Frequently Asked Questions
We are successful in the long term when we create value added for the environment, society and the economy with products, solutions and technologies. Sustainability is firmly anchored in our strategy and corporate governance. We carry out the company purpose “We create chemistry for a sustainable future” using the various tools of our sustainability management. We systematically incorporate sustainability into our business and our assessment, steering and compensation systems. We identify sustainability trends at an early stage and derive appropriate measures for our business to seize new business opportunities and minimize risks along the value chain.
We are constantly working to broaden our positive impact on key sustainability topics and reduce the negative impact of our business activities. The Corporate Development unit, which is part of the Corporate Center, has steered the integration of sustainability into core business activities and decision-making processes since 2020. Global steering of climate-related matters is also bundled in this unit, such as coordinating measures to reach our climate protection target and steering the target on making our product portfolio more sustainable.
The Board of Executive Directors and the Supervisory Board are regularly briefed on the current status of individual sustainability topics. In addition, the Board of Executive Directors is informed about sustainability evaluations in business processes, for example, in the case of 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 also established an external, independent Stakeholder Advisory Council (SAC) in 2013 and a Human Rights Advisory Council (HRAC) in 2020. In the SAC, international experts from academia and society contribute their perspectives to discussions with BASF’s Board of Executive Directors. The HRAC is led by our Chief Compliance Officer. It comprises external human rights specialists and internal experts, who advise senior management. This help us to build on our strengths in how we handle human rights and address potential for improvement.
We systematically evaluate sustainability criteria, including the effects of climate change, as an integral part of decisions on acquisitions and investments in property, plant and equipment or financial assets. In this way, we not only assess economic dimensions, but also the potential impacts on areas such as the environment, human rights or the local community. We evaluate both the potential impacts of our activities as well as which effects we are exposed to.
We evaluate key sustainability topics with our comprehensive materiality analysis. The graphic shows how we identify and 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.
The relevant topics identified based on the three dimensions of materiality include climate and energy, resource efficiency and waste, health and safety / product stewardship, emissions to air and soil, and responsibility along the value chain.
Identifying and assessing sustainability topics1, 2
1 Our stakeholders also confirmed the materiality of the nonfinancial topics that the Value to Society approach 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 (CO2-neutral growth until 2030 and achieve €22 billion in Accelerator sales by 2025) as most important key performance indicators. We have established the necessary steering mechanisms and control systems at Group level. Carbon management bundles our global activities to reduce greenhouse gas emissions. We use the Sustainable Solution Steering method to manage our product portfolio. To assess the sustainability performance of our products and identify solutions that make a substantial sustainability contribution in the value chain (Accelerator products), we regularly reassess our product portfolio.
In addition to the two climate protection and Accelerator sales targets, we have also set ourselves further sustainability targets on responsible procurement, engaged employees, women in leadership positions, occupational health and safety, process safety and water management.
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. By the end of the 2020 business year, we had evaluated 98.4%1 of the relevant portfolio.2 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 2020, sustainability analyses and assessments had been conducted for more than 57,000 specific product applications, accounting for €54.1 billion in sales. These consider the products’ application in various markets and sectors. 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.
1 Parts of the relevant portfolio have not yet been evaluated, including the integrated polyamide business acquired from Solvay in 2020.
2 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
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. Based on our corporate strategy, we have set ourselves a global target: We aim to make sustainability an even greater part of our innovation power and achieve €22 billion in Accelerator sales by 2025.
In 2020, we generated sales of €16.7 billion with Accelerator products (2019: €15.0 billion). Accelerator products account for 30.9% of the evaluated relevant portfolio. Performer products account for 56.4% and Transitioner products for 12.6% of the solutions assessed. Sales of Accelerator products rose by 11% compared with the previous year. This is primarily attributable to the positive development of Accelerator sales in the Surface Technologies and Agricultural Solutions segments. In the Agricultural Solutions segment, the first-time assessment of the seed business acquired from Bayer contributed to the increase.
If, during reassessment of our portfolio, we identify products with substantial sustainability concerns, we classify these as “Challenged.” Challenged products account for around 0.1% of the evaluated relevant portfolio. We develop and 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, as of 2018, we will phase out all Challenged products within five years of initial classification as such 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. This is why our Sustainable Solution Steering method is used in areas such as our research and development pipeline, in business strategies as well as in merger and acquisition projects.
Accelerator products make a substantial sustainability contribution in the value chain. By 2025, we will increase the sales from Accelerator products to €22 billion (2020: €16.7 billion).
To generate our own steam and power, we mainly use natural gas (82.7%) and what are known as substitute fuels (14.9%). These are residues from chemical production plants that can no longer be reused. We cover more than 70% of the BASF Group’s electricity demand with gas and steam turbine plants in highly efficient combined heat and power plants. 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 2020. In 2020, 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. The figure for purchased electricity in 2020 was around 0.41 metric tons of CO2 per MWh (market-based approach). As part of our carbon management, we therefore initially aim to reduce the carbon footprint of purchased electricity.
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 18.7 million MWh in 2020, which translates to 3.8 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 6.2 million metric tons of carbon emissions in 2020.
BASF also plans to make the individual carbon footprints for around 45,000 sales products available by the end of 2021 with the help of a new, in-house digital solution. PCFs comprise all product-related greenhouse gas emissions that occur until the BASF product leaves the factory gate for the customer: from the purchased raw material to the use of energy in production processes (Scope 1–3). Calculating PCFs creates transparency for our customers and partners, enabling us to develop plans together to reduce CO2 emissions along the value chain up to the end product.
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 is an international organization representing around 515 investors with over $106 trillion in assets and more than 150 major organizations with $4 trillion in purchasing power. In 2020, BASF again scored an A– on CDP’s Climate List, giving it Leadership status. In the scoring framework used by CDP in 2020, BASF was ranked among the best 25% of the participating chemical companies. To achieve its climate target of CO2-neutral growth until 2030, BASF is continually optimizing existing processes and is increasingly using energy from renewable sources. BASF is also developing completely new low-emission production processes. The company bundles this work in its ambitious carbon management.
In the CDP assessment for sustainable water management, BASF again achieved the top grade of A and thus Leadership status. 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 “Forest” assessment for the first time in 2020 and was ranked A–. As an actor in various value chains, BASF is committed to ending deforestation in these supply chains. One of BASF’s measures to protect the forests is its voluntary commitment to source 100% of its palm oil and palm kernel oil from certified sustainable sources by 2020. We met this target in 2020.
BASF continued to be included in the MSCI ESG Ratings in 2020 with the second-highest score of AA. The analysts highlighted BASF’s Verbund system as a key competitive advantage for resource-efficient processes. BASF’s emissions intensity for greenhouse gases and air pollutants – one of the lowest compared with competitors in the chemical industry – was also assessed positively.