sustainability presentation hsbc esg conference

Sustainability Presentation

15th HSBC ESG Conference

Frankfurt – February 4-5, 2020

Ticker: CON

ADR-Ticker: CTTAY

http://www.continental-ir.com

Michael Sämann, IR Manager

Sabine Reese, IR Manager

Thomas Sewald, Head of Corporate Environment




Climate Protection

4 26

Agenda

2EDMR – Equity and Debt Markets Relations

Sustainability at Continental1 3

Clean Mobility

2 14

Circular Economy

3 16Supply Chain

5 24

18

21





1) Sustainability at Continental Corporate Strategy at a Glance




4

1) Sustainability at Continental Sustainability Governance

▪ Dr. Ariane Reinhart (Executive Board member

responsible for Human Relations and Sustainability)

▪ Wolfgang Schäfer (CFO)

▪ Corporate Sustainability department

▪ Relevant business areas and central functions

▪ Other experts (on request)

Interdisciplinary and cross-divisional

Corporate

sustainability

department

Continental Sustainability Committee Continental AG

Executive Board

Steering and implementation Decision-making

Updated sustainability strategyCurrent focus topics Strategic planning process

2018 2019 2020+

Timeline for strategy development:

Strategic

coordination

Business areas/

central

functions

Our ambition:

Continental creates

meaningful positive

impact




5

Our BASICS

describe how we

want to work

together based on

our four values

Trust, Passion to

Win, Freedom to

act and For one

another.

The Continental

Code of Conduct

describes ethical

standards and

requirements

regarding employee

behavior.

The Corporate Social

Responsibility

Principles describe

our basic areas of

responsibility towards

society.

The Corporate

Governance

Principles describe

in detail the

corporation's

managerial and

supervisory tasks

and processes.

The Quality Policy

describe our approach

towards a quality-

driven culture.

The ESH Policy

defines the basic rules

regarding

environmental

protection and safety &

health in our

production processes.

The Sustainable

Natural Rubber

Policy defines our

detailed

requirements in our

natural rubber

sourcing.

The Business

Partner Code of

Conduct describe

ethical standards and

requirements

regarding supplier

behavior.

1) Sustainability at Continental Policies and Key Principles

https://www.continental.com/en/sustainability/employees/basics-164356


https://www.continental.com/resource/blob/177168/3069e8b5c8a6e98685509a388120eb11/code-of-conduct-data.pdf

https://www.continental.com/resource/blob/177168/3069e8b5c8a6e98685509a388120eb11/code-of-conduct-data.pdf

https://www.continental.com/resource/blob/63008/b2a149aaa1fa4378497bb23046b55b06/csr-principles-en-data.pdf



https://www.continental.com/resource/blob/63010/45ee8e183eb658ee49479c229889e895/esh-policy-en-data.pdf

https://www.continental.com/resource/blob/63010/45ee8e183eb658ee49479c229889e895/esh-policy-en-data.pdf

https://www.continental-corporation.com/resource/blob/147948/998c27c257600af64a4fd9da252fd813/sustainable-natural-rubber-sourcing-policy-continental-en-data.pdf

https://www.continental.com/resource/blob/63004/74f0647d9cb60772971c86e88ab630f3/suppliercodeofconduct-en-data.pdf



https://www.continental-corporation.com/resource/blob/147948/998c27c257600af64a4fd9da252fd813/sustainable-natural-rubber-sourcing-policy-continental-en-data.pdf

https://www.continental.com/resource/blob/63004/74f0647d9cb60772971c86e88ab630f3/suppliercodeofconduct-en-data.pdf




• Vision: One of the most progressive and attractive

employers

• Corporate Values and Code of Conduct define basics for

good working conditions: i.e. human rights and safety &

health

• Detailed annual Strategic Workforce Planning Process

(SWP)

• HR work focused on “Industrialize Best Fit” and “Enable

Transformation” to cover future workforce demand

Sustainable Engagement Index, measuring

employee commitment in FY 2018

80%› Unforced flucuation: 6.3 %

› Sickness absence rate: 3.3 %

6

1) Sustainability at Continental Culture / People – Good Working Conditions




› Good, responsible corporate governance

geared toward sustainable, long-term value

creation and in the interests of all stakeholder

groups

› Compliance with all the legal requirements and

internal regulations is an integral part of our

corporate culture

› Continental counts on the diversity of its

employees and is working on increasing the

proportion of women in management positions

at executive and senior executive level .

