 2020. For more information, see the remuneration report on our website under Company/Executive Board.

For more information on sustainable management practice and our diversity concept, see the Corporate Governance section starting on page 15 of this annual report. For more information on compliance, see the Compliance section on page 22 of this annual report, as well as the report on risks and opportunities starting on page 85.

Results of the concept

In 2016, the design, implementation and effectiveness of Continental’s compliance management system for the areas of anti-corruption, competition/antitrust law, fraud and other property offenses were audited in accordance with Audit Standard 980 of the Institut der Wirtschaftsprüfer e.V. (IDW) and were issued an unqualified review opinion.

As at December 31, 2021, Continental had increased its share of female executives and senior executives to 17.8% (PY: 16.1% including Vitesco Technologies). A significant share of this was attributable to the spin-off of Vitesco Technologies. Our initiatives and measures to promote gender diversity are also proving effective.

For more information on sustainable management practice, see the integrated sustainability report at www.continental-sustainability.com.