Sustainability

Together with decentrally organized specialists, the Corporate Strategy & Sustainability unit in the Corporate Center is responsible for integrating sustainability into core business activities and decision-making processes. The unit is also responsible for the global steering of climate-related matters. Since January 2022, the Net Zero Accelerator unit has been driving forward new and existing projects, focusing on further acceleration and implementation to achieve CO₂ reduction targets worldwide. Both units report to the Chairman of the Board of Executive Directors.

The Board of Executive Directors and the Supervisory Board are regularly briefed on the development of individual sustainability topics. The Board of Executive Directors incorporates the results and recommendations from sustainability evaluations of business processes into its decisions, for example, on proposed investments and acquisitions. It makes decisions with strategic relevance for the Group and monitors the implementation of strategic plans and target achievement.

In 2022, BASF appointed a Chief Human Rights Officer to further embed human rights aspects in decision-making processes. He reports directly to the Chairman of the Board of Executive Directors.

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 impact the environment and society.

We already have many years of experience in this area from evaluating our products and processes using methods such as Eco- Efficiency Analyses, the SEEbalance^® Socio-Eco-Efficiency Analysis, our Sustainable Solution Steering portfolio analysis, BASF’s corporate carbon footprint or the calculation of product carbon footprints. 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. 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.

We are in ongoing exchange with our stakeholders through a variety of formats. This helps us to even better understand what matters to societal groups, what they expect of us and which measures we can pursue in order to establish and maintain trust, build partnerships, and increase public acceptance of and the sustainability of our business activities.

We already established an external, independent Stakeholder Advisory Council (SAC) in 2013 and the Human Rights Advisory Council (HRAC) in 2020. In the SAC, which is led by the Chairman of the Board of Executive Directors, international experts from academia and society contribute their perspectives to discussions with BASF’s Board of Executive Directors. The HRAC is an advisory body comprising external human rights specialists and internal experts. It helps us critically reflect on our positions and address potential for improvement.

We have a particular responsibility toward our sites’ neighbors. We promote open exchange between residents and our site management and strengthen trust in our activities with established community advisory panels. Our globally binding requirements for community advisory panels are based on the grievance mechanism standards in the United Nations’ Guiding Principles on Business and Human Rights.

Our political advocacy is conducted in accordance with transparent guidelines and our publicly stated positions. The same applies to our activities in associations. Our Industry Associations Review compares the energy and climate protection positions of BASF and the most important associations of which we are a member, with explanations on our approach. 

For more information on our stakeholder activities, see basf.com/stakeholder-engagement

For more information on the Stakeholder Advisory Council, see basf.com/en/stakeholder-advisory-council

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

For more information on our guidelines for responsible lobbying, see basf.com/guidelines_political_communication

For more information on the Industry Associations Review, see basf.com/corporategovernance

Climate change is the greatest challenge of the 21st century. Swift and resolute action is needed to ensure that the targets agreed in the Paris Climate Agreement can be achieved. We stand by this responsibility. In many areas, products and innovations based on chemistry are the key to a climate-neutral future – from insulation foams for energy-efficient buildings, lightweight construction components and battery materials for e-mobility to sustainable agriculture.

At the same time, we are working intensively to significantly reduce the carbon footprint of our production and thus of our products. Our carbon management focuses on five levers to reduce greenhouse gas emissions and demand for fossil fuel:

• Grey-to-green: We are increasingly meeting our electricity needs from renewable sources.
• Power-to-steam: In the future, we will increasingly rely on electrical steam generation and in this way, also tap previously unused waste heat potential.
• New technologies: We are developing completely new carbon-free and low-carbon processes and technologies for climate-smart chemistry.
• Bio-based feedstocks: We are increasingly replacing fossil resources with alternative raw materials.
• Continuous opex: Our operational excellence activities continually improve the energy and process efficiency of our plants.

We only consider external offsetting as a temporary measure 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 absolute greenhouse gas emissions from our production sites and our energy purchased by 25% by 20301 – while growing production volumes in parallel. Compared with 1990, this would translate into a reduction of around 60%. Our long-term goal is net zero greenhouse gas emissions by 2050.¹ We are intensely pursuing our climate protection targets with investments of up to €4 billion by 2030. We expect that the investments in our transformation toward net zero will account for around €400 million per year on average between 2023 and 2027 and will then increase toward 2030.

In 2022, the BASF Group’s emissions under these targets amounted to 18.4 million metric tons of CO₂ equivalents (2021: 20.2 million metric tons).

Make-and-buy strategy for renewable electricity

A core component of reducing greenhouse gas emissions is the gradual conversion of our energy supply to renewable sources as part of our carbon management. This mainly affects our electricity supply. In 2022, electricity supply from renewable sources as a share of total electricity consumption was 16% (2021: 16%). Our electricity requirements will increase significantly in the coming years due to the planned electrification of our steam generation and the gradual switch from natural gas-based to electricity-based, low- carbon production processes, for example in our steam crackers. We aim to source more than 60% of our power needs from renewable sources by 2030. Based on our growth forecast, this is roughly equivalent to our total power demand in 2021.

In the transformation of our power supply, BASF is pursuing a make-and-buy approach. Firstly, we are investing in our own renewable power assets, particularly offshore wind farms. Secondly, BASF will purchase green power from third parties. A key purchasing criterion is the “additionality” of the electricity purchased. This means that electricity is primarily sourced from new renewable energy facilities.

Work on the Hollandse Kust Zuid (HKZ) offshore wind farm, a joint project with Vattenfall and Allianz, is proceeding according to plan and it should be fully operational in 2023. With 140 turbines and a capacity of 1.5 gigawatts, HKZ will then be one of the largest subsidy-free offshore wind farms in the world.

In 2022, we signed further long-term supply agreements for green power. In North America, for example, we have secured around 250 megawatts of wind and solar generation capacity through virtual power purchase agreements with Dawn Solar and EDF Energy Services. BASF has also signed a 12-year supply agreement with X-ELIO to supply 48 megawatts of solar power to the Freeport site in Texas. In China, we initiated further long-term supply agreements for green power with the State Power Investment Corporation and Brookfield, including for our new Verbund site in Zhanjiang, which is currently under construction. Our aim is to supply the site entirely with electricity from renewable sources from the startup phase of the large-scale plants in 2025 – much earlier than originally planned.

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. We are already testing an alternative process – methane pyrolysis² – in Ludwigshafen, Germany. This is virtually carbon-free if renewable energy is used and extremely energy efficient compared with other methods. Together with Siemens Energy, and depending on funding from the German Federal Ministry for Economic Affairs and Climate Action (BMWK), we are also planning to build a proton exchange membrane (PEM) water electrolyzer in Ludwigshafen with an output of 54 megawatts for carbon-free hydrogen production.

Another focus area is alternative heating concepts for our steam cracker furnaces, which could reduce process-related emissions by at least 90% in the future. To test the feasibility of this new process and two different heating concepts that use electricity from renewable sources, we started construction of a demonstration plant at the Ludwigshafen site in Germany together with our partners SABIC and Linde in September 2022. The project has been granted €14.8 million from the BMWK under the Decarbonization in Industry funding program and is scheduled for startup in 2023.

We are also investigating carbon capture and storage (CCS). For example, we are part of an industrial CCS project at the Antwerp site in Belgium (Kairos@C) as the first phase of the Antwerp@C project, which will enable BASF to avoid the emission of up to 1 million metric tons of CO₂ every year from production.

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

Scope 3 emissions along the BASF value chain in 2022³

Million metric tons of CO₂ equivalents

Transparency through product carbon footprints

In 2020, we developed a digital solution to make our product- specific greenhouse gas emissions more transparent and we have since determined the product carbon footprints (PCFs) for all of our around 45,000 sales products. The digital methodology we developed was used as the basis for a globally uniform guideline for calculating cradle-to-gate PCFs in the chemical industry that was agreed by the members of the Together for Sustainability initiative in September 2022. This will enable the climate impact of products to be directly compared and evaluated in the future based on a standardized approach. A technical solution for sharing PCF data between companies is under development and should be implemented by the end of 2023. 

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

In 2021, we launched our global Supplier CO₂ Management Program to create transparency and to better steer and work toward reducing emissions in the supply chain. In a first step, we have requested the PCFs of our raw materials and we support our suppliers in determining these, for example, by sharing our knowledge of valuation and calculation methods with them. Since the start of the program, we have asked more than 1,300 suppliers, covering around 60% of our raw materials-related greenhouse gas emissions. 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 purchasing decisions. 

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

¹ Scope 1 and Scope 2 (excluding the sale of energy to third parties, including offsetting). The target includes greenhouse gases according to the Greenhouse Gas Protocol, which are converted into CO₂ equivalents (CO₂e).

² Project sponsored by the German Federal Ministry of Education and Research (Grant number 03SF0571A)

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). For more information on our Scope 3 emissions reporting, see basf.com/corporate_carbon_footprint

BASF acknowledges its responsibility to respect internationally recognized human rights. For many years, we have engaged in constructive dialog on human rights with other companies, nongovernmental organizations, international organizations and multi-stakeholder initiatives to better understand different perspectives and address conflicting goals. BASF is a founding member of the U.N. Global Compact and a member of the Global Business Initiative on Human Rights (GBI). We have embedded our responsibility for human rights into our Code of Conduct and set this out in our Policy Statement on Human Rights.