7

25.0%2025

14.8%2018

Women in Management Positions

1) Sustainability at Continental Culture / People – Fair Business Practices




› We strive to be recognized by our

customers as a benchmark in quality.

› Quality Policy describe our approach

towards a quality-driven culture.

› Certified management systems at our

locations support a higher product and

process quality.

8

Status Quo: Certified quality management

systems according to ISO 9001 o.s.

~90%

total workforce covered by certification

As at Dec.

31, 2018

1) Sustainability at Continental Quality First – Reliable Products by Continental




Consolidated sales of products in 2018

that reduce energy consumption and / or

emissions

› Virtual A-Pillar: By pairing its interior camera and

integrated OLED displays in the vehicle’s A-pillar, forward

blind spots are eliminated.

› Eco Tires: EcoContact 6 delivers maximum fuel efficiency

and optimized grip thanks to improved component

geometry and efficient silica distribution.

› Super Clean Electrified Diesel: By making various

modifications to a Euro 6 Diesel standard vehicle,

Continental engineers were able to massively reduce real

driving emissions (NOx and CO2).

› “People’s-Hybrid”: The hybrid with 48-volt technology

uses up to 21% less fuel, is relatively affordable and is

usable in all vehicle classes.

› Digital Air Spring System: This revolutionary technology

allows the driver’s cab to be regulated electronically, thus

reducing fuel consumption.

~40%

› Examples:


1) Sustainability at Continental Innovative Products – Sustainable Mobility: Clean, Safe & Affordable




New Credit Line for Continental:

Better Conditions for a More Sustainable Business

• Revolving bank credit line refinanced ahead of schedule

(amount: €4 bn, term: five years)

• Syndication clearly oversubscribed; better credit conditions for

Continental

• Breaking new ground in the German automotive industry:

interest payments will now also depend on concrete

improvements in the company’s sustainability performance

• These include procuring electricity externally from renewable

sources, increasing the proportion of women in management

positions, reducing the accident rate and sick rate, and

increasing the proportion of recycled waste.

10

1) Sustainability at ContinentalSustainable Finance Concept

3)New




Source: www.charta-der-vielfalt.de (German Federal Government Commissioner for Migration, Refugees and Integration); www.luxemburger-deklaration.de; www.globalcompact.de; http://www.wbcsd.org;

http://www.erscharter.eu; http://www.weprinciples.org; http://www.snr-i.org/; https://econsense.de/.

11

1) Sustainability at ContinentalMemberships and Initiatives

EDMR – Equity and Debt Markets Relations




Source: https://www.ecpigroup.com; https://www.cdp.net; https://www.sustainalytics.com; https://www.msci.com; https://www.ecovadis.com/.

› Continental is listed in the following indexes:

12

1) Sustainability at Continental Ratings and Indexes

› Ratings:

› Prime (C+) (2019) › Climate: Score B (2019)

› Water: Score B (2019)

› Supply Chain: Score A;

Supplier Engagement

Leader Board (2018)

› Gold Status (2019)

› 65 /100

› Best 5% of companies

› BBB (January 2020) › Outperformer (2019)

73 / 100

EDMR – Equity and Debt Markets Relations




13

Good Working Conditions

• Creating inspiring, motivating and

fair working conditions

• Human rights in our own

operations

Innovations & Digitalization

• Maintain innovational strength

• New business models

• Digital transformation & ethics

Green and safe factories

• Sound operations not harming

people or the environment (e.g.

waste & water reduction, energy

efficiency, health & safety)

• Solid management systems

Sustainable Profits

• Generating revenue streams over a

longer time

• Distributing the value generation in

a responsible manner

Corporate Governance

• Responsible management

• Fair business practices

• Balanced view of different

perspectives (diversity)

Product quality

• Delivering high quality products

• Product integrity

• Quality management

Safe Mobility

• Increasing road safety

• Minimizing severe road accidents

and fatalities by technological

solutions

Corporate Citizenship

• Community engagement

• Employee engagement,

volunteering, donations and other

social activities

• “Sustainability Heroes”

