AgBalance® is an assessment methodology developed by BASF for the holistic measurement and analysis of sustainability in agriculture and food production. Economic, ecological and social indicators are employed to create specific recommendations for sustainable production methods. AgBalance® received independent validation from global auditors in 2011.
Audits are a strategic tool for managing standards. During a site or plant audit, clearly defined criteria are used to create a profile for topics pertaining to environment, safety or health, for example.
A back-up line is a confirmed line of credit that can be drawn upon in connection with the issue of commercial paper if market liquidity is not sufficient, or for the purpose of general corporate financing. It is one of the instruments BASF uses to ensure it is able to make payments at all times.
Barrel of oil equivalent (BOE)
A barrel of oil equivalent (BOE) is an international standard for comparing the thermal energy of different fuels. It is equal to one barrel of crude oil, or 6,000 cubic feet or 169 cubic meters of natural gas.
Base of the pyramid
The base (or bottom) of the pyramid refers to the lowest income group in the world economic pyramid. The concept is used to describe business models which actively target this demographic as, for example, customers, suppliers or distributors – thus combining the pursuit of entrepreneurial opportunities with endeavors to improve quality of life.
Biocatalysis is the use of enzymes as biological catalysts for the targeted application, acceleration or control of chemical reactions. The high selectivity of enzyme catalysts allows for simplified processes and lower production costs.
Biotechnology includes all processes and products that use living organisms, for example bacteria and yeasts, or their cellular constituents.
CO2 equivalents are units for measuring the effect of greenhouse gas emissions. A factor known as the global warming potential (GWP) shows the effect of the individual gases compared with CO2 as the reference value.
Coil coatings are specialty coatings that can be applied to steel and aluminum bands creating a composite material that incorporates the traits of the metal and the coating material. The composite material is especially resistant to corrosion and can be easily formed. Coil coating sheets are mainly used in the construction industry.
Commercial paper program
The commercial paper program is a framework agreement between BASF and banks regarding the issuing of debt obligations on the financial market (commercial paper). The commercial paper is issued under a rolling program for which the terms can be determined individually. This requires a good rating.
Compliance is an important element of corporate governance. It refers to the company’s behavior in accordance with laws, guidelines and voluntary codices.
Conflict minerals describe minerals listed in the U.S. Conflict Minerals Trade Act. These include tantalite (coltan), cassiterite (tin ore), wolframite, gold, and their derivatives, by which conflicts in the Democratic Republic of Congo or neighboring states are financed.
Consumer goods sector
The consumer goods sector includes, for example, the textiles and leather industry, the electrical industry and domestic appliance manufacturing, as well as the paper industry and the personal care and cleaners sector.
Dow Jones Sustainability World Index (DJSI World)
The Dow Jones Sustainability World Index (DJSI World) is a worldwide sustainability index which lists the top 10% of the 2,500 largest companies that appear in the Dow Jones Global Index in terms of economic, ecological and social criteria
Earnings before interest and taxes (EBIT) – at BASF, EBIT corresponds to income from operations.
Earnings before interest, taxes, depreciation and amortization (EBITDA) – at BASF, EBITDA corresponds to income from operations before depreciation and amortization.
The EBITDA margin is the margin that we earn on sales from our operating activities before depreciation and amortization. It is calculated as income from operations before depreciation and amortization as a percentage of sales.
EBIT after cost of capital
EBIT after cost of capital is calculated by deducting the cost of capital from the EBIT of the operating divisions. The cost of capital thereby reflects the shareholders’ expectations regarding return (in the form of dividends or share price increases) and interest payable to creditors. If the EBIT after cost of capital has a positive value, we have earned a premium on our cost of capital.
The Eco-Efficiency Analysis is a method for the evaluation of products and processes with respect to economic and environmental issues. The aim is to compare products with regard to profitability and environmental performance.
According to our definition, emerging markets comprise the region Asia Pacific (excluding Japan, Australia and New Zealand), South and Central America, Eastern Europe, the Middle East and Africa.
The equity method is an accounting technique used in the Consolidated Financial Statements to include BASF’s investments in companies over which it has significant influence. The book value of the investment changes depending on the equity of the company in question.
