Meine sehr geehrten Damen und Herren, als Vorsitzender des Aufsichtsrats der Covestro AG und damit als Versammlungsleiter eröffne ich die 8. ordentliche Hauptversammlung unserer Gesellschaft, begrüße Sie herzlich auch im Namen von Vorstand und Aufsichtsrat. 2022 war erneut kein gewöhnliches Jahr, für uns alle nicht und nicht für unser Unternehmen. Der russische Angriffskrieg gegen die Ukraine hat das zurückliegende Jahr überschattet und dauert weiter an. Viele andere Probleme sind dadurch entstanden oder wurden verschärft. Einige Stichwörter mögen genügen: Energiekrise, Hunger auf der Welt, hohe Inflation und eine sich deutlich abschwächende Konjunktur. Ein Szenario, in dem unser Unternehmen vor enorme Herausforderungen gestellt war und ist. Ich bin froh, dass Covestro bis heute recht gut durch dieses schwierige Jahr gekommen ist.
I am pleased that Covestro made it through this difficult time. A lot of people talk about a polycrisis. The board of management will go into more detail as to how these challenges can be countered. At this point, I would like to turn to the topics of the annual general meeting. As a result of progress in digitalization and their positive experience with virtual AGMs during the coronavirus pandemic, the legislator adapted the Stock Corporation Act in July 2022 to allow virtual AGMs to continue. Against this background, the board of management and the supervisory board decided together to conduct this year's AGM as a virtual meeting. We're not talking about the virtual format that we are familiar with from the last three years during the coronavirus pandemic. We're talking here about a new and improved format with far-reaching shareholders rights.
Unlike past years, you, our shareholders, will have the possibility today to enter into a dialogue with the board of management and the supervisory board of your company. We are looking forward to that very much. Today, you will have the possibility to request the floor electronically, and when I call your name, you can speak to us live by video transmission and also to speak to your shareholders and to ask your questions. I'll explain the whole process to you in more detail later on. At this point, let me say the following: With the new legal situation, the German legislators have made a virtual AGM, basically the same as an in-person meeting and have strengthened shareholders rights. The new virtual AGM will be more interactive, it will be livelier and certainly more intense than we've been used to in the past few years.
We are aware of the fact that not only a few of you really appreciate direct contact and dialogue with us. We, too, let me assure you, we have always appreciated such direct contact and exchange with you. We weighed the pros and cons for this year's AGM, and we decided that the advantages outweigh the drawbacks. Let me mention the following: A higher reach, which means that with the virtual meeting, investors who are far away can join us much less time and cost. We save time and cost also for you, our dear shareholders, because you no longer have to travel to the AGM. Last but not least, a much more positive economic impact because this is something which clearly makes a significant contribution to climate protection.
For these reasons, the board of management and the supervisory board will be recommending that we authorize the board of management to also allow for virtual AGMs. This is as will be the case this week and in the coming days and weeks, where other listed companies are making the same recommendation to their shareholders. This authorization is to be in line with the legal requirements. It will be limited in time, we do not want to exhaust the maximum five year limit. Instead, we are recommending authorization with a term of years. What we're trying to show you is that in the next two years, we want to deal with this authorization in a responsible way, and we will be selecting a design for our AGM. We will inform you extensively and that you can best and most effectively exercise your shareholder rights.
If you go along with our proposal, the board of management will also take into account the agenda items, and they will also decide on the format of each respective AGM. Should we decide in favor of a virtual AGM, then the board of management, in line with legal requirements, will also decide on the rights for the shareholders to ask questions. The way we see things today, we tend to believe that in future as well, shareholders will be able to ask their questions during a virtual AGM, as is the case today for today's regular AGM for 2023. In other words, we do not want to refer to questions that you would ask before the AGM and then only allow for follow-up questions during the meeting.
This is also something that we mentioned in the documents you received with the notice to today's AGM, because of course you want to have an impression as to how we will be dealing with the discretion we have been given in the future as well. Ladies and gentlemen, following these preliminary remarks, I'd like to come to some of the formalities of today's AGM. We will be transmitting the AGM from Covestro's business premises in building Q 24 in the ChemPark in Leverkusen. This room is G 165, is the in-person area where the podium is, as well as the neighboring rooms G 167 and G 163. I would now like to welcome those of us here on stage with me.
I'd like to welcome our Notary Public, Dr. Marc Hermanns, based in Köln, who, as in the past years, will be taking the minutes of today's AGM. The board of management is also here in full. I would like to welcome the CEO, Dr. Markus Steilemann, Dr. Thomas Toepfer, our CFO and labor director, Ms. Sucheta Govil, who is responsible for sales and marketing, and Dr. Klaus Schäfer, who is our CTO. The supervisory board is also present here in Leverkusen. The members of the supervisory board are in a different room due to a lack of space, but they will be in this area and can contact us at any time.
We will be showing you the supervisory board members every now and again in our transmissions so that they will be visible to you, our shareholders. Our supervisory board member, Lise Kingo, was not able to travel from abroad to Leverkusen.
That is why she is participating virtually. She will be in attendance for the whole meeting, as you can see on the screen. The only one who is missing is Marc Stothfang, and he has fallen ill and is excused. We also have Ms. Ina Moritz, who is our proxy, as well as Dr. Martin Brönner, who were appointed by the company. Today's AGM will be transmitted live, both by video and audio, for all of the registered shareholders via the investor portal. Shareholders and the public at large can also follow the entire AGM live on our website. Various social media channels will also be transmitting our AGM. This would only be up to and including the board of management's speeches.
The necessary technical requirements for our live transmission were carefully checked by our service providers. We assume that today's AGM will run smoothly in technical terms. The notary public also took a look at the technology involved and is aware of the provisions that have been taken. However, with video and audio transmissions, there can also be fluctuations also with regard to the availability of the investor portal. This is something that the company has no influence on. Should there be any technical problems, please check your internet link and update or change perhaps your browser. If the transmission continues to be interrupted, just be patient for a few minutes. If the disturbance is at our end, of course, we might use our fallback system. If that is the case, we will inform you via our investor portal.
If there are problems in the audio transmission, we will show information in the video transmission, and conversely, if there is a problem with the other transmission, then of course, we will try to make sure that the complete transmission is reestablished as quickly as possible. Ladies and gentlemen, in accordance with the transitional requirements and provisions for virtual AGM, which are convened up until and including the 31st of August, 2023, and they decided also with the approval of the Supervisory Board on the 16th of December, 2022, that this AGM will take place without the physical presence of the shareholders or their representatives, and that this will be a virtual AGM. The requirements for a virtual AGM have thus been fulfilled.
The major reasons for this decision is something that I described to you at the beginning with regard to granting certain rights, is something that I will talk about a bit later. Right now, I'd like to note the following: The notice today's virtual AGM was published in the Federal Gazette on the 7th of March, 2023, including the agenda and the draft resolutions from the Board of Management and the Supervisory Board into form and time. The documents are with the Notary Public and will be included in the minutes. We did not receive any requests for additions to the agenda, nor did we get any countermotions or election proposals. The company received a statement which was published by the due date in the investor portal and on our website.
Since the 7th of March, 2023, when the notice was published, all of the required documentation and information was made available on Covestro AG's website. The documents also will be available for the entire duration of today's virtual AGM. One example of all of the required documents is here in this room with Dr. Hermanns, our Notary Public. Ladies and gentlemen, so that you can ask your questions on updated information, we have also published the CEO's and CFO's speeches as well as my own speech one week before the AGM. These were published on the company's website. Ladies and gentlemen, of course, we will also, as required by law, be keeping a list of participants. Here, you will see the company's representatives, proxies, as well as the shareholders represented by them with their equity holdings.
The list of participants, in accordance with the new legal requirements, will list all of the shareholders or their representatives who have registered for today's virtual AGM via our investor portal. The list of participants is available here in the meeting room, and it is available on the investor portal for the shareholders who have registered via the investor portal. It will be updated on an ongoing basis whenever necessary. I will be announcing the number of attendees during the course of the AGM. Ladies and gentlemen, shareholders who registered in due form and due fine were able to exercise their voting rights prior to the AGM, either by absentee ballot or by granting authority and instructions to the company's representatives. During this meeting as well, we also made it possible to vote electronically, and you can also give instructions.
The possibility to authorize representatives from the company via the investor portal or to give them instructions will be open until the beginning of the vote. The possibility to vote electronically via the investor portal will last a few minutes longer until I, as the chair of this meeting, conclude the vote. When we get to the vote, I will then draw your attention once again to the relevant points in time. I would like to call upon you now to vote in a timely manner. Information on voting can be found in the notice to this meeting, as well as on Covestro's website. Ladies and gentlemen, as I said, this year, unlike previous years, we have the possibility for you to request the floor using a button in the main menu of the investor portal.
Now I'll explain to you the most important aspects, both for the content of your contributions as well as the formal process which we want to use to conduct today's discussion. First of all, let me talk about the content. Please, your contributions should be such as would be the case in an in-person meeting. Only speak to items on the agenda as well as if need be to the bylaws and do not digress to irrelevant items. I'd also like to ask you to be brief in the interest of the other shareholders who may also want to take the floor. As a guideline, I would like to mention a period of 10 minutes. I'd like to make one point clear. This is not a formal speaking time restriction or limitation. It is a non-binding request.
I would be very grateful if, in the interest of everyone concerned, you could focus on the 10-minute guideline. We will be using a clock to show how long someone has been speaking. As Chairman, I'm called upon to make sure that our AGM is conducted in accordance with the law and appropriately. This means that I can also formally limit your speaking time should this appear necessary during the course of our AGM, in particular with regard to the number of requests for the floor that have not yet been dealt with. Today's discussion will be a general discussion, as you are familiar with from earlier in-person meetings. You will have the possibility to discuss all agenda items, and you do not have to sign in for individual agenda items. As Chair, I am also called upon to decide upon how you should ask your questions.
As in the notice, I would like to note that questions can only be asked via video transmission. If you want to ask a question, please sign in via the investor portal saying that you want to take the floor, and then you can decide whether you want to speak, ask questions or both. Similarly, you have to request the floor if during today's meeting you want to present a motion, whether this deals with the articles of association or if you want to present an election proposal. When you request the floor in the investor portal, you can also inform us that you want to present a motion, and I would be grateful if you were to do so I can look and see if your motion should perhaps be given priority in giving you the floor.
Now I'd like to give you some technical details for your request for the floor and how we are going to conduct our discussion. When you request the floor, you will be put on our list of speakers. The speakers will then be divided up into groups of about five people max. These five people will then be called out. Before we begin our discussion, I'll call out your names, and I'll ask you to be ready for a test for your audio and visual transmission. We will then interrupt the AGM for about five minutes, and during this period, our technical team will carry out the technical test with the speakers that I have called out. We will continue the AGM, and I will call out the speakers one after another and give you the floor.
You will then make your contribution via video transmission, and then you can also be seen and heard by your shareholders as well in the public transmission of the AGM. We will collect questions and then prepare the answers. At the end of the last presentation, we will then have a first round of answers, and then I will call out the next speakers, and we'll repeat the same procedure until all of the speakers have been given the floor and have been able to ask their questions and all the answers have been given. Ladies and gentlemen, I would also like to mention that as of the beginning of this event, up until the end, until I conclude this meeting, that you can object to decisions taken by the AGM. You will find a button on the main menu in the investor portal.
The notary public will then accept any objections we receive, and these will be included in the minutes for the AGM. That should suffice on formalities. Ladies and gentlemen, before we turn to the agenda, I would like to briefly review the past year as seen by the Supervisory Board. As I said, 2022 was primarily a year of hardship and concerns. After decades of peace and stability, war has returned to Europe. As a result, the energy supply situation has drastically worsened, with major impacts on our industry and our company. This includes the weakening of the economic environment. The overall situation where Covestro has been confronted, so to speak, with a twofold challenge and still is confronted with this. On the one hand, we had to do everything we could in order to maintain operations and business.
On the other hand, in these difficult times, our company also had to continue pursuing its strategic goals and growth opportunities. We were successful at both, ladies and gentlemen. Covestro managed the energy crisis, which reached its peak last fall and last winter, thanks to the excellent dedication and flexibility of our employees. We adjusted very quickly to the situation. We reduced our energy requirements, improved our efficiency, and in some sites, we switched from gas to oil as our fuel. Strategically speaking, we stayed on course, and we continued to focus on circularity, our major vision. That means we have the right approach in order to both maintain our livelihood on Earth and to combine this with sustainable added value. A milestone in sustainability strategy at Covestro are our ambitious climate targets, which our company published last year.
By 2035, our goal is to be climate neutral in terms of operations. This applies, first of all, for our direct greenhouse gas emissions, which we produce in our own production. This is where we're talking, in particular, about the very climate-intensive substance, nitrous oxide. The emissions from energy sources which we receive from third parties. These are to be reduced to net zero. That's not enough. We're also working on a climate goal for indirect emissions from procured raw materials, which would be in up and downstream processes in the added value chain. Climate neutral and circular, this is what our product range is becoming more and more at Covestro. Our materials and solutions last year were in demand last year. As a result of the weak economy, the volumes declined.
Because we were able to achieve higher selling prices on the market, the sales figure grew to a record number. However, the situation was different when it came to profit due to the increased energy and raw material costs and one-off effects, as well as exceptional impairments in non-current assets and impairments for deferred tax assets. We had negative net income for the first time. For the first time, we will not be able to pay you a dividend. Shareholders, we regret this, and we hope that you can bear with us. I am convinced that our company, due to its good position, will be in the position to pick up on the payments that we had in previous years. I'd like to mention one more thing.
The negative net income for 2022 is not something that only led to no dividend payment. The difficult economic situation at Covestro also meant that the Board of Management and the employees will not be receiving an annual bonus for fiscal 2022. The CEO, Dr. Markus Steilemann, the CFO, Dr. Thomas Toepfer, will be going into more detail on this when they talk about the course of business and strategic development. Ladies and gentlemen, that brings us to the agenda as published in the notice. We will begin with agenda item 1. This relates to the financial statements and reports. Ladies and gentlemen, I would now like to hand over to the Chairman of Covestro AG, Dr. Markus Steilemann.
Thank you, Dr. Pott. Now, we, the members of the board of management, also want to extend a very warm welcome to you, our shareholders. We're delighted that you're participating in our annual general meeting, and we hope that you, your friends, and family are doing well in these difficult times. Ladies and gentlemen, shareholders.
The last time we met, Russia had just launched its war against Ukraine. The terrible carnage has already been going on for over a year now, and it has led to many other serious problems. We mustn't give up, and we don't have to either, because despite all the misery and difficulties, we also keep seeing rays of hope, ways forward and solutions at the political level in our personal lives and at our company, Covestro, of course. Courage, confidence and solidarity. That's what will take us forward. Decisive, resolute action is what's required now. This is because there is need for action virtually everywhere. First and foremost, the war that is raging less than 2,000 km away from us has to be stopped. We also have to deal with its many consequences, which are affecting us all very directly.
There's the energy crisis in Germany and the rest of Europe, which is causing problems for each and every one of us. It is also hitting our company and the entire industry, the chemical sector. The same applies to the high rate of inflation, which is likewise a consequence of Russia's war of aggression. Amidst all of this, we have an ailing global economy. Fortunately, the coronavirus pandemic is receding, but it has left deep scars. That is anything but a favorable environment for Covestro. The state of crises had a massive impact on our business in 2022, and our expectations for the current year have been dampened accordingly. There is no reason to be pessimistic, ladies and gentlemen. On the contrary, we're looking ahead with confidence.
Right now, we can see that our company has the right setup, that we took the right steps in 2022, and we will keep doing precisely this in the future. The redefinition of our company, on which I reported to you at the last AGM, has also played its part. It has taken Covestro's efficiency and customer proximity to the next level. Financially, we are on solid ground, and our policy of producing in the regions and for the regions makes us more independent from global supply chains. Overall, our strategy is heading onward and upward. Its name, Sustainable Future, shows that we are looking way ahead into a positive, sustainable future for our company and for society as a whole.
We take in a lot more in this process than just overcoming the current crises and problems which are known to pose enormous long-term challenges such as climate change, the overexploitation of natural resources, or damage to the environment. The past year, with its droughts and floods, demonstrated what humanity has to expect. We at Covestro are helping to deal with many of the problems. With our products, technologies, and solutions, we systematically address global trends such as sustainable mobility and renewable energy. We're gearing our entire company completely to become fully circular while pursuing ambitious climate targets. I will come back to that in more detail later on. This is how we will fulfill our company's purpose of making the world a brighter place and put ourselves in the ideal position to achieve future growth. As I said, more on this in a moment.
My dear shareholders, I now want to delve a little deeper into an issue that concerns us all, the energy crisis. As you know, we need a lot of electricity to produce chemicals and plastics, and also steam, which we mainly generate from gas. These resources have become extremely scarce all of a sudden and a lot more expensive than they were already in Europe, especially in Germany. Our energy costs have almost tripled since 2020. We reacted swiftly and decisively to this situation thanks to the commitment and inventiveness of many colleagues. They have already made quite a few adjustments within the company with great success, I must add. Let me give you one example, chlorine. We need this chemical for two-thirds of our products. We make it ourselves, although this process consumes large quantities of electricity.
For this reason, experts from various areas at Covestro got together to identify potential savings. The result was a new management model for our chlorine plant in Leverkusen, Germany. It allows us to estimate how electricity prices will change during the course of a month. Now we can identify to the day and minute the most cost-effective time to operate the plant. This pays off as it allows us to save costs in the mid EUR tens of thousands every week. A great team effort that's made me very proud, only one of many ideas and measures with which we responded to the energy crisis decisively, flexibly, and collaboratively. This also applies to the many other challenges. All of Covestro's 18,000 employees showed fantastic commitment and did excellent work in 2020, which was a difficult year in countless large and small projects alike.
For this, all of us on the board of management owe them the greatest respect, and we want to offer them our heartfelt thanks. 2022 demonstrated once more that we are a great team that works in solidarity around the world, not least thanks to our exceptional corporate values. Curious, Courageous, and Colorful. Ladies and gentlemen, this set of values and the commitment and know-how of our colleagues also helped us in the past year to tackle the adverse economic conditions. The economy has experienced a significant downturn. Global growth halved in 2022, affecting almost all major industries that we supply. The decline in global demand is slowing down growth in the core industries to which we deliver our products. The construction sector expanded by just 1.2% in 2022. The electrical, electronics, and household appliances sector shrank by over 2/3.
The furniture industry was also down by almost 4% in 2022 compared to the previous year. Only the automotive industry is performing well. Growth more than doubled here. Therefore, Covestro faced economic headwind in 2022. Despite that, we increased our sales by 13% to a new record high. This is unfortunately not matched by earnings, where we were only able to cushion the massive rises in energy and raw material prices to a limited extent. This is why our operating result or EBITDA was down almost 48%. Because of one-off factors, our bottom line showed a loss for the first time ever. This is something I want to emphasize once again, financially, our company, your company, remains very stable. Ladies and gentlemen, we again had a cash surplus referred to as free operating cash flow in the crisis year, 2022.
Simply put, we still have cash on our books. Last week, we published our results for the Q1. Despite a decline in demand, the financials for the Q1 were much better than anticipated, as shown by our current earnings. Our resolute implementation of our strategy and measures show that we're on the right path. For this, I would like to thank all our employees for their commitment and dedication in the last few months. We have achieved a milestone on our own steam. Together, we will continue to do all we can to master the challenges in the coming weeks and months. Our CFO, Thomas Toepfer, will now share some deeper insights into our financial results, and he will outline our expectations for the current year. Having said that, over to you, Thomas.
Ladies and gentlemen, from me as well, a very warm welcome. It's a great pleasure for me to present to you the results for the past fiscal year. Markus Steilemann has already given you some context for the recessionary environment in Europe and high market volatility due to the uncertain situation of power and gas supplies. This trend could not be offset by growth in other markets. Since we were able to pass some of the cost increase to customers, group sales rose by 13% to almost EUR 18 billion despite lower volumes. This helped us generate the highest sales in our company's history. As already indicated, we were only partially able to pass on the higher costs. As a result, the very high energy and raw material prices led to a considerable negative pricing delta between selling and raw material prices.
While energy and raw material prices kept going up in the course of the year, the options for passing on these prices became increasingly limited. There was a negative volume effect of around 5%. On the bottom line, our EBITDA at the end of fiscal 2022 totaled EUR 1.6 billion, after EUR 3.1 billion being posted at the end of the previous year. Let's now take a look at our two segments. The negative pricing delta affects the Performance Materials segment in particular. Due to the commodity-type nature of its products, the segment is particularly highly exposed to changes in demand in the market. This limits the opportunities for passing on the energy and raw material prices in a recessionary environment. The sharp decline in the EBITDA margins brings this into sharp focus.
While sales were up, EBITDA went down 63% year-on-year to a total of EUR 951 million. We anticipate that the year 2023 will remain challenging for Performance Materials. Thanks to its strong specialization, the Solutions & Specialties segment, on the other hand, benefits from closer customer relations and better options to pass on the high costs resulting from rising energy and raw material prices. This segment's greater resilience is reflected by an almost stable EBITDA margin. Despite a decline in volume, strong sales growth also led to higher earnings. An important operational lever in this context is the fact that the successful integration of the resins and functional materials, RFM business, is happening faster than planned. Despite the robust performance in the year 2022, Solutions & Specialties will continue to face challenges in the current year.
The financial performance of the two segments led to an overall decrease in our EBITDA to EUR 1.6 billion. In the past year, we also had exceptional impairments of non-current assets totaling EUR 463 million and impairment losses on deferred tax assets from tax loss carryforwards totaling EUR 255 million. These one-time factors led to a negative income. Our dividend policy since the distribution of dividends for fiscal 2020, our dividend policy has specified that between 35% and 55% of net income should be distributed as dividends. Accordingly, we paid a record dividend of EUR 3.40 per share for fiscal year 2021, and again, in line with our dividend policy, will not pay any dividend for fiscal year 2022.
As our bonus system, the PSP system, also focuses on the overall performance of the company, our board of management and employees will not receive a bonus payment for the past year as a result of the negative group income. A look at free operating cash flow also highlights just how challenging the past fiscal year was. Here, the sharp decline in EBITDA is reflected mainly from Q2 onward. We countered this trend specifically with consistent working capital management, and in doing so, we were able to generate a positive effect of EUR 312 million, as you can see here. In addition, we had capital expenditure totaling EUR 832 million.
