Sustainability will be a precondition for staying in business

What makes a supply chain ­sustainable?

When sourcing materials and processing them, a business must think about the impact it has. Economic and even ecological impacts, such as on landscape, biodiversity or carbon footprint, are somewhat easier to address on the basis of existing standards than social impacts, such as on values and human rights. These need global societal alignment and governance, as in the UN Global Compact, which BASF co-founded. This calls on companies to align strategies and operations, also with a view to human rights and corruption. Translating international standards into business practice is key and an integral part of our work at BASF.

Why are sustainable supply chains so important to BASF?

Chemistry is part of the solution to ­environmental and social challenges, but it’s also part of the problem. Our processes are still too intensive in terms of fossil energy and CO₂ emissions. Besides driving innovative technologies, it’s important to properly manage input and output into our chains to sustainably develop our products and services. Also, we see a growing demand for sustainable products. Soon sustainability will be a precondition for staying in business.

How far does BASF’s responsibility go along its value chains?

We aim to produce as close as we can to the end-customer. And it is about transparency. We are constantly screening our chains – which aren’t really chains but networks of interactions with suppliers and customers – to identify sustainability impacts. Our Supplier CO₂ Management Program, for example, aims to make the carbon footprints of all our ­suppliers ­transparent. With more than 70,000 suppliers, that’s a big task. We are also training our suppliers and guiding our customers. Beyond that, it is all about alliances and partnerships to live up to our corporate responsibility.

One important chain for BASF is the battery value chain. What are sustainability challenges and how can transparency succeed?

Batteries play a major role in ­powering sustainable developments such as ­electric vehicles. That is good news for the ­climate, but not necessarily for those ­living in areas where material for batteries is sourced. People and land can suffer from environmental impacts, and child labor is an issue in some countries. In 2017, BASF co-founded the Global Battery ­Alliance (GBA) to address these issues. It’s a multi-stakeholder alliance that includes businesses, governments, NGOs and civil society. Within the GBA we are working on standards and tools to make this value chain socially, environmentally and economically sustainable, as well as innovative. As a flagship ­initiative, we are developing rulebooks for a “battery passport,” based on the digitalization of data. It will show the state of the battery regarding several ­sustainability criteria. We will start with the most critical ones: the social aspect of child labor and the environmental aspect of greenhouse gas emissions.

How can we overcome challenges in building sustainable supply chains?

Acknowledging the complexity of ­supply chains and having proper management and due diligence processes in place. Understanding that ESG environmental, social and governance aspects need to be addressed in alliances with partners and stakeholders. Recognizing that we – in business, civil society and ­governments – need to do that together.