Identification and Management of Sustainability Topics

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 on this page 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.

Our organizational and management structures

We are constantly working to broaden our contributions to key sustainability topics and to reduce the negative impact of our business activities. 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. 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, 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 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 here as well as which effects we are exposed to.

If we identify potential negative impacts or previously untapped opportunities to make a greater contribution, for example in planned investments, these are presented transparently in the internal decision-making process and possible mitigation measures, such as changes in water management, are proposed.

In our Sustainable Finance Roundtable, we discuss topics relating to sustainable finance. Here, experts from departments such as Finance, Corporate Strategy, and Investor Relations and Communications discuss new legal or capital market-driven requirements. The interdisciplinary group analyzes the steadily growing requirements, assesses the impacts on BASF and drives forward the necessary change processes as well as the concrete implementation of measures.

Last Update February 24, 2023