We also invested in maintaining and improving existing plant in fiscal year 2022 with a view to positioning our production in the best possible way and offering our employees safe and modern workspaces. Moreover, we invested in expanding our production capacity. Markus Steilemann will tell you more about this in just one moment. As you can see, income taxes totaling EUR 538 million were also incurred in fiscal year 2022. This amount was driven predominantly by a geographical mix that was unfavorable from a tax perspective. The other effects item relates primarily to the bonus payment for fiscal 2021, which turned into a cash outflow in Q2 of 2022. That means that for the year as a whole, we had a positive cash flow of EUR 138 million.
This positive cash flow is clear evidence that we are managing challenging times. We have a solid balance sheet and a strong liquidity base. We are increasingly combining our financing and sustainability strategies and by doing so, continue to focus on sustainable growth. On the 13th of April, we also published advanced KPIs with EUR 286 million for the predicted EBITDA, and we have therefore exceeded our estimates for the capital market, and that despite low demand in the Q1 . Thus, the first three months of 2023 were much more successful than we had imagined at the beginning of the year. Shareholders, we are in a very good position to deal with the current economic situation, and we are looking with confidence towards the future. Now back to Dr. Markus Steilemann.
Thomas, thank you for your commentary. It means that 2023 will be another challenging year, ladies and gentlemen, but I'm sure that we will once again adeptly handle the challenges by pulling out all the stops to get through the current crisis and by systematically pursuing our strategy, because it has clearly put us on the right track. What this means is that we are seizing the major opportunities associated with the global mega-trend towards comprehensive sustainability. The world must become greener and smarter, safer and more livable. We at Covestro help achieve this by contributing what we do particularly well, highly sustainable, innovative plastics. They are tailored exactly to the needs of many key industries, and they are bundled in two segments, one being tailored plastics based on innovation and customized solutions.
The other is the business with standard materials, where cost efficiency is one of the focal points. I must emphasize that both business lines are very attractive and full of potential. This is because they address important global trends and the needs of many key industries, be it the energy industry, be it the mobility sector or the construction industry. They are all going through far-reaching transformations in their quest to become sustainable. For this, they need the right materials that we provide in close consultation with our customers and continuously improve. It means that we are literally on course for sustainable growth. Let me give you a few examples to illustrate this. The energy industry. This sector is by far the largest source of greenhouse gases that are damaging the climate.
This alone is reason enough for the industry to make a rapid transformation away from fossil fuels such as coal, to renewable sources such as solar and wind. At the same time, many other sectors, including the chemical industry, will need more power in the future, and this will also have to be green. Renewable energy is still not cost-effective enough to compete with fossil fuels. This is where our products and solutions come in. For wind turbines, for example, we have developed a polyurethane infusion resin that can be used to make rotor blades lighter, longer and stronger, and to increase yields. Their production is becoming more efficient at the same time. As a result, the production costs of rotor blades have declined by 8%. Electricity production costs could fall by 2.4% in total if Covestro materials were used.
This harbors major potential for manufacturers of wind turbines and operators of wind farms. Ladies and gentlemen, our products are not only driving the energy revolution, but are also supporting the sea change in mobility. The future belongs to alternative drives such as the electric motor. Here too, our materials are literally paving the way. The company's polycarbonate make electric vehicles lighter and in turn increase their range, and they are extremely useful in battery cases and charging stations, making them safe, robust and cost-effective. Apart from electric drives, we also have an eye on other major mobility topics. The trend towards autonomous driving is one example that can offer countless advantages such as greater safety and comfort. What's more, there is an increasing desire for individualization, which is also reflected in mobility. To this end, we are developing innovative materials and concepts for functioning fully networked vehicle interiors.
Ladies and gentlemen, shareholders. Another very topical example of sustainable growth comes from the area of packaging. As you know, there are clear regulations, especially in Europe, relating to the huge amounts of packaging waste and the negative consequences this has on the environment. To deal with this, much more waste will have to be recycled. To date, this has worked best when paper is used as the packaging material. For this purpose, it has to be treated first, for example, to prevent it from letting moisture penetrate. Here, our company also offers suitable products. We have developed a special coating resin, which gives the paper the properties of plastic so that it keeps moisture out, for example. What makes it so special is that it can still be recycled as paper. Our innovative material is particularly sustainable for two reasons.
It contributes not only to closing material loops in the packaging industry, but is itself manufactured according to circular economic principles from raw materials that are in part plant-based. Ladies and gentlemen, I want to touch on another key sector that needs our materials in order to become more sustainable. I'm referring to the construction industry, which is responsible for around 20% of global greenhouse gas emissions. It is therefore understandable that only climate neutral buildings are to be built in the EU in the future. At the same time, millions of existing apartments and houses will require energy efficient refurbishment. This will drive up demand for efficient installation. This is because well-insulated buildings release little heat and keep the cold outside. Rigid polyurethane foam is a particularly good insulant. We at Covestro supply the main components for it, including the substance MDI.
My dear shareholders, we therefore expect demand for MDI to increase. We are getting ready by ramping up our production capacities. At our site in Tarragona, Spain, we commissioned a new large-scale plant where MDI is produced in a particularly environmentally friendly way a week ago. This is achieved using a special technology that Covestro has developed together with a partner company. I now want to come back to chlorine. We need chlorine for MDI, our innovative technology allows us to produce it using 25% less electricity. This means in turn that the new plant in Spain will avoid up to 22,000 metric tons of carbon dioxide emissions per year. As you can see, ladies and gentlemen, we continue to invest in our production network in these challenging and uncertain times, including at our site in Map Ta Phut in Thailand.
We recently held the groundbreaking ceremony for a new plant there, which will produce specialty films from polycarbonate. They are used above all in ID documents, car displays, and electronic devices, and there is increasing demand for them in the Asia Pacific region. The materials for these films are in part based on organic waste. Alternative raw materials and energy saving production are only two examples of the extent to which we focus on sustainability internally as well. Here we have set ourselves new ambitious goals in 2022. We want to make Covestro's operations climate neutral by as early as 2035. This means that by then, greenhouse gas emissions from our own production and from purchased energy are to amount to net zero. We took a step in this direction. We reduced our emissions of CO2 equivalents by around 10% last year.
At the same time, we continue to make progress in the transition to renewable energy. It now accounts for 12% of our total power consumption. Our target for this year is up to 18%. We are achieving this above all by negotiating direct agreements with energy suppliers. At our Shanghai site, China, we, for example, are already able to meet around 30% of our annual electricity demand with wind and solar energy. Moreover, Shanghai and all other major sites around the world have now attained certification under the important internationally recognized ISCC PLUS standard. This is a central requirement for what is referred to as mass balancing. This is an arithmetic system for attributing recycled and bio-based raw materials to end products. It is similar to the familiar principle of working out the proportion of green electricity from the grid.
This will allow us to drive our largest project, the circular economy, with which we are aligning the entire company. My dear shareholders, for us, becoming fully circular is the key to solving many global challenges. Circularity will help humanity conserve the Earth's dwindling resources, protect the environment, and achieve climate neutrality. At the same time, new ways of creating value are being uncovered, which combines sustainability and growth. At Covestro, we have therefore committed ourselves wholeheartedly to the circular economy. Something like this cannot, of course, be done overnight at the push of a button. We're just at the beginning of a long journey, but we have already taken a number of promising steps, and we will rigorously stay the course until we have turned our vision into reality. However, the transition to the circular economy is not a project that can be completed in isolation.
What we need is the comprehensive transformation of society as a whole. The economy must and will change, and we as consumers must adapt our behavior. Product labels can also help raise awareness of the circular economy in the general population. They will create acceptance and trust. Covestro therefore introduced a label in 2022 that identifies circular materials and technologies. The new label is called CQ, derived from circular intelligence. We use it to identify products that contain a minimum of 25% alternative raw materials. In the same way as the label for organic products in supermarkets, they now also give our customers a choice. Ladies and gentlemen, the use of non-fossil fuels is one of the pillars of a circular economy. The other is recycling products and waste.
Let me illustrate how important it is to recycle using an everyday product that I presume all of you have at home. Mattresses. In Europe, around 40 million of them are discarded every year. If you laid them next to each other, they would cover the circumference of the Earth twice. These 40 million mattresses normally end up in waste incineration plants or landfills, even though old mattresses are nothing other than a valuable raw material for new ones. To recycle mattresses rather than let them go to waste, that, too, is one of our aims at Covestro, ladies and gentlemen. To be more precise, it's about what's inside the foam under the cover, which makes the mattress comfortable. This foam is often made of polyurethane, a versatile material for which we produce and continually improve the key components. Polyurethane has many advantages, but also one drawback.
It can't be recycled, or at least not so far. This is changing. We've also got off to a successful start in this area. Together with partners, we have developed innovative technology for recovering both core raw materials. We are doing it through a chemical process by breaking the foam down into its molecules, which can then be used to produce new foam and new mattresses. The framework for this groundbreaking project is provided by Evocycle CQ, our program for innovative recycling. As part of this process, we want to advance chemical recycling, as I've just mentioned. That is a new approach for which we therefore need the right conditions. Ladies and gentlemen, another promising approach to taking the circular economy forward is microscopic, but can have a huge effect.
I'm referring to industrial biotechnology, which involves the use of microorganisms and enzymes, a topic of the future that is also the focus of research and development at Covestro. In the past year, we intensified our biotechnology activities and established a dedicated research group. Here, experts are working on using enzymes specifically for plastic recycling. In addition, the enzymes are intended to help treat wastewater and break plastic waste down fully in the natural environment. Biotechnology has already helped us achieve a breakthrough. We can use this technology to produce the chemical aniline entirely from plants. We need aniline to produce MDI, the key insulin component I spoke about earlier, as you might recall. With insulins, we in turn address the mega topic of sustainable building, we've come full circle. Having said that, ladies and gentlemen, I'm coming to the end of my presentation. Let me summarize. Stability.
Our Sustainable Future strategy and the solid balance sheet give us a firm foundation, even in challenging times. Sustainable growth. We're gearing our business systematically towards areas of the future, such as sustainable building, new forms of mobility, and renewable energy. Circular economy. We're forging ahead to make circularity a global guiding principle as a key to solving many of the challenges we face, both now and in the future. Our company is on the right track. We stand firm, we create value, and we produce benefits. Thank you for your attention.
Ladies and gentlemen, on behalf of the supervisory board and on your behalf as well, I would like to thank the board of management and all of the employees for their hard work. Under extremely difficult situations, they have all shown a great deal of dedication. I would like to say this on behalf of the supervisory board. You have taken important decisions. Measures have been introduced to get Covestro through these difficult times. At the same time, you have also talked to us and kept us on course so that you can consider the long-term trends and lead to sustainability. Ladies and gentlemen, before we turn to the supervisory board report, I'd like to give you information on the attendance figures.
Of the capital stock amounting to EUR 192.2 million, divided up into 193,200,000 shares, we see that 122,462,427 shares with exactly the same number of votes are represented here today. That is 63.39% of the registered share capital. In addition, we also have 525,890 absentee ballots. This gives us a total of 122,988,317 shares overall. This is 63.66% of the share capital. Ladies and gentlemen, I'd now like to turn to the Supervisory Board report.
You will find this report on pages 19 to 27 in the annual report, which I'd like to refer you to. We have reported in detail there, so I will be somewhat briefer today as a result. As we've mentioned a number of times already, the past year was characterized by the energy crisis and a downswing in the global economy. The coronavirus pandemic also had negative impacts on our business in the first half of the year. Lockdowns in China led to logistics problems and disruptions in the supply chain. In these critical times, the board of management took the necessary decisions in order to maintain business and in order to maintain the viability of our company. This also included securing our liquidity and our profitability.
At the same time, Covestro continued its path towards circular economy and also entered onto a path towards climate neutrality, which is to be achieved by 2035. We have supported the supervisory board very closely and support their decisions. In February of this year, we accepted the request made from our CTO, Dr. Thomas Toepfer, to terminate his contract. He will be leaving Covestro on the 31st of August 2023 and will take on the same role at the European aircraft manufacturer, Airbus. Up until then, Dr. Thomas Toepfer will continue his work as CFO and labor director, and he will continue to show complete dedication. The supervisory board has introduced its search for his successor and will make an announcement at the appropriate point in time. Mr. Toepfer, at this point, I would like to thank you for your great amount of commitment to our company.
We regret the fact that you are leaving and would like to wish you all the very best in the future. Ladies and gentlemen, when it comes to personnel matters, I'd also like to announce that there were some important changes in the past fiscal year for continuity in management. The contract for our CEO was extended ahead of time by five years. Once again, congratulations, Mr. Steilemann. The contract for our CTO, for Dr. Klaus Schäfer, was extended due to the difficult situation on the energy market. It was extended by 6 months. His successor, Dr. Thorsten Dreier, will take on this office in July. He is now head of the business entity Coatings & Adhesives at this Covestro. Dr. Schäfer, we too would like to thank you for your many years of service to your, our company and its predecessors.
You have had a number of roles and have made a major contribution towards Covestro's success. Mr. Schaefer, we wish you all the very best for the new phase in your life. We would also like to wish you, Mr. Dreier, all the very best. You have enriched our company for many years with your technological expertise, customer focus, market orientation, and management qualities. We on the supervisory board are convinced that you as CTO are an excellent person for this job. Ladies and gentlemen, Dr. Dreier will be working together with Dr. Schaefer before taking over his activity, and he is becoming familiar with all of his new tasks.
We are convinced on the supervisory board that Dr. Dreier will also drive Covestro's transformation towards circular economy and climate neutrality, together with the other members of the board of management. Let's let Dr. Dreier introduce himself very briefly.
Dear shareholders, my name is Thorsten Dreier, as of the 1st July, I will become CTO at Covestro. I am very much looking forward to introducing myself to you today. I see myself as someone who's always been with Covestro. After studying chemistry and getting my PhD in Münster, I began as a lab director in polyurethane at Bayer. In the past two decades, I have seen a lot of different areas at Covestro, R&D, et cetera, up until the business. I have seen, worked with many international teams, and I'm very much associated with the people who work here. I am now responsible for adhesives and this Coatings & Adhesives business entity. Before that, I worked in production for many years. That is why this new challenge feels sort of like coming back home.
I believe in Covestro's vision, and I'm convinced that we can improve the world with our products. With my experience and expertise, I would like to make a contribution to driving Covestro's transformation and to making Covestro a climate-neutral area. Now let me say a few words about myself. I'm not only someone who belongs to Covestro, but I live here in North Rhine-Westphalia. I live with my wife and daughter in Düsseldorf. I was born in Dörpen. At the very beginning, I played soccer for Borussia Dortmund. Then I began my career in the chemical industry, and that was an excellent decision. Ladies and gentlemen, not only on the Board of Management, we also had some changes in the Supervisory Board as well. At last year's AGM, Dr. Sven Schneider was elected as representative of the shareholders.
He was the successor to Dr. Rolf Nonnenmacher on the supervisory board. He was then elected to the audit committee, he then assumed the chair of the audit committee. Then at the end of the last AGM, both employee representatives, Christoph Gürtler and Frank Löllgen, joined the supervisory board to succeed Dr. Ulrich Liman and Frank Werth. All three new members were introduced to you at the last AGM. They have supported supervisory board's work in very challenging past fiscal year. The entire supervisory board was in regular dialogue with the board of management. We were convinced of the decisions and measures introduced by management. At the same time, we also monitored the work of the management board on an ongoing basis. This was primarily at the 6 meetings of the supervisory board, where all members of the supervisory board were present.
One member could not attend one single meeting for personal reasons. It was possible for him to support the resolution at this meeting as a result of a pre-briefing, and was able to submit his vote by mail. Another Supervisory Board meeting could not take part in the two meetings of the second half of the year for health reasons. The Supervisory Board focused on the following topics in the past year. The current crisis situation with respect to the Russian war against Ukraine and its impacts on the company. This was the subject matter of all of the Supervisory Board meetings in 2022. We also had a number of additional reports from the Board of Management outside the Supervisory Board meetings. The continued transformation of the group and the integration of the business entity resins and functional materials acquired from DSM in 2021.
These were topics that we dealt with in nearly all of our Supervisory Board meetings. On the Supervisory Board, we received detailed reports from the Board of Management on these topics. We also dealt in detail with the existing challenges and progress that had been made. We also reviewed the assumptions and discussed them with the Board of Management. At the first meeting of the year under review in February, we dealt in detail with the annual and consolidated financial statements for fiscal 2021, with the audit report and the oral report from the external auditor, as well as the proposal on the use of the distributed product. Other topics were the risk situation, as well as the path toward climate neutrality presented by the Board of Management. This is something that we agreed to, including the associated targets for emission reductions.
The Supervisory Board on the 21st of April, the same day as the virtual AGM. That was the focus of that meeting. Following the AGM, we then had a constituent meeting of the Supervisory Board so that the six new members of the Supervisory Board that had been elected in March for the employee representatives. The same applied to the representatives of the shareholder representative, Dr. Sven Schneider. Petra Kronen was elected Deputy Supervisory Board Chair, and the members from the employee representatives were elected to the Supervisory Board's committees. Dr. Sven Schneider, elected by the AGM to the Supervisory Board, was elected to be a member of the Audit Committee and then to be the Audit Committee's chair. Ladies and gentlemen, let's continue going through the year.
At our meeting in June, the Supervisory Board dealt in detail with the self-assessment of the effectiveness and efficiency of the Supervisory Board's activities. This was supported from an external expert. Other topics were the gender quota on the Board of Management and Supervisory Board, also the recent changes to the German Corporate Governance Code. The Supervisory Board, as I said before, also supported the decision to reappoint and extend the contract for the CEO, Dr. Markus Steilemann, for another five years after the end of his current appointment. From July until early October, the Supervisory Board dealt with four time-critical topics and decisions using the written procedure. On the 29th of July, they dealt with the sale of additive manufacturing at Covestro.
On the fourth of August, they also agreed to an increase in the funding, as well as on the 25th, they also agreed to an Euro Commercial Paper, as well as the issuing of a promissory note loan. On the fourth of October, they decided to extend Dr. Schäfer's term of office for another six months. At the Supervisory Board meeting on the ninth and 10th of November, the Supervisory Board decided to appoint Dr. Dreier as Dr. Schäfer's successor. The fall meeting of the Supervisory Board is our so-called strategy meeting. It is accompanied by a strategy workshop beforehand, which is organized by the Board of Management. The focus of the strategy meeting was also the group strategy, the short, medium, and long-term trends, as well as the challenges and also strategic leeway.
In December, we dealt with compensation issues, and this includes a review of the fixed compensation for the Board of Management, as well as their long-term variable compensation. Another regular topic at the last Supervisory Board meeting of the year is dealing with the corporate planning proposed by the Board of Management for the next fiscal year. In this case, it was for 2023, as well as the medium-term outlook. The Supervisory Board approved both the corporate planning as well as the funding frame for fiscal 2023. At this meeting, we also dealt with the plans for today's AGM, the agenda, as well as the draft resolutions.
We also agreed to the decision of the Board of Management to conduct today's meeting virtually. There was regular exchange between the CEO and myself between our meetings, especially with regard to questions of strategy and planning, business development, and upcoming decisions. Members of the Supervisory Board also were very much committed to their own continuing education, despite the challenges considered due to the coronavirus pandemic, as well as some of the restrictions regarding in-person meetings and travel restrictions. This was particularly in the form of the full-day strategy workshop in November, in conjunction with the Supervisory Board's strategy meeting. In conjunction with the effectiveness and efficiency assessments supported by an external expert, we also had a two-day workshop for the Supervisory Board, moderated by someone from the outside.
The special roles and tasks of the Supervisory Board were discussed against the backdrop of the current crisis situation, the Russian war against Ukraine and the energy crisis. In October, we made use of a visit to the Plastics Fair, K 2022 in Düsseldorf, to learn more about the plastics industry and current trends and challenges. We focused here on sustainability and circular economy. In November, there was also a training course supported by external experts with regard to capital market questions and capital market law. Ladies and gentlemen, I'd now like to refer briefly to the activities of the Supervisory Board's committees. The work of the Supervisory Board is prepared and continued by the committees. The committees met as follows during the period under review. The Presidium Committee once, Audit Committee four times, HR Committee five times, Nomination Committee once, and Sustainability Committee five times.
At all of these meetings, all of the members participated, with the exception of one Supervisory Board member who fell ill the second half of the year. A number of Supervisory Board members also participated in committee meetings, especially at the meetings of the Sustainability Committee, which explicitly opened its door to guests from the full Supervisory Board. The Audit Committee also monitored the accounting process, as well as the effectiveness of the internal control system and the risk management system. They were informed on an ongoing basis with regard to developments in the compliance management system, as well as risk assessments. The Audit Committee also had continuous discussions with the external auditor with regard to major audit risks and also the orientation for the audit.
Special topics for the Audit Committee included current and future regulatory requirements to the sustainability report and its implementation, changes to the German Corporate Governance Code, asset management for the pension assets, as well as information security and cyber risk management. The HR Committee dealt with the achievement of goals by the board of management members and compensation. We also discussed the reappointment and extension of the contract to the CEO, Dr. Steilemann, as well as the successor planning for CTO, Dr. Schäfer. An important topic for the Nomination Committee this year, of course, was the skills profile for the supervisory board. This was reviewed and supplemented in order to meet the requirements of the new version of the German Corporate Governance Code. The Nominating Committee also prepared the qualification matrix required by the code, which was then dealt with by the Presidium Committee.
The Presidium Committee had a meeting in order to deal with continuing its work on the qualification matrix, as well as preparing a decision in the supervisory board. The Sustainability Committee dealt with Covestro's climate program, the path towards climate neutrality, including the proposals for target setting and implementation measures for the Scope 1 and Scope 2 emissions. This means greenhouse gas emissions which generated from our own production or from purchased energy. Over the course of the year, the Sustainability Committee also dealt with Scope 3 emissions. In other words, the emission of greenhouse gases from purchased raw materials, as well as other up and downstream processes in the added value chain. Here we're talking about circular economy as well as the EU Chemical Strategy, as well as the approach taken thereon by Covestro.
Other topics for the Sustainability Committee included assessment of external rating agencies with regard to ESG, environment, social affairs, and governance, as well as the approach taken here by Covestro. The ESG aspect abiding by human rights as well as transparent reporting. I'd now like to come back briefly to the Audit Committee. Here we had regular exchange between the chairman of the Audit Committee. At the beginning of the year, this was Dr. Nonnenmacher, and then Dr. Schneider, and our CFO, Dr. Toepfer, in order to discuss the risk and compliance system, as well as the accounting process at Covestro. The Audit Committee and Supervisory Board then received the financial statements and the combined management report, which all received an unqualified audit opinion, as well as the audit report from the external auditors.
