Our Sustainability Concept

We are aware that our business activities can have both positive and negative impacts on the environment and society. We aim to increase our positive contributions and minimize the negative impacts of our business activities. To achieve this, we need to measure how our actions and our products affect the environment and society.

We have many years of experience in this area from evaluating our products and processes using methods such as the SEEbalance^® Socio-Eco-Efficiency Analysis, Eco-Efficiency Analyses, our TripleS (Sustainable Solution Steering) methodology, BASF’s corporate carbon footprint and the calculation of Product Carbon Footprints (PCF).

We want to offer our customers innovative products and solutions that support their sustainability goals. Our business units are therefore in close contact with our customers in order to better understand their sustainability needs and offer tailored BASF solutions. The insights from this dialog are considered in the implementation of research projects and in innovation processes.

A significant steering tool for the product portfolio, based on the sustainability performance of our products, is TripleS. In 2022, we updated this method in order to further steer our product portfolio to transformation topics such as climate change and energy, resource efficiency and circular economy. With this update we have integrated the TripleS evaluation even more deeply into the assessment of our R&D development processes, also considering the requirements formulated within the Safe and Sustainable by Design framework by the E.U. Commission. Within the scope of the further development of our method, in 2023 we began to reassess the products in the relevant portfolio¹  with regard to their applications and regional aspects. As a result, we categorize our product portfolio into five segments, taking sustainability-related aspects into account: Pioneer, Contributor, Standard, Monitored and Challenged (see graphic). The reassessment will be completed in 2024. We will take regulatory changes into account if they have a material impact on our portfolio and therefore also on our segmentation. The allocations by segment and sales are therefore provisional.

The new KPI sales of Sustainable-Future Solutions summarizes the total sales of Pioneer and Contributor products. Products allocated to these segments make a positive sustainability contribution in the value chain. For example, polyurethane catalysts, which reduce energy consumption and material use, and high-performance insulation materials, which save energy for end users. In line with our corporate strategy, we have set ourselves the target of making sustainability an even greater part of our innovative power. By 2030, more than 50% of BASF’s sales relevant to TripleS¹ are to be attributable to Sustainable-Future Solutions (2023: 41.4%). With TripleS, we are steering our product portfolio and our research and development units toward sustainable solutions. According to our updated methodology, in 2023, around €1 billion of our annual expenditure on research and development contributed to potential Sustainable-Future Solutions.

If, during the reassessment of our portfolio, we identify products with sustainability concerns, we classify them either as “Monitored,” or in case of significant concerns, as “Challenged,” as we did in the past. A description of possible measures is mandatory for both categories. In the case of Challenged products, we develop our own action plans. These include research projects and reformulations to optimize products or replacing the product with an alternative. To systematically align our portfolio with contributions to sustainability, we are generally phasing out all Challenged products within five years of their initial classification.

Of BASF’s €68.9 billion in sales in 2023, €55.5 billion is relevant for the TripleS evaluation. We have analyzed €52.8 billion of this as part of TripleS by the end of 2023.² The relevant portfolio comprises BASF  Group’s sales from sales products to third parties in the business year concerned. This excludes business that is not product-related, such as licenses or services.

¹ The definition of the relevant portfolio and further information can be found in the TripleS manual at basf.com/en/sustainable-solution-steering

² Sum of validated and provisional segmentation

^a Sales shares based on the analysis of the relevant portfolio carried out by the end of 2023.¹ The provisional segmentation has not been audited by KPMG. The allocation to the segments is provisional, as the reassessment of our portfolios has not yet been completed.

As a cofounder of the U.N. Global Compact, we contribute to the implementation of the United Nations’ (U.N.) Agenda 2030. Our products, solutions and technologies help to achieve the U.N. Sustainable Development Goals (SDGs) – especially SDG 2 (Zero hunger), SDG 5 (Gender equality), SDG 6 (Clean water and sanitation), SDG 7 (Affordable and clean energy), SDG 8 (Decent work and economic growth), SDG 12 (Responsible consumption and production) and SDG 13 (Climate action). To prioritize the SDGs relevant to BASF, in 2023, internal experts once again assessed the impacts and positive contributions of our products, our corporate targets and strategic action areas.

In 2023, we updated our materiality analysis from 2022. The results do not only set the framework for reporting, but also help us to better understand the complex and sometimes diverging requirements and expectations that our stakeholders have of us and to define strategically relevant topics for our long-term business success. As part of the update in 2023, we reviewed whether new topics had been identified or the topics from the previous year had significantly changed in priority. We used a big data tool to review the relevance of sustainability topics for various stakeholder groups. We also included the expertise of external stakeholders, with whom we are in constant contact, and of employees in this review.

