Sustainability

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).

In 2023, we updated our materiality analysis from 2022 that already addressed the double materiality required by regulations from 2024 onward. 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 material¹ and confirmed by the BASF Sustainability Reporting and Controlling Committee. We are now reviewing the methodology of our materiality analysis again to ensure that it meets the requirements of the European Sustainability Reporting Standards.

For more information on our materiality analysis, see basf.com/materiality

1 Biodiversity; business ethics; circularity and resource efficiency; climate change adaptation; climate change mitigation; diversity, inclusion and equal work; human rights and labor rights; process safety, occupational health and safety; product stewardship; waste; water and wastewater

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, the 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.

As an energy-intensive company, we take responsibility for the efficient use of energy and global climate protection and are committed to the Paris Climate Agreement. Although the transformation toward climate neutrality is challenging for energy-intensive companies, BASF is determined to follow this path and become a pioneer in low-emission chemistry.

Our products and solutions contribute to reducing greenhouse gas emissions in many areas. At the same time, we are working to significantly reduce our CO₂ emissions along the value chain. This creates opportunities for our business activities.

To reduce our greenhouse gas emissions and demand for fossil raw materials, we are focusing on the following measures:

• Renewable energy: We are increasingly meeting our electricity needs from renewable sources.
• CO₂ abatement: We are taking targeted measures to avoid CO₂ emissions.
• Circularity: We are increasingly using renewable and recycled raw materials as well as raw materials based on the use of CO₂.

We only consider external offsetting for our Scope 1 and Scope 2 emissions as a temporary solution in the medium term if our activities do not make the desired contribution to reducing emissions.

For more information on climate protection and carbon management, see basf.com/climate_protection

Schematic overview: Development of the BASF Group’s greenhouse gas emissions (Scope 1 and 2)¹

Million metric tons of CO₂ equivalents

Global targets

Compared with the 2018 baseline, we want to reduce greenhouse gas emissions from our production processes (Scope 1) and our sites and our energy purchases (Scope 2) by 25% by 2030¹ – despite our growth plans and the construction of a new Verbund site in Southern China. This corresponds to a decrease of around 60% compared with 1990. Our long-term goal is net zero greenhouse gas emissions by 2050.1 Between 2024 and 2027, we are planning investments totaling around €900 million in our transformation toward net zero.

In 2023, the BASF Group’s Scope 1 and 2 emissions amounted to 16.9 million metric tons of CO₂ equivalents (2022: 18.4 million metric tons). The decline in demand compared with the previous year as a result of a weak economy led to persistently low production volumes and therefore lower emissions in 2023. The share of electricity from renewable sources was increased compared with the previous year, to 20%, and, together with measures to increase energy and process efficiency, made a relevant contribution to reducing emissions.

We also set ourselves an ambitious Scope 3.1 target² in 2023 for our specific raw materials-related emissions. By 2030, we want to reduce these in relation to the purchasing volume specifically by 15% from the 2022 baseline. In 2023, specific Scope 3.1 emissions² amounted to 1.61 kilograms of CO₂ per kilogram of raw material purchased (2022: 1.58).³ In the long term, we strive to reduce Scope 3.1 emissions to an unavoidable minimum by 2050, thereby expanding our long-term net-zero target to include these greenhouse gas emissions.

Make & buy approach for renewable electricity

A core component in reducing our greenhouse gas emissions is the gradual conversion of our energy supply from fossil to renewable sources. This mainly affects our electricity supply. In 2023, electricity from renewable sources as a share of total electricity consumption rose compared with the previous year to 20% (2022: 17%).⁴ Our electricity requirements will increase significantly in the coming years due to the planned gradual electrification of our steam generation and the switch from natural gas-based to electricity-based, low-emission production processes, for example in our steam cracker. Nevertheless, we aim to source more than 60% of our power needs from renewable sources by 2030.

In the transformation of our power supply, we are pursuing a make & buy approach. Firstly, BASF is investing in its own renewable power assets. Secondly, we are purchasing green power on the market through long-term supply agreements. Profitability and additionality are key purchasing criteria: This means that the electricity purchased is primarily sourced from new renewable energy facilities.

In 2023, we successfully advanced our plan for a power supply from renewable sources. The Hollandse Kust Zuid offshore wind farm, a joint project with Vattenfall and Allianz, was officially inaugurated in fall 2023 and should be fully operational in 2024. With 139 turbines and a capacity of 1.5 gigawatts, it is one of the largest offshore wind farms in the world. In April 2024, BASF signed an agreement to purchase 49% of Vattenfall’s wind farms Nordlicht 1 and 2.

