Sustainability Report – Environmental Information

Material Impacts, Risks and Opportunities Related to Biodiversity and Ecosystems

Continental assessed its actual and potential negative and positive impacts as well as abstract and tangible risks and opportunities related to biodiversity and ecosystems according to the regulatory requirements, as described in the General Disclosures (ESRS 2) section. The general disclosures include an overview of the assessment of all identified impacts, risks and opportunities (IROs), including the time horizons considered.

In this IRO assessment, the material impacts, risks and opportunities related to biodiversity and ecosystems were identified. For easier understanding and reading, they have been grouped together into the following IRO clusters:

• Protection of ecosystems in the supply chain
• Biodiversity in the downstream value chain

The descriptions of potential negative impacts and abstract risks are presented from a business-inherent perspective. They outline general impact potentials and risk exposures based on structural aspects such as business activity, geographical aspects, business model and product characteristics. This does not take into account mitigation through the management approach of Continental described in the respective IRO cluster. Actual negative impacts, tangible risks, positive impacts and opportunities are described from a company-specific perspective and consider the outcomes of the management approaches. A detailed definition of the IRO types can be found in the Impact materiality and Financial materiality subsections in the General Disclosures (ESRS 2) section.

The descriptions of IROs are to be considered as self-contained, which may result in repetitions.

The following pages provide detailed descriptions of the IROs within respective IRO cluster. They also outline the management approach developed for each IRO cluster, which manages the identified impacts, risks and opportunities. In addition, the associated targets, actions and metrics are explained (where available).

Protection of Ecosystems in the Supply Chain

Material impacts, risks and opportunities in the protection of ecosystems in the supply chain IRO cluster

ID		Short description	Type of IRO		Primary time horizon			Explanation
24		Negative impacts on ecosystems due to land-use changes in the supply chain	Potential negative impact		Short-term			Continental’s supply chain spans multiple stages of the value chain in various industries that extract and produce a wide range of materials, such as carbon black, natural rubber, synthetic rubber, other polymers and metals. These chains carry material process- and industry-inherent potential for direct negative impacts on ecosystems and biodiversity. In deeper tiers of the supply chain, there is a potential of land or water use changes, particularly in raw material extraction and production. For the natural rubber supply chain, there is a rubber industry specific potential negative impact from possible deforestation in cultivation regions.
25		Indirect negative impacts on ecosystems due to other drivers in the supply chain	Potential negative impact		Short-term			The potential negative impacts described in the Climate Change and Emissions and Substances sections, related to drivers such as greenhouse gas emissions, pollutants to air, water and soil, as well as other industry-related stressors in the supply chain, lead to an additional potential for indirect negative impacts on biodiversity and the condition of ecosystems.
26		Sanctions in connection with deforestation	Abstract and tangible risk		Medium-term			Continental sources materials such as natural rubber through global supply chains. With regard to potential negative impacts related to possible deforestation, this results in an industry-inherent exposure to effects that may arise from regulatory developments related to deforestation. In the event of violations of existing or future regulatory requirements, this could lead to fines, penalties or remediation costs, including possible business interruptions. With the implementation of the European Deforestation Regulation (EUDR), a tangible risk exposure arises for companies in the rubber industry , particularly due to the dynamics in regulation and uncertainties surrounding the new requirements.
27		Supply chain interruptions and higher costs for materials/services related to deforestation	Abstract risk		Medium-term			Continental sources materials such as natural rubber through global supply chains. With regard to potential negative impacts related to possible deforestation, this results in an industry-inherent exposure to effects that may arise from regulatory developments related to deforestation. If regulatory requirements on deforestation were tightened significantly and rapidly, the pool of suppliers able to provide compliant natural rubber could shrink. This could lead to higher material costs as well as potential supply chain interruptions.

Management approach for the protection of ecosystems in the supply chain

Continental is convinced that mobility and the global economy must be cleaner and transition to a circular economy to protect ecosystems, supporting their resilience and regeneration. As part of our sustainability ambition, we are committed to reducing our impact on the environment by improving resource efficiency and implementing preventive measures, while fostering these practices along our value chain. Continental has consequently implemented management approaches that address the impacts, risks and dependencies related to biodiversity and ecosystems.

The management approach addresses two key drivers of biodiversity loss in the supply chain: pollution and deforestation. As part of responsible purchasing, Continental also indirectly addresses land-use changes in connection with deforestation.
For the driver pollution, Continental has implemented a management approach to avoid and reduce potential negative environmental impacts related to generated greenhouse gas emissions and generation of pollutants in air, water and soil in the supply chain. These management approaches are described in the Scope 3 emissions, value chain resilience and transition subsection in the Climate Change (ESRS E1) section and in the Environmental protection in the supply chain subsection in the Emissions and Substances (ESRS E2) section.

In addition, through its sustainable natural rubber sourcing policy, Continental has implemented a specific management approach to prevent biodiversity loss caused by deforestation, particularly from natural rubber cultivation, and to comply with regulations for deforestation-free supply chains. As natural rubber is also a renewable material, it plays a key role in a circular economy (see the Resource Use and Circular Economy (ESRS E5) section, Circularity subsection).

The management approach focuses on direct suppliers and indirectly on the deeper supply chain. Continental expects its direct suppliers to cascade the principles through their own supply chains. For sustainable natural rubber, the management approach explicitly covers the supply chain down to the rubber plantation.