With these financial statements and also the assessment as to the further development of the company is something that we have agreed with. As in the past, I am convinced that the excellent cooperation between Board of Management and Supervisory Board. We have close, transparent, and trustworthy cooperation. What is most important to us here is the principles of good corporate governance. Ladies and gentlemen, that concludes my report on the Supervisory Board. At this point, I would like to say a few words on the compensation report and the adjusted compensation system for the members of the Board of Management. You will be voting on that under agenda items five and six. Let's begin with the compensation system. Our compensation system for Covestro AG's Board of Management members is something that the AGM voted on last year and approved this with a majority of 88.75%.
This system is to continue essentially for the future. That is why the supervisory board has not decided on any fundamental change. They simply want to adjust the existing system with a adjustment as of the 1st of January, 2023. With the adjusted system, it's not only for short term, but also for the long term variable compensation component. You will have the possibility to adjust the payout % should there be any unforeseeable developments. This proviso will be applied for the first time for the performance period from the 1st of January, 2023 until the 31st of December, 2026. The supervisory board has also done away with the mobility lump sum for new executive board members, as well as the reimbursement of costs for an annual health check.
The supervisory board has also implemented the possibility in the compensation system for 2022, which allows us to add additional criteria to the sustainability component. This possibility for the long-term variable compensation as of 2023 can include indirect greenhouse gas emissions. Scope 2 was then included in the compensation system and has been included in the presentation of the long-term variable compensation. As in the past, and even more so for our adjusted system, the following will apply. The system is based on the corporate strategy, and it should also make a contribution towards sustainable corporate success and to achieving strategic corporate targets. We want to ensure Covestro's attractiveness amongst competitors and also attract highly qualified managers, guarantee high transparency, and also be in line with legal and regulatory requirements.
Compensation for the Board of Management includes not only performance non-related components, but also question of variable and multi-year performance-related compensation criteria. The focus of the overall compensation is, thus, based on long-term sustainable corporate development. In accordance with the responsibility taken by the Board of Management within our motto, "We Are One," we see that all of the Boards of Management have the same KPIs in their variable compensation. The link to economic success will guarantee any fluctuation in variable compensation if the targets are over-exceeded or missed. Compensation for the Board of Management is in line with the basic principle of the compensation structure at the Covestro group, and this applies for the Board of Management as well as managers and senior executives. They all have the same structure.
Ladies and gentlemen, now I'd like to give you a few comments on our compensation report for fiscal 2022. This is something that we'll be dealing with under agenda item five. The Board of Management and Supervisory Board have printed the compensation report. You can find it in the notice to this meeting following the agenda. You will also see the audit opinion by our external auditors, KPMG. The auditors was also mandated to review the contents of the compensation report for fiscal 2022. This review is also taken into account in the audit opinion.
Ladies and gentlemen, in our written compensation report, you will also see that at that point in time, the report was still being reviewed to see if and to what extent Covestro would be applying for relief with regard to the laws to keep the prices down for electricity and natural gas and heat. These laws provide for rules regarding bonuses as well as dividends as of certain relief amounts. The members of the board of management agreed that certain vested variable compensation components would be shifted at least until April of 2023. Meanwhile, Covestro has decided that they will apply for relief under these laws to keep the prices down. This would be not to exceed the threshold of EUR 25 million. This means that neither bonus payments nor dividends are banned.
Neither of them are banned. Ladies and gentlemen, that brings us now to the discussions, and I have already explained the formalities to you in the past.
Please use the respective button in the main menu of the investor portal if you would like to request to speak. After submitting a request to speak, you will be added to our list of speakers. Registered speakers will be allocated into groups of probably five people. Once they have been called upon by me, the debate will be interrupted for around five minutes to be able to do a quick technical test with the respective speakers. Subsequently, I will then call upon the first 5 people one after another for them to connect live with us and with their co-shareholders via video and give them the opportunity to voice their questions and any motion they may have.
Please, if possible, submit any of the remarks or questions you might have in one fell swoop. We will take note of the questions and collect them for them to be answered. After each group, we will have a round of answers where the members of the board of management will refer to these questions. Questions which refer to the area of responsibility of the supervisory board will be answered by me, assuming the board of management consents. If we still have any open or unanswered questions or requests to speak, we will have a further round of questions until all questions have been answered. I would like to ask you again to please be as brief as possible and try not to exceed 10 minutes.
There is no formal limitation on the length of questions or speaking, but I do reserve the right to limit speakers' time if I believe that this is necessary for the further course of the debate. I would just like to also point out the following: After the debate and after your questions have been answered, we will begin with the voting procedure. Via our investor portal, you can still grant proxies and instructions until the beginning of the voting procedure, and you can also change or revoke any proxies or instructions you may have issued. You will also be able to submit postal votes until the end of the voting procedure, and at the due time, I will tell you before those functions are deactivated to then be able to calculate the results of the voting.
Ladies and gentlemen, we shall now begin with the debate. I already have a number of requests to speak. The first speakers are Mr. Andreas Masseck, Mr. Frederik Beckendorff, Mr. Arne Rautenberg, Mr. Alejandro Jimenez, and Mr. Ulrich Giebel. Our technical team would like to ask these five people who I have just named to join them for the technical test in the investor portal. That will take around five minutes. The AGM is interrupted for probably around five minutes. We shall continue with the first speakers. Ladies and gentlemen, I would just like to let you know that the technical check for the first speakers will still take a little longer. I would like to ask for your patience. We will resume the AGM as soon as possible.
Ladies and gentlemen, you will have noticed that our technical check took a little longer than we initially thought it would. We please ask for your understanding and ask you to accept our apologies. That brings us to the first speaker. Before we do that, I would just like to outline the following procedure. You still have the opportunity and the possibility to request to speak via the investor portal and the respective button there. We will still continue to divide you into groups. Our technical team will then contact the respective groups of speakers for the technical checks. When the respective speakers are activated in the live stream, we will have to use a slightly different method than we originally thought.
The respective speaker will be sent an individual link by our technical team, and after I have called their name, they will be able to join the virtual AGM live. In practical terms, nothing changes for you as a speaker. Just to reiterate, please accept our apologies for the long wait. As you can see, the supervisory board is also still present. Our first speaker is Mr. Andreas Masseck. The floor is yours.
Thank you very much, Mr. Pott. It's a very exciting AGM. I feel like a bit of a pioneer at this virtual AGM. My name is Andreas Masseck. I am the spokesperson of the SdK Association. I'm sure shareholders are familiar with our association. We represent private shareholders and institutional investors at around 500 AGMs. I would like to come to the report. The dividend policy has set out a 35%-55% of the group income to be paid out as dividend. Mr. Toepfer, you explained that in 2022 we had solid liquidity with an excess of cash flow.
Would that not be enough of a reason to at least pay out a minimum dividend and then look at adjusting the compensation policy to then allow for a dividend for shareholders? I would be very interested to hear what you have to say about this. Depreciations led to changes in the group earnings in the estimated. Please could you explain what these depreciations were? In your presentation for 2022, mention was made of an unfavorable tax situation. Is that why are changes to the tax policy of the corporation perhaps envisaged? I would also be interested to know how the board of management intends to adapt to changes in energy prices in the various regions.
At the moment there is a share repurchase plan, and I would like to know what the further plan is in this regard. Regarding the risk assessment, a number of legal risks are mentioned. Which current legal risks are seen in the Dormagen-Krefeld-Uerdingen pipeline and the U.S.A. and the supply chain law there with a potential high fines? I would also be interested to know how many people are currently present at the AGM now. I would like to explain how the SdK intends to vote today. We have the ratification of the actions of the board of management and certain matters that are not at the behest of the board of management, such as the Ukraine conflict and the energy price problems and supply chains which have led to certain situations and circumstances.
The SdK is of the belief that the board of management has nevertheless managed to steer the company through these difficult times and has led to good growth in this time. A clear forecast for the ongoing year would, however, be desirable. It is normal to have a long-term framework agreements with customers and suppliers. Usually, this is using some sort of software. That's why I can't quite follow why it's not possible to provide a forecast for the ongoing financial year. This brings me to item three, the ratification of the members of the supervisory board.
According to the detailed report, 96.5% of the members took part in the supervisory board meetings and the year-end financial statements were audited and approved, and the German Corporate Governance Code regulations were focused on by the shareholders. This referred to paragraph 171 of the Stock Corporation Act. We believe that the supervisory board fulfilled all of their obligations. KPMG, this is item four. KPMG was mandated as the annual auditor, and we're talking about a reporting period of EUR 3.6 million. The SdK would appeal for a complete division of auditing and consultancy to ensure neutral, objective auditing free from commercial interests. In the present case, we can accept this.
KPMG does indeed fulfill the criteria required by the SdK for annual auditing. Approval of the compensation report. Now this was formally audited by KPMG in accordance with paragraph 162 of the Stock Corporation. Therefore, we assume that this report is correct and complete. Agenda item six, approval of the compensation system for the members of the Board of Management. Again here, we agree the compensation system is suitable in the in regard of payment for performance in the reporting period.
We just heard that, due to the negative annual earnings 2022, the Board of Management remuneration decreased by more than half year-on-year. The draft resolution seeks to supplement the adjustment for unpredictable incidents. The mobility lump sum is going to be renounced and withdrawn. The SdK has no consent here. I would, however, like to know just for the case of understanding, what exactly is meant by an unforeseeable event or unforeseeable incident. That brings me now to agenda point seven, the decision regarding the supplement of clause 13 of the Articles of Incorporation regarding the power of the Board of Management to hold the AGM as a virtual AGM. We vehemently object to this.
The AGM is the only opportunity for shareholders to exchange opinions directly with the management and other shareholders to influence the corporate policy of a company. That is a very precious good in the mind of the SdK, and that is why at least an in-person AGM should be held, ideally a hybrid AGM, to give the opportunity for those people to attend as they wish. Now, a regulation in the articles of incorporation to introduce a virtual AGM can only be agreed with in the event of a crisis situation. Such a crisis situation is only deemed to be given if government regulations force this. Therefore, a purely virtual AGM must be objected to. Only in emergency situations could we ratify this. In 2024, a purely virtual AGM has been envisaged.
Is that the case? Please tell us clearly yes or no. Agenda item eight, a resolution about the adaptation of item 16, paragraph 4 of the articles in cooperation regarding the possibility for Supervisory Board members to participate in virtual AGMs virtually. Again, we object to this as per agenda item seven. We believe that people should be present in-person. Ladies and gentlemen, that was what I have to say. I hope the shareholders concur with the SdK's proposals, and thank you very much for your attention.
Thank you very much, Mr. Masseck, for your remarks and for your comments. Our next speaker is Mr. Frederik Beckendorff. Thank you.
Dr. Pott, ladies and gentlemen, my name is Frederik Beckendorff. I am the spokesperson of the DSW. We represent those shareholders who gave us their proxies. First of all, I would like to express my regret that today's AGM is being held as a virtual AGM, despite the fact that there are no longer any COVID restrictions. We expressly regret the fact that there is no direct exchange between the company and shareholders, and personal dialogue is not possible as we see. We believe this is a very important matter. Dr. Steilemann, unfortunately, I cannot agree with one point that you said. Participation in a virtual AGM cannot be equated to being at an AGM in person. I believe that this is a little far-fetched to claim. I know that lots of people have been advocating very strongly for virtual AGMs, but in.
Why are we not able to have a hybrid AGM today? The reasoning for a virtual AGM today were alluded to by you, Mr. Pott. I would just like to ask, how many people are currently participating in the virtual AGM, and how does this compare to the last in-person AGM of 2019? How many people are dialed in from abroad? How much has the virtual AGM cost today, and what is the comparison to an in-person AGM? How many T-CO₂ emissions have been saved by not having an in-person AGM today? We've had some technical problems today, that has certainly reinforced our critical position regarding this, we therefore appeal to preferably having an in-person AGM.
We would be very interested to know what caused the technical problems and know if you would be able to rule them out in the future. Ladies and gentlemen, fiscal year 2022 was for Covestro, due to many of the external factors, very challenging, and you've alluded to these factors. Despite a record level of group turnover, the operational operating profits and operating cash flow have decreased operating cash flow by -90%. Due to deferred tax assets, we have now posted a loss in the company. We would be interested to know what has led to this and what measures have been taken. Do the depreciations refer to RFM as acquired from DSM in 2021? Have there been any other depreciations? What headrooms do you see in the various units?
Under which circumstances do you think there could be a recovery in the midterm of the losses made this year, in this last fiscal year? For the shareholders, fiscal year 2022 was bad as well, not least because of the lack of a dividend. It doesn't seem that there's going to be much improvement in 2023. 2022, according to the dividend policy, was going to see a dividend payout of 35%-55% of the group earnings. We can understand why a dividend is not paid out due to the losses. Nevertheless, we still wonder whether the measures taken were correct, whether the correct calculations have been applied. There have been quite some fluctuation in the payment of dividends in the chemical industries. What are your further considerations regarding dividend policy?
Perhaps there could be a better basis for calculation based on operating free cash flow. We're talking about minus 27% of fiscal 2022, which is considerably worse than competitors. We have o nly a slight improvement over, on the, share index year on year. With a volume of EUR 150 million.
It seems that the share buyback program has been discontinued, one share is also seen often as the third best option for the best use of liquidity. We also talk about investments in the business or payout in the form of a dividend. Do you plan to reestablish this program, or would it be more consistent to just discontinue it? What about the implementation of the buyback program? Dr. Steilemann, you talked about Covestro's prospects, as well as producing for the markets and also to be structural leadership and when it comes to changing from gas. When we talk about the increase in costs, when it comes to competitiveness in European science, do you see a real risk of a deindustrialization in Germany? DSL also talked about closing a plant in Ludwigshafen, and that they would be doing away with 100 jobs.
Will the same thing happen here, or will we be talking about a loss of competitors and higher production costs? What is the share of plants which are in operation? You produce chlorine. You mentioned that. In 2022, we saw that we also had to discontinue chlorine production in Dormagen, also the reduction of polycarbonate in Zhuhai. What are the reasons for this, and what are the impacts of this loss in production? In November 2022, you announced that in 2020, you would be taking investments for a world scale plant for MDA, EUR 1.5 billion, and that you would reassess this and do so at a later point in time. You were going to have the plant in the United States, and this is also something that's being reassessed.
What is the current status? What do you think is the future of the chemicals industry in the U.S., or is it in China? In the U.S. and in China or in China? What about the production landscape? What will be the geographic distribution in several years' time? Most of your comments, Dr. Steilemann, focus on sustainability and circular economy. What about the past year? You were also very active, and you were pioneers. In 2022, we see there are new and more ambitious targets when it comes to greenhouse gas emissions, so that you can be climate neutral by 2035, as well as a prediction for up and downstream processes as well. Covestro is not yet part of the Science Based Targets initiative, such as other companies, for example, LANXESS. What about SBTi? How do you see that? Are you going to commit this?
Are you going to commit to science-based climate targets in order to reduce or limit climate warming to 1.5 degrees? Covestro is focusing on circular economy. In the medium and long-term environment, they want to offer a climate-neutral situation. We also have to talk about further identification of circularity in order to have KPIs and to define the targets. These indicators include a share of alternative fuels in production and the share of circular solutions in the entire portfolio. Could you give us these figures for 2021 and 2022? If these can be calculated, how, what were they? Now, let's come back to today's agenda. Agenda item 6, we're going to be approving an adjusted compensation system for the Board of Management. Up until now, this was something that was planned for 2021 and 2022.
What was the main reason why the supervisory believed that this system needed to be amended yet again? What are the requirements here? Will we be able to adjust the payout % for the long-term variable of their compensation? Maybe the Supervisory Board could have also considered 2019 to 2022. It could have been adjusted, assuming that this charge would also have included a CO2 factor. Fiscal 2023, when it comes to the long-term variable, beginning in that year, CO2 has also included indirect CO2 emissions. What about the targets for reducing CO2 emissions in the short and long-term compensation? What about the risk of a unilateral incentive if savings lead to a higher target achievement when it comes both to STI and LTI? Here we also have variable compensation. How can these be extended?
Let's come to the elephant in the virtual room when it comes to the agenda item number seven. In today's virtual AGM, we also have not asked a follow-up question. You said it's very close to a in-person AGM. The criteria for your decision to hold a virtual meeting today, it seems to be not specific enough. We expect assurance from the company that in a virtual AGM, nothing will be focused on which would have any impact on the shareholders' rights, a domination agreement or any major changes to the Articles of Association. I won't be commenting any more on that. Instead of that, I will then reject this agenda item. We will vote in favor of the others, however. That brings us to the current fiscal year.
Our expressions for 2022, unlike what you have said, you didn't say very much on this at all. Fiscal 2023, you expect an EBITDA clearly below last year, clearly below the free operating cash flow, and a clearly ROCE over WACC, and a double-digit decline. In the past week, you published the figures for the Q1, much better than expected at the beginning of the year, you still will be showing a loss. What about the visibility after the Q1? When we consider the Q1, have things improved? When will you be able to make your forecast more specific? Do you assume that in fiscal 2023, that you will have a balanced result? What about your forecast for this year, EUR 2.8 billion? That still continue.
Steilemann, as chairman of the Association of Chemical Industry, you have been very much in favor of lowering the cost for gas and electricity. You just talked about this in your compensation report in another context, that you said you would be looking into a possibility of taking this. Dr. Pott also said something on this today. My question is: What prices for electricity and gas are you basing this on? What energy prices do you expect in the medium term? At the present point in time, are you ruling this out to go beyond EUR 25 million? To conclude my statement, I'd like to talk about the two members of the board of management that are leaving, Dr. Klaus Schäfer and Dr. Thomas Toepfer.
Thank you very much to both of you, who have showed a great deal of commitment to the company over the past years. I'd also like to thank all of the members of the Board, as well as the employees who worked very hard in a very difficult time. I'd like to wish you all the very best for fiscal 2023. Thank you very much for your attention.
Thank you, Mr. Beckendorff, for your commentary. The next speaker is Mr. Arne Rautenberg. Please, the floor is yours.
Unfortunately, the sound quality is so bad that the interpreters can't understand anything. This is down on the European chemical sector, which posted a gain of 2% and much worse than the DAX, which posted a gain of 12% over the same period. Mr. Steilemann, real adjustments have to be made so that Covestro can extricate itself from this trough. Covestro is suffering under the substantial energy costs, which have risen to over EUR 2 billion. What is your position with respect to the long-term energy cost assumptions, and how will they affect the industrial plant in Germany? Mr. Steilemann, in the past, small cost-saving programs were sufficient in order to buffer the cost increases, this isn't going to be enough anymore.
In view of the energy crisis in Europe, the times have changed considerably. We have seen competitors taking increasing numbers of measures. You also plan to follow suit in Covestro. We would welcome this very much. Mr. Steilemann, the Russian war of aggression demonstrates how quickly geopolitical nightmares can become reality. What are the opportunities and risks that you identify in China? How flexible is your China strategy? How quickly could you reduce dependency on China as a production site and a sales region? Ladies and gentlemen, as a sustainable investor, we look to ESG criteria. All economic players have an obligation by 2050 to be climate neutral so that the global rise in temperature can be limited to below 2 degrees.
Every company, including Covestro, won't be able to get around their responsibility for Scope 1 emissions. Their own emissions that is, or emissions along the value chain without doing a lot to reduce Scope 1, 2, and 3 emissions, you won't be able to curb climate change. From 2025 onwards, we will no longer invest in CO2-intensive companies who refuse to publish long-term climate targets. This includes Scope 3 emissions on the basis of standardized calculation measures. Union Investment will therefore increasingly look to ambitious targets of Covestro in terms of the climate, and will push for that. The chemical industry is one of the most energy-intensive sectors. Covestro has already announced substantial plans to reduce Scope 1 and Scope 2 emissions, but they haven't been validated externally. Why haven't you joined the Science Based Targets initiative?
I believe that this is necessary in order to increase the credibility of these ambitions. We would welcome this a lot. What about your climate neutrality goals for Scope 3? When will you publish these? Ladies and gentlemen, this brings us to the agenda. We approve the acts of the supervisory board and the board of management, but we're against the draft resolutions on items 7 and 8. We are not in agreement with item 8 because no detailed commentary has been provided in terms of the conditions under which the board of management will avail itself of the possibility to hold a virtual AGM. On top of that, we haven't been told exactly how future AGMs will be held in detail.
We are against item eight because the physical presence of members of the Supervisory Board is something we believe is essential to maintain the dialogue with the shareholders on the day of the AGM. We agree with all of the other items on the agenda. Ladies and gentlemen on the Board of Management and Supervisory Board, as you can see from our tenor, we have a clear preference for in-person AGMs. Only then can you have a proper general debate. Only in such a format can the shareholders really reach the entire Board of Management and Supervisory Board. You should be available to the shareholders at least once a year in person, so that you can field questions. In-person proceedings are essential for everyone to gain a feeling for the atmosphere. We do recommend that you return to in-person proceedings in the future.
Thank you so much for your attention.
Well, Mr. Rautenberg, thank you very much for your submissions. The next speaker on my list is Mr. Jimenez. Mr. Jimenez, please go ahead.
Yes. Hello. Thank you. I will first ask the question in English, and then my colleague will translate to German. Hello, my name is Alejandro Jimenez, and I'm of course asking a question today on behalf of Grünfin. Grünfin is a sustainable investment platform for businesses who care about the planet and its people. Hello, I'm Alejandro Jimenez. I am asking a question on behalf of Grünfin. This is a sustainable investment platform and also on behalf of ShareAction, a shareholder association. We are currently in a decisive decade where the 1.5 degrees centigrade of the Paris Agreement has to be achieved.
The most recent agreement of the IPCC has emphasized that rapid and sustainable reduction of greenhouse gas emissions will still be able to limit global warming to 1.5 degrees centigrade in order to stave off the worst possible consequences of climate change. We welcome the efforts of Covestro to achieve the 1.5 degree target. On top of that, we are pleased about the goal of Covestro to i ncrease their dependence on renewable energy and increase the quota of renewable energy and energy mix. We believe that other players in Europe should follow suit, we would like to know what Covestro's plans are to manage residual emissions in the future. In your annual report, you declared that Covestro is looking into compensation measures in order to prevent residual emissions in the future.
