March 9, 2017
As an industry leader and contributing member of society, BASF strives to create value for society at large. But what does this mean, what does it encompass and is there a way to assess it? For the first time, BASF has released the results of its ‘Value-to-Society’ assessment which reflects BASF’s financial and non-financial impacts on society in monetary terms. In an interview, Dr. Dirk Voeste, Vice President Sustainability Strategy at BASF, explains this new approach and how its results can support BASF in living up to its corporate purpose.
Dr. Dirk Voeste: Our company purpose states ‘We create chemistry for a sustainable future’. We do so for example by ensuring safe production patterns, resource efficiency in the Verbund and delivering sustainability benefits for our customers and society at large with our products and solutions. Still we are often asked how exactly BASF contributes to a sustainable future and how this contribution is measured. What benefits and costs do our business activities generate for society?
The first challenge of course was how to define our value contribution to society. We wanted to assess the ‘real’ impact our business activities have on society, the lives and well-being of people. This goes beyond measuring financial results, KPIs or the output of BASF’s operations. It includes, for example, the benefits of newly created jobs, but also the costs that are associated with our use of natural resources.
We found that BASF’s value contribution to society is significantly net-positive overall. Positive means that the social and economic benefits of our business activities like job creation or benefits that come through the use of our products, substantially exceed our costs to society. The latter are measured in areas such as emissions, waste, land use, or resource depletion.
Thanks to the efforts of a small, cross-divisional team, which worked for about three years on the understanding and set-up of the model, we have robust results for 2013, 2014 and 2015. This data demonstrates a stable positive contribution of our economic, social, and environmental impact along the value chain.
Value-to-Society calculations contain three main innovations. First, they give us the chance to assess the impact of BASF’s business activities in a holistic way. For example, when calculating the societal costs of climate change we assess aspects like human health, changes in the environment or economic disruptions through extreme weather events.
Second, the results for every aspect are calculated in Euro terms. This allows us to compare the relevance and interdependencies of different economic, social, and environmental impacts against one another.
Finally, Value-to-Society provides an end-to-end assessment of our business activities. It covers the relevant aspects along the value chain including our external suppliers, our own operations and our customers.
The new approach looks at our contribution from a broader perspective and provides us with a comprehensive view. These additional insights support strategic decision making. For example, we can calculate the impact to society of a newly constructed production plant by looking at different scenarios. Depending on the location, such an investment would create different impacts, for example by adding value through employment or contracted local construction services. In addition to decision-making, the tool also supports in monitoring the development of positive and negative impacts our business has over time.
For our stakeholders it provides a new and tangible way of evaluating our contribution to a sustainable future.