Sustainable Portfolio Management
A significant steering tool for the product portfolio, based on the sustainability performance of our products, is TripleS. In 2022, we updated this method in order to further steer our product portfolio to transformation topics such as climate change and energy, resource efficiency and circular economy. With this update we have integrated the TripleS evaluation even more deeply into the assessment of our R&D development processes, also considering the requirements formulated within the Safe and Sustainable by Design framework by the E.U. Commission. Within the scope of the further development of our method, in 2023 we began to reassess the products in the relevant portfolio1 with regard to their applications and regional aspects. As a result, we categorize our product portfolio into five segments, taking sustainability-related aspects into account: Pioneer, Contributor, Standard, Monitored and Challenged (see graphic). The reassessment will be completed in 2024. We will take regulatory changes into account if they have a material impact on our portfolio and therefore also on our segmentation. The allocations by segment and sales are therefore provisional.
TripleS (Sustainable Solution Steering)a
a Sales shares based on the analysis of the relevant portfolio carried out by the end of 2023.1 The provisional segmentation has not been audited by KPMG. The allocation to the segments is provisional, as the reassessment of our portfolios has not yet been completed.
The new KPI sales of Sustainable-Future Solutions summarizes the total sales of Pioneer and Contributor products. Products allocated to these segments make a positive sustainability contribution in the value chain. For example, polyurethane catalysts, which reduce energy consumption and material use, and high-performance insulation materials, which save energy for end users. In line with our corporate strategy, we have set ourselves the target of making sustainability an even greater part of our innovative power. By 2030, more than 50% of BASF’s sales relevant to TripleS1 are to be attributable to Sustainable-Future Solutions (2023: 41.4%). With TripleS, we are steering our product portfolio and our research and development units toward sustainable solutions. According to our updated methodology, in 2023, around €1 billion of our annual expenditure on research and development contributed to potential Sustainable-Future Solutions.
If, during the reassessment of our portfolio, we identify products with sustainability concerns, we classify them either as “Monitored,” or in case of significant concerns, as “Challenged,” as we did in the past. A description of possible measures is mandatory for both categories. In the case of Challenged products, we develop our own action plans. These include research projects and reformulations to optimize products or replacing the product with an alternative. To systematically align our portfolio with contributions to sustainability, we are generally phasing out all Challenged products within five years of their initial classification.
Of BASF’s €68.9 billion in sales in 2023, €55.5 billion is relevant for the TripleS evaluation. We have analyzed €52.8 billion of this as part of TripleS by the end of 2023.2 The relevant portfolio comprises BASF Group’s sales from sales products to third parties in the business year concerned. This excludes business that is not product-related, such as licenses or services.
1 The definition of the relevant portfolio and further information can be found in the TripleS manual at basf.com/en/sustainable-solution-steering
2 Sum of validated and provisional segmentation