Covestro should be aware that the attempt to compensate emissions in one area by reductions in another is a risky strategy and a strategy that is not reliable when it comes to achieving climate targets. My question to you is, can Covestro explain to us the residual emissions it anticipates? What measures it is considering to reduce emissions? How they intend to reduce their dependency on compensation measures to the extent possible? Thank you.
Thank you, Mr. Jimenez, for your submissions and your questions. The next speaker on my list is Mr. Ulrich Giebel. Mr. Giebel, please go ahead, sir.
Chairman, ladies and gentlemen, I'm Ulrich Giebel. I'm a private shareholder. Mr. Toepfer in his presentation spoke of the fact that EUR 245 million in impairment losses have been recognized for losses carried forward. This is surprising to me because on page 275 of your annual report, you write that all the deferred tax asset overhangs are deemed to be maintaining their value. We're talking about more than EUR 200 million, and according to the annual report, these will expire after five years. Therefore, I can't understand why you arrived at a number of EUR 245 million in terms of value reductions. My second question relates to the difference on the asset side in terms of pension commitments.
It has dropped to EUR 5.9 million. Possibly if these differences on the asset side drop, they will have to be compensated for in the future. This means that we will be facing more burdens. Perhaps you could explain to us or please actually do explain to us why these differences on the asset side have been reduced and how you intend to manage the situation in the future. My next question is directed to the rotor blade materials that you mentioned in your speech. You place great emphasis on sustainability and on recycling. You also presented your project for recycling polycarbonates. The rotor blades, however, are made of composite fiber materials. These composite fiber materials to date cannot be separated out from each other and therefore, they are classified as hazardous waste and are harmful for the environment.
I don't understand therefore, how you can speak about sustainability and recycling while thousands of tons of rotor blades will go out of service and that material will have to be dealt with. Please explain to us how you intend to get a handle on that problem. Something that cropped up in my mind is that despite the substantial losses incurred last year, Covestro increased its workforce. All told, 1,329 full-time equivalents were hired. Given that, I would ask you to explain why you're expanding your labor force whereas you're making losses. I would like to express some praise, however, and this is directed to the supervisory board.
You're doing a wonderful job in presenting the attendance of individual members of the supervisory board in a very transparent manner. All of the members of the supervisory board were present during supervisory board meetings and committee meetings with the exception of Mrs. Kingo and Mr. Stothfang, who was sick in October. The next item on my agenda relates to your operations in Russia. I didn't see any commentary on this today. Please explain to us what activities you have in Russia and what business you conduct with Russia. My next point relates to the works council. The activity of a works council, according to the law, is honorary. That means that the employees receive their normal salary or wages and are not compensated in addition to that for their activity in the works council. I have seen other companies deal with this situation differently.
I'd like to ask you how many members of the works council exist in Germany? How many works council members have been exempted from their normal tasks? Please could you tell us the three highest salaries that are paid to members of the works council. You will probably get back to me with arguments on data privacy. I will be tenacious. The number of works council members doesn't allow me to draw conclusions from the salary figures you could disclose with respect to the people that they are attributable to. I just wanted to say that now. The group last year incurred a loss. This is why I'd be interested to know how high the expenses in the group were for gifts in total. Could you please let us know what presents were made and how much they cost?
Perhaps the five biggest gifts. Despite the loss, the net obligations from defined benefit pension commitments, EUR 430 million were spent in 2022, given a loss of EUR 277 million. This means without this net obligation from defined benefit pension commitments, you wouldn't have actually incurred a loss. Here I'd like to know why, despite the losses, you continued to pay into the defined benefit obligation. You said that Mr. Toepfer will join Airbus. The further commentary on the board of management gave me the impression that people may be fleeing the board of management. My question is whether the shareholders should do the same and perhaps also flee to Airbus. My question is, what's happening? This is a mass exodus of management board members.
A question for Mr. Toepfer. He asked for his contract to be ended prematurely. On conclusion of his contract, will several severance payments, bonuses, et cetera, be paid? In other words, how much in terms of monthly salary would you have to still pay Mr. Toepfer? In particular, I'd be interested about the Prisma tranche. EUR 989,000. We're talking about almost EUR 1 million. 2022 was a lost year, and 2023 is almost half over. It doesn't look all that good either. Of these EUR 991,000, will Mr. Toepfer receive a portion, although he's leaving the company? With respect to Mr. Schäfer, in the annual report, you have stated a pension commitment of EUR 126,750 per year, which doesn't lapse.
For EUR 126,750, a normal employee would have to work an entire year, you're just paying this as a pencil, excuse me, a pension installment to a former member of the Board of Management or someone who will become a former member of the Board of Management. My question is what the conditions are for these payments. What is the age limit? Will additional salaries be counted against this? What other pension installments will be paid? The 2019 Prisma tranche that goes into 2022 was paid out or, excuse me, was deferred in January of 2022. You deferred it, you postponed it. Only so that the other shareholders understand what we're talking about, we're talking about EUR 418,000, Mrs. Govil EUR 488,000.
Dr. Klaus Schäfer EUR 211,000, EUR 256,000 for the fourth board member. Apparently, for a lost year in this Prisma tranche, there still are payments that are being made. This is why I can't understand the commentary made by the SdK, who claim that the system has proven worthwhile. I don't see how the pension installments and the payment from the Prisma tranche actually fit. In addition to the pension obligations in Prisma, there's an expense for pension obligations for 2022, the year in which the loss was incurred. This expense for Dr. Steilemann was EUR 393,000. EUR 390,000 is going to be transferred to his obligation. Mrs. Govil, EUR 190,000.
Schäfer EUR 186,000, and EUR 246,000 for Mr. Toepfer. This isn't something that we understand. The entire system of management board compensation is too complex. I'd like to ask you how many employees are working on this system for these four members of the board of management? Can the employees and management board members not be paid in a way that is understandable, in order to avoid a tranche popping up surprisingly somewhere that no one can understand. Insurance expenses have dropped. Why have your insurance expenses dropped? At the same time, you have received insurance premiums, and they have risen from EUR 30 million to EUR 36 million. The question I have in this regard is what do you receive insurance premiums for, and why did these premiums rise in 2022?
Thank you. Mr. Giebel, thank you for your submissions. Ladies and gentlemen, we now need a couple of minutes in order to prepare answers to the questions we've received so far. Therefore, I shall interrupt the AGM once again for approximately 20 minutes, after which we shall continue the AGM with the first round of answers.
Ladies and gentlemen, we hereby resume the AGM. As you can see on screen, the supervisory board, the board of management, and the notary public are still present here today. We should like to introduce the first round of answers in response to the first round of questions, and I'd like to hand the floor to Mr. Steilemann on behalf of the board of management.
Thank you, Mr. Pott. Mr. Masseck, you asked about the influence of energy costs, bureaucracy, and taxes on future site investments. All investment projects of Covestro have to satisfy certain requirements with respect to profitability and economic viability. This includes current site factors such as energy costs, tax situations and approvals as well as time to implement. Mr. Rautenberg, you asked about the specific impacts of lasting increases in energy costs on the TDI plant of Covestro in Germany. You were interested in actions that Covestro has initiated in order to react to this situation. Chemicals is a central industry to Germany for the success of the energy transition. We, as a chemical company, are aware of our responsibility to combat climate change. Of course, we depend on green electricity.
In order for the transition to succeed in Germany and for Germany to remain an attractive business site, we need large amounts of renewable energy quickly at affordable prices. The chemical and plastics industry in Europe is facing a huge challenge. A lot of plants in the current crisis couldn't be operated profitably. The danger of de-industrialization, therefore, cannot be ruled out, especially given that other regions are setting very unbureaucratic and attractive incentives. The most recent measures taken by the U.S. government are a good example of this. We're optimistic that we will master the current crisis and emerge from it stronger than before. We need political pragmatism, and above all, speed in order to do so. In North Rhine-Westphalia, for instance, about 6,500 of our nearly 18,000 employees are active here. Covestro produces 1/3 of the total global production.
We want to invest in the transformation and expansion of our site in order to make sure that our jobs here in Germany can also be passed on to future generations. One prerequisite for this is the expansion of renewable energy. Covestro will source much more energy from renewable sources than it's doing today, but we need to have much more competitive prices for renewable energy in order to do so. The length and complexity of approval procedures also play a role. In both cases, policymakers have to take action and set the proper stage. Covestro, in terms of the product TDI, has thanks to its proprietary fiberglass technology, has a leading position in terms of costs in Germany. Due to the drop in energy costs, the TDI plant, therefore, is capable of being competitive in production against the foreign competition.
At present, we don't have any plans to restructure the German or European production infrastructure, especially given that our concept of regional production for regional markets is being upheld. Mr. Rautenberg, you asked about cost-saving programs, which in other companies in the chemical industry have been announced, and whether Covestro has similar plans or believes that they are necessary. The constant optimization of workflow and processes has become an integral part of our organization. From current measures, we can count supplementary initiatives to implement, to improve, costs of fixed assets. We have other measures also in place, which will result in tangible relief. This is flanked by portfolio measures such as the successful sale of our 3D printing and additive manufacturing businesses, and the announced necessary closure of our composite material business in Markt Bibart.
Mr. Beckendorff, you asked about the status quo of the planned NDI investments of Covestro, and where we believe the future of the chemical industry is. In view of the European energy crisis and the constant weakening of the global environment, in November 2022, Covestro decided to pause the project for a world-scale NDI plant and to reassess the endeavor. The decision on the future site of the plant remains to be taken. Long term, we see long-term growth for global NDI demand, driven by trends for energy-efficient construction. We want to profit from these trends. We will continue to invest in growth in all regions across the world. Mr. Beckendorff, you also asked about further changes in the geographical distribution of production sites of Covestro within the next five years. As I already mentioned, we currently don't plan to change our German or European production network.
Our sites in the United States as well as in Asia are firm value-generating elements of our global production network. New builds of a plant require painstaking planning that can take up to seven years. Even if you want to add onto an existing plant, it takes about 4-5 years. Therefore, in the next five years, we do not expect any significant change to the geographical distribution of our production network. Mr. Beckendorff, you are also asking about our considerations with respect to the Science Based Targets initiative. The Science Based Targets initiative, SBTi for short, is a partnership of a number of different stakeholder groups that are interested in developing science-based environmental initiatives in order to achieve the 1.5 degree target.
Our net zero target is based on scientific assumptions that are suitable to reduce global warming to 1.5 degrees. It exceeds the cross-sectoral Orientation Iceberg. Our interim goal for 2023 is a reduction of greenhouse gas emissions from in-house productions and procured energy of 60% compared to 2020. SBTi, however, requires a reduction of just 42% over the same period. The development in relation to sector-specific orientation assistance for the chemical industry from SBTi, which will be available from 2025, is something that we continue to monitor. We don't have any plans at present to validate our goals through SBTi. As soon as the goals for the sector have been presented, we will revisit this issue. Having said that, I would like to now hand the floor to Mr. Toepfer.
Thank you very much. Mr. Masseck, you asked if we would consider paying a minimum dividend due to the solid liquidity we referred to. I can tell you that our dividend policy provides for dividend payouts only in the case that we have a net profit with a quote of between 35% and 50%. Our net profit in 2022 was unfortunately negative, and therefore it is not possible to pay a dividend. If we look at the free operating cash flow, this was also only slightly positive, so that doesn't really give us any significant leeway for a dividend payment.
We could, of course, envisage in the future, if the liquidity would allow for it, that we adjust the dividend policy upwards, but we don't want to have a lump sum minimum dividend so that we can then continue to adequately react to crisis situations and continue to weather these storms as a company. Mr. Masseck, you also asked where we currently see ourselves with regard to the share buyback program announcing in February 2022. In February 2022, we did announce a share buyback program of EUR 500 million because at the time, we thought investment in our own shares was the most worthwhile investment for our shareholders.
That was accompanied by the liquidity from the very successful fiscal year 2021 and the estimates that we had at the time, which were valid for the overall development of 2022. As part of two tranches, we have EUR 75 million each. In the first half of 2022, we have already bought back EUR 3.5 million worth of shares. Due to the depression or the recessionary environment due to the Russian war of aggression in Ukraine, we then paused the buyback program. We are still convinced of the attractiveness of our investment, and we will therefore continue that program as soon as we can see a sustainable recovery of the economy.
On the horizon, Mr. Masseck, you also asked if we were intending to make any amendments in the corporate structure and company structure due to the unfavorable tax mix. Now, we are an internationally operating company, and in 2022, we had very positive tax results outside of Europe. That means that we had high tax in these countries. On the country, we had very negative results, in particular in Germany, because of not applying, because of the deferred tax assets, and that led to an unfavorable mix, which led to a high tax quota in the Covestro Group. Because this is a result of favorable geographic alignment with the corporation, we don't see any amendments to the structures as being pertinent at the time.
Mr. Masseck, you also asked about class action lawsuits in the U.S.A., any risks also regarding the supply chain and the CO pipeline in Dormagen ChemPark. Since 2018, We've had 12 class actions that have been filed in Western Pennsylvania. In all of these class actions, it is claimed that various manufacturers of MDI and TDI had infringed a number of laws regarding the production of MDI and TDI, and the attorney general of Mississippi, in September 2019, on behalf of the state and its citizens, made similar assertions and also said there were infringements of consumer protection rights and competition law. In the meantime, those claims have been revoked.
Covestro, at the moment, does not see any justification for the assertions made in these class actions. The discovery phase, which is currently ongoing, will be concluded probably by thirtieth of June. You also asked about any legal risks resulting from the supply chain. Now, I would first of all like to say that Covestro is 100% committed to complying with human rights. We advocate the UN Guiding Principles for industry and human rights and the respect of national action plans. We are committed as a company to our responsibility to comply with all human rights, including in any subsidiaries and any global supply chains and value creation chains. We also wish to prevent any infringement of human rights.
We have a respective management system. Our human rights office, which is supervised by our global human rights officer, is committed and dedicated to the comprehensive integration of human rights requirements in our company. Our management approach is based on the Guiding Principles for Industry and Human Rights of the United Nations. It also takes into account the German Supply Chain Due Diligence Act and the French law on compliance with human rights. These measures are implemented in collaboration with our human rights office and our management system for human rights due diligence consist of the following. First of all, a clear commitment to protecting human rights in all Covestro's business activities. Secondly, a regular risk analysis of our business activities all along the value creation chains.
Thirdly, the definition of any measures required to prevent identified risks and monitor these. Fourthly, the introduction of a complaint mechanism for alleged incidents and infringements. Fifthly, reporting about our activities. Since our complaint mechanism has been in place since 2021, there has been no notification of a confirmed infringement of human rights. The legal risks referred to arising from the Supply Chain Due Diligence Act are limited to trade requirements. They are not industry-specific, the work of associations, in particular the VCI, and direct and indirect exchange with legislators have given us a good understanding of the expectations made of the chemical industry. We believe that as Covestro, we are in a good position to confront any potential legal risks in conjunction with the Supply Chain Due Diligence Act. Mr. Masseck, you also asked about our CO connection pipeline.
For many years, we have been of the belief that the litigation files have no grounding, and that we will indeed be successful. The Supreme Court of the Bundesland North Rhine-Westphalia, in its decision of the 31st of August 2020 has then dismissed the litigation suit as unjustified, and the court in Düsseldorf on the 28th of February 2023 also followed suit. We therefore are still extremely confident that any pending, the few pending lawsuits against us will also be rejected. Mr. Masseck, you asked about the reasons for the depreciations in 2022 for material assets and deferred tax assets. You also asked about the calculation method for these assets. The depreciation for fixed assets was calculated in accordance with the requirements of the International Accounting Standards, IAS 36.
According to this, if there are indications of depreciation of an individual asset or individual assets, which can be allocated to a unit which is generating a payment means has to be audited. If the achievable amount does not exceed the respective booking and accounting amount, a depreciation is posted as the difference between the booking value and the achievable amount. In fiscal year 2022, the war of aggression started by Russia against Ukraine led to extremely negative changes in the economic environment of Covestro. In particular, this huge increase of energy prices, which could only be confronted and passed on to customers to a certain extent, and the expected downturn in demand led to a generally recessive or recessionary environment due to this.
The fact that we saw a considerable increase in third-party capital costs, a number of audits were initiated. Covestro believes that the strategic plans were done correctly, and this was done correctly on the various reporting levels within the seven business units, which also have the two reporting segments, Performance Materials, Solutions, and Specialties. As part of the audits of 2022, the achievable volume was posted as a cash flow of the expected future cash flow in these units. The forecast of the for future cash flow are based on current corporate planning of the Covestro Group, and we normally look at a forecast period of five years.
The result of this, of these depreciation audits, checks were, it was found that the achievable volume for our business with standard polyol, polyols, and standard TDI, and so on and so forth, would be below the respective accounting value. Therefore, an exceptional depreciation was to be carried out in these areas. These adjustments were in particular the result of a downturn in the economic environment, which also had a number of negative effects. We have the cash flow forecast before all of the assumptions about future sale prices and volumes, costs, growth rates, and so on and so forth, and that has a negative effect on the attainable volume. On the other hand, the considerable increases in costs in the raw materials and energy sectors will lead to a fundamentally increased capital binding.
To record the depreciation in accordance with the regulations of IAS 36, first of all, the business and company value of the selected areas was completely taken into account. In our business year and the fiscal year 2022, we had a total of depreciations of EUR 463 million, EUR 27 million of those went to the assets, and EUR 463 million to the earnings of the results of the previously noted depreciation assessment of these EUR 436 million, EUR 267 million accountable to the business with standard polyols, EUR 99 million to standard TDI, EUR 46 million to the business with powder resins, and EUR 27 million to polyurethanes specialties and solutions.
Moreover, in 2022, in Germany, within the Covestro AG, we had around EUR 250 million of active deferred taxes which were not applied, and the non-application of these active deferred taxes is due to the fact that we do not assume that these deferred taxes will be U.S.A.ble within an applicable and acceptable period. Mr. Masseck, you also asked about the reasons for the thus far only qualitative comparative forecast for 2023. In past years, we provided a forecast, in particular for the steering KPIs, EBITDA, and FOCF, always as quantitative values as part of the EUR 500 million bank.
Now, given the fact that we believe that 2023 will continue to be a challenging year with uncertain economic outlooks and geopolitical frameworks, we decided for the time being to provide quality, qualified comparative values. Our contracts with our customers have short terms. At the same time, we have high volatility with the raw material and energy costs. Moreover, the demand situation is very difficult to predict still, and that is why a system-based forecast for Covestro is not practicable in an integrated fashion. It is our goal, however, regarding the EUR 500 million EBITDA and FOCF, that we wish to return to this, and we also wish to have a WACC within a certain level defined as well. Further developments will actually be decisive for when we can return to that system.
Beckendorff, you asked whether in the ongoing fiscal year there will be any further exceptional depreciations to be expected for material assets and immaterial assets. You also asked according to which conditions in the medium term we may have recoveries. You also asked about the individual headroom for various units. We take into account all of the balance statement and assessment methods, and we use and apply all of these indicators for all generating units. Regarding the activated business and company value, we always have to look at these indicators insofar as there are any indicators which suggest that there will be any depreciations that were not applicable for 2022. Another test we carried out.
There could be an assets recovery on the one hand, but on the other hand, we cannot have an application here for depreciated assets. At the moment, we don't see any significant indications that the reasons for these exceptional depreciations in fiscal 2022 are now no longer applicable. At the same time, we don't see that the depreciations that have been carried out in 2022 will not be sufficient. Regarding the so-called headroom. At the time of the central test in the Q4 of 2022, the following applied. Overall, there was an excess of the generated by the units which were not subject to any depreciation, and this was exceeded the overall book value of EUR 8.7 billion by about EUR 4 billion. A large portion of this headroom was due to the segment Solutions & Specialties.
We had book values of EUR 300 million or more for all non-depreciated payments. We had a relative headroom of at least 20%. The average relative headroom for all non-depreciated areas was around 46% on the date of calculation. Please do understand that we cannot provide you with any further details here for confidential reasons. The question of active deferred taxes, difference between tax value and IFRS, group balances, balance statements, and any posted losses are subject to forecasts. In the medium term, we may see a reapplication of active deferred taxes in Germany if the forecast for Covestro AG would say that this is probable in a foreseeable time.
Mr. Beckendorff, you were asking about considerations about the dividends policy, what our considerations might be, and what our free operating cash flow might allow for here for a more suitable basis for calculation. I fundamentally agree with you that there are a number of different perspectives that one could take. At first, we decided not to provide any adjusted figures because we would then have to. We would like to be able to assess all of our options. That is why we believe that the non-adjusted reported figures are more pertinent as indicators. These are figures that have been provided by the auditors. Of course, it could be envisaged that we have a cash parameter as a reference parameter, and then free operating cash flow as one of our key core performance indicators is a very relevant parameter.
Given this, all in all, we have taken the non-adjusted net profit as the reference parameter for our dividend policy, and we believe that this is the correct way to proceed. Mr. Beckendorff, you also asked for an explanation of the reasons for the depreciations that have been posted and for information about which business units were affected in particular. You also asked as to whether there were any depreciations on parts of the business resins and functional materials that was acquired in 2021. In fiscal 2022, we had depreciations of EUR 463 million in the financial statement. EUR 27 million were accounted for by a number of different assets and EUR 436 million of depreciations of assets as a result of central depreciation calculations.
These calculations or impairment tests were carried out on the basis of what is known as generating units. Of the EUR 463 million, EUR 267 million were accounted for by the standard polyol business, EUR 999 million standard TDI, EUR 46 million for the powder resins, and EUR 27 million for the European Specialty Solutions. The depreciations in the powder resins were referring to our non-fixed assets, which were applied during the sale and price allocation during the acquisition of RFM. In fiscal 2022, the war of aggression started by Russia led to significant negative changes in the economic environment. Because these increased costs could only be passed on to customers to a certain extent, in 2022, we saw a downturn in the business forecast year-on-year.
A further effect, year-on-year with 2021 was the increase of third-party capital costs. Mr. Beckendorff, you also asked about the reasons provided by the board of management regarding the poor development of the Covestro shares compared to the selected STOXX Europe 600 Chemicals Index. STOXX Europe 600 Chemicals is a very broad and diverse index. With our cyclicity, we were affected by the energy crisis and global downturn in demand. In particular, and therefore, somewhat below the overall performance of the index. Mr. Beckendorff, you also wanted to know if the share buyback program would be resumed and how successful the implementation has been so far. You also asked if it might not be a better idea to completely stop that.