Climate

Protection

Clean

Mobility

Circular

Economy

Sustainable

Supply Chain• Zero CO2 from purchased

electricity end of 2020

• Zero CO2 from production

in 2040

• Zero CO2 from entire

value chain in 2050

• Zero Tailpipe Emission

Vehicles (ZTEV)

• Other emissions on the

road

• Focus of EU sustainable

finance taxonomy

• Complete material cycles

for metals and plastics

• Use of renewable

materials

• 95% recycled waste in

2030

• Minimizing negative

social and environmental

impacts in our supply

chains

• Focus on “risk-based Due

Diligence” & processes

Current examples for hot topics regarding sustainability

Source:

https://www.flickr.com/photos/161768312

@N07/46871949391

Fridays for

Future

SDGs

United Nations Sustainable

Development Goals

European

Green Deal

Source: www.bild.de

Blackrock &

others urge

CEOs

CO2 limits &

customer

targets

Source: Volkswagen

Sustainable

Finance

Source: https://theentrepreneurfund.com/

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to e

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1) Sustainability at Continental Materiality Matrix / Impact Evaluation

https://www.flickr.com/photos/161768312@N07/46871949391







CO2-neutral value chain


Source: www.continental-sustainability.com

› Guided by the United Nations’ sustainable

development goals (SDGs)

› Commitment to the two-degree target

under the Paris climate agreement

2020

20502040

Use of electricity from

renewable sources in all

production sites

CO2-neutral production

2) Climate ProtectionEnvironment Strategy

https://www.continental.com/en/sustainability/sustainability/reporting-and-general-topics-62992




100%reduction of: • CO2 emissions related to

electricity (scope 2) by 2020

• total CO2 emissions from production (scope 1 and scope 2) by 2040

• total CO2 emissions from supply chain (scope 1, 2 and 3) by 2050

20%kWh/sales reduction by 2030 compared to 2018

4%reduction of water demand per year based on sales in water stress high risk areas

2%reduction of waste generation per year based on sales


CO2 emissions Energy Water Waste

2%reduction of water demand per year based on sales in water stress medium and low risk areas

1 TWhreduction of external energy demand by energy efficiency projects in 2020 until 2030

95%improvement of the recycling quota by 2030

Source: www.continental-sustainability.com

2) Climate ProtectionOur Goals

https://www.continental.com/en/sustainability/sustainability/reporting-and-general-topics-62992





Continental established an environmental management

system throughout the corporation more than 30 years ago.

2) Climate ProtectionStatus of Environmental and Energy Certification at Continental

Source: Continental Annual Report 2018, page 52.

Production & Development

Locations worldwide

Thereof

ISO 14001

certified

Thereof

ISO 5001

certified

90 locations

≙ 50% of

workforce

200 locations

≙ 80% of

workforce

› Our activities are geared toward continually

optimizing the use of resources in relation to

business volume.

› We manufacture products that make an active

contribution toward protecting the environment

and conserving resources throughout their entire

duration of use as well as when they are

ultimately recycled.

https://www.continental.com/resource/blob/167610/6f107b888fd556412c6b263b67d60075/annual-report-2018-data.pdf




› Global ESH policy managed by

particular ESH organization

› Commitment to environmental

protection, especially to the

reduction of resource use and

climate protection

› Strategy 2020: to cut specific

inputs and outputs (energy, water,

waste and CO2) by 20% compared

to 2013 baseline

› ISO 14001 certification covers

>80% and ISO 50001 ~50% of

our total workforce worldwide

Environmental data1 Unit 20174 20185 ∆ 2017

Track record:

∆ 2013

Total energy use2 TWh 9.5 9.9 +4% +29%

Specific energy use2 MWh / € mn 218 223 +2% -3%

Total water demand mn m3 19.8 20.6 +4% +27%

Specific water demand m3 / € mn 456 465 +2% -5%

Total waste generation t 379,992 419,426 +10% +50%

Specific waste generation t / € mn 8.8 9.5 +8% +13%

Thereof: Waste recycled % of total waste 81 78 -3%-p. -6%-p.

