Leadership & Governance Index
Management of Legal & Regulatory Environment (SASB Code: RT-CH-530a.1)
Discussion of corporate positions related to government regulations and/or policy proposals that address environmental and social factors affecting the industry
Political dialog in compliance with corporate values and principles:
We support and promote responsible, accountable, transparent and democratic processes that benefit society at large. This means for us to respect the roles and responsibilities of the institutions and organizations we seek to engage and being open about the interests we seek to advance. Our interaction with politicians is based on evidence. We are open for dialog with all stakeholders. BASF is not affiliated with any political party, individual members of parliament or incumbents or candidates for a political office.
In this context, we commit ourselves to responsible, honest and transparent action based on our values and principles. We are committed to ensuring that our dialogue and advocacy is compliant with our Global Code of Conduct, and the rules and principles set out in our policy.
Operational opportunities and risks regarding regulation and policy:
Risks for us can arise from intensified geopolitical tensions, new trade sanctions, stricter emissions limits for plants, and energy and climate laws. In addition, changes in chemical regulations can affect both the BASF Group’s product portfolio and that of our customers, for example, on the use or registration of agrochemicals.
Political measures could also give rise to opportunities. For example, we view measures around the world to increase energy efficiency and reduce greenhouse gas emissions as an opportunity for increased demand for our products, such as our insulation foams for buildings, catalysts, battery materials for electromobility, or our solutions for wind turbines. Our broad product portfolio enables us to, in some cases, offer alternatives if new chemicals have to be developed as a result of restrictions in connection with the REACH chemicals regulation or new standards in our customers’ industries.
Strategic opportunities and risks regarding regulation and policy:
We expect to achieve continued regulatory and societal pressure, climate-neutral energy production, climate-neutral energy consumption, and a climate-neutral resource and raw material base. The political approaches to address these issues will vary greatly from region to region. However, based on Europe in particular, we expect measures with a high level of regulation and detail that will have the potential to significantly impact the competitiveness of BASF’s operations and product portfolio.
Furthermore, we see the risk of the current geopolitical shift in balance of power leading to the establishment of uncoordinated or divergent global legislative standards and regulatory systems, not just in relation to chemicals, but also to environmental, social and corporate governance criteria and the regulatory framework for digitalization.
We counter these risks as part of our corporate strategy. We explain our strategy in meetings with political decision-makers and social stakeholders. In doing so, we also inform ourselves of the changes we must undergo and advocate for a favorable and stable regulatory framework at both the national and international level.
Integration of ESG in Enterprise Risk Management:
The Group-wide Governance, Risk Management, Compliance (GRC) Policy forms the framework for risk management and is implemented by the operating divisions, the service and research units and the regions according to their specific business conditions.
A catalog of opportunity and risk categories helps to identify all relevant financial and sustainability-related opportunities and risks as comprehensively as possible. We also systematically assess opportunities and risks with effects that cannot yet be measured in monetary terms, such as reputational and climate risks. To reflect these, risks for companies in connection with the transition to a low-carbon economy (transition risks) as well as physical risks as defined by the Task Force on Climate-related Financial Disclosures (TCFD) were added to the catalog.
Because global climate policy ambitions and the implementation of the relevant measures play a decisive role in the ongoing growth of the chemical industry and its customer industries, global long-term scenarios (up to 2050) with various global warming paths were defined. To assess the impact of different global climate policy approaches on our business units, the scenarios were discussed by the business units in workshops. Their feedback will be incorporated into the further development of scenario assumptions and outcomes.
A dataset of scenario-specific macroeconomic parameters will be provided to test the eco-nomic feasibility of investments and business strategies.
We use standardized evaluation and reporting tools for the identification and assessment of risks. The aggregation of opportunities, risks and sensitivities at division and Group level using a Monte Carlo simulation helps us to identify effects and trends across the Group.
Our Group-wide Compliance Program aims to ensure adherence to legal regulations and the company’s internal guidelines. Our global employee Code of Conduct firmly embeds these mandatory standards into everyday business.
BASF website: Politics (basf.com)
Operational Safety, Emergency Preparedness & Response (SASB Code: RT-CH-540a.1)
Process Safety Incidents Count (PSIC), Process Safety Total Incident Rate (PSTIR), and Process Safety Incident Severity Rate (PSISR)
In 2021, we recorded 0.3 process safety incidents per 200,000 working hours worldwide (2020: 0.3).
BASF has used the criteria and reporting thresholds for process safety incidents developed by the International Council of Chemical Associations (ICCA) since 2018.
We investigate every incident in detail, even under the constraints of the coronavirus pandemic, analyze causes and use the findings to derive suitable measures. We share the findings in our global network in the interest of continuous improvement.
Our data collection methods for environmental protection and occupational safety are based on the recommendations of the ICCA and the European Chemical Industry Council (CEFIC).
Further information on our global data reporting: BASF Report 2021: About the Report: Data, p. 6
Operational Safety, Emergency Preparedness & Response (SASB Code: RT-CH-540a.2)
Number of transport incidents
Our goal is to minimize risks along the entire transportation chain – from loading and trans-portation to unloading. The transportation of dangerous goods is subject to mandatory national and international dangerous goods regulations as well as our global guidelines. The sites and subsidiaries are responsible for implementing transportation safety regulations and guidelines. Compliance is regularly monitored by the Environmental Protection, Health & Safety unit in the Corporate Center using globally standardized transportation safety reviews. A particular focus is incidents involving goods spillages that could lead to significant environmental impacts. These include dangerous goods leaks of BASF products in excess of 200 kilograms on public traffic routes, provided BASF arranged the transport.
We recorded three incidents in 2021 with spillage of more than 200 kilograms of dangerous goods* (2020: 2). None of these transportation incidents had a significant impact on the environment (2020: 0).
More information on Transportation and Safety: Distribution Safety
*Hazardous goods are classified in accordance with national and international hazardous goods regulations