On the 28th of February 2022, we announced a program for the buyback of shares to the value of EUR 500 million. We did that because we were convinced that that was the best way of investing in our own shares to then remain profitable. By June 2022, we had bought back 3.5 million shares to the value of a total of EUR 150 million. The average purchase price per share was EUR 43.08. Now, given the challenging economic environment, we paused the program and have not carried out any further purchases. We believe that we need to see a foreseeable stabilization of our liquidity before we can resume this. We are still, however, convinced that our shares are very attractive investments.
Now, Mr. Beckendorff, you also asked whether visibility regarding the forecast for 2023 has improved and when we will be more specific about this. As I've already set out, given the fact that the economic and geopolitical frameworks and conditions continue to be challenging and uncertain, we have first of all decided to allocate the forecast for 2023 as being a qualified comparative forecast. Our plan is to return to the quantitative figures with EBITDA and SOSVS and with the parameter RSV over WAC within one band. We wish to wait and see how the economy develops before we return to that. Mr. Beckendorff, you also asked whether our net profit for fiscal 2023 will at least be balanced. If we look at our EBITDA forecast, significantly below the previous year, we might have a positive net result.
Where we will actually be at the end of the day will depend on the actual achieved EBITDA and also tax burdens across the various different countries. A more specific forecast is not possible at this moment. Mr. Beckendorff, you also asked about our portfolio of the forecast mid-cycle EBITDA concept with a planned EUR 2.8 billion. As I've already said, in almost three quarters, Covestro was subject to energy price developments like we have never seen before. We are now, however, back in a realm where we believe that we can make our European sites competitive again against imports from other regions. In absolute terms, the poor situation is due to the recessive demand.
Now, with a return and a recovery of the economic environment, we'll still stick with our mid-cycle forecast, and that is an EBITDA of EUR 2.8 billion in 2024. That is no change over what we have already announced in the past. Mr. Beckendorff, you also asked what our forecasts use for the electricity and gas prices for 2023. You also asked whether we would intend to apply for relief of over EUR 25 million. Fundamentally, we have contracts for short-term and mid-term pricing, so that is up to three years. For Germany, that would therefore be the index of the EEX electricity and gas energy index.
We will apply for the energy price break with the absolute, top limit of EUR 25 million, assuming we do fulfill the criteria, such as with these various, contracts and options. We do, however, rule out applying for an energy price break relief for over EUR 25 million. I would now like to pass on to my colleague, Sucheta Govil.
Thank you. Mr. Beckendorff, you also asked about the share of alternative raw materials in production and the share of circular solutions in our overall product portfolio for 2022 and 2021. Sales of products based on alternative raw materials are currently around 1%, but have already increased compared to 2021. In line with sales volumes, the proportion of alternative raw materials purchased is also around 1%. In order to drive the development of our sustainable product portfolio with a focus on circularity, we announced last year that in the long term, we intend to offer all products in a climate neutral version that follows the principle of the circular economy. As a step in this direction, we are focusing on our Circular Intelligence or our CQ portfolio solutions with alternative raw materials.
They consist of at least 25% alternative raw materials. For us, alternative raw materials are raw materials based on biomass, CO₂, or waste, or materials produced on a non-fossil basis using renewable energy. One example of such a sustainable product is our climate neutral MDI. Under the CQ label, which is only a few months old, we have already sold almost 1,000 metric tons in 2022. The further expansion of a sustainable product portfolio is supported by our innovation portfolio. In line with our sustainability goals, by 2025, 80% of our R&D project costs will be used for research and development in areas that contribute to achieving the United Nations Sustainable Development Goals. In particular, we support product innovation that contributes to these goals while taking into account our innovation, our goals regarding circular economy and of course, climate neutrality.
We have already been steering the product portfolio towards greater sustainability since 2016. At the same time, of course, we are revising our method to also assess the sustainability of our existing products, particularly with regard to circular economy and climate neutrality, and to align our product portfolio even more closely to this in the future. With that, I hand over to my colleague, Dr. Klaus Schäfer.
Thank you. Thank you, Sue. Mr. Beckendorff, in view of the strong rise in energy costs, you asked us about the valuation of the competition or competitiveness of the German and European sites of Covestro, and you also asked whether a creeping deindustrialization looms on the horizon. Chemicals is a central industry for Germany, and it's elementary if we want to succeed in the green transformation. As an energy-intensive industry, we shoulder special responsibility in combating climate change. However, we're also especially dependent on the availability of green electricity. In order for the transformation to be successful in Germany and for the site to remain attractive over the long term, we require, above all, large volumes of renewable energy quickly and at competitive prices. Overall, the chemical and plastics industry in Europe is facing enormous challenges.
Many plants can or in the past, weren't able to be operated profitably in the current crisis. A danger of deindustrialization, therefore, cannot be ruled out, especially given that other regions are already employing positive and unbureaucratic incentives. The most recent measures taken by the US government are a good example, such as the Inflation Reduction Act. Nevertheless, we're confident that we'll be able to master the current crisis and emerge from it stronger than before. However, we need political pragmatism and above all, speed of action in order to do so. In North Rhine-Westphalia, for example, approximately 6,500 of our just under 18,000 employees worldwide are active. This is where we conduct a third of our total global production.
Accordingly, we intend to invest in the transformation and the expansion of our sites in order to make sure that jobs here are future-proof and can be handed down to future generations. It's very decisive to expand renewable energy massively and quickly. After all, chemicals and Covestro will need a large amount of renewable energy en route to achieving climate neutrality. Another essential point is the duration and complexity of approval procedures. In both cases, policymakers have to take urgent action and set the right stage. Given the significant reduction in energy prices in Germany and Europe that has occurred recently, we are now in a situation in which our European sites can or have regained their competitiveness over imports from other regions of the world.
As before, the height of the energy crisis of the past year, we are active again in regional markets with regional competitors that are subject to similar energy costs. In view of the increasing liquid gas capacities, import capacities that is, we assume that the energy price will remain on the current level and therefore the competitiveness of our production plant is secured. Mr. Beckendorff, you asked us about potential production closures by us in Germany and whether we will be able to benefit from some competitors failing. You asked us about the current capacity utilization of our plants in Germany and the share of plants that is still in operation. The current and future production costs in Europe are a constant burden with which both the individual companies as well as the sector as a whole and the regulatory authorities have to deal.
Thanks to our intensive research activities in the development of innovative production methods such as gas-based technology in TDI manufacturing, or the adiabatic isothermal phosgene generation technology for MDI, Covestro commands a leading cost position with its core products, cost leadership through technology leadership. We believe that our key products, MDI and polycarbonates, have wonderful future and growth prospects in insulation, electromobility and wind energy. Capacities available in Europe are therefore essential to meet this demand. We therefore currently don't plan to restructure our German or European production infrastructure. Competitors decide to close production plants permanently, such decisions can have a negative impact on product availability of the industry, especially in times of heightened demand. We plan to run our production facilities at full capacity for our core products TDI, MDI, and polycarbonates by the end of the year.
The capacity utilization of the European plant base is limited, unfortunately, due to a temporary scarcity of chlorine. Otherwise, our plants, unless they are subject to scheduled or unscheduled outages, are in full operation. Moving back to chlorine, Mr. Beckendorff, you asked about the backdrop and the effects of the production outage of the chlorine production activities at the Dormagen site with respect to the production of polycarbonate, MDI, and TDI. The chlorine plant in Dormagen was damaged due to an incident in August 2022, which was last year, and due to the limited availability of spare parts and resources, the plant can only be recommissioned step by step. Security is an indispensable basis for the business activities of Covestro. We work closely together with the authorities and adhere resolutely to existing provisions and regulations which can result in time delays.
Due to the incremental and only partially possible recommissioning of chlorine production at the Dormagen site, the limitations for Covestro's in-house TDI production and for the chlorine deliveries to other companies active in the chemical parks have been limited. Let me clarify something. The production of polycarbonates and MDI does not affect the Dormagen site as a result of force majeure. Covestro manufactures polycarbonate and MDI, among other things, at the site in Krefeld-Uerdingen and not in Dormagen. For the sake of completeness, I would like to mention, however, that polycarbonate and MDI, as a result of force majeure in chlorine production, are affected in Krefeld-Uerdingen and therefore are only available to a limited extent. We currently assume that by September 2023, at the earliest, we will be able to fully meet our delivery obligations and therefore eradicate the force majeure situation.
Until we have overcome force majeure, as a matter of principle, however, we will only be able to deliver limited amounts of the products that are affected by force majeure. I shall continue now, Mr. Masseck. You asked about the current number of participants in our AGM. 113 participants are currently dialed in to today's AGM. Mr. Masseck, you wanted to know about our preference with respect to a virtual AGM in 2024 and 2025. We could envisage holding further virtual AGMs, and therefore, we are putting up for vote the authorization of us in order to implement them. The decision on whether to exercise the authorization will be taken at the beginning of the corresponding year.
Mr. Masseck, you refer to item six on the agenda, approval of the compensation system for the board of management. You asked about the reasons for the introduction of an adjustment clause for unforeseeable and unplannable development in the long-term variable compensation, referred to as the long-term incentive or LTI for short. You asked why this clause has been introduced and what developments this entails. First of all, we expand the possibilities of the supervisory board, which in the area of short-term variable compensation already has options, to include the long-term variable compensation. This possibility of adjusting the payout % in the event of unforeseeable and unplannable developments is supposed to prevent a take-on effect in the form of an exorbitant increase in payout. These could result from greenhouse gas emissions being reduced less or more than planned.
It also enables the correction in the event of acquisitions, which could make a significant contribution to future emissions. This is supposed to avoid that the assessment of strategically important investment decisions is curtailed by the potential effects on the long-term variable compensation. The Supervisory Board is therefore authorized in the event of material structural changes in the Covestro Group to take account of regulatory changes or unforeseeable economic developments that have a significant impact on the achievement of goals by the LTI program, the LTI percentage payout ratio, et cetera, and exercise its discretion in doing so. Such individual significant changes and developments are deemed to be present in the event of a change in total payout from the LTI program of at least 5 percentage points compared to the situation without considering the event.
Mr. Beckendorff, you also asked the extent to which the AGM of the Association of Chemical Industries in 2020 took place. You also asked why today we are not holding a hybrid event. Details on the general meetings of the VCI of the recent years are not available to us. We can at least say that the AGM there in 2022 was hybrid and that 60 guests attended virtually and 154 guests were present in-person. The legislator in 2022 has anchored virtual AGMs as an alternative to in-person AGMs in the German Stock Corporation Act. It also has created the opportunity to conduct AGMs in virtual format in the future.
After assessing the possible options under consideration, in particular of this current legislation, our shareholder structure, expected costs, the current pandemic situation, and experience gained in previous years, we reached the decision to conduct a virtual AGM in 2023 as well. Mr. Beckendorff, you asked about the number of attendees at today's AGM compared to the in-person AGM in 2019. In addition, you'd like to know the share of participants from abroad. We are transmitting our virtual AGM via various channels, including global public channels, such as our website and various social media channels. We do not have enough information about how many people are actually following the AGM via these channels, unfortunately. In our investor portal, as I said before, we have a total of 113 shareholders, and/or their representatives who have dialed in.
In the investor portal, you and everyone else has at their disposal, the participants register. This lists all of the voting proxies nominated by the company present here in the room, as well as the shareholders that they represent, along with their respective shareholdings. In addition, in line with the most recent statutory regulations, all shareholders and representatives or proxies have been stated, who have dialed into the AGM electronically today. The participants register also contains information on the domicile of the shareholders listed therein. However, whether they are actually participating from a domicile abroad or from another location is information that is not at our disposal. At our last in-person AGM in 2019, 554 shareholders or proxies attended on-site in Bonn.
Mr. Beckendorff, you also asked about the costs of this year's AGM and about the cost savings compared to an in-person AGM. For the virtual event this year, 2023, the costs amount to approximately EUR 800,000. With this concept, the costs therefore are about half of the costs of an in-person proceedings. Mr. Beckendorff, you asked about absolute CO2 savings achieved through the implementation of the AGM as a virtual AGM. It is very complex to conduct this type of calculation, as you may well imagine, according to our knowledge, it is not very precise. As I mentioned in opening, we are convinced that a virtual AGM has a much more favorable environmental footprint. This year, we are announcing an external meeting room, we're transmitting the AGM from within our own office space here in Leverkusen.
We also don't have as much travel costs by the service providers or other employees that are supporting the organization of the AGM. Employees' resources, furniture and technology can be used elsewhere in the company therefore. The number of individuals participating in the AGM today has also been reduced to an efficient minimum. We have fully renounced guests due to the virtual format, therefore, expenses and environmental impacts by catering waste and water have been reduced further. Mr. Beckendorff, you've asked about the reasons for technical problems when connecting speakers today, and you wanted to know how Covestro would ensure next time that everything worked seamlessly. Mr. Beckendorff, as you were able to figure out yourself, the last step to connect the speakers didn't succeed seamlessly.
For this reason, we have agreed on an alternative solution together with the service providers involved. As I mentioned earlier, we apologize for the long waiting time. At current, we are analyzing with everyone involved the potential causes so that if we were to hold virtual AGMs in the future, we could avoid any technical interference and disturbance. Mr. Beckendorff, you asked about the specific reasons why, from the perspective of the supervisory board, the compensation system of the board of management had to be changed. The amendments to the compensation system relate to introduction of the possibility to adjust the payout % in the event of unforeseeable and unplannable development. In so doing, a corresponding discretionary adjustment was included analogous to the existing provision in relation to short-term variable compensation.
The supervisory board, in doing so, would like to have a uniform structural approach for both variable compensation components. By adding the sustainability component, the supervisory board availed itself of an option already existing in the system. Basically, this was merely an implementation of an existing provision and not an amendment. Mr. Beckendorff, you asked under what conditions the supervisory board would avail itself of the newly created possibility to adjust the payout percentage of long-term variable compensation, LTI. As I mentioned earlier, the possibility to adjust the payout percentage for the LTI was introduced in order to be able to take account and react to unforeseeable and unplannable developments.
These can be take on effects in the form of an exorbitant payout that can result from a significant decline in production and a reduction in emissions that are not primarily due to in-house measures. It also enables to make corrections in the event of acquisitions that make significant contributions to emissions and avoids that the assessment of strategically important investment decisions is curtailed by the potential impact on the long-term variable compensation. The Supervisory Board is therefore authorized in the event of material structural changes within the Covestro group, regulatory changes or unforeseeable economic developments that have a substantial impact on the total target achievement of the long-term incentive programs to adjust the corresponding payout percentage according to its discretion.
Furthermore, you asked whether Supervisory Board adjusted the payout of the Prisma Tranche 2019 to 2022 under the assumption that the Tranche already included a CO2 factor. A concrete response to this question is impossible, unfortunately, because the savings potential for greenhouse gas emissions over a period of four years, for the first time in the Prisma Tranche, 2021 to 2024 was introduced. In the Tranche that you addressed, therefore, 2019 to 2020, two calendar years are contained for which no savings goals have been identified. At the same time, in this four year period, there were two events that the Supervisory Board would definitely have considered in this period.
This is the acquisition and integration of the business segment resins and functional materials of DSM and the significant decline in production and the reduction in emissions that was caused primarily by this in 2022. Both transaction, as a matter of principle, are assigned to the category of those events that the supervisory board would consider for an adjustment. Mr. Beckendorff, you asked about the ratio of reduction targets for greenhouse gas emissions for the short-term and long-term variable compensation, and you expressed your concern about a one-sided incentivization. Furthermore, you asked about the expansion of variable compensation by additional ESG criteria. First of all, the targets are different between the STI and LTI with respect to the corresponding time horizons for the short-term variable compensation.
As before, we have the group-wide compensation program, Covestro Profit Sharing Plan, Covestro PSP for short. This applies for the predominant number of employees of Covestro worldwide. The members of the board of management of Covestro also participate in the Covestro PSP program and receives their short-term variable compensation on the basis of the provision of this compensation program. For this, the supervisory board recently, for a multi-year period, namely the period from 2022 to 2024, established values for the 100% payout from the corresponding key figures, including the greenhouse gas emissions of Scope 1 and Scope 2 within the scope of the long-term variable compensation program. For the tranches up until 2025, we defined an emission target only for the direct emissions, i.e. Scope 1 emissions.
Accordingly, the desired reduction for both stages, Scope 1 and Scope 2, becomes relevant for the first time, for the tranche ending in 2026. The corresponding target for both compensation programs has been derived from our roadmap to climate neutrality, with which by 2030 we want to achieve a reduction of greenhouse gas emissions of 60% compared to 2020. The reduction of emissions plays a key role within the scope of our company vision to fully align our business to the circular economy and sustainable growth. The supervisory board therefore believes that greenhouse gas emissions are one of the predominantly relevant key figures in order to ensure the operative orientation of the Covestro Group and the company vision. This is done justice to, in our view, by the fact that the key figure in both...
The key figure has been anchored in both variable compensation systems. On top of that, the indirect greenhouse gas emissions of upstream and downstream processes have to be reduced as well in the value-added chain. This is Scope 3. A concrete target will be formulated during this year. This will definitely be considered in the targets for variable compensation. On top of that, at present, for the new tranche, 2024 to 2027 of the long-term compensation system, as well as for the short-term compensation system starting in 2025, various options for further key figures on the basis of ESG are being discussed and reviewed. We ask of your understanding that at present, we cannot make any concrete statements with respect to the detailed design of future compensation plans.
Mr. Beckendorff, you asked about the authorization to conduct virtual AGMs, which is up for vote today. Let me start by saying that in the last years, we made good experiences with the virtual format. With respect to the virtual AGM format, we received positive feedback throughout. The drawback, however, was that we were not able to enter into direct dialogue with you. We have provisions in the German Stock Corporation Act that enable the conduct of virtual AGMs, the legislature has strengthened the rights of shareholders significantly. The Board of Management and the Supervisory Board are therefore of the opinion that this virtual format is therefore practicable and also share-friendly as an alternative to classical in-person AGMs.
For this reason, we propose to you under item 7 on the agenda to amend the articles of incorporation in order to authorize the Board of Management to reach decisions on the format of future AGMs in the future. We made a conscious decision in favor of the alternative of the authorization, unlike the further option envisaged by the legislator, where the articles of incorporation of a company in general can envisage the conduct of virtual AGMs. In this way, from year to year, a flexible decision can be reached in the interests of the company and all of our shareholders. Our convocation definitely allows you to glean the fact that we intend to exercise this authorization in a responsible manner.
For this reason, we don't want to completely exhaust the potential authorization period of up to 5 years this year fully, and therefore, have limited it to the next two years, 2024 and 2025. For the annual general meetings in these two years, we will reach the decision according to due diligence, exercising our discretion with due responsibility, taking account of shareholder rights, sustainability issues, as well as cost aspects. In considering the interests of the shareholders, we are fully aware of the fact that it can make a difference to shareholders, whether the company law measures you mentioned are envisaged on the agenda.
We ask of your understanding that today we cannot present you with a binding or general checklist for the next years. We also ask of your trust that we will exercise our discretionary powers to reach this decision within the ambit of the law responsibly. This brings me to the end of my answers. I think Mr. Steilemann will continue.
Thank you very much, Mr. Pott. Mr. Rautenberg, you asked me what I thought about the geopolitical situation in China and the risks that Covestro has. You also asked about flexibility at Covestro, our dependence on China as a production site, and in question of reducing our sales market. We are faced with a significant increase in geopolitical risks in all regions where we are active. We are developing emergency plans for all relevant scenarios. Hypotheses for specific conflicts are things that we will not comment on. Part of our strategy has been localization of production in the most important markets. We call this local for local. This gives us a certain amount of protection against disruptions in global trade streams. Our financial department has also considered the number of possible risks and also has a number of measures prepared.
We see that for major investment decisions, we also take into account geopolitical risks. China has a share of just over 20% of our revenue. Although we have a good position in China, this is clearly lower below the share of China's global market for our products. China is an important market and production site for China. With regard to our existing production setup in China, we have a certain flexibility with regard to the regions supplied from there, a shift of our existing production sites is something which is hardly possible. Mr. Rautenberg, you asked questions about Covestro's climate targets, especially as to when Covestro will be announcing Scope 3 climate targets and whether SBTi certification would be considered with regard as to a goal of the Paris Agreement limiting global warming to 1.5 degrees.
Last year, we gave our own goal in order to have net zero emissions by 2035. We plan to have these emissions reduced by 60% to 2.2 million metric tons CO2 equivalents compared to 2020. The absolute Scope 1 and Scope 2 emissions last year dropped compared to 2020 by just under 12%. In line with our strategic focus on circularity and climate protection, we are now working on a Scope 3 reduction target for long-term reduction of indirect greenhouse gas emissions from up and downstream processes in the value chain. We are planning to announce this target this year. In 2022, the Scope 3 emissions accounted for close to 78% of the total amount of greenhouse gas emissions from our group.
Most of the Scope 3 emissions were in the categories which are upstream, and we also see a switch in our raw material basis as the major lever to reduce Scope 3 emissions. Procuring alternative raw materials is especially important here. By alternative raw materials, we mean all raw materials based on biomass, CO2 waste or non-fossil bases, or that are produced with renewable energy. As part of our current target development, we are now analyzing all of the options we have to reduce Scope 3 emissions, including downstream of the value chain. We are acting according to our vision in order to focus completely on circular economy. You also asked about a validation of our climate targets as a result of the Science Based Targets initiative, and if so, when.
The SBTi, Science Based Targets initiative, is a partnership amongst a number of different interest groups, their goal being to draw up scientifically fun-founded climate targets within the hope of achieving the 1.5-degree target. Our net zero target is based on scientific assumptions that we can reduce global warning to 1.5 degrees and exceeds the orientation of the SBTi. Our intermediate goal for 2030 is to reduce greenhouse gas emissions from 60% compared to 2020. SBTi calls for a reduction of 42% in the same period of time. Developments with regard to sector-specific orientation for the chemicals industry using SBTi, which are to be ready by 2024, are developments that we are observing very carefully.
Right now, we do not plan to have our targets validated by SBTi, but as soon as the guidelines are available for the chemical sector, of course, we will have another look at that. Mr. Jimenez, you asked about the residual emissions we expect, what compensation measures we are considering, and how we want to minimize the dependence on compensation measures to the greatest possible extent. Covestro's target is to have net zero greenhouse gas emissions by 2035 in our own production, as well as in the consumption of externally procured energy. We're doing everything we possibly can to reduce our emissions on our own. In order to achieve our net zero target, we have defined three different action areas. First of all, optimize our production processes so that we can have a sustainable and energy efficient production.