Total CO2 emissions (Scope 1+2)3 mn t CO2 3.2 3.3 +4% +31%

Specific CO2 emissions (Scope 1+2)3 t CO2 / € mn 73 74 +1% -2%

1Based on the environmental data system which includes the relevant production and development sites, excluding fleet

consumption. Definitions based on Global Reporting Initiative (GRI). Specific data refers to the adjusted sales in the

respective year.2Fossil energies as well as electricity and steam.3According to Greenhouse Gas Protocol (Scope 2: location-based) on the basis of energy use reported as well as emission

factors of Defra (2016) and IEA (2017).4Data with external limited assurance.5Data with external reasonable assurance.


2) Climate ProtectionEnvironmental Management




18

› Business Partner Code of Conduct defines general

sustainability standards for suppliers: i.a.

› Human rights

› Labor standards,

› Environmental protection

› Combatting corruption.

› Dedicated initiatives on sustainable natural rubber in

cooperation with GIZ and participation in a global industry

platform (GPSNR)

› Supplier Self Assessments to evaluate compliance with

standards (750 Supplier Self Assessments via NQC and

EcoVadis as at Dec 31, 2018)

Due Diligence Approach towards a

sustainable supply chain

Policy

Risk Assessment

MitigationGrievance

mechanism

Monitoring & Reporting

3) Supply ChainFocused on ‘Risk-Based’ Due Diligence




19

Pilot Project

Traceability in

Indonesia

2018 ff

Sourcing Policy for Sustainable Procurement of Natural Rubber

Joint Venture

Assessement tool

“Rubberway”

2019 ff

Founding member of multi-stakeholder platform

2020 ff

2017 ff

Self-

Assessments

of suppliers

3) Supply ChainDue Diligence: Focus on Sustainable Natural Rubber




20

Main Content:

➢ Continental’s commitment to sustainability

➢ Social Principles: Respecting Land Rights and Local Communities,

Improving Working Conditions

➢ Environmental Principles: Protection of Rain Forests, Biodiversity,

Ecosystems and Water

➢ Grievance management: Anonymous Reporting through Anti-

Corruption & Compliance Hotline

➢ Non-compliance of business partners will lead to mandatory

improvement actions. If these improvement actions are not fulfilled

this may result in the termination of business relations.

3) Supply ChainSustainable Natural Rubber Sourcing Policy




21

Product Design / R&D Production Cultural mindset change

Use of recycling material

Tire retreading

95%20302018

Recycled waste

Employee engagement campaign:

“Sustainability Heroes”

Exam

ple

s

78%

4) Circular EconomyJourney towards Material Cycles and Renewable Materials




8,000 tons

Breathing life into tires a second and even a third time

is the basic idea behind the ContiLifeCycle approach.


Using a novel and proprietary process, Continental has succeeded in

recycling rubber from used tires in such a way that the raw material will

be directly returned into the production cycle for new or retreaded tires.

At ContiLifeCycle (CLC) plants, we reprocess worn-out truck tires in a

retreading process that conserves resources. The rubber powder that

is produced during retreading is further processed into recyclate, which

is used in the production of new and retreaded tires.

The retreaded tires offer the same performance characteristics and

rolling resistance as new tires.

4,000 tons

Recycling

of used rubber in

the recycling plant

saves

of CO2 per year

less water

of natural

rubber

80%

80%50%less energy

less waste2,400

less tons

4) Circular EconomyTires – ContiLifeCycle





90%less energy

90%less raw material

less CO2 emissions50-90%

Remanufacturing is a standardized industrial process and an integrated part of our service strategy. Rather than

manufacturing products from scratch, Continental remanufactures existing products by repairing and replacing

components with new original Continental parts. For the circular economy we save energy, water, material and

costs to make renewed products for a sustainable future.

up to

used

produced

up to

consumed

4) Circular EconomyRemanufacturing





We will become a full system supplier!

Driving Intelligence› Situation analysis

› Decision-making

› Low-level vehicle control

› ADCU (mid-term)

Seat Material Tailored seat surfaces

› Resilient

› Easy to clean

› Comfortable

LocalizationRobust localization in urban areas

› Radar

› Wireless infrastructure beacons

Radar SensingShort range sensor

› Object detection

› Barrier detection

› 4 sensors for 360° view

Camera Sensing› Object detection


› Front sensor cover drive path

Drive Module› One axle drive from

Continental (2018)

Tires› ContiEcoContact™ 5

Lidar SensingSolid state flash lidar (mid-term)

› Object detection


› 4 sensors for 360° view

Continental Urban Mobility Experience

5) Clean MobilitySelf Driving Car Project CUbE




With our holistic,

intuitive and

ergonomic human-

machine interface,

we capture

commands,

prioritize and

present

information.