In order to be able to fully supply our Verbund site in Zhanjiang in Southern China, which is currently under construction, with electricity from renewable sources in the future, we have entered into a joint venture with Mingyang for an offshore wind farm in Southern China, which includes development, construction and operation. We have also extended our long-term supply contract with the State Power Investment Corporation (SPIC) and secured a supply of 1,000 gigawatt hours of green electricity per year from 2025. In 2023, we also concluded further long-term supply agreements for green power at other sites in Asia, such as the Verbund site in Nanjing, China, and our sites in South Korea. In North America, for example, we were able to secure around 250 megawatts of solar generation capacity through virtual power purchase agreements in 2022.

Climate-smart technologies

To further reduce CO₂ emissions, we are also developing completely new technologies for emission-free and low-emission production. They will need large volumes of electricity from renewable sources in order to realize their full potential. The main focus here is on basic chemicals, which are often still emission-intensive to produce. This applies, for example, to steam crackers, which use high levels of energy to break down naphtha into olefins and aromatics. We started up a demonstration plant¹ for electrically heated steam cracker furnaces at our site in Ludwigshafen, Germany, together with our partners SABIC and Linde, in April 2024.

A further important basic material in the chemical industry is hydrogen, which we have so far mainly used as a raw material. We started construction of a PEM (proton exchange membrane) water electrolyzer² with a capacity of 54 megawatts at the Ludwigshafen site in Germany with Siemens Energy in 2023. Powered by electricity from renewable energy, the plant, which will go into operation in 2025, is expected to produce up to 8,000 metric tons of emission-free hydrogen and thus reduce greenhouse gas emissions at the site by up to 72,000 metric tons per year. BASF will primarily use the hydrogen produced as a raw material for the manufacture of products with a reduced carbon footprint.

Another focus area of our technological development is carbon capture and storage (CCS). For example, we are currently part of an industrial CCS project at the Antwerp site in Belgium (Kairos@C) as the first phase of the Antwerp@C project, which could enable BASF to avoid the emission of up to 1 million metric tons of CO₂ into the atmosphere every year from production. Together with Yara, we are also evaluating the development and construction of a world-scale production plant for low-emission blue ammonia using CCS in the United States. Around 95% of the CO₂ generated from the production process is to be captured and permanently stored in the ground.

Corporate carbon footprint

BASF has published a comprehensive corporate carbon footprint every year since 2008. This reports on all emissions along the value chain – from raw materials to production and disposal.

For more information on our emissions reporting, see basf.com/corporate_carbon_footprint

Emissions along the BASF value chain in 2023³

Million metric tons of CO₂ equivalents

Product carbon footprints

In 2020, we developed a digital solution to make our product-specific greenhouse gas emissions more transparent and thereby determined the carbon footprints of around 45,000 sales products. These product carbon footprints (PCFs) include all greenhouse gas emissions – from raw materials extraction to the finished product leaving the factory gates (“cradle-to-gate”). In 2023, we further expanded our portfolio of products with a certified reduced carbon footprint, including engineering plastics.

We make our automated PCF calculation approach available to interested industry players through partnerships. At the same time, we are involved in various initiatives to drive transparency, harmonization and standardization across the industry. This also took place as part of Together for Sustainability (TfS), where we were involved in the creation of a uniform guideline for calculating the carbon footprint of products in the chemical industry. This will enable the climate impact of products to be directly compared and evaluated based on a standardized approach. A digital solution for sharing PCF data between companies is currently in the pilot phase and should be implemented in 2024.

For more information on product carbon footprints, see basf.com/en/pcf

We launched our Supplier CO₂ Management Program in 2021 to achieve transparency regarding Scope 3.1 emissions. The goal is to obtain a more accurate data basis and better manage and reduce emissions in the supply chain. In a first step, we have requested the PCFs of our raw materials since 2021 and support our suppliers in determining these, for example, by sharing our knowledge of evaluation and calculation methods with them. Since the start of the program, we have approached more than 1,600 suppliers, covering around 70% of our raw materials-related greenhouse gas emissions.

After around two years, we have more than 1,000 validated PCFs for our raw materials. In a second step, we will now work with our suppliers on solutions to reduce product-related emissions.

 For more information on the Supplier CO₂ Management Program, see basf.com/suppliers

1 The project has been granted €14.8 million from Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK) under the Decarbonization in Industry funding program. The project is also being financed by the European Union via the NextGenerationEU fund.

2 The project is funded by the BMWK and the Federal State of Rhineland-Palatinate.

3 According to the Greenhouse Gas Protocol; Scope 1, 2 and 3; reported categories within Scope 3 are shown in parentheses. Scope 3 emissions in category 10 (“Processing of sold products”) are not reported according to the standard for the chemical sector. Only direct use phase emissions are reported in the customer category (Scope 3.11). Excluding greenhouse gas emissions from BASF trading activities.