A sustainability aspect is considered material in the sense of double materiality if it has been classified as having both impact materiality and financial materiality. To assess impact materiality, both actual and potential positive and negative impacts of our company’s activities were considered along the value chain. To this end, the scale, scope and likelihood of occurrence of these impacts were assessed. For the analysis of financial materiality the topics were classified based on their potential financial impacts on BASF. Specifically, we analyzed how each sustainability aspect affects us geographically, for example, whether a local business unit or an entire region is affected, whether it impacts our production, our employees, the achievement of targets we have set for the BASF Group, or our reputation.

The topics from 2022 were confirmed, with two adjustments: “Occupational health and safety” was expanded to include “process safety.” “Plastic waste” was integrated into the overarching topic of “circularity and resource efficiency.” Based on this update, 11 topics were identified as material (see list) and confirmed by the BASF Sustainability Reporting and Controlling Committee. At the beginning of 2024, we will review the methodology of our materiality analysis again to ensure that it meets the requirements of the European Sustainability Reporting Standards, for example, in terms of double materiality.

¹ The topic is presented separately here due to its allocation to the “Environmental” category, but it was considered in the materiality analysis as “Process safety, occupational health and safety.”

Together with decentrally organized specialists, the units Corporate Strategy & Sustainability and Corporate Finance are responsible for integrating sustainability into decision-making processes and for steering and reporting on sustainability topics. The Corporate Strategy & Sustainability unit is also responsible for the global steering of climate-related matters. The Net Zero Accelerator unit plays a key role in achieving our climate protection targets by accelerating and implementing projects related to low-emission production technologies, circular economy and renewable energy. The Corporate Finance unit reports to the Chief Financial Officer, while the other two units report to the Chairman of the Board of Executive Directors.

Sustainability topics are discussed and managed by the Board of Executive Directors. When making its decisions, the Board of Executive Directors considers the results and recommendations from sustainability evaluations of business processes. It makes decisions with strategic relevance for the Group and monitors the implementation of strategic plans and target achievement. The Supervisory Board is regularly briefed on the development of individual sustainability topics by the Board of Executive Directors.

The Chief Human Rights Officer is responsible for further embedding human rights aspects in decision-making processes. He reports directly to the Chairman of the Board of Executive Directors.

We systematically evaluate sustainability criteria, including the effects of climate change, as an integral part of decisions on investments, acquisitions and divestitures in property, plant and equipment and financial assets. In this way, we not only assess economic dimensions, but also the potential impacts on areas such as the environment, human rights or the local community. We evaluate both the potential impacts of our activities here as well as how we are affected.

If we identify potential negative impacts, for example, in planned investments, these are presented transparently in the internal decision-making process together with possible mitigation measures.

In our Sustainable Finance Roundtable, experts from departments such as Finance, Corporate Strategy, Investor Relations and Communications discuss new legal or capital market-driven requirements. The interdisciplinary group analyzes the steadily growing requirements, assesses the impacts on BASF and drives forward the necessary change processes as well as the concrete implementation of measures.

The Sustainability Reporting and Controlling Committee is the central decision-making body for questions relating to internal and external reporting and the controlling of sustainability topics. This committee of managers from the relevant Corporate Center and operating units facilitates rapid decisions to ensure that external and internal requirements for sustainability-related information and data are met immediately and in the best possible way.

BASF’s business success depends on the societal acceptance of our business activities (license to operate). Parts of our business activities, such as the use of certain new technologies or our environmental impacts, are often viewed by stakeholders with a critical eye. We take questions from our stakeholders seriously, initiate dialogs and participate in discussions. Our stakeholders include customers, employees, investors, suppliers, the communities surrounding our sites, and representatives from industry, academia, politics and society. We are in ongoing exchange through a variety of formats of our strategic stakeholder engagement.

We are involved in networks, lobbying groups and associations in order to jointly promote sustainability topics. In our own independent exchange formats, we discuss our contribution to a socially just climate transformation (just transition) with representatives from business, science, politics and civil society. For example, we discussed solutions and challenges on the path to climate neutrality with our stakeholders at the BASF Sustainability Lab in 2023. In-depth, context-related discussions take place in topic-specific committees such as the Human Rights Advisory Council and the Nature Advisory Council.

We promote continuous exchange between local residents and our site management with community advisory panels. We also involve key stakeholders in the decision-making process about future investments at an early stage in order to work together on viable solutions. Our  political advocacy is conducted in accordance with transparent guidelines and our publicly stated positions.

Our societal engagement is an important part of our sustainability management and our corporate responsibility. Communities at our sites and disadvantaged groups around the world are particularly important to us. Our activities are bundled in three action areas globally across all levels of the BASF Group: We want to improve people’s quality of life by preventing and combating disease (health), promoting educational equality, employability and economic participation (skills), and conserving natural resources (resources). Our aim is to make a positive contribution to society by leveraging our expertise and resources. In accordance with our societal engagement policy, our actions are in line with our compliance requirements, BASF’s strategy and our sustainability commitments.