Our Sustainability Concept
We implement our corporate purpose – We create chemistry for a sustainable future – by systematically incorporating sustainability into our strategy, our business, and our assessment, steering and compensation systems. We secure our long-term success with products, solutions and technologies that create value added for the environment, society and the economy.
Sustainability is at the core of what we do and a driver for growth and value. Analyzing our contributions to sustainability also enables us to manage risks effectively. We pursue a holistic sustainability approach that covers the entire value chain – from our suppliers and our own activities to our customers. We have formulated commitments for our conduct along the value chain and underpinned these with corresponding targets and measures.
Based on our corporate strategy, we steer the global sustainability target for climate protection via the most important key performance indicator (KPI) “absolute CO2 emissions”1. To this end, we have established the necessary steering mechanisms and control systems at Group level, for example, by intensifying training and providing further support for decentralized implementation. Our activities to reduce greenhouse gas emissions include using renewable energies for both electricity and steam production, developing and applying new low-carbon production processes, using renewable raw materials, and ongoing measures to further increase energy and resource efficiency in our production. We have also set up a project organization to achieve our climate protection targets. The Net Zero Accelerator unit concentrates on implementing and accelerating projects on low-carbon production technologies, the circular economy and renewable energies.
In addition to this climate protection target, we have set further sustainability targets, for example, on responsible procurement, resource-efficient and safe production, engaged employees and diversity.
We want to offer our customers innovative products and solutions that support their sustainability goals. That is why we ensure that the business units continuously monitor and evaluate relevant sustainability aspects. These evaluations are taken into account in strategies, in the implementation of research projects and in innovation processes, among other things.
A significant steering tool for the product portfolio, based on the sustainability performance of our products, is the Sustainable Solution Steering method. This rates our products’ applications in the relevant markets and customer industries. If, during reassessment of our portfolio, we identify products with significant sustainability concerns, we classify these as “challenged.” We develop and systematically implement action plans for all products in this category. These include research projects and reformulations to optimize products, or even replacing the product with an alternative. To rigorously align our portfolio with contributions to sustainability, in 2018 we started phasing out all Challenged products within five years of their initial classification as “challenged” at the latest. A particular focus in the continued development of our product portfolio is on products that make a substantial sustainability contribution in the value chain. These include products that make positive contributions to areas such as health and safety, reducing emissions and the circular economy.
Our target of generating €22 billion in Accelerator sales by 2025, which was based on our corporate strategy, was already achieved in 2021 with sales of €24.1 billion. In order to address the growing sustainability requirements in our markets with innovative solutions, we want to align our product portfolio even more strongly with climate protection, climate neutrality and the circular economy going forward. That is why we are updating our methodology and our product portfolio steering target and will introduce a revised method in 2023.
As a co-founder 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 2022 internal experts again assessed the impacts and positive contributions of our products, our corporate targets and strategic action areas.
In 2022, we carried out an improved materiality analysis that already focuses on the double materiality required by future regulations. This identified both sustainability topics on which we have a potentially positive or negative impact through our business activities along the value chain, and those topics that have or could have a positive or negative impact on the company’s performance. The graphic on this page illustrates our approach and the dimensions of double materiality.
In the first step, external developments and data were evaluated in order to prioritize topics. These included competitor and customer activities, relevant standards and regulations, and other trends relating to sustainability. The 48 topics identified in this step were then evaluated based on their importance for the chemical industry and the requirements and expectations of our stakeholders (such as customers, suppliers, competitors, investors and NGOs) using big data tools and further prioritized as the next step.
The core topics identified were then assessed in terms of their double materiality for BASF. Each sustainability aspect was considered from two perspectives: To assess sustainability relevance (“impact materiality”), both the actual and the potential positive and negative impacts of our company’s activities were considered along three stages of the value chain (upstream, own operations, downstream). Here, we assessed the scale of impact, its scope and likelihood of occurrence. The individual topics were classified based on their potential financial impacts on BASF as part of the financial materiality analysis. Specifically, we analyzed how each sustainability aspect affects us geographically, for example, whether a local business unit or entire regions are affected, whether it impacts our production, our employees, meeting the targets we have set for the BASF Group, or our reputation. The results 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.
A sustainability aspect is considered material in the sense of double materiality if it has been classified as material both at the level of sustainability relevance and at the level of financial relevance. Under the Global Reporting Initiative, a sustainability aspect is additionally already considered material if it has only been classified as material at the level of sustainability relevance. On this basis, the following 12 topics were identified as material and confirmed by the Corporate Sustainability Board: waste, climate change adaptation, biodiversity, business ethics, occupational health & safety, climate change mitigation, circularity and resource efficiency, plastic waste, human rights and labor rights, product stewardship, diversity, inclusion & equal work, and water & wastewater.
1 The target includes Scope 1 and Scope 2 emissions. Other greenhouse gases are converted into CO2 equivalents in accordance with the Greenhouse Gas Protocol.
Identifying and assessing sustainability topicsa
a Material within the meaning of section 289c HGB or relevant within the meaning of the Global Reporting Initiative