Introducing and implementing sustainable water management has been a cornerstone of our strategy for many years now. Our goal is to introduce sustainable water management at our Verbund sites and at all production sites in water stress areas by 2030, covering around 90% of BASF’s total water abstraction. We achieved 70% of our target in 2023 (2022: 62%). Sustainable water management was introduced at seven further sites in 2023 (2022: seven sites). In 2023, BASF again achieved Leadership status with a rating of A- in CDP’s water assessment.

For more information on our position paper on water protection, see basf.com/water  

As a chemical company, we use many valuable resources provided by nature such as water, air and soil. At the same time, our business activities have an impact on nature, through emissions into the environment or the purchase of renewable raw materials. Protecting biodiversity is therefore a key element of our commitment to climate protection and sustainability. We want to contribute to achieving the global goal to halt and reverse biodiversity loss by 2030.

To better understand BASF’s impact on nature, we are guided by the five drivers of biodiversity loss defined by the Intergovernmental Science Policy Platform on Biodiversity and Ecosystem Services (IPBES): land-use change, pollution, climate change, overexploitation and invasive species. We do not consider the latter to be material for BASF.

We actively seek out partnerships with relevant interest groups and organizations worldwide, for example, in the Taskforce on Nature-related Financial Disclosures (TNFD), to expand our knowledge, to raise awareness about biodiversity and to drive necessary actions forward. In 2023, BASF founded a new advisory council for topics related to the protection of biodiversity and ecosystems, the Nature Advisory Council (NAC), to obtain an independent societal perspective on our activities related to nature and biodiversity issues. The aim is to receive constructive feedback and specific advice on nature-related topics and our strategic approach as well as our contributions to a sustainable future.

For more information on our Nature Advisory Council, see basf.com/en/nature-advisory-council

We align our biodiversity measures with the impact of our business activities along the value chain. Our focus here is on three areas: supply chains, sites and production, and product impacts. For this purpose, we are guided by the risk mitigation hierarchy: We try to avoid having an impact on nature. If this is not feasible, we want to reduce these impacts, support the restoration of nature or contribute to the transformation of value chains toward better environmental sustainability. Currently, there is no standardized, globally accepted indicator for the loss of biodiversity (in contrast to greenhouse gas emissions as a key indicator of climate change). In addition, impacts must be considered primarily in a local context. We therefore use indicators such as nitrogen emissions to water to measure drivers of biodiversity loss and species occurrence to assess the status of ecosystems.

We evaluate our products and solutions in crop protection and seeds, for example, throughout the entire research, development and registration process. After they have been approved for the market, we continue assessing them regularly for potential risks and impacts on the ecosystems in which they are used. We have initiated various projects and offer training to prevent misuse of our products.

For more information on product stewardship for crop protection products and seeds see BASF Report 2023

Some of the business activities of our raw materials suppliers involve land uses that can influence biodiversity. We have laid down our expectations with regard to environmental, labor and social standards in the supply chain as well as our commitment to preserving biodiversity in the Supplier Code of Conduct.

BASF again participated in the “Forests” assessment conducted by the international organization CDP in 2023 and achieved a score of A-, once more giving us Leadership status.

For more information on the CDP forests questionnaire, see basf.com/en/cdp

In 2023, BASF purchased around 30,000 different raw materials from more than 6,000 suppliers. Our focus is on a secure supply and stable supply chains, in which our suppliers source and produce raw materials in line with environmental and social requirements. Our expectations of our suppliers are laid down in our Supplier Code of Conduct.

For more information on supplier management, see basf.com/suppliers

Fossil and petrochemical resources

BASF’s most important raw materials (based on volume) include natural gas and crude oil-based petrochemical products such as naphtha and benzene. We are continuously evaluating whether fossil and petrochemical resources can be replaced with nonfossil or recycled alternatives.

Renewable resources

In addition to fossil resources, we employ renewable raw materials, mainly based on vegetable oils, fats, grains, sugar and wood. In 2023, we purchased around 1 million metric tons of renewable raw materials. The mass balance approach allows us to allocate the amount of renewable raw materials used to a wide variety of end products. Palm oil, palm kernel oil and their derivatives are some of our most important renewable raw materials. We aim to ensure that palm-based raw materials come from certified sustainable sources. We have been a member of the Roundtable on Sustainable Palm Oil (RSPO) since 2004. For the first time in 2023, our Care Chemicals division published a comprehensive Responsible Sourcing Report on the palm value chain as well as further renewable raw materials value chains. In 2023, we purchased 159,798 metric tons of certified palm oil and palm kernel oil (2022: 191,714). We again met our own voluntary commitment to source only RSPO-certified palm oil and palm kernel oil.

