Global
Investors

Frequently Asked Questions

We believe that the economy, environment and society are inextricably linked and interrelated. We want to create value in all three areas with our products, solutions and technologies. We pledged our commitment to sustainability in 1994 and since then, have systematically aligned our activities with the principles of sustainability. We want to further strengthen our position as a thought leader in sustainability. We see sustainability as an integral part of our strategy as well as our targets, steering processes and business models. This establishes us as a responsible and attractive partner supporting our customers, opens up new growth areas and secures the long-term success of our company. Our approach covers the entire value chain – from responsible procurement and safety and resource efficiency in production to sustainable solutions for our customers.

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 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. 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.

We identify key sustainability topics with our comprehensive materiality analysis. The graphic below shows how we assess relevant topics. Here, we take into account topics that we have an impact on, topics that have an impact on us, and topics that our stakeholders consider important to us. The topics identified based on these three dimensions of materiality are: climate and energy, health and safety / product stewardship, water, emissions to air and soil, resource efficiency and waste, biodiversity, human rights, employment and diversity.

Identifying and assessing sustainability topics1, 2

identifying-sustainability-topics.png


1 Our stakeholders also confirmed the materiality of the nonfinancial topics that the Value to Society method identified as having an impact along the value chain.
2 Quantitative thresholds for defining material topics have not been set due to the complexity of the assessment methods used for each dimension of materiality. The final list of topics is based on an expert comparison of the results of all the assessment approaches described.

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) as most important key performance indicators. To this end, we 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 improve the sustainability contributions of our product portfolio along the value chain. To assess the sustainability performance of our products and identify solutions with a substantial sustainability contribution in the value chain, we regularly reassess our product portfolio. We already reached our 2025 sales target for Accelerator products in 2021. Consequently, we will update our product portfolio steering target over the course of 2022.

In addition to the climate protection and Accelerator sales targets, we have set ourselves further sustainability goals. A particular focus is the circular economy due to its strong connection to climate protection. We have defined further targets on water management, responsible procurement, engaged employees, women in leadership positions, occupational health and safety, and process safety.

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. In March 2021, we replaced our previous target of CO2-neutral growth until 2030 (baseline 2018: 21.9 million metric tons of CO2e) with a new, more ambitious climate protection target to reduce absolute CO2 emissions by 25% compared with 2018 (new target: 16.4 million metric tons of CO2e).
2 Accelerator products make a substantial sustainability contribution in the value chain.

Since 2007, BASF publishes an integrated report combining economic, environ­mental and social performance. Using specific examples, we illustrate how sustainability contributes to BASF’s success and how we as a company create value for our employees, shareholders, business partners, neighbors and the public.

A significant steering tool for the product portfolio, based on the sustainability performance of our products, is the Sustainable Solution Steering method. It considers our products’ applications in various markets and customer industries. Transparently classifying our products on the basis of their contribution to sustainability enables us to systematically improve them. We review the categorization of the portfolio at least every four years. This includes analyzing the portfolio in workshops.

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 systematically align our portfolio with contributions to sustainability, in 2018 we started phasing out all Challenged products within five years of their initial classification at the latest. We strive to offer products that make a greater contribution to sustainability in their area of application to live up to our own commitments and meet our customers’ demands. That is why an adapted version of our Sustainable Solution Steering method is used in areas such as our research and development pipeline, and in merger and acquisition projects. The results and any measures required are part of our business strategies.

By the end of the 2021 business year, we had evaluated 98.7% of the relevant portfolio1 (2020: 98.4%). 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 (2020: >57,000), accounting for €71 billion in sales (2020: €54.1 billion).

In 2021, we generated sales of €24.1 billion with Accelerator products (2020: €16.7 billion) – already reaching our target for 2025. Accelerator products account for 33.9% of the assessed relevant portfolio. Sales of Accelerator products rose by 44.3% compared with the previous year. This is primarily attributable to the positive development of Accelerator sales in the Surface Technologies and Chemicals segments. Performer products account for 54.9%, Transitioner products for 11.1% and Challenged products for 0.1% of the solutions assessed.

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 the comparative assessment, which is why we regularly reassess our product portfolio.

  The definition of the relevant portfolio and further information can be found in the Sustainable Solution Steering manual at basf.com/en/sustainable-solution-steering

By the end of the 2021 business year, we had evaluated 98.7% of the relevant portfolio1 (2020: 98.4%). 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 (2020: >57,000), accounting for €71 billion in sales (2020: €54.1 billion).