Driver & Passengers Devices Infrastructure Other Vehicles We add new functions as wellas value-adding mobility services

by providing a holistic

connection to the outside world.

Vehicle

We manageand optimize the information flow

throughcost-competitive

systems integration.

5) Clean MobilityInformation Management – Inside the Vehicle and Beyond

25




Cost Competitive Systems SolutionsWe integrate components, functions and services into cost competitive

systems serving our customers including the aftermarket.

We integrate

Holistic Human-Machine Interface

By knowing the needs of drivers and passengers we provide the expertise

for superior comfort, ergonomics, and intuitive ease-of-use.

We inform

Holistic Connectivity

We provide technologies for vehicle networking to connect drivers and

passengers with vehicles, the cloud and the infrastructure. From products

to services, protected by advanced Cyber Security solutions.

We connect

5) Clean MobilityHolistic Connectivity Product Highlights for Intelligent Mobility

26




Disclaimer

› This presentation has been prepared by Continental Aktiengesellschaft solely in connection with the 15th HSBC ESG Conference on February 4-5, 2020, in Frankfurt. It has not been

independently verified. It does not constitute an offer, invitation or recommendation to purchase or subscribe for any shares or other securities issued by Continental AG or any

subsidiary and neither shall any part of it form the basis of, or be relied upon in connection with, any contract or commitment concerning the purchase or sale of such shares or other

securities whatsoever.

› Neither Continental Aktiengesellschaft nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss that may arise

from any use of this presentation or its contents or otherwise arising in connection with this presentation.

› This presentation includes assumptions, estimates, forecasts and other forward-looking statements, including statements about our beliefs and expectations regarding future

developments as well as their effect on the results of Continental. These statements are based on plans, estimates and projections as they are currently available to the

management of Continental. Therefore, these statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new

information or future events. Furthermore, although the management is of the opinion that these statements, and their underlying beliefs and expectations, are realistic as of the date

they are made, no guarantee can be given that the expected developments and effects will actually occur. Many factors may cause the actual development to be materially different

from the expectations expressed here. Such factors include, for example and without limitation, changes in general economic and business conditions, fluctuations in currency

exchange rates or interest rates, the introduction of competing products, the lack of acceptance for new products or services and changes in business strategy.

› All statements with regard to markets or market position(s) of Continental or any of its competitors are estimates of Continental based on data available to Continental. Such data are

neither comprehensive nor independently verified. Consequently, the data used are not adequate for and the statements based on such data are not meant to be an accurate or

proper definition of regional and/or product markets or market shares of Continental and any of the participants in any market.

› Unless otherwise stated, all amounts are shown in millions of euro. Please note that differences may arise as a result of the use of rounded amounts and percentages.

› Note: Due to the application of the modified retrospective approach during first time adoption of IFRS 9, Financial Instruments, and IFRS 15, Revenues from Contracts with

Customers, as at January 1, 2018, all the figures from comparative periods are shown unadjusted. Due to the application of the modified retrospective approach during first-time

adoption of IFRS 16, Leases, as at January 1, 2019, all the figures from comparative periods are shown unadjusted.




ContactEquity and Debt Markets Relations

Vahrenwalder Str. 9

30165 Hanover

Germany

e-mail: [email protected]

Fax: +49 511 938 1080

www.continental-ir.com

Michael Sämann

Analysts, Institutional Investors and

Sustainability Investors

Phone: +49 511 938 1307


Marvin Kalberlah

Analysts, Institutional Investors and

Social Media

Phone: +49 511 938 14034


Christopher Macke

Analysts and Institutional Investors

Phone: +49 511 938 1062


Klaus Paesler

Analysts, Institutional Investors, ADR

and Private Investors

Phone: +49 511 938 1316


Sabine Reese

Sustainability, ASM, CMD

Organization, IR Website, Capital

Market Disclosure Requirements

Phone: +49 511 938 1027


Bernard Wang

Head of IR

Phone: +49 511 938 1068


Sina Ramatschi

Assistant to the Head of IR

Roadshow and Conference Organization

Phone: +49 511 938 1163


mailto:[email protected]

http://www.continental-ir.com/







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