For more information on our voluntary commitment to palm oil products and the Responsible Sourcing Report, see basf.com/en/palm-dialog

Recycled feedstocks

Recycling is playing an increasingly important role due to limited resources, growing sustainability requirements in the markets, and regulatory developments. In a challenging environment with limited availability of alternative raw materials, we still aim to process around 250,000 metric tons of recycled and waste-based raw materials in our production plants annually from 2025, replacing fossil raw materials.

Chemical recycling of plastic waste complements mechanical recycling and can help to reduce the amount of plastic waste that is disposed of in landfills or thermally recovered. In our ChemCycling^® project, our technology partners use the pyrolysis process to produce pyrolysis oil from mixed plastic waste or end-of-life tires, which are not currently mechanically recycled. We feed the pyrolysis oil into the BASF Verbund as a substitute for fossil raw materials and manufacture new products from it using the mass balance principle. Our customers can process these mass balanced products in the same way as conventional products. Our portfolio of Ccycled^® products now comprises around 240 products.

With the rapidly growing market for electric vehicles, there is also an increasing need for recycling lithium-ion batteries. As a leading producer of battery materials with local production capacities in the three main markets – Asia, Europe and North America – BASF has in-depth expertise in battery chemistry and process technology. We are utilizing these competencies to address battery recycling as an additional growth market in cooperation with partners along the value chain. In this way, we want to ensure that valuable metals remain in the production cycle for as long as possible.

For more information on circular economy, see BASF Report 2023

Mineral raw materials

Responsible sourcing of mineral raw materials is important to BASF as we are aware of the challenges in the supply chain and our due diligence. We have implemented the E.U. Conflict Minerals Regulation. This defines supply chain due diligence for tin, tantalum, tungsten, their ores and gold (3TG) imported into the E.U. from conflict-affected and high-risk areas (CAHRAs). In addition, BASF is committed to responsible and sustainable global supply chains for other mineral raw materials. These include cobalt, a key component in the production of battery materials. Together with BMW Group, Samsung SDI Co. Ltd., Samsung Electronics Co. Ltd., Volkswagen AG, Stihl AG & Co. KG and GIZ, we have been involved in the cross- industry Cobalt for Development initiative since 2018. Together with BMW Group, Mercedes-Benz AG, Fairphone B.V., Daimler Truck AG and Volkswagen Group, we have also been a member of the Responsible Lithium Partnership since 2021.

For more information on the Cobalt for Development project, see basf.com/cobalt-initiative

BASF acknowledges its responsibility to respect internationally recognized human rights. Through our business, we are connected to a large number of people worldwide who are directly or indirectly influenced by our activities. We accept the resulting obligations and opportunities along the supply chain in accordance with our scope of influence. For many years, we have engaged in constructive dialog on human rights with other companies, nongovernmental organizations, international organizations and multistakeholder initiatives to better understand different perspectives and address conflicting goals. We have embedded our responsibility for human rights into our Code of Conduct and set this out in our Policy Statement on Human Rights. The head of our legal and compliance organization also acts as Chief Human Rights Officer and oversees the overarching risk management.

We established a Human Rights Advisory Council (HRAC) in 2020 to integrate external expertise. Its members include independent international human rights experts. The trust-based dialog on human rights topics helps us to better understand different perspectives and to deal more openly with critical situations.

For more information, see basf.com/humanrights

For more information on the Human Rights Advisory Council, see basf.com/human-rights-council

Our comprehensive safety concepts are designed to provide the best possible protection for employees, contractors and our sites’ neighbors, and to prevent damage to property and the environment. Our sites and Group companies are responsible for implementing and complying with Group-wide requirements and local standards. The Environmental Protection, Health, Safety and Quality (EHSQ) unit in the Corporate Center performs regular audits to check compliance with these requirements.

We use the number of High Severity Process Safety Incidents (hsPSI) per 200,000 working hours as a reporting indicator. We have set ourselves the target of reducing High Severity Process Safety Incidents to a rate of no more than 0.10 per 200,000 working hours by 2030.

For more information on process safety, see basf.com/process_safety

For occupational safety, we use the number of High Severity Work Process Related Injuries (HSI) per 200,000 working hours as a target. We have set ourselves the goal of reducing high-severity work process-related injuries to a rate of no more than 0.05 HSI per 200,000 working hours by 2030.¹

For more information on occupational safety, see basf.com/occupational_safety

1 Hours worked by BASF employees, temporary workers and contractors

We see product safety as an integral part of all business processes, as an element of our risk management and as an important pillar of our commitment to Responsible Care^®. We continuously work to ensure that our products pose no risk to people or the environment when they are used responsibly and in the manner intended.

For more information, see basf.com/product-safety