European Water Stewardship (EWS) Standard
The European Water Stewardship Standard enables businesses and agriculture to assess the sustainability of their water management practices. The criteria are: water abstraction volumes, water quality, conservation of biodiversity and water governance. The EWS Standard was developed together with NGOs, governments and businesses.
Exploration refers to the exploration and investigation of an area in the search for mineral resources such as crude oil or natural gas. The exploration process involves using suitable geophysical processes to find structures that may contain oil and gas then proving a possible find by means of exploratory drilling.
Fermentation is the transformation of organic substances by means of enzymes, bacteria, yeasts or fungi. When these microorganisms are optimized through biotechnological processes, fermentation can serve as an alternative to chemical processes that is both efficient and conserves resources.
Field development is the term for the installation of production facilities and the drilling of production wells for the commercial exploitation of oil and natural gas deposits.
Formulation describes the combination of one or more active substances with excipients like emulsifiers, stabilizers and other non-active components in order to improve the applicability and effectiveness of various products, such as cosmetics, pharmaceuticals, agricultural chemicals, paints and coatings.
Free cash flow
Free cash flow is cash provided by operating activities less payments related to property, plant and equipment and intangible assets.
Global Product Strategy (GPS)
The Global Product Strategy aims to establish global product stewardship standards and practices for companies. The program, initiated by the International Council of Chemical Associations (ICCA), strives to ensure the safe handling of chemicals by reducing existing differences in risk assessment.
Greenhouse Gas Protocol (GHG Protocol)
The Greenhouse Gas Protocol, used by companies from different sectors, NGOs and governments, is a globally recognized standard to quantify and manage greenhouse gas emissions. The reporting standards and recommendations for the implementation of projects to reduce emissions are jointly developed by companies, governments and NGOs under the guidance of the World Resources Institute and the World Business Council for Sustainable Development.
Health Performance Index (HPI)
The Health Performance Index (HPI) is an indicator developed by BASF to provide a more detailed insight into the application of health management. It comprises five components: confirmed occupational diseases, medical emergency planning, first aid, preventive medicine and health promotion.
IAS stands for International Accounting Standards (see also IFRS).
The International Financial Reporting Standards (until 2001: International Accounting Standards, IAS) are developed and published by the International Accounting Standards Board (IASB), headquartered in London, United Kingdom. In accordance with the IAS Regulation, the application of IFRS has been mandatory for listed companies headquartered in the European Union since 2005.
ILO Core Labor Standards
The ILO Core Labor Standards are laid out in a declaration of the International Labor Organization (ILO). It comprises eight conventions which set minimum requirements for decent working conditions. BASF has a Group-wide system to monitor employees’ and suppliers’ adherence to these labor standards.
ISO 14001 is an international standard developed by the International Organization for Standardization (ISO) that determines the general requirements for an environmental management system for voluntary certification.
ISO 19011 is an international standard developed by the International Organization for Standardization (ISO) that determines requirements for audits of quality management and environmental management systems.
We define joint ventures as all activities in which other partners besides BASF hold a stake. The accounting method applied for those activities depends on the circumstances of the respective investment.
BASF uses materiality analysis to analyze and evaluate societal interest in sustainability topics as well as their potential significance for the company. The aim is to develop strategies at an early stage to address potential new risks and opportunities.
MDI stands for diphenylmethane diisocyanate and is one of the most important raw materials for the production of the plastic polyurethane. This plastic is used for applications ranging from the soles of high-tech jogging shoes, to car shock-absorbers, refrigerator insulation and even insulation for buildings.
In chemistry, migration refers to the movement of molecules on the surface of plastics or in surrounding materials. Plastics with low migration values hinder or prevent the migration of, for example, additives, which makes them especially suitable for applications that come into contact with food or drinking water.
Monitoring systems and tools serve to measure and ensure the adherence to standards. One area that is monitored is our voluntary commitments, such as the adherence to human rights and internationally recognized labor standards.
MSCI World Chemicals Index
The MSCI World Chemicals Index is a stock index that includes the world’s biggest chemical companies. It measures the performance of the companies in the index in their respective national currencies, thus considerably reducing currency effects.
Definitