Sustainable Steering of our Product Portfolio

Our product portfolio also changed in 2024 based on acquisitions and divestitures. The main changes are listed here. The development of our product portfolio toward more sustainability is a critical lever in assisting our customers with their green transformation. We particularly rely on our TripleS method (Sustainable Solution Steering) which allows us to evaluate our product portfolio’s contribution to categories such as climate change mitigation, energy and resource efficiency and transitioning to a circular economy. As part of the TripleS method, we categorize our product portfolio into five segments, taking sustainability-related aspects into account: Pioneer, Contributor, Standard, Monitored and Challenged (see graphic). Initially, we review all products to identify any current or possible future negative impacts on sustainability topics. We consider minimum standards such as the BASF Code of Conduct, hazards and chemical exposure over the entire life cycle, expected regulatory trends and reputational risks for BASF. If our portfolio assessment identifies products with sustainability concerns, we classify them either as Monitored, or in case of significant concerns, as Challenged. Products identified as having no negative impacts are reviewed to determine whether they contribute to at least one of the following sustainability categories: climate change and energy, resource efficiency, circular economy, pollution reduction, water protection, biodiversity, zero hunger and poverty, health and safety. At the same time, the product should not negatively impact any of the other sustainability categories in a significant way. Products where neither a positive contribution to nor a negative impact on sustainability has been identified are classified as Standard. Products where a positive contribution has been identified are classified as either Contributor or Pioneer depending on their contribution level compared with the market standard.

Share of sales revenue generated by each TripleS segment in the 2024 business year

Taken together, the Pioneer and Contributor products make up our Sustainable-Future Solutions. Products allocated to these segments make a positive sustainability contribution in the value chain. They include, for example, bio-based and biodegradable polymers, which can be used as alternatives to synthetic polymers in personal care products, and high-performance insulating materials that save energy in their ultimate application. We are continuing our efforts to steer our portfolio even more toward sustainability with our “Winning Ways” strategy. By 2030, more than 50% of BASF’s sales in the scope of TripleS are to be attributable to Sustainable-Future Solutions. This target was adopted by the Board of Executive Directors in 2023 based on an analysis of BASF’s portfolio and our growth forecasts. When setting the target, we considered the startup of our Verbund site in Zhanjiang, China, for example. Our TripleS method and the associated target are based on clearly defined, transparent criteria concerning the respective sustainability topics (Environmental, Social and Governance, ESG), as described in our methodology manual. There is currently no general quantitative scientific framework for the steering of a product portfolio based on business performance and sustainability contribution that companies could use as a guide when setting targets.

In 2024, BASF sales revenue¹ from Sustainable-Future Solutions products came to 46.3% (2023: 41.4%, our base year). We remain well on our way to achieving the target set. Together with the operating divisions, our Corporate Sustainability unit in the Corporate Center continuously tracks progress toward meeting the target based on our monthly reports of sale revenue. Any trends that are identified are recorded and documented as part of the annual operational planning process carried out by Corporate Finance. When collecting our TripleS data, we work on the assumption that we have taken all the latest relevant regulatory developments and all market developments into account. We are limited in the extent to which we are able to differentiate the contribution made by our products from the contribution made by competing products because the assessment is made on a qualitative basis and not on the basis of market studies. We use TripleS to review our product portfolio at least once every four years. The TripleS method was applied in 2023 and 2024 to more than 50,000 products from the relevant portfolio,² which were assessed in terms of their applications as well as regional aspects. The portfolio relevant to TripleS comprises BASF Group’s sales revenue from sales products sold to third parties in the business year concerned. This excludes business that is not product-related, such as licenses or services.

We have integrated TripleS into the assessment of our research and development processes so as to incorporate the requirements formulated by the European Commission in its Safe and Sustainable by Design framework, among other things. Our use of TripleS creates transparency regarding the contribution to sustainability made by our product portfolio and future products developed by R&D. We are reviewing the sustainability-related challenges facing our products and steering our portfolio in the direction of more sustainable solutions. According to our methodology, in 2024, around €0.9 billion of our annual expenditure on research and development contributed to potential Sustainable-Future Solutions (2023: around €1 billion).

In the case of Challenged products, we develop action plans. These include research projects and reformulations to optimize products or replace them with alternatives. We are generally phasing out all Challenged products within five years of their initial classification. BASF has implemented global processes to ensure that products are only sold in markets where they have been approved. If a product is affected by a marketing ban or loses its approval in a particular market, the product is immediately reviewed and withdrawn from the market in accordance with local legal requirements. In general, products are phased out based on our voluntary commitments before they are impacted by bans. No products of significance for BASF were impacted by bans in the 2024 business year.

¹ Of BASF’s €65.3 billion in sales in 2024, €54.5 billion is relevant for the TripleS evaluation. By the end of the 2024 business year, we had evaluated 98.3% of the relevant portfolio.
² The definition of the relevant portfolio and further information can be found in the TripleS method manual at basf.com/en/sustainable-solution-steering