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.

See basf.com/humanrights for more information

BASF sources many raw materials, precursors, technical goods and services. Our suppliers are an important part of our value chain. Our objective is to create competitive advantages through our professional procurement structures, to establish stable and reliable supply chains, and at the same time, meet high ethical and environmental standards. Together with our suppliers, we want to improve sustainability in the supply chain and minimize risks. Consequently, we require our suppliers to comply with the applicable laws in full and to adhere to internationally recognized environmental, social and governance (ESG) standards. We also expect our suppliers to make an effort to enforce these standards at their suppliers. In addition, we ask our suppliers to support and comply with our global Supplier Code of Conduct – or to demonstrate and ensure their commitment to the principles specified in the Code of Conduct, for example in their own code of conduct. 

For more information on our supplier management, see BASF Report 2022

In 2022, BASF purchased a total of around 35,000 different raw materials from more than 6,500 suppliers. We expect our suppliers to source and produce raw materials in line with environmental and social requirements. We support them in doing this via our supplier management, for example, or with various sustainability projects along the raw materials supply chain. 

See basf.com/raw-materials  for more information

In addition to fossil resources, we employ renewable raw materials, mainly based on vegetable oils, fats, grains, sugar and wood. In 2022, we purchased around 1.2 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 we have actively supported the Roundtable on Sustainable Palm Oil (RSPO) since 2004. In 2022, we purchased 191,714 metric tons of certified palm oil and palm kernel oil. BASF again reached its voluntary goal of sourcing only RSPO-certified palm oil and palm kernel oil. 

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

Recycling is playing an increasingly important role due to limited resources, growing sustainability requirements in the markets and regulatory developments. That is why we want to increase the use of recycled feedstocks with our Circular Economy Program: 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.

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. In our ChemCycling^® project, our technology partners use the pyrolysis process to produce pyrolysis oil from mixed plastic waste or used tires, which are not yet mechanically recycled. We feed the pyrolysis oil into our 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 balance products in the same way as conventional products. Our Ccycled^® portfolio now comprises more than 200 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, BASF has profound 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 the circular economy, see BASF Report 2022

Sourcing mineral raw materials responsibly is important to BASF. 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, Samsung SDI, Samsung Electronics, Volkswagen and GIZ, we have been involved in the cross-industry Cobalt for Development initiative since 2018. We have also been a member of the Responsible Lithium Partnership since 2021, together with BMW, Mercedes Benz Group, Fairphone and Volkswagen. 

For more information on the Cobalt for Development project, see basf.com/cobalt-initiative and cobalt4development.com

Safety and quality are our number one priorities. That is why we have established comprehensive management and control systems. Our Responsible Care^® Management System comprises the global directives, standards and procedures for environmental protection, health and safety (EHS).

For occupational and process safety as well as health protection, we rely on comprehensive preventive measures. We count on the active involvement of all employees and contractors here. Our 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. 

For more information on Responsible Care^®, see basf.com/en/responsible-care

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. 

See basf.com/product-safety for more information

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 89% of BASF’s total water abstraction. We achieved 61.6% of our target in 2022 (2021: 53.5%). Sustainable water management was introduced at seven further sites in 2022 (2021: 7). In 2022, we again achieved Leadership status with a top rating of “A” in CDP’s water assessment.

See basf.com/water for more information

As a chemical company, we depend on ecosystem services like the availability of renewable resources and high air, water and soil quality, while also influencing them. Protecting biodiversity is a key element of our commitment to sustainability.

We align our biodiversity measures with the impact of our business activities along the value chain. Our focus here is on three areas: sites and production, product impact and supply chains. To be able to take the right measures, we need to understand how our actions affect the biodiversity of the affected ecosystems. Measuring biodiversity is a challenge, as a global indicator – like greenhouse gas emissions for climate change – does not yet exist. We use indicators such as nitrogen emissions to water to measure drivers of biodiversity loss, and indicators such as species occurrence to assess the status of ecosystems. In addition, we regularly test various analysis tools available on the market. Preservation of biodiversity is taken into consideration in the management of our sites. We strive to operate our facilities in a responsible manner and minimize negative effects on the environment by keeping air, water and soil emissions as low as possible and reducing and avoiding waste.

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. 

For more information on product stewardship for crop protection products and seeds, see BASF Report 2022

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 2022 and achieved a score of A–, once more giving us Leadership status. 

For more information on our commitment to biodiversity, see basf.com/biodiversity