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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 pioneer for sustainable solutions. We see sustainability as an integral part of our strategy as well as our targets, steering processes and business models. In doing so, our aim is to be a responsible and attractive partner for our customers, develop new growth areas and lay the foundation for the long-term success of our company. Our approach covers the entire value chain – from the responsible procurement of our raw materials 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 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. The global climate protection target is linked to the compensation of the entire Board of Executive Directors and senior executives via the most important KPI “absolute CO2 emissions.” 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. It is chaired by Board of Executive Directors member Saori Dubourg.
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 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.
Identifying and assessing sustainability topicsa
a Material within the meaning of section 289c HGB or relevant within the meaning of the Global Reporting Initiative
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.
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.
1 The target include Scope 1 and Scope 2 emissions. Other greenhouse gases are converted into CO2 equivalents in accordance with the Greenhouse Gas Protocol.
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. 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.
Compared with separate methods of generating steam and electricity, we saved 12.0 million MWh of fossil fuels and avoided 2.4 million metric tons of carbon emissions in 2022. To achieve the highest possible energy yield with the lowest possible greenhouse gas emissions, we continuously invest in our combined heat and power plants. In 2022, internally generated power in the BASF Group had a carbon footprint of around 0.25 metric tons of CO2 per MWh of electricity and was below the national grid factor at most BASF sites.
The Verbund system is also key to carbon-optimized energy supply at our sites. 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 19.0 million MWh in 2022, which translates to 3.8 million metric tons less CO2 released into the environment. With combined power and steam generation as well as our continuously optimized Energy Verbund, we were thus able to avoid a total of 6.2 million metric tons of carbon emissions in 2022. 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 680 investors with over $130 trillion in assets and more than 280 major organizations with $6.4 trillion in purchasing power. In 2022, BASF again scored A– on CDP’s Climate List, giving it Leadership status. Among other things, the assessment considers the transparency of emissions reporting, the handling of risks and opportunities arising from climate change, the climate protection strategy and CO2 reduction measures.
BASF achieved the top rating of A in the CDP assessment for sustainable water management (previous year: A–). 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.
BASF participated in the CDP’s “Forests” assessment for the third time in 2022 and was ranked A–, as in previous years. BASF is committed to ending deforestation in the relevant businesses in which it is active. As such, BASF is one of the companies with Leadership status in this area as well.
BASF again achieved 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 belongs to the best category for “diversified chemicals” with a medium ESG risk and was recognized for its risk management, for example, in the areas of CO2 emissions, wastewater and waste, as well as occupational health and safety.
BASF is participating in a pilot project on the U.N. Global Compact’s new reporting format. We consistently support the U.N. Global Compact and its 10 principles of responsible business conduct and the Sustainable Development Goals.
1 Sustainalytics provides institutional investors and companies with ESG and corporate governance research, ratings and analytics.