Responsibility for the responsible purchasing of natural rubber lies with the respective purchasing departments, which have their own specialists for sustainability and for natural rubber and are also supported by the general sustainability departments. Strategic monitoring is the responsibility of the group sector decision bodies and, at an overarching level, Continental’s Executive Board.
Responsibility for implementing general environmental protection in the supply chain is described in the management approach for environmental protection in the supply chain in the Emissions and Substances (ESRS E2) section. Responsibility for reducing greenhouse gas emissions is described in the management approach for Scope 3 emissions, value chain resilience and transition in the Climate Change (ESRS E1) section.

Continental monitors business partners in the natural rubber supply chain to determine whether they comply with the sustainable natural rubber sourcing policy in their own operations and cascade these principles along their entire value chain.
Requirements resulting from supplier obligations may lead to audits and follow-up measures, such as corrective action plans (CAPs) or other mitigation measures.

As part of the joint development partnership with the Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ), Continental conducts on-site training for smallholders in Indonesia to promote sustainable farming practices. The program, launched in 2018, was extended for a further three years in 2025, with the number of smallholders receiving support expected to rise to 6,000. This collaboration is an example that Continental actively promotes sustainable agricultural practices, is aware of the social consequences of deforestation-related impacts on biodiversity, and actively pursues an improvement.

Another relevant purchasing process is the so-called risk mapping, for example based on the risk analysis from the Rubberway platform and verified self-assessment procedures, which assesses potential deforestation at various upstream nodes in Continental’s natural rubber supply chain. Rubberway was developed through an industry collaboration and has implemented traceability mechanisms for natural rubber down to the plantation level. These help to improve understanding and transparency related to natural rubber sourcing.

To source natural rubber from responsible sources, Continental also uses the digital trading platform Agridence, formerly HeveaConnect. The platform provides transparent access to standardized information on compliance with social and environmental standards, quality criteria and average sales prices. At the same time, the platform also offers the possibility to integrate information from Rubberway analyses. Additional IT tools are also used for traceability along the supply chain, including the analysis of potential deforestation.

Another important process of the management approach is the cooperation within the industry, among other aspects to improve cultivation methods, traceability and compliance with due diligence. Continental is a member of the Global Platform for Sustainable Natural Rubber (GPSNR). This includes an annual reporting on progress and supports an industry-wide learning approach, which contributes to the effectiveness of the management approach.

As a potential future lever to reduce pressure on ecosystems, Continental is conducting the “Taraxagum” research and development project, which investigates and develops the potential of natural rubber from dandelions as an alternative for natural rubber from tropical rubber trees.

In addition to formalization internal rules, as described in the management approach for environmental protection in the supply chain in the Emissions and Substances (ESRS E2) section, Continental’s set of rules for biodiversity in responsible purchasing includes the following public frameworks:

• Sustainable natural rubber sourcing policy;
• Commitments to a responsible value chain (RVC commitments); 
• Business Partner Code of Conduct.

The management approach is particularly oriented along the due diligence regulations, such as the German Supply Chain Due Diligence Act (LkSG) and the European Deforestation Regulation (EUDR). In addition, the management approach was harmonized with the GPSNR.

The GPSNR is a platform that brings together different stakeholders and takes into account the interests of its members (from smallholders to natural rubber processing companies, tire and automotive manufacturers, as well as civil society organizations). In addition, public consultations with non-members are held.

The policies are communicated externally via the website and internally via Continental’s various channels. In addition, all new and existing direct suppliers are requested to sign the Business Partner Code of Conduct.

Biodiversity in the Downstream Value Chain

Material impacts, risks and opportunities in the biodiversity in the downstream value chain IRO cluster

ID		Short description	Type of IRO		Primary time horizon			Explanation
28		Negative impacts on biodiversity in the use phase and at the end of the product life cycle	Potential negative impact		Short-term			The potential negative impacts described in the Climate Change, Emissions and Substances as well as Resource Use and Circularity sections, related to drivers such as greenhouse gas emissions, pollutants to air, water and soil during product use and end-of-life disposal, lead to an additional potential for indirect negative impacts on biodiversity and the condition of ecosystems. Another potential negative impact, which is associated with product use only in a broader sense, arises from the driver of land-use change associated with the general expansion of road infrastructure.

Management approach for biodiversity in the downstream value chain

Continental’s management approach for biodiversity in the downstream value chain addresses pollution, climate change and end-of-life treatment of products as key drivers of biodiversity loss. The related management approaches are described in other sections of this sustainability report:

• Management approach for Scope 3 emissions, value chain resilience and transition with regard to climate change-related negative impacts on biodiversity and ecosystems in the Climate Change (ESRS E1) section.
• Management approach for product-related aspects regarding environmental protection with regard to the product-specific reduction of pollution in the product use phase in the Emissions and Substances (ESRS E2) section.
• Management approach for circularity with regard to resource outflows and end-of-life treatment of products in the Resource Use and Circular Economy (ESRS E5) section.

Due to the nature of Continental’s products, the driver land-use change, such as road infrastructure, in the downstream value chain is considered outside Continental’s sphere of influence. Therefore, no specific management approach was defined for the driver land-use change.