We also intend to increase the share of electricity from renewable sources. We are also counting more on the use of green steam from renewable sources of energy. If nonetheless, there are still unavoidable residual emissions after all of this potential has been fully exhausted, the final means would be to consider high value compensation measures. We are planning to base this on the highest international accepted certification standards. We are also following the activities of the European Commission with regard to working out a certification system for carbon removals in order to achieve the best possible climate protection effect of a compensation measure. At the present time, we assume that the residual emissions in 2035 will amount to about 200-300 kilotons of CO2 equivalents per annum.
If compensation measures are used, these will most likely be in accordance with the Greenhouse Gas Protocol. In fiscal 2022, we did not make use of any compensation measures. Mr. Giebel, you asked about the challenges when it comes to recycling materials for rotor blades for wind turbines. I'd also like to say that we focus on circular economy. An important part of that is recycling our materials. We are working on a comprehensive portfolio of research and development projects with recycling of various materials. This includes polyurethane resins, which are used to manufacture rotor blades. We have identified a number of promising approaches which would also allow the recycling of composite materials. These include pyrolytic and chemolytic methods, which in both case would allow us to recycle the fiberglass as well as the chemical components.
Giebel, you asked why, despite high losses last year, we hired more employees. You also asked us why we are expanding our headcount while the group is making a loss. In the first half of fiscal 2022, we had already made these hirings. We also were filling vacancies as part of demographic change and as a result of certain requirements. The number of employees compared to 2021 has gone up from 17,909 to 17,985 worldwide. That is the figure for 2022. The slight increase in headcount is due, among other things, to the fact that some of the personnel measures were not fully in effect in 2022, which shows you the full-time employee figures, as well as demographic change, as well as the required overlap for the transfer of knowledge.
The number of hirings in 2022 is clearly below the figure of the previous year. In addition, by introducing a restricted hiring approach, this has been in place since about the middle of 2022. We've already reacted to the change in the economic development. Here vacancies are only filled if they are considered critical to business. We're talking here about positions which are necessary for economic success. This is approved by the member of the board of management responsible for the particular area. Now I'd like to hand over to Thomas. Mr. Giebel, you talked about the difference in the pension entitlement and why this amount has fallen and how Covestro wants to deal with this in the future. In accordance with the requirements under the commercial law, we also consider this with regard to the fair value.
When we talk about the closing date, we see the differences in values depending on the development of the interest rate as well as the amount of assets. With regard to the values we have in the commercial code statements, which applies for Covestro AG, which was the value reduction in the asset as of the 31st of December, is the one that had the largest effect. We're talking here about an assessment effect. There is no reason to make any changes in the covering amount, that's why there is no immediate burden which would not be considered appropriately with regard to those entitled to their payments. You also asked about how many works councils there are in Germany. We understand you're saying how many members of a works council there are in Covestro. In Germany, we have a total of 83 works council members.
You also asked about how many works council members do not have to perform their normal job because they are works council members. In Covestro, there are 31 such members. You asked about the three highest salaries amongst the works council members. We understand you to be saying, what are the highest amounts paid to those works council members who are freed from their regular job to be works council members? In 2022, the highest total gross salary was EUR 198,900.57, followed by a total gross salary of EUR 168,955. The third-highest total gross pay was EUR 165,842.
You also asked about the amount spent on gifts in the year under review, as well as the amounts for the five largest gifts. Gifts to external individuals without advertising amounts was approximately EUR 25,000 overall. The five largest presents amounted to EUR 1,073. You also asked why, despite making a loss, we are still paying into the performance-related entitlements. In Germany, we see that this is where the pension entitlements are based on agreements with the works council, and a reduction in the entitlements is very difficult due to labor law. In difficult years, there are further payments. We also see commitments by the company are always seen as performance-oriented commitments. The pension itself is determined by a defined contribution, which is calculated into a building block for your pension.
For new hirees, since the 1st of January 2021, there is no guaranteed pension, simply a capital payment. Mr. Giebel, you also asked why impairments of EUR 245 million were taken for losses carried forward, and how we determined this amount. I would like to refer you to our annual report, where we mention an amount of EUR 1.202 billion. The annual report gives you an amount of EUR 1.202 billion. These are loss and interest carried forwards for a period of more than 5 years. Based on tax requirements, we're talking about taxable income, but not a tax amount.
The amount of EUR 245 million of deferred taxes in Germany would have to be impaired in accordance with the International Financial Accounting Standard, IFRS, because we're talking here about an amount of EUR 1.202 billion for the losses carried forward within an appropriate period of time of 5 years. Mr. Giebel, you asked about a decline in insurance payments in 2022 and why these went down from EUR 43 -EUR 28 million. Not all of the insurance payments are recorded in other expenses. Some of the insurance payments are also included in various functional costs. These also include we see EUR 52 million for insurance payments compared to EUR 51 million the year before. They are basically at the same level as in 2021.
Giebel, you also asked about insurance premiums that were received in 2022, other operating income is where we record insurance premiums, and this is also used to cover Covestro's own risks. Here, we're not talking about reimbursements for claims. These premiums increased by 20% to EUR 36 million as a result of developments on the market. With that, I'd like to hand over to Sucheta Govil.
Thank you, Thomas. Mr. Giebel, you asked about our activities and our business with Russia. Relatively shortly after the outbreak of war in Ukraine, we at Covestro decided not to supply any more products to Russia. With the fifth EU sanctions package at the latest, many chemicals were also covered actually by this export ban. Consequently, Covestro also discontinued its business activities with Russia in the fiscal year 2022. In previous years, actually, this has accounted for less than 1% of group sales. The Covestro company, which was actually a sales support office in Russia, was also liquidated in the process. Thank you. With that, I hand over. There are no questions here.
Mr. Giebel, you asked about the conditions for the pension entitlements amounting to EUR 126,750 for Dr. Schäfer. You also asked about the terms and also the age requirements and whether other income would be considered. We're talking here about an entitlement from the Bayer system, which was vested by him and as of the time he leaves the company, as of the 1st of July 2023, these can be paid out at the request of Dr. Schäfer. At that point in time, he will have completed his 60th year and that there are no conditions attached. With regard to the compensation for the members of the board of management, I'd like to mention that we review the appropriateness of their compensation by annual benchmarks with a group of peer companies.
These benchmarks show on a regular basis that our compensation package, including the pensions for our members, are appropriate. For the majority of the DAX and MDAX companies, the members of the board of management receive payments for their pension in various different forms. You asked about the changes on the board of management at Covestro. You really can't talk about an exodus. Dr. Klaus Schäfer extended his contract by 6 months to have a smooth transition for his successor, and then he will be retiring, which he deserves. Dr. Thomas Toepfer will be leaving for personal reasons. He's switching over to Airbus. Mr. Giebel, you also asked about 2022. You talked about payments from the Prisma tranche, and you asked for a comment on the amounts or information and amounts for the pension entitlements. Here we're talking about Prisma, which is a long-term compensation based on 4 years.
The last Prisma tranche that was just paid out is based on the years 2019 through 2022. That would be not enough just to deal with fiscal 2022. The payments made for these pension entitlements are the result of contractual obligations vis-à-vis our board of management members. For all of our employees, it does not depend on the specific business situation. Mr. Giebel, you referred to our compensation system as very complicated and non-transparent. You asked about the number of workers and employees who work on that. You also asked if employees and boards of management couldn't be paid by a simpler system. In our HR department, we have two employees who work on the system used for the board of management compensation. You say that it's too non-transparent, too complex.
We can't understand that, especially since other investors who spoke before you gave us positive feedback. The system used for employees and the Board of Management with various components, fixed salary, short and long-term variable compensation, fringe benefits, as well as pension, is something that is perfectly normal on the market. Variable compensation, which is linked to a significant share of the compensation based on the corporate performance, is something which is also required by the German Corporate Governance Code for members of the Board of Management. Mr. Giebel, you asked about severance pay, bonus, continuous payment, et cetera, after Dr. Toepfer leaves. With regard to his contract until the 31st of August 2023, he will be receiving his fixed compensation pro rata and the mobility allowance, both we paid monthly, as well as monthly expenditures for Covestro AG and for his pension.
He also participates in the compensation program for fiscal 23, in April of next year, he may receive a payout as soon, and this applies to the other members of the board of management as well, as soon as the requirements, if the requirements are met. The claim for payout from the long-term compensation program, Prisma, will not apply to all of the tranches for the tranches beginning with 2020 and for later years will according with the plan. That is why this will not be the case. Thank you very much to our colleagues, as well as for your answers. That brings us to the next round of questions. I'd like to look at the screen. The next speakers will be in the following order: Mr. Matthias Gaebler, Rolf Nonnenmacher, Felix Jahn, and Mr. Ulrich Giebel.
Our technical team would like those individuals to please go to the investor portal and go for your technical test. I'm going to interrupt now, hopefully only for about 5 minutes. We will continue with the questions. Thank you. We're going to take a break now. See you in just a minute. Ladies and gentlemen, we continue our AGM now. Our next speaker is Mr. Matthias Gaebler. Mr. Gaebler, please.
Thank you very much, Mr. Pott. I have already got changed so that you can see my general mood. I didn't have. You know, I've never bought a concert ticket to listen to the same music for 75 minutes. This is awful, and it's a terrorism, audio terrorism. That brings me to the question, what is the title of the first piece of music? Please use different music when you next have a break, and there will be another break when we go into the votes. A question to the notary public now. He has been taking the minutes. It's 4:00 AM. I'm the sixth speaker. It's this very unusual and also the break that was over an hour. I believe that the shareholders should be compensated for that.
You have stolen life from us. I'm sure that you wouldn't notice a little bit of money if you paid some compensation. Perhaps EUR 12 the minimum wage and multiply that by the number of shareholders taking part, and then perhaps make a donation to a local school. I think that would be an adequate compensation. I think your chairing of these proceedings of this AGM is not terribly impressive. I requested the AGM be postponed and to resume at 4:00 PM, for example, and then we could have just had a break between 1:00 PM and 4:00 PM, and then we wouldn't have been subjected to this awful music. Of course, you haven't heard from all of the shareholders. You're in charge of this meeting.
Why didn't you just get a microphone? Why didn't you just completely restart the system, grab a microphone, and then you could have sorted out everything? This really isn't a very good example of how to carry out a virtual AGM. I can't see why it took you one hour as the Chair of the Supervisory Board to prepare your answers to the questions the first half hour. Last year, there's the Beiersdorf AGM, and he, the Chair of the Supervisory Board there, needed 8 minutes to prepare his answers. Those are my preliminary remarks, and I would now like to come to my actual questions and statements. I could go off on a tangent because there's been enough time wasted today. I will try not to.
As I've already said, I think the, this AGM could have been dealt with a little better. The share price is rather poor. Since 2018, we've seen 50% loss. Please tell me, give me three reasons why we should remain as shareholders, why we should buy more shares, perhaps. What are the three greatest risks that have that could have a negative effect on the share price? I would like to know what all of these empty sales are all about. If we look at the Federal Gazette, first of all, we see 15 items. Are you even aware of what's going on? We've got all of these sales. I mean, this is detrimental to your image. How are you trying to counter this?
Are you not doing anything? You just say, "No. Well, that's just the way it is, and we just have to put up with it." I really think you should make a statement on this. Now, of course, for me as a shareholder, dividends are the most important item. Now, of course, the board of management are getting considerably less money but still getting some money, and we're not getting any dividends. Why is there no synchronization between the board and the shareholders? I think there ought to be some sort of uniformity here. I would like to know what the mobility allowances were that were paid to the board in previous years and also the preventive medical checkups that have now been gotten rid of.
I don't think that the board of management compensation payments are that low that they couldn't have done something there. Also regarding the authorization for the decision regarding a virtual AGM. It says somewhere in the document, people who are abroad are somewhere else far away. How are we to understand this term distance? Are we talking about 10 km, 100, 1,000 or more? You're in Leverkusen, but you could, of course, play upon the rivalries between Cologne and Düsseldorf and where the distance is there deemed to be a lot greater than they actually are. Turning to the question of sustainability. You want to be as you want to be carbon neutral by 2035, I believe. If I've remembered that so.
I would like to know when you wish to achieve that in Germany and when you want to achieve that globally, and where are you at the moment? What is your current position? I'd like some figures on this to have some more specific ideas. I would like to hear about property and the real estate assets. I am interested here predominantly in Germany. I think on a global level, it's probably too difficult to tell me. Regarding politics and the various threats that are coming from Berlin. Talking about energetic refurbishment, what are you expecting you will have as expenses there?
Let's stick with real estate, I would like to know if you've already provided all of your property tax returns and what your land price values are, rough value would be here. Do you already have some tax return declarations there, and what will you do with them? Do you intend to appeal them? Will you go public with this? How do you intend to deal with these issues? The question of telework, working from home. What has been the development there from before the pandemic, the pandemic and now, and what would be the maximum amount of working from home that you would allow? Do you think that you will be able to improve your the amount of staff that you'll be able to attract if you change your working hours?
Regarding the compensation report of the board of management. I don't think that this report is transparent at all. I do very much doubt whether you could actually calculate... My specific question here, have any of the members of the board of management ever checked the payments that they receive? If they have done so, what are they actually receiving per month? I'd like to know that. How many employees are actually involved in these processes? Perhaps you can also refer to this. I would also be interested in the quantitative, the distribution of in the steps of EUR 30,000 up to EUR 120,000, then up to one hundred and...
250, and then 250-500, and then over EUR 500,000 as salaries. I'd like to know how many employees are in which respective bracket. I can skip over my next question because that's already been addressed. I would like to know about the energy price increases, electricity and gas, and oil and what you expect the developments to be here. I would like to have a distinction according to energy resource. Are there any potential savings that you can make here? Any electricity saving programs? I think any person with any common sense has already started to try and reduce the amount of energy they use about 15 or 20 years ago.
The core question behind all of this is, are any of the sites in Germany at risk of being closed in the short, medium or long term? You may have to turn to foreign sites. Now regarding the ability to pass on cost increases to customers. Now, in your risk management system, you had a system, you had an approach, but this here appears to have actually not been an improvement at all. What were your main investments over the last year and how do you intend to continue this year given the massive increases? Now, IT, which measures have you taken regarding IT security and what costs did that entail?
Data security and data privacy, particularly with an increase in the amount of people working from home and perhaps working from abroad, how can you guarantee IT security there? Of course, the obligatory question from me regarding China. Do the company use Huawei mobile phones, and how do you deal with the known problems in this regard? Now, let's come back to the AGM. Who's in the back office? How many people are external? How many lawyers do you have there? If you have a virtual AGM, and you say that this is making a contribution to climate protection, how many people had to fly and travel how far, and what were the reductions here? First of all, I think we shouldn't be talking about how much CO₂...
How many CO₂ emissions can be saved by not having shareholders arriving, traveling? I think it's more a question of the board of management. You talked about EUR 800,000, but the in-person is was double the cost. I would say that the virtual AGM is far too expensive. We're talking about EUR 7,000 per person. If we had over 500 people, we're talking about just about EUR 3,000 per head. If we look at that from that perspective, the virtual AGM is simply ludicrous from that perspective. Coming back to plans, what do you intend for the next year? You've said a couple of times that you'll make a decision at the end of the beginning of the year. I would like to object to this.
A very simple question: Have you already booked the venue for 2024 or reserved anywhere? It's an open secret that companies of your size, of course, have to reserve the venue a year in advance. If you've not already done that, we know to 80% or 90% that next year you will have a virtual AGM. That brings me to the environmentally damaging financial statement. Not because of the paper, you're not thinking about shareholders. I have to download these documents from the Internet. Of course, people at home normally have an inkjet printer. What do you do with your financial statements? You have white font on a black background. What a waste of ink. What a waste of ink. I mean, you're talking about environmentally friendly operations, that really is a waste.
It should just be black and white. Nothing more, nothing less. That brings me to my next question. Did you voluntarily send out any printed documents, even though that is no longer legally required? The title of your financial statements, that you have the title, Speeding Up to Circularity. What does that even mean? The CFO's report, there's mention of commodity and ROCE over what? What does that mean? Please just put a bit of effort in and think about the people that you're actually addressing here about your target group. I particularly don't like the use of the German term Mitarbeiter. Please just do away with all this gendering. Just tell me why you need to do this. There's an extreme difference between the German term Mitarbeiter and Mitarbeitende.
You don't always have Mitarbeitende, which in English would be working people, because some of them are sick or they're on holiday, so they are then no longer actually working at the time. Just use normal words. Mention was also made of additives, and then I just wonder, can you not just say, use the German term and the German terms for the business units? If your, colleague, Ms. Govil doesn't understand German, then that is maybe... We had simultaneous interpretation from English into German, so I couldn't understand anything. The first minute of the response was completely unintelligible, so I'd like to ask for the first minute of that to be re-repeated, because I simply couldn't understand. I would also like to know how long Mr. Toepfer's contract would have actually lasted. Congratulations.
Well, I would like to appeal to you to forgo any further payments because you are moving to another company. Mr. Pott, how many people were in the running for the new position? How many candidates have you already spoken to about the successor for Mr. Toepfer, and when can we expect a decision to be made? Now, I would also like to ask what the peak number of participants was at the virtual AGM. What was the biggest success in the reporting year for the board of management? What were the three biggest problems aside from the technical problems that we've experienced today? I must say that there are other things that I'm struggling with. Your investor portal, unfortunately, is subject to an error.
There's lots of things you can click on, but there's one item that's missing, and at the Beiersdorf AGM, they had it. It said, request a gift. They had the virtual AGM, and they managed to marry up that with the usual in-person AGM. I think you should do that. In your portal, you have to save your data if you want to speak. It would be interesting to see what you're going to do with all of this information. Regarding the participants list, why didn't you put that at the beginning? It's at page 64 of 69. It would also be very much appreciated if you could update that. You were showing the number from 10:02 AM for three hours.
At Beiersdorf, they kept updating it, that's a pretty poor performance. Why do you stipulate the proxy holders' professions? Do you have some sort of a complex? The only thing that has to be fulfilled for somebody to hold a proxy is their age. They have to fulfill the minimum age requirement. I would like to ask you to update the participants list. The Stock Corporation Act doesn't require the participants' professions to be stipulated. Ladies and gentlemen, I don't want to bother you any further. I've asked enough questions and, of course, the requests and so on and so forth. I think there's no real need to go into any further detail about that. I hope that you will be self-critical after this.
I have bombarded you with a number of fairly blunt remarks, my last question would be: How many questions were you aware of in advance of the AGM? That's actually standard procedure. This idle time that you had could have been used to and to other questions, and my question there would be, why did you not avail yourself of the opportunity to use that time? Ladies and gentlemen, I've asked enough questions. I won't bother you any further. Thank you to all employees who give their all for the company every day. I would, of course, be very happy to see if the share price increase and if we could then also see the payment of dividend on the agenda next year. Thank you very much for your attention.
Thank you, Mr. Gaebler, for your remarks. Next speaker is Mr. Felix Jahn.
Hello, I hope everybody can hear me. I will try to be concise so that we can all virtually go home at least. Dr. Pott, ladies and gentlemen, members of the Supervisory Board, members of the Board of Management, and 113 co-shareholders. I would like to have answers to the following questions. First of all, which credit risks and speculative features does Moody's see with the Baa level five for Covestro? A further question, which proposals have come from Silchester International Investors are deemed worthwhile by the Board to increase the investment value of Covestro? I assume that your negotiations have already taken place with Silchester. Question three refers to what Mr. Masseck also inquired about. You are clearly not intending to buy back any of your own shares in 2023.
If you were to compare that with your competitors, Huntsman International, they have said in much more specific terms that they plan to spend EUR 400 million if they don't find any acquisition targets. You were rather wishy-washy. You said if your cash flow is okay, then you might think about it. Can you generally tell us a little bit more about your capital allocation, M&A, and level of debt? That would be very worthwhile as far as I'm concerned. Fourth question. In 2022, Dr. Klaus Schäfer, Dr. Bortenlänger, Ms. Kingo, Dr. Schneider, Stachelhaus and Mr. Thomas didn't acquire any Covestro shares. Was that a sign of their lack of trust, or do they simply not think that Covestro is an attractive investment? This question, your...
The competitor, Huntsman, has emphasized that they no longer wish to be a shock absorber. How to what extent do you think Covestro will be a shock absorber? I didn't completely understand what they were meaning by that, but I'd be interested to hear your opinion. Why do you mention in your report on page 152, the mention of capital costs, and then you refer to page 246, I believe. It seems that you keep applying different yardsticks that you're trying to pull the wool over our eyes a little. How do you assess the WACC? This is for 2024 and 2023. How would this compare with the calculation values applied for 2022?
Now just something that I would like to add to the question from Mr. Giebe. The assets for share prices. Why have we had such a reduction here? Did you invest in such speculative shares? You really shouldn't be doing that, I don't believe. Now my penultimate question. This goes to Dr. Toepfer. What particular challenges do you think your successor will face if they come from a different sector to Covestro? Perhaps linked to this, if somebody was to choose from to switch from Bayer to Paris Saint-Germain, how would they cope in this Champions League, so to speak? Is this not a bit of a problem regarding motivation?
My last question, how many minutes did the how many minutes of technical difficulties did we have today? Thank you very much.
Thank you, Mr. Jahn. I would now like to ask the next speaker, Mr. Ulrich Giebel, to take the floor. Mr. Giebel, the floor is yours.
Yes. Thank you, Chair. I have one further question regarding the gifts. I was a little bit surprised that these gifts of around EUR 200 were being allocated. I wasn't talking about the overall costs, but the price of every individual gift. The other question refers to your response to the mobility allowance. This term, mobility allowance, I would like to ask your simultaneous interpreters to add this word now. If you use English terms, please interpret them.
What is a mobility allowance? To what sum was this mobility allowance paid? What kinds of mobility are used and why were they allocated? Those are the questions that I would have. Thank you.
Thank you very much, Mr. Giebel, for your further questions there. That brings us to our next speaker, Mr. Rolf Zester.
Yes. Hello to all participants. I have a question born purely of curiosity. For around 700 people. We had around 700 people at the last AGM in person, and then the pandemic came along, and then we all had to look at the idea of working from home. My question is, what have been your experiences that you've gained from the headquarters rather that was provided for 700 people?
Unfortunately, Mr. Zester's connection is rather poor.
You have so much space and so much office space. How can you use it, perhaps for other purposes? Are there any other influences on other construction projects, born of the new ways of working? That was the only question I have.
Thank you, Mr. Zester, for your question. Ladies and gentlemen, we will now need a little time to prepare our responses to some rather specific and rather comprehensive questions that have been tabled here. I would therefore like to interrupt the proceedings for approximately 20 minutes. Then, of course, we will resume the AGM and respond to those questions accordingly. Thank you very much.