In 2021, we generated sales of €24.1 billion with Accelerator products (2020: €16.7 billion) – already reaching our target for 2025. Accelerator products account for 33.9% of the assessed relevant portfolio. Sales of Accelerator products rose by 44.3% compared with the previous year. This is primarily attributable to the positive development of Accelerator sales in the Surface Technologies and Chemicals segments. Performer products account for 54.9%, Transitioner products for 11.1% and Challenged products for 0.1% of the solutions assessed.

 

 The definition of the relevant portfolio and further information can be found in the Sustainable Solution Steering manual at basf.com/en/sustainable-solution-steering

We already reached our 2025 sales target for Accelerator products in 2021. Consequently, we will update our product portfolio steering target over the course of 2022.

Compared with separate methods of generating steam and electricity, we saved 15.0 million MWh of fossil fuels and avoided 3.0 million metric tons of carbon emissions in 2021. In 2021, internally generated power in the BASF Group had a carbon footprint of around 0.24 metric tons of CO2 per MWh of electricity and was below the national grid factor at most BASF Group locations.

Another important component of carbon-optimized energy supply at our sites is the Verbund system. It helps us realize synergies and manage value chains in a resource-efficient way. For example, waste heat from one plant’s production process is used as energy in other plants. 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. That is why we will continue to invest in the creation and optimization of Verbund structures and drive forward the consolidation of production at highly efficient sites.

We calculate carbon footprints for around 45,000 sales products to increase carbon transparency for our customers. These Product Carbon Footprints (PCF) include all product-related greenhouse gas emissions generated until a BASF product leaves the factory gates (“cradle-to-gate”).

We use an in-house digital solution to calculate the carbon footprint of our products (PCF). In 2021, this was recognized by organizations such as the European Chemical Industry Council (CEFIC) with the Responsible Care Award for digitalization. The methodology follows general standards for life cycle analysis such as ISO 14044 and ISO 14067, as well as the Greenhouse Gas Protocol Product Standard, and has been certified by TÜV Rheinland.

We used the new method to calculate PCFs for around 45,000 sales products in 2021. 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 were able to offer the first products with a certified reduced carbon footprint through the use of renewable energy.

We also started to make the automated PCF calculation approach available to interested industry players by way of partnerships. In a first step, IT companies will be able to translate BASF’s methodology and in-house solution into a marketable software through licensing agreements.

BASF has participated in the program established by the international organization CDP (formerly the Carbon Disclosure Project) for reporting on data relevant to climate protection since 2004. CDP represents over 590 investors with over $110 trillion in assets and more than 200 major organizations with $5.5 trillion in purchasing power. In 2021, BASF again scored an A– on CDP’s Climate List, giving it Leadership status. In the scoring framework used by CDP in 2021, BASF was ranked among the top third of participating chemical companies.

BASF was rated A– in the CDP assessment for sustainable water management. The assessment takes into account how transparently companies report on their water management activities and how they reduce risks such as water scarcity. CDP also evaluates the extent to which product developments can contribute to sustainable water management for customers of the companies assessed. BASF continues to implement its sustainable water management target at all relevant production sites (Verbund sites and sites in water stress areas).

BASF participated in the CDP’s “Forests” assessment for the second time in 2021 and was ranked A–, as in the previous year. As a participant in various value chains, BASF is committed to ending deforestation in these supply chains. Consequently, BASF is one of the companies with Leadership status, as for climate protection and water management.

BASF maintained its Prime status in the ISS ESG rating developed by Institutional Shareholder Services and is among the top 7% of the companies assessed. BASF received special recognition for addressing key sustainability issues such as environmental management, energy efficiency and business ethics with a comprehensive set of measures and processes.

In Sustainalytics’1 ESG Risk Ratings, BASF is ranked among the top 10% of companies in diversified chemicals. It was commended for the fact that its sustainability targets are reflected in the compensation for the Board of Executive Directors, underlining strong overall management of environmental, social and governance matters.

BASF was again recognized as a Global Compact LEAD company by the U.N. Global Compact in 2021. BASF consistently supports the U.N. Global Compact and its 10 principles of responsible business conduct and the Sustainable Development Goals.

BASF was among the top 10% in the World Benchmarking Alliance’s (WBA) Food and Agriculture Benchmark, which assessed 350 companies from the food and agricultural sector on sustainable business practices.

1 Sustainalytics provides institutional investors and companies with ESG and corporate governance research, ratings and analytics.

 

More on BASF's positioning in ESG ratings

Last Update February 25, 2022