Investor Relations Perspective
“BASF’s contribution to a sustainable future” –
Interview on the development of sustainability awareness among financial market participants
Mr. Balensiefer, what is your position at BASF Investor Relations about?
In financial market communications at BASF, I deal with sustainability issues and discuss them with investors and financial analysts. This position at BASF Investor Relations has existed since 2006. As a company, we entered the dialogue with financial market participants on sustainability topics at an early stage. We want to communicate BASF’s positions, and we also have to provide answers to many investor questions. In discussions at investor conferences, on the phone or by e-mail, I provide information about BASF’s efforts to protect the climate and to promote diversity in the workforce, about our responsibility along the value chain and about many other non-financial issues.
Which topics are particularly important to financial experts at the moment?
Climate change, our climate protection goals and measures to avoid CO2 emissions currently play an important role. Supply chain responsibility also plays a key role, especially working conditions at suppliers and partners as well as compliance with human rights. I am also frequently asked about our crop protection activities. Our shareholders want to know how BASF contributes to sustainable agriculture.
How important is sustainability for investors? How has its significance developed over the past 25 years?
For a long time, financial market participants have looked at sustainability mainly from the perspective of risk minimization. Investors wanted to find out which non-financial risk factors could burden a company’s reputation and thus its share price. Chemical companies therefore focused on health and safety conditions and the prevention of environmental pollution.
Today, the financial markets also see the opportunities for innovative companies that can arise from the many challenges. The chemical industry in particular is no longer seen only as part of the problem, but also as part of the solution to important global challenges, such as feeding a growing world population, mitigating climate change or adapting to changing climatic conditions. It is recognized that the industry with its innovation power can drive forward sustainable solutions such as battery materials for electric vehicles or processes for a resource-conserving circular economy.
How is this development reflected in corporate reporting?
BASF began reporting on environmental issues many years ago and published its first environmental report on the ecological effects of the company’s activities in 1988. Since 2007, BASF has published an integrated annual report in economic as well as ecological and social categories. Increasingly comprehensive legal requirements and guidelines for reporting on non-financial factors also play a role.
Under the headline “Sustainable Finance”, we currently see major political efforts to anchor sustainability aspects more firmly in the financial world. Investors who want to invest sustainably often tell us that the greatest challenge here is the comparability of companies and sectors. What is a sustainable business activity? The standardization of assessment criteria and the transparency of non-financial reporting are frequently cited as the key to answering this question.
Has the relationship between investors and BASF changed?
The fundamental interest of investors in revenue growth, rising earnings and share prices as well as high dividends remains unchanged. Investors increasingly engage with companies on their ideas and recommendations regarding sustainable business management. These investors, often large pension funds or sovereign wealth funds with an investment horizon of ten, twenty or thirty years, focus on the long-term business success of a company.
What do you advise private investors who want to invest sustainably?
Generally, your bank’s financial advisors are the right contacts. Ask about sustainability-oriented financial products and how they are structured, ask about the underlying definition of sustainability, ask about the analysis approach and experience of their team. Demand will increase the corresponding supply over time.
What sustainability developments do you expect in your field of activity?
In my view, the urgency of sustainability issues will continue to increase as the impact of our lifestyle and climate change becomes more visible. It will also become clearer how companies can contribute to environmental protection and sustainable development. I also see myself challenged here: Many topics in the chemical industry are so complex that an important part of my work consists of explaining contexts and interdependencies. This includes communicating that companies like BASF can contribute innovative solutions to help improve the quality of life in the future. In essence, it is always about communicating our corporate purpose: “We create chemistry for a sustainable future.”