Mr. Steilemann will read off those answers again. Please go ahead, sir.
Thank you, Mr. Pott. I shall begin with the questions that have just been alluded to. Mr. Beckendorff, you asked about the share of alternative raw materials in production and its share in circular solutions in the total portfolio. The sales of products on the basis of alternative raw materials still amounts to about 1%, since 2021 it has already risen. Analogously to sales, the share of alternative raw materials in procurement also is around 1%. The development of our sustainable product portfolio, focusing on circularity, something that we announced last year, we want to make all products climate neutral. As a step in this direction, we are banking on what we refer to as circular intelligence or CQ solutions based on alternative raw materials.
They consist of at least 25% alternative raw materials. For us, raw materials that are alternative are in particular raw materials that are based on biomass, carbon dioxide or waste, or that are produced on a non-fossil basis using renewable energy. An example of such a neutral product is our climate neutral MDI. Under our new CQ label, we have sold almost 1,000 metric tons. The further expansion of our sustainable product portfolio is supported by our innovative product portfolio. Based on our sustainability targets, 80% of project costs are supposed to be allocated in research and development to areas that contribute to achieving the climate targets. We want to make our contribution to the United Nations Sustainable Development Goals. Our goals in respect of the circular economy and carbon neutrality are being pursued with this in mind.
Since 2016, we have been increasing the sustainability of our product portfolio to this end, and in this way, we are also developing our product portfolio to improve the sustainability of our products, so we can assess them better in terms of circular economy and sustainability, and realigning our product portfolio to this end. Mr. Giebel, you asked about our activities and business operations with Russia. Shortly after the start of the war in Ukraine, as Covestro, we decided to stop delivering products to Russia. With the fifth EU package of sanctions, a lot of chemicals were subject to the ban. In 2021, Covestro just discontinued business operations with Russia, which as in the preceding year, accounted for less than 1% of group sales. On top of that, the Covestro company, which is a sales support company in Russia, was liquidated.
Mr. Gaebler, you asked until when we in Germany and worldwide we want to be carbon neutral. On top of that, you wanted to know where we stood today. Covestro's aim is by 2035 to have net zero greenhouse gas emissions in its own production. That should also apply to energy procured externally. By 2035, we want to reduce this by 60% compared to 2020. We're talking here about global targets which apply to all environmentally relevant sites. The goals therefore relate to the German sites as well as to all of the other sites. In absolute greenhouse gas emissions from in-house production and externally sourced energy, Scope 1 and Scope 2 emissions compared to 2020 were reduced from by 11.8% to 4.9 million metric tons CO2 equivalent.
Compared to the preceding year, absolute Scope 1 and Scope 2 emissions dropped by 9.2%. Having said that, I'd now like to hand the floor to Thomas.
Thank you very much. Mr. Gaebler, you also asked about the reasons why shareholders are holding Covestro shares or should buy additional ones. Well, we're convinced that Covestro, over the long term, creates value for our shareholders, and that it's in line with our internal goals, such as internal capital employed, over the weighted average cost of capital. The current earnings, which as you, we believe are not satisfactory, were essentially due to the challenging eco-economic environment, therefore, if the economy improves, earnings potential should be much greater, which then of course, should have an effect on our share price.
Furthermore, sure, Covestro benefits from the megatrends that we explained before, which enable strong, sustainable growth. You further asked about the three biggest risks to which our share price could be exposed. The biggest risk we have identified is the recessionary demand, which is weighing on our earnings. Furthermore, we have identified the high energy costs as a risk, which affects the economy and also demand for our products potentially. Last but not least, we believe that excessive regulation could curtail our business. You also asked, Mr. Gaebler, about the short sales of our shares, which have been significant, and how we're dealing with this. According to the most recent statistics, approximately 5% of Covestro shares have been shorted. Compared to an average shorting of 3%-4% in the DAX, it's just slightly higher than the relevant market comparison.
The reason for this is because in the mean term, there have been a lot of long short-term hedge funds where a long position is hedged by a short position. That means that a lot of the short positions that you have mentioned have resulted from this hedging strategy. We believe that this is a normal process on the capital market and is not anything specific to Covestro and therefore is not evidence of mistrust of our shareholders in our company. Mr. Gaebler, you also asked whether all, land tax declarations have been filed on time and what are the three highest and lowest, land prices, or land reference prices, and whether we have received tax notifications and whether we intend to file suits against them.
Well, all land tax declarations have been filed with the corresponding financial authorities. So far, only a very small number of tax notifications has been received by Covestro. Whether we take legal recourse against these tax notifications is something we're gonna assess on a case-by-case basis. With respect to the reference values for land, we can give you the following response. The three highest figures are EUR 370, EUR 330, and EUR 310, all of which are for land in Erding. The three lowest figures are EUR 0.60 and EUR 0.80 for two forestry spaces in Erding, and EUR 1.50 for an agricultural area in Brunsbüttel. Mr. Gaebler, you also asked about the total risk and how it's being managed within the scope of our risk management system, how it's developed, and whether it's deteriorated.
Measured in terms of absolute effects from the pandemic to date, total risks have risen by a good 40%. The pandemic, therefore, certainly has been a significant driver. In particular, however, risks have arisen through geopolitical events such as the war waged by Russia on Ukraine. The global inflation trend, the rise in commodity prices, interrupted supply chains, and the global increase in recessionary tendencies have been identified within the scope of risk management and have therefore been considered. Having said that, it's not just the pandemic, but definitely a larger number of facts that play a role here. Therefore, taking account of the probability of occurrence of the risks, if we compare the total risk exposure with our risk capacity, we see a significant overhang of risk capacity. Therefore, we do not identify anything that would jeopardize the systems of our company.
Mr. Gaebler, you also asked about the personnel expense quota that we intend or that we expect in 2023 in terms of wage and salary increases. In 2023, we anticipate a 13% share in terms of our expected revenue. Mr. Gaebler, you also asked about the use of cell phones, in particular Huawei cell phones in Covestro. At Covestro, we do not use any technology by Huawei, be it cell phones or anything else IT-specific. Mr. Gaebler, you also asked about how working from home has developed at Covestro from the time before the pandemic until now. Well, during the pandemic, employees who had the possibility of working from home almost actually worked completely from home during that time. Employees in production and employees in activities that couldn't be performed from home had to work on-site and did so.
In the meantime, however, we have spoken with the employee representatives, and we have concluded an agreement that took effect in 2021. The provisions envisage that employees who work from home or can work from home, rather, on a weekly basis or a monthly basis, have to work at least 20% on-site so that social contacts are secured. The basis for this, however, is always an individual agreement and coordination with the superiors or the individual. In doing so, we enable our employees to have a high degree of flexibility without having to lose the social contacts that we nurture amongst ourselves. Mr. Gaebler, you asked whether we have identified significant changes in terms of recruiting and its effects on the work-life balance. Well, generally speaking, we have realized that the younger generation views the work-life balance as a high value.
Covestro has various offerings in this, including expansive options for mobile working, flexible work hours, workload reductions for older employees, sabbaticals, flexi-days. These are unpaid leaves, days of leave. On top of that, Covestro as a company provides support for various family situations, such as, help in taking care of children and old persons. You asked about our personnel policy in terms of a potential four-day week. Well, the four-day week, isn't anything anyone's asking about at Covestro. At least they haven't so far, but we continue to monitor the market in this respect very closely, and the models that exist already offer the necessary flexibility should this ever become an issue in our company.
Mr. Gaebler, you asked how many employees have been considered in the average salary figure for the employees, and you've asked about how they are distributed quantitatively amongst the various salary groups. It's 18,493 employees who were considered as of the cut-off date of the 31st of December, 2020. We calculated the distribution on the basis of their salaries. Salaries of part-time employees were then extrapolated to the salary of a permanent employee. We extrapolated that to 100% employment.
We paid these employees the following in terms of salary groups: 2,950 from EUR 0-30,000, 5,208 between EUR 30,000 and EUR 60,000, 4,968 from EUR 60,000-90,000, 2,928 between EUR 90,000 and EUR 120,000, 2,333 between EUR 120,000 and EUR 250,000, 48 between EUR 250,000 and EUR 500,000, and 4, EUR 500,000 and above. Mr. Gaebler, you wanted to know whether Covestro, at request, would or actually has voluntarily mailed printed annual reports, although this is not required by law. We did not produce any annual reports in print. The annual reports are available online and can be downloaded as a PDF.
This is why we didn't mail out any printed annual reports. The predominant proportion of demand from our shareholders confirms that our approach is suitable. Mr. Matthias Gaebler, you also asked about our real estate holdings in Germany based on square meters. The total space, based on our last calculation, amounted 9,350,000 square meters. You also asked about the carrying amount and the market value of our real estate holdings in Germany. The carrying amount as of the cut-off date on the 31st of December, 2022, was approximately EUR 443 million. The market values are determined on a regular basis only for real estate holdings which are covered by the mandatory disclosure. As of the 31st of December, 2022, this amounted to EUR 134 million.
Jahn, you asked about the challenges for my successor as CFO, and you also asked about my motivation for the remaining term of my activities here at Covestro. Well, here, what I can tell you, first of all, is that I can guarantee that until I leave Covestro, I will, of course, fulfill all of my tasks connected with my job with due diligence, with full motivation as before, because rest assured that even emotionally, I have a strong bond to this company. With respect to the challenges for my successor, well, what I have to say is that these are, of course, the things that are great challenges for Covestro as well. In other words, ensuring that we navigate through the crisis robustly with good finances so that we can maintain our solid balance sheet, which we have already highlighted in the speeches today.
I think for the finance function, this is especially important. Having said that, I would like to hand the floor to Sucheta Govil.
Thank you, Thomas. Mr. Matthias Gaebler, you were also asking in how far we could pass through cost increases via our sales prices. In the fiscal year 2022, increased raw material costs led to a negative EBITDA impact of about EUR 2.9 billion compared with the previous year. Increased sales prices led to EBITDA increase of EUR 1.6 billion versus the previous year. The raw material cost includes their energy cost. With that, I can say we could pass through approximately 55% of raw material price increases via increased sale prices. Thank you.
I hand over to Klaus Schäfer.
Thank you, Sucheta. Mr. Gaebler, you asked about our energy cost budget for this year, 2023, and what energy cost increases have been considered in this figure. As we mentioned earlier, our business budget is generally based on market price expectations and forward contracts that are traded on the energy markets and exchanges that are of relevance to us. This applies to short-term as well as medium-term time horizons and planning periods. In other words, periods of up to three years. For Germany, for example, would be the index of the EEX energy exchange that we use for electricity and gas. For 2023, we have a risk management system for energy costs, which is based on physical and financial market tools. Furthermore, we use technical tools where, for example, we switch from gas to oil as a fuel.
This puts us in a position to optimize our energy costs and to keep them within a smaller bandwidth than we did last year. Mr. Gaebler, you asked about whether our energy costs are on schedule within budget and what sensible savings potentials existed. Well, in Europe, at the beginning of 2023, we had some relief in terms of energy costs in Europe compared to the budget that we had for the preceding year. Since we have created flexibility in fuel procurement, we'll take advantage of this to achieve savings should the opportunity arise. In terms of the energy efficiency measures, I must tell you that for years we have had an ongoing program which we are continuing, and we deliver it to deliver savings as well.
Okay, let me continue. The question was with regard to the music we played during the breaks, and this is something that was three different pieces. Here we're talking about the following. The first is called Care to Remember, composed by Colors of Illusion. The second one is Looking For a New Start, composed by Linda Stenmark, Anders Lystell, and Michael Stenmark, and interpreted by Loving Caliber. The third one is called When We Try, composed and interpreted by Irae. Unfortunately, in the short term, it's not possible to select different music for the rest of today's AGM. I hope that you can understand. You also asked about the notary public and if he has taken very clear minutes with regard to short selling. I can confirm that.
Another question, Mr. Gaebler, was why you did not go into the details of our of your request at the beginning of the articles of incorporation to break until 4:00 PM. Let me say two things to clarify things for the other shareholders. Mr. Gaebler did not submit a formal motion. This would only have been possible when he had asked for the floor. Mr. Gaebler informed us electronically and gave us such a suggestion. The following should be said: The long break this morning, which we truly regret, is due to unexpected technical difficulties. Clearing these up took longer than we originally expected. Taking a break for several hours, let's say until 4:00 PM, was never something that was considered. The next question, Mr. Gaebler, was with regard to variable compensation and synchronization between the board of management and shareholders.
You can see from the compensation report for 2022, payments are only made from the long-term compensation program called Prisma. These were vested compensation that is due to the board of management members. The assessment basis for this is the four-year performance period from 2019 to 2022. For fiscal 2022, neither the board of management members nor the workforce itself have received a short-term variable compensation. The synchronization you're requesting so that the shareholders would not be given a dividend is something that is given. Mr. Gaebler, you asked about mileage and CO2 emissions for the company cars used by our boards of management. We are committed to climate protection. We do not have any business cars, including the boards of management. We also asked about the mileage and CO2 emissions based on flights by the board of management members.
Due to the effects of the pandemic and increasing digitalization, flights by our Board of Management members have been reduced significantly. I cannot give you a precise calculation of the kilometers or CO2 emissions. It's something that we've not planned. The CO2 emissions caused by flights. You also asked how many questions were received prior to the AGM. We received a total of 33 questions ahead of time before the AGM. You also asked at what time most of the participants were present, at what time? The peak was at two minutes past noon. Here we had 132 shareholders who were logged into the investor portal for today's virtual AGM. Mr. Gaebler, you also asked if the members of the Board have reviewed their vested compensation and to see what monthly amounts would be transferred to them.
The compensation is determined by the human resources department. This is reviewed using the severalized principle. Calculation of compensation is mentioned clearly and transparently in the compensation report. Detailed review of the compensation is carried out by our external auditors. Whether the Board of Management members check their compensation themselves is up to them, I certainly cannot give you any information on that. Mr. Gaebler, you asked how long Dr. Toepfer's contract ran. It was until the 31st of March 2026, at his request, it is being terminated ahead of time on the 31st of August 2023. Other questions went to the term other remote areas on agenda item 8. Are we talking about 10, 100, or 1,000 kilometers?
Well, as you can take from our wording, the members of the board of management and the supervisory board should participate in person at the AGM. Our articles of association allow the members of the supervisory board in certain cases to participate via audio and visual transmission if it is not possible for them to appear in person, either because they're abroad or because they're at some remote area. It is not a question of a specific number of miles. It is also due to the fact that they cannot participate for other reasons. This is going to be adding another case where the supervisory board members can participate via audio and video transmission should the AGM be virtual.
Gaebler, you also asked about the number of employees and external individuals in the back office, and you also want to know how many of these external individuals are lawyers. Our back office has 53 employees today. The number of external individuals amounts to 10. 2 of them are external lawyers. Your question as to whether we have already rented or reserved rooms for the next year's meeting. As I said before, we want to maintain the possibility to keep this question open, but at the same time, for next year, we have reserved premises which we would use for a potential in-person meeting. The decision will be taken using our discretion and with regard to the specific situation. This will take into account the rights of the shareholders, sustainability aspects, as well as costs.
Mr. Gaebler, you also asked who or which consultant is involved with the search for the successor to Mr. Toepfer and how much this will cost. You asked how many discussions or interviews you've had with candidates and when can we expect a decision. We have a well-known agency concerned with this search, and their services are being offered at usual conditions. Because we're in an ongoing process, however, we cannot tell you anything about the number of candidates, nor when the decision will be taken. Mr. Jahn, you asked why Dr. Schäfer, Dr. Menge, Ms. Kingo, Mr. Schneider, and Patrick Thomas did not buy any Covestro shares this year.
Schäfer has fulfilled his requirements in full. The supervisory board members, now that there are no regulations in the German Corporate Governance Code, are no longer required to purchase or to hold shares. These decisions are at their own discretion. Mr. Jahn, you also asked how many minutes these technical difficulties took. The break, due to the technical difficulties, was a total of 66 minutes. You, Mr. Gaebler, asked about presents to shareholders at AGMs. Last year, we did not give out any presents intentionally, especially not at our virtual AGM. Our decision is not based on what other companies do. Mr. Gaebler, you also asked why the total number of participants was not mentioned at the very beginning. We keep a list of participants as required by law of today's AGM, as well as the shareholders logged in on the investor portal and their representatives.
This is in line with the legal requirements. The information with regard to the total number is found at the end of the list because this is seen as the result of the above information. You also asked why the initial list of participants was shown at 10:02. It did not change. It stayed the same for three hours. Why didn't we update it every five minutes like other companies do? This is in the investor portal at irregular intervals whenever there is substantial change. You also asked for information as to why, when it comes to the proxies, why we mention their profession and does RA stand for attorney in German? The only thing they need to meet is being legally mature. This is something that is in line with information on the authorization. RA is correct. It's a common abbreviation.
It is not necessary to indicate their profession, but this is something that was taken over from the publicly available forms, and they agree with this, and they didn't require us to publish this. The company's representatives also have to be authorized by the shareholders, and they are given instructions. They cannot be a member of either of the boards, and they cannot react to instructions from the company. Mr. Gaebler, you also asked about our mobility allowance, the amount, the reason for this allowance, as well as the types of mobility. The mobility allowance is a lump sum, and those workers at Covestro, due to their contract, they can finance their individual mobility in a form which they are free to choose on their own. Now, whether they buy, purchase or lease cars or if they finance public transport tickets, that is up to them.
The amount of this lump sum depends on the contract. It's EUR 2,000 per month for Board of Management. Other employees at different levels get a lump sum of EUR 1,000-EUR 1,200. Mr. Gaebler, you asked about our greatest success story and the three biggest problems. The success story is sustainability achievements, the announcement of our climate neutrality goals, our Scope 1 and 2 emissions, and the energies used in 2022, as well as the consistent implementation of our strategy for a Sustainable Future despite the difficult economic environment. The major challenges in fiscal 2022 was the decline in demand, the strong increase in energy costs, and more regulation, which we are going through as a company. Mr. Gaebler, you asked us about IT security measures at Covestro in the year under review and the costs involved.
IT security is of central importance for us. In 2022 we took security measures and we were able to improve our resilience. For example, the design of our cloud-based hosting environment and migration into the cloud was supported intensively. We also expanded our monitoring abilities. We also conducted a stress test in order to test our resilience. Covestro has a security monitoring center, which they have active 24 hours a day, 7 days a week by an external service provider. We also have additional measures as well as individual project support. The costs for IT security are in the upper one digit, single-digit EUR million range. You also asked about data security when employees work from home. In order to ensure data security, we use modern technology such as multi-factor authentication and encryption. We also see that access is only with devices that have been tested.
Internet access is secured with a security gateway. Emails are reviewed at different levels. The workstations have up-to-date antivirus programs and safety solutions. It is not possible for the co-workers to work from abroad. Mr. Giebel, you asked about the type and the costs of presents. The five most expensive gifts were primarily payments to the company with regard to cases of death and also for funerals, for example, for flowers. Mrs. Esser, you asked about our experience with the new administration at Covestro and our capacity utilization. You asked if there were plans to make use of these areas and if experience in the past has had any experience on planned building measures. In early 2018, we decided to build a new headquarters in Leverkusen. That's why there was a shortage of office space in Leverkusen. We wanted to have highly modern workspaces for our employees.
The new building has 628 workstations based on the current directive. We will also saw that there were new ways of working in order to promote culture change in our company. The basic aspects here are teamwork, transparency, flexibility, and communication. Due to hygiene regulations as part of the pandemic, the building has not been used in full, until mid-2022. With the new building and the new ways of work have shown very positive experience. We see that we are almost occupied in full, and the feedback from employees is very good. It's inspiring and motivating. Our colleagues, especially appreciate interaction and meeting possibilities, which are possible once again in the new building. This building offers us a high degree of flexibility and fits in very well with our hybrid working world following the Corona pandemic.
We do not have any plans to use these office spaces in any other way. Of course, we observe further developments, and we adapt our plans depending thereon. Mr. Gaebler, you asked if sites could be at risk in Germany in the short, medium, or long term. Covestro reviews the competitiveness of all of our sites worldwide. The way we see things today, they are all competitive in Germany. Covestro's approach to produce in the regions for the regions pays off. The analysis is based on medium and long-term energy costs. Our motto is this measure with regard to the site in Markt Bibart, we do not plan any further plant closings in Germany. I would like to hand over to Mr. Toepfer, and you asked about the proposals made by Silchester International in order to improve corporate value.
I can say that Silchester announced on the 15th of March 2023 that 3.05% of Covestro shares would be held. They do not have any specific proposals to the board of management or the supervisory board with regard to improving or increasing the value of Covestro. Mr. Jahn, you also asked about credit risk and speculation our BAA2 Moody's rating includes. I can say that Moody's is an independent rating agency which draws up its assessment on the basis of publicly available information and discussions with Covestro on creditability, on creditworthiness. We also see that there are some other elements that are included as well, and the result of this is also based on a uniform Moody scale. The prime standard refers to a company and shares that are worth investing in.
This, at Moody's, applies for a rating between AAA to BAA3. The Moody's rating at Covestro is BAA2, which is in this top category, which means that creditworthiness is expressed here with regard to Moody's assessment. Mr. Jahn, you also asked about our weighted average cost of capital for 2022 and with regard to the change compared to 2022. The weighted average cost of capital is made up of equity costs and borrowings, and this is also adjusted according to the target capital. We smooth all of the factors over the appropriate period of time. The WACC for 2023 are based on 0.2% interest rate and a credit amount for 1.2% and also takes into account the long-term tax reduction, the tax shield of 26%.
The return on equity is also something that has a 10.9% premium and a beta factor of 1.9. The calculation is based on a long-term capital structure of 65% equity and 35% borrowings. This means that there is a weighted average cost of capital of 7.6% for 2023. This is compared to 2022, an increase of 0.6%. In the previous year, the input factors were as follows: The riskless interest rate was 0.1%. The credit increase for our grading category was 1.1%. The long-term tax decrease was 25%, and the mark risk premium was 8.7%, and the beta was 1.7.
The capital structure assumptions remained unchanged. From these assumptions, we come up with 7.0% costs for capital for 2022. Mr. Jahn, you also asked why in the annual report for 2022 on page 130 in footnote 6 or on page 152, footnote 4, you asked why we use different capital costs amounts than on page 256 of the annual report for 2022. I can say the following. On page 130, we're talking about the so-called target achievement, which was measured in 2022. In footnote 6 on this page, we used a value of 7.0% for 2022, as I just explained. Compared to that, the value for 2021 was 6.6%.
On page 152 of the annual report, here we're talking about a forecast. For 2023, the value of 7.6% was taken into account. This is also the calculation of this figure, which I just mentioned to you. Compared to this, it was 7.0% for 2022. The capital cost amount on page 256 of the annual report 2022 deviates from the one used for the WACC, weighted average cost of capital. This is for the impairment test based on the requirements of IFRS. Unlike the amount used for the weighted average cost of capital, we're talking here about a capital cost following income taxes, which is calculated as the average of the equity and borrowing costs, and this is also a specific capital structure for peer companies in the same industry.
This is the equivalent of the return expected by the shareholders, the amount here is the long-term financing terms for peer group. The final aspect here, the latter aspect, is a difference in compared to what you find on page 130 and 152. Mr. Jahn, you also asked about our capital allocation, including M&A and the share buyback program, as well as our indebtedness. I would also like to say that our capital allocation was based on four pillars: organic investments between 2016 and 2022 of EUR 4.9 billion, and our industrial cost leadership allows for organic investments can be very profitable. Due to the current tense situation, our investment budget for 2023 has been reduced by about EUR 800 million. When the economic situation returns to normal, this should then go slightly above the amount for amortization.
Our second priority is our dividend between 35% and 55%. With a positive net income for 2016 to 2022, we had a total of EUR 2.3 billion that was used for this purpose. The third priority is our portfolio, in other words, acquisitions. Since 2016, we have spent EUR 1.5 billion on this. At the same time, I can say that the largest acquisition is not something that we're focusing on. Finally, we talk about the share buyback program. We bought shares back in total of EUR 1.2 million, and we have a EUR 500 million program that we discussed today. This includes the attractiveness to invest in our company, and we are convinced that our share is attractive. We just interrupted this so that our liquidity could be conserved during a difficult situation.
Once the economic situation improves, then the share buyback program will be back on our agenda. We are not ruling out the possibility that this could happen in 2023. However, we have not taken a decision here yet, and our indebtedness will also play a role here. You say that we continue to have an indebtedness which is consistent, and we have a sound investment-grade rating from Moody's. Mr. Gaebler, you asked why we use English terms in the annual report and speeding to circularity and the term WACC and ROCE. Well, we are a global company. That's why we use both English and German, and some of the terms have really become very common in German to use the English term. The title of the annual report for 2023 is Speeding Up to Circularity. This means accelerating towards circular economy.
That means last fiscal year, we did everything we could in order to make progress with our vision towards circular economy. With commodity, we're talking about standardized products that we sell in large amounts. To assess profitability, the KPI return on capital employed, ROCE, which is the return on capital employed, that's what is measured there. The return on capital employed is calculated from the relationship of the operational results after the taxes and with regard to the capital employed. If the return on capital employed is higher than the WACC, that is to say the minimum return is that this is then met, and then the company has created value, and we determine this at the end of a fiscal year.
You asked, Mr. Giebler, you also asked about the graphic design of the financial statement and report and about potential environmental burdens by printing this. All I can say here is that we consciously no longer print these reports and provide them online as a PDF so that we have as low an environmental footprint from this as possible. We employ modern principles for the drafting of business reports in our graphic design here. Then there was a question regarding the downturn of the value of our shares and share funds in our planned assets of EUR 178 million. Our planned assets are based on a balanced investment strategy, and the assets developed comparatively to a general development in share prices.
This was reflected by the downturn in the DAX index. I think therefore we, it develops in parallel to other competitors. I would now like to give the floor to Klaus Schäfer.
Thank you, Thomas. Mr. Giebler, you asked about our electricity prices and how this is based on index and market prices, such as the energy index EEX. There you can see the transparent prices. Thus, our purchasing prices are as volatile as the respective products are traded on the stock exchanges and the other exchanges. We have therefore no influence on our gross electricity prices throughout the year. To secure ourselves against increasing energy costs, we have fixed contracts and financial instruments.
Covestro does not therefore have a fixed gross price per kilowatt hour with regard to electricity in advance, and therefore we also have no influence on the overall fiscal year in this regard. Mr. Giebler, you were interested to know about the requirements for energy efficient refurbishment in the next 5-10 years. You also wanted to know the percentage of our real estate had an energy consumption value of over 150. Now, new energy measures are only obligatory when refurbishing existing buildings or when building new buildings. The required energetic refurbishing measures have thus far been carried out on the basis of the respective applicable legal regulations in our general investment and maintenance activities. Therefore, we cannot provide a reliable estimate of the medium-term specific energetic efficiency refurbishment requirements at the moment.
The predominant overwhelming majority of Covestro buildings was built before the value of 150 kWh per square meter per year was established in the 1980s. For example, the campus building is the newest building, it has a consumption of around 90 kWh per square meter per year and has also been fitted with a photovoltaic system. Covestro does not map energy efficiency classes for the existing buildings, rather we look at our energy consumption as part of our regular energy audits. Mr. Giebler, you also asked about the three largest investments in the ongoing fiscal year. We interpret your question in respect to the projects that will have the highest expenses in the ongoing year.
Thus the three largest investments will be the extension of the aniline capacity in Antwerp with a planned investment of EUR 135 million in 2023. The establishment of capacity for thermoplastic polyurethane, TPU, plant in China, with planned investment of EUR 25 million in 2023, and the expansion of global capacity for polycarbonate-based special films in Thailand, with a planned investment of EUR 12 million in 2023. That was it from me. Two shareholders have asked why Covestro has decided to use gender-sensitive language. Diversity, equal opportunities, and inclusion are an important part of Covestro's value. We put a lot of value on respect towards other people, irrespective of their gender, origin, religion, sexual orientation, or identity.
We are therefore very much aware of the fact that a sensitive and careful use of language can be an important step towards achieving non-discriminatory working culture. At Covestro, we have therefore decided, where possible, to not use the generic masculine, in public documents, to use gender-neutral wordings. For example, the German term Mitarbeiter or 2 terms, the masculine and feminine terms.
Thank you very much for these answers. We have had a further request to speak from Mr. Gaebler. Mr. Gaebler, the floor is yours.
Mr. Pott, thank you very much. Thank you for responding to my questions, and I think most of them have been responded to in quite some detail, but some of them were not very satisfactory. I would just like to query. You said EUR 435 million or something for the real estate. You don't need a big back office to work out this. We all know that you used to belong to Bayer. They have buildings from the 20s, 30s, 40s, and I just want a general estimate from the CFO, what the book value would be and what the market value might be. Just whether it's two-fold, three-fold. I don't need a direct, precise calculation. I just want a general idea from you.
What I think was not a very satisfactory answer was the property tax declarations. Now, you only have four weeks to appeal such tax declarations. Are they just lying around on your desk? I would like to hear a specific answer here. Are you going to appeal them? Are you going to object to them? I'd like to know in more detail how you intend to deal with them. Mr. Pott, you said regarding the board of management members, whether they actually check how much they are paid, that you don't know, I can under-accept that. The CFO, CEO, they don't need a back office to do that.
Simply answer, do they check how much they've been paid, or whether they just say, "Well, I get so much money each month, but it doesn't really matter if there's a few thoU.S.A.nd EUR missing there." It's a really simple question. Of course, Mr. Toepfer, you're the CFO. Please respond in detail regarding the kilowatt-hour prices for electricity. Of course, I know you have different prices because they're on the electricity markets. In 2022, you had a certain amount of electricity that you bought. How much was it? I think at least you can have some sort of figure here for us on that. Actually, if we look at the Leipzig electricity exchange market, there were negative prices. Then another question, wouldn't you be able to make use of such fluctuations?
My criticism about the white text on the black background, the first few pages of the report. I print these documents. If I'm preparing for this kind of AGM, I print them, and I want to be able to highlight things. It's simply a question of using so much ink. Just say that you'll, in the coming years, provide us with a normal black-and-white printout. I don't have any understanding for the use of anglicisms. It's written in German. I think you can use a German title on the title page, on the cover page, because no Americans are going to read this because it's only in German. Just use German, please. That would be my request. Please use German technical terms, because everybody uses different terms here. The question again to you, Mr. Toepfer, I'm sure you can answer this as well.
Your contract was until 2026. Will you waive your right to have your fixed salary paid until beyond your time of employment? It's the question. It's a simple question. Are you an honest businessman and you say, "If you don't sell anything, you don't get any money," or are you going to exploit it for what it's worth? I asked some questions about Mr. Toepfer's successor and which companies have assisted you with this. You answered this simple question by saying, "Well, it was a respected, well-known HR consultancy." Of course, they all think that they're renowned. My question is, which one? I know there's Egon Zehnder, but there's a few others as well. Please tell me who.
What are the conditions? Standard market conditions. I'm not an HR consultant. I don't know what the usual conditions are, please just tell us here. I don't know if it's maybe three months' salary, six months' salary. Just tell us a figure. It's not too difficult to tell us, is it? Please just be frank and honest with us in your answers. Mr. Pott, you made a mistake, I believe that, the overall number of participants is at the end of the report, that is not correct. This figure is between the proxy holders, which is around page 60, and then the virtually dialed-in shareholders. This makes absolutely no sense to me.
It's like saying that you would put the list of contents of a book, take it from the front page and put it somewhere in the middle. Just say, "We'll do it better next year." Stop being such penny pinchers about the gifts. I think that's not a big ask, is it? There's not too many unanswered questions there. I don't think you need your back office to be able to respond to them. Then, of course, the question of having not had an official motion submitted by me. Well, Mr. Pott, have you actually been in the investor portal? It says there, "Requests to speak or motions." How am I supposed to submit a motion if there are technical problems?
I was on the list of speakers, if I don't have the opportunity to speak logically, I can only make that in writing through the system. Again, here, I think this should be food for thought. Of course, there are certain legislations here that would apply as well. I'm sure you're familiar with the various laws and regulations here. You see, there are a few unanswered questions here, and I don't think you really need the assistance of your back office to be able to provide some simple answers to these. I would be very grateful if you could try and clarify these unanswered questions. Thank you very much.
Yes. Thank you, Mr. Giebler, for your questions. Indeed, I think we can respond to some of those questions straight away. I think a few of the others maybe have to be considered for a little longer. I would now like to announce a break of around 15 minutes, a quarter of an hour. We will return as soon as possible. Thank you.
Ladies and gentlemen, the AGM is resumed. All of the responses have been drafted. Let me start, Mr. Gaebler. You asked again about the name of the personnel consultancy and the conventions. We ask of your understanding that we will not divulge that name, I can tell you that the personnel agency ranks among the top three worldwide, so it's extremely renowned. You also asked about the conditions. The conditions, depending on the contract that we will conclude, will be between 50% to 100% of the annual fixed salary. That depends on how much we will have to pay to the agency. Mr. Gaebler, you also addressed the issue of gifts. Once again, we will look into your suggestion in the run-up to the AGM next year. If you look at Beiersdorf, for example, they have other products.
Our products may not be that attractive to you, maybe we can come up with an alternative. With respect to a request for postponement of the AGM, well, Mr. Gaebler, from a formalistic and legal point of view, I could give you our perspective, I don't think that's what you want. The choice is quite easy. When we had the technical glitch, we didn't know exactly how long it would take for us to remedy it, there was absolutely no way for us to predict that. Therefore, postponing it, for example, to 4 PM wouldn't have been appropriate at all. I must reiterate and tell all of the other shareholders as well that we really deeply regret this postponement, therefore, should we hold a virtual AGM next year, we will do all we can to prevent this type of problem.
Mr. Gaebler, you also asked us to review the participants' registry. Once again, we are happy to look into that. Whether indeed, we implement further improvements or identify potential for improvements remains to be seen. That concludes my part. I should now pass the floor to Mr. Steilemann.
Thank you so much. Mr. Gaebler, you asked a specific question to the CFO, to me specifically, as far as I'm concerned. I did review my salary, and you also asked the same of Mr. Toepfer, so I'll hand over to him so he can give you a personal response. I can confirm that as well. As far as I'm concerned, and Mr. Gaebler, that's quite simple because the compensation consists of a fixed portion which is easy to remember and a variable component.
The short-term bonus consists of the four key performance indicators which are published in the annual report and therefore are easy to grasp. I believe we're not the only ones that won't have any difficulty and don't have any difficulty in verifying that they're being paid the right amount. Thank you, Thomas. Mr. Gaebler, you also asked us soon to produce a black and white version of an annual report, and you referred specifically to the first seven pages of the annual report. Thank you very much for your suggestion. In preparing the next annual report, we would consider that proposal. Mr. Jahn, perhaps this may not have come across properly, but you asked about the picture of the shock absorber and in that relation, the measures that we're taking to reduce costs and passing those cost savings on to the customer.
In 2020, especially in the second half of the year, the cost increases could not fully be passed on to the customers. No, that was 2022, excuse me. In 2023, we have seen some relief in electricity and energy costs, the situation remains tight. Our product prices are constantly adjusted and are subject to supply and demand and also the prices of commodities and energy. Of course, Covestro always does its best to pass on commodity and energy prices. The extent to which this is possible, however, depends on the degree of demand and the supply from the competitors. Thank you so much. Now I'd like to hand the floor to Thomas Toepfer.
Thank you. Here again, there was a lack of clarity, perhaps. We don't know whether the response came across properly.
We are talking about the human resources cost quota that we are anticipating in light of salary increases. For 2023, we anticipate a staff cost ratio of approximately 13% of expected revenue. Mr. Gaebler, you directed a question to me. You said that my contract would have run until the Q3 of 2026, and whether I would renounce my rights to compensation. The answer is quite simple. Of course, the rights are calculated in such a way that the fixed compensation and the short-term bonus are paid out for eight months of 2023, and all long-term compensation rights from the Prisma tranche that are payable or would have been payable after I left the company in 2023 would lapse. I hope that this is in line with the expectation that you basically implicitly expressed in your question.
You asked about the market value of our real estate holdings, and I believe implicitly you asked whether we have great hidden reserves here. Well, against the backdrop of the age and the structure and the location of our buildings in Germany, we don't believe that we have substantial hidden reserves. This is in part due to the fact that these buildings were transferred within the scope of the carve-out from Bayer, and they have been on our books since the year 2000, as you assumed. On top of that, we are limited when running a chemical park, so we don't have any substantial hidden reserves, and the EUR 134 million in market value is just a portion of the assets which amount to EUR 443 million. This is because real.
Real holdings in a chemical park, cannot be reliably estimated in terms of their value. You asked about land tax notices and whether we will file lawsuits against them. The answer is simple. It's just way too early to make a reliable indication. Only 11 of 175 expected land tax notices have been received, and they were received only a couple of days ago, so no legal time limits have even started, not to speak of expired. We are looking at this, and of course, we will coordinate our efforts in this respect, but we don't have a reliable database in order to make a statement with respect to taking potential legal recourse. Last but not least, you asked us about the specific gross electricity price for purchases in Germany.
Ask of your understanding that for competition reasons, we're not going to disclose a specific price. Having said that, let me pass the floor to Klaus Schäfer.
Mr. Gaebler, once again, coming back to electricity. You asked whether Covestro benefited from negative electricity prices. The answer is a clear yes. During certain periods, Covestro in Germany was able to purchase electricity based on negative prices following the logic that we set out earlier today. Mr. Gaebler, there's one point that I would like to set the record straight on. My colleagues pointed this out to me when responding to your question as to whether our energy costs are within the budget and which of them consists of energy savings potential. I had a tongue twister. I referred to 2032. Of course, we're not there yet.
I should have said that in Europe, at the beginning of 2023, we experienced a slight relief in terms of energy costs compared to the original budget. The other part of the response remains as it stands. Thank you.
Thank you, Mr. Schäfer, for these submissions. Based on the information available to me, the speakers list has been processed, and this has just been confirmed. Therefore, at this juncture, I'd like to express my sincere gratitude to my colleagues on the panel for the very extensive and comprehensive responses. Above all, thank you, our dear shareholders, for asking these questions and for showing such keen interest in our company. We do not have any further requests for the floor. All of the questions have been answered, and I hereby close the debate on all items on the agenda. Ladies and gentlemen. There's a follow-up question?
Sorry, I didn't see it because it's not on my system. We apologize. There appears to be a follow-up question that we haven't seen on screen. Therefore, Mr. Gaebler, the floor is yours. If you're still or here again, you can go ahead and make your add-on submission. Mr. Gaebler, I can hear you and see you, so please go ahead.
Yes, hello. Mr. Pott, thank you for the answers. I'm not fully satisfied, but in light of how late it's gotten, I'm not going to be too lengthy. I would like another piece of information. It is important to receive responses. Average electricity prices are something you still haven't responded to. They can be vague. Electricity procurement prices were less than EUR 0.10, and some competitors pay 40%-50%, which is the retail price.
I don't need the actual figure, but I just would like to have a rough average, maybe shoot off the cuff without relying on your back office. Aside from that, I do hope that you are able to close the AGM quite soon.
Thank you for your question, Mr. Toepfer. Looks like he's ready to answer your question, hopefully satisfactorily. Mr. Gaebler, if you look at this across all regions, our gross average electricity price, including all levies and taxes, was roughly EUR 0.28 per kilowatt hour. I hope that that gives you a ballpark, also relative to the figure that you just mentioned. As I said just now, this is a global figure for the past year. Mr. Toepfer, thank you so much for that. I'm going to look around again to see whether there's another knock-on question.
That doesn't appear to be the case so far. Now, definitively, I find that no further requests for the floor have been made. All questions have been answered. Now, finally, I would like to close the debate on all items on the agenda. Having said that, ladies and gentlemen, we now come to the votes on the draft resolutions on items 2 to 8 provided by management, one being the electoral proposals by management. As you can see in the invitation of the 7th of March, 2023 in the German Federal Gazette, I would like to point out that with respect 2.2 , the ratification of the acts of the members of the Supervisory Board, that those Supervisory Board members who hold shares may not vote. This also applies to proxies for members of the Board of Management.
The same applies to proxies of members of the supervisory board in relation to item 3 on the agenda. Ladies and gentlemen, as I set out in opening, you now have the last possibility via our investor portal to cast a vote via electronic absentee ballot or to issue instructions and authorizations to the proxies nominated by the company. Likewise, your vote and instruction can be changed for the last time, if you so wish now.
Looking at the clock, it's 6:55PM. You have until 7:00 PM, five minutes to make use of the functions I just mentioned. The authorization and instruction feature will be deactivated. The proxies nominated by the company will cast your votes according to your instructions. After the end of the vote, the absentee ballot function will also be deactivated, and the absentee ballots that have been received in due time will be considered in the total count of the votes. We will count all yea votes to determine the results of the vote, as well as all nay votes. Any abstentions will not be considered. All of this will happen electronically and hopefully will not take too much time. We will now take a brief break and wait until 7:00 PM. CET, as I just said, after which I shall reopen the AGM.
Ladies and gentlemen, it is now 7:00 PM. I assume that all of the shareholders and their representatives have had enough time to exercise their voting rights. The functions for giving authorizations or instructions in the investor portal on our website has now been closed. The absentee ballot function will still work until we conclude the vote for just a couple of more minutes. The company's proxies will then be voting as per your instructions. I would now like to conclude the vote and note that now no absentee ballots can be submitted, and I'd like to interrupt the annual general meeting so that we can determine the results of the votes. This will, as I said, probably only take a very small amount of time. Our notary public, Dr. Hermans, will be monitoring the counting of the votes.
I will announce the result of the votes as soon as I have them.
Ladies and gentlemen, I now have the results of the vote in front of me, and I would now like to continue our AGM. I will be announcing the results and will be handing them over to the notary public for the minutes. As usual, you will also see the results on the company's website after today's AGM. First of all, I'd like to give you some updated information on the shares. Of the capital share amounting to EUR 193,000,200,000 divided up into 93,200,000 fifths, we see that 122,470,259 shares are represented with the same number of votes. This is 63.39% of the share capital.
In addition, we also have 531,626 absentee ballots that were received. This gives us a total of 123,001,885 shares. That is 63.67% of the registered share capital. Now I would like to come to the results of the vote. With regard to agenda items two through eight refer to the management board and the supervisory board's draft resolutions as published in the Federal Gazette on the 7th of March 2023. When it comes to agenda item two, ratification of the actions of the members of the board of management, I note that the AGM has accepted the proposal with the required majority. On behalf of all the members of the board of management, I would like to thank you for the trust.
When it comes to agenda item three, ratification of the actions of the members of the Supervisory Board, I would like to note that the proposal from the Board of Management and Supervisory Board has been adopted with the required majority. Here too, on behalf of all of the Supervisory Board members, I'd also like to thank you for the faith you have trusted in me. Now when it comes to agenda item four, election of the auditor for the audit of the annual financial statements and for the audit review, I would like to note that the Annual General Meeting has adopted the proposal from the Supervisory Board with the required majority. Agenda item 5: approval of the compensation report. I note and announce that the AGM has adopted the proposal from the Board of Management and the Supervisory Board with the required majority.
Agenda item six: approval of the compensation system for the Board of Management members. I note and announce that the AGM has adopted the resolution from the Supervisory Board with the required majority. Agenda item seven: Resolution on revising Article 13 of the Articles of Incorporation by including the authorization of the Board of Management to arrange for a virtual Annual General Meeting to be held. I note and announce that the AGM has adopted the proposal from the Supervisory Board and the Board of Management with the required majority. Agenda item eight: I would also like to note that with regard to the resolution of revising Article 16, Paragraph 4 of the Articles of Incorporation to allow Supervisory Board members to attend the virtual Annual General Meeting by way of audio and video transmission.
I note and announce that the annual general meeting has adopted the proposal from the Supervisory Board and the Board of Management with the required majority. Now we have arrived at the end of our agenda. You now have two minutes time in order to enter any objections you might have with regard to the resolutions that have been adopted via the investor portal, if you see any reason to do so. This possibility will continue for two minutes. It's now 7:28. You have until 7:30 to enter any objections you may find necessary to submit. Ladies and gentlemen, it is now 7:30. We can no longer accept objections for the minutes. That brings us to the end of today's virtual annual shareholders meeting. Thank you very much once again for your interest in our company.
I'd also like to thank all employees who were involved in preparing and carrying out this event today. Thank you very much for your dedication. Our next regular annual general meeting at Covestro will most likely take place on the 17th of April, 2024. Stay healthy and goodbye. That concludes today's virtual annual general meeting for Covestro AG at 7:31 P.fM. Thank you very much and have a safe trip home.