Number of sites partially or fully powered by emission-free electricity in 2021
We implement our corporate purpose – We create chemistry for a sustainable future – by systematically incorporating sustainability into our strategy, our business and into 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. Based on our corporate strategy and the global targets derived from this, we steer the sustainability targets (reduce absolute CO2 emissions1 by 25% by 2030 compared with baseline 2018 and achieve €22 billion in Accelerator2 sales by 2025) and have established the necessary steering mechanisms and control systems at Group level. Our global 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 use the Sustainable Solution Steering method to manage our product portfolio.
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).
The Corporate Strategy & Sustainability unit in the Corporate Center integrates sustainability into core business activities and decision-making processes. The new Net Zero Accelerator project organization has reported to the Chairman of the Board of Executive Directors since January 2022. It concentrates on implementing and accelerating projects relating to low-carbon production technologies, the circular economy and renewable energies.
The Board of Executive Directors and the Supervisory Board are regularly briefed on the current status of individual sustainability topics. The Board of Executive Directors makes decisions with strategic relevance for the Group and monitors the implementation of strategic plans and target achievement. The Corporate Sustainability Board, which is composed of heads of business and Corporate Center units and regions, supports the Board of Executive Directors on sustainability topics and discusses operational matters. A member of the Board of Executive Directors serves as chair.
1 The target includes Scope 1 and Scope 2 emissions. Other greenhouse gases are converted into CO2 equivalents (CO2e) in accordance with the Greenhouse Gas Protocol.
2 Accelerator products make a substantial sustainability contribution in the value chain.
BASF significantly raised its climate protection targets in 2021: We want to reduce total greenhouse gas emissions from our production sites and our energy purchases by 25% compared with 2018 – despite targeted growth and the construction of a large Verbund site in southern China. This corresponds to a reduction of 60% compared with 1990. By 2050, we aim to achieve net zero emissions from our production sites and our energy purchases. By 2025, we plan to invest up to €1 billion to achieve our climate protection targets. Additional investments of up to €3 billion are to follow by 2030.
To achieve our ambitious climate protection goals, we have adopted comprehensive carbon management with five strategic levers to reduce greenhouse gas emissions. We are increasingly meeting our energy needs from renewable sources (grey-to-green lever). We are relying more on energy recovery to produce steam (power-to-steam lever). We are working to further improve the energy and process efficiency of our plants (continuous opex lever). We are increasingly replacing fossil resources with bio-based raw materials (bio-based feedstocks lever). And together with partners, we are pioneering nearly carbon-free production processes, especially for emission-intensive basic chemicals (new technologies lever). We only consider external offsetting as a temporary measure if our activities do not make the desired contribution to reducing emissions.
Million metric tons of CO2 equivalents
Make-and-buy strategy for renewable electricity
A central component of reducing greenhouse gas emissions as part of our carbon management is gradually shifting our energy supply to renewable sources. This applies to both our electricity and steam supply and our production processes, where we will progressively replace fossil fuels with renewable sources. In 2021, renewables accounted for 16% of BASF Group’s global power demand. By 2030, we project that 100% of our 2021 global power demand will be obtained from renewable sources.
To meet our demand, BASF is pursuing a make-and-buy strategy. This includes investing in our own renewable power assets and purchasing green power from third parties. A key purchasing criterion is the “additionality” of the energy purchased. This means that power is primarily generated by new wind and solar farms.
In 2021, BASF purchased a stake in Vattenfall’s wind farm Hollandse Kust Zuid (HKZ). Once fully operational, it will be the world’s largest offshore wind farm with a total installed capacity of 1.5 gigawatts. The project is expected to become fully operational in 2023. Furthermore, BASF has signed 25-year power purchase agreements (PPAs) with ENGIE and Ørsted for the supply of significant amounts of renewable electricity from wind and solar power in Europe. In the United States, BASF has entered into long-term supply contracts for wind and solar power for its Freeport and Pasadena sites. In China, BASF has signed agreements with suppliers for the purchase of renewable power for its new Verbund site in Zhanjiang.
Number of sites partially or fully powered by emission-free electricity in 2021
Innovative processes for climate-smart chemistry
Most of our production processes are already highly optimized. Completely new technologies are therefore needed to reduce greenhouse gas emissions over the long term and on a large scale.
Our focus here is on the production of basic chemicals such as hydrogen. We are driving forward two alternative processes for climate-smart hydrogen production: water electrolysis and methane pyrolysis. We are currently working with Siemens Energy on initial concepts for the construction of a water electrolyzer with a capacity of 50 megawatts at the Ludwigshafen site in Germany. The methane pyrolysis process requires 80% less electricity than water electrolysis and is virtually carbon-free if renewable energy is used. We started up a pilot plant for methane pyrolysis at the Ludwigshafen site in Germany in 2021.
Another focus area is alternative heating concepts for our steam cracker furnaces. BASF has signed an agreement with SABIC and Linde to develop and pilot electrically heated steam cracker furnaces. Together, we have developed concepts to replace the fossil fuels used in the heating process with renewable energy, which has the potential to almost completely avoid CO2 emissions. Our eFurnace project for a multi-megawatt pilot plant in Ludwigshafen is progressing as planned and is on track to start up in 2023 subject to a positive public funding decision.
In addition to new low-carbon production processes, we are also investigating the use of innovative carbon storage methods. At the Antwerp site in Belgium, BASF plans to invest in one of the largest carbon capture and storage (CCS) projects under the North Sea together with its Antwerp@C consortium partners. The project could avoid more than one million metric tons of CO2 emissions per year from the production of basic chemicals. A final investment decision is targeted for 2022.
Transparency through product carbon footprints
By using green power, low-carbon steam, bio-based feedstocks and highly efficient processes BASF is able to offer its customers both net-zero products as well as products with a low product carbon footprint (PCF). We can thus help our customers to transform their value chains and respond to rising demand from consumers who want to make a personal contribution to reducing carbon emissions. We have developed an in-house digital solution to calculate PCFs for around 45,000 sales products. The transparency this creates enables us to target our CO2 reduction measures to those areas where our customers can later achieve the greatest value added from lower carbon emissions in the value chain.
In 2021, we introduced a global Supplier CO2 Management Program to create transparency and better steer and eventually reduce upstream emissions. In a first step, we ask our suppliers to provide PCFs for our raw materials. We support them by sharing our knowledge of evaluation and calculation methods. In doing so, we are also contributing to the standardization of PCF calculation. In a second step, we want to work with our suppliers on solutions to reduce product-related emissions and establish the PCF as a criterion for our purchasing decisions.
The Verbund system is an important component of our energy efficiency strategy: Waste heat from one plant’s production process is used as energy in other plants. In this way, the Verbund saved us around 21.4 million MWh in 2021, which translates to 4.3 million metric tons less CO2 released into the environment.
With combined power and steam generation as well as our optimized Energy Verbund, we were thus able to avoid a total of 7.3 million metric tons of carbon emissions in 2021.
CO2 avoided by the Verbund and combined heat and power generation in 2021
million metric tons
Chemical recycling of plastic waste complements mechanical recycling and can help to reduce the amount of plastic waste that is disposed of in landfill or thermally recovered. From 2025 onward, we aim to process around 250,000 metric tons of recycled and waste-based raw materials every year worldwide, replacing fossil raw materials. In our ChemCycling™ project, our technology partners use a pyrolysis process to produce pyrolysis oil from mixed plastic waste or used tires, which were previously not recycled. We can feed this pyrolysis oil into our Verbund as an alternative to fossil raw materials and use it to make new products that have exactly the same properties as products manufactured from fossil feedstocks.
In addition to fossil resources, we employ renewable raw materials, mainly based on vegetable oils, fats, grains, sugar and wood. In 2021, we purchased around 1.3 million metric tons of renewable raw materials. The mass balance approach allows us to allocate the amount of renewable and recycled resources used to a wide variety of end products.
Palm oil, palm kernel oil and their derivatives are some of our most important renewable resources. We aim to ensure that palm-based raw materials come from certified sustainable sources and have actively supported the Roundtable on Sustainable Palm Oil (RSPO) since 2004. In 2021, we purchased nearly 243,000 metric tons of certified palm oil and palm kernel oil. BASF again reached its goal of sourcing only RSPO-certified palm oil and palm kernel oil.
A significant steering tool for the product portfolio, based on the sustainability performance of our products in the respective customer applications, is the Sustainable Solution Steering method. By the end of 2021, we had evaluated 98.7% of the relevant portfolio.1 This refers to the BASF Group’s sales from products in its strategic portfolio to third parties in the business year concerned. By the end of 2021, sustainability analyses and assessments had been conducted for more than 56,000 specific product applications, accounting for €71 billion in sales. New market requirements arise as a result of the continuous development of new product solutions in the industry or changing regulatory frameworks. This has an effect on comparative assessments, which is why we regularly reassess our product portfolio.
Transparently classifying our products on the basis of their contribution to sustainability enables us to systematically improve them. Accelerator products make a substantial sustainability contribution in the value chain. These include catalysts that reduce emissions to the environment, biodegradable mulch films for agricultural applications, and high-performance insulation materials for higher energy savings and reduced material use in building construction. We aim to make sustainability an even greater part of our innovation power and achieve €22 billion in Accelerator sales by 2025. We met this target already in 2021. Consequently, we will update our product portfolio steering target over the course of 2022.
We engage in worldwide initiatives with various stakeholder groups. For instance, we have been a member of the U.N. Global Compact (UNGC) since its establishment in 2000. As a recognized LEAD company, we contribute to the implementation of the Agenda 2030 and the associated goals. For example, we support the UNGC action platforms in the form of the CFO Taskforce for the SDGs and the Decent Work in Global Supply Chains action platform. BASF is also active in 13 local Global Compact networks.
Our political advocacy is conducted in accordance with transparent guidelines and our publicly stated positions. The same applies to our activities in associations. For instance, we published an Industry Associations Review in 2021 comparing the energy and climate protection positions of BASF and the most important associations of which we are a member, with explanations on our approach.
We stipulate binding rules for our employees with standards that apply throughout the BASF Group. In doing so, we consider, respect and promote internationally recognized principles such as the 10 principles of the U.N. Global Compact and the Core Labor Standards of the International Labor Organization (ILO).
We also established a Human Rights Advisory Council (HRAC) in 2020. It is an advisory body comprising external human rights specialists and internal experts. This helps us to critically reflect on our positions and address potential for improvement.
As a chemical company, we depend on ecosystem services like the availability of renewable resources and air, water and soil quality, while also influencing them. Protecting biodiversity is a key element of our commitment to sustainability. We use impact assessments to ensure the strategic alignment of our biodiversity measures, and we are committed to preserving biodiversity along the entire value chain via strategic partnerships.
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 in the Supplier Code of Conduct.
BASF offers products and solutions for a wide range of industries. We want to ensure that our products meet our customers’ standards in quality and, through appropriate use, pose no risk to humans, animals or the environment. Our commitment to the objectives set forth by the Responsible Care® charter of the International Council of Chemical Associations (ICCA) obligates us to continuously minimize the negative effects of our products on the environment, health and safety and to optimize our products on an ongoing basis. It is important to consider the potential impacts of product use on biodiversity, for example, with regard to the biodiversity loss driver of pollution.
We evaluate our products and solutions in crop protection and seeds 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 impact to the ecosystems in which they are used. We have initiated various projects and offer training to prevent misuse of our products.
BASF participated in the “Forests” assessment conducted by the international nonprofit organization CDP for the second time in 2021 and achieved a score of A–, again giving us Leadership status.
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. However, there are no standards for measuring and reporting on companies’ overall impact that cover economic, environmental and social aspects of business activities along the value chain. This is why we developed the Value to Society method in 2013 together with external experts.
Overall, the Value to Society method helps us to continually monitor our progress. It complements existing concepts for assessing risks and business opportunities by providing a macro perspective and enables us to derive the necessary business steps. The results illustrate the positive contributions and negative effects, both at BASF and in our value chains. Positive factors include taxes paid, wages, social benefits, employee training and net income.1 Negative contributions include environmental impacts such as greenhouse gas emissions, land use and emissions to air, soil and water, as well as health and safety incidents.
We are a founding member of the value balancing alliance e.V. (VBA) and have contributed our knowledge and experience to this cross-industry initiative. We support the development of an accounting and reporting standard that makes the contribution of companies to society transparent and comparable. The aim is to present the financial, ecological, and social impacts of business activities on the basis of a standardized framework. The VBA is supported by major auditing firms, the Organisation for Economic Co-operation and Development (OECD), leading universities and other partners. Together with the VBA and other partners, we supported the establishment of the International Sustainability Standard Board (ISSB) and are part of the G7 Impact Taskforce. Through our Corporate Finance unit, we represent Business-Europe as a member of the Sustainability Reporting Board of the European Financial Reporting Advisory Group (EFRAG).
The following overview provides examples of how we create value for our stakeholders.
It is modeled on the framework of the International Integrated Reporting Council (IIRC).
Discover the interactive How We Create Value graphic in the BASF Online Report at basf.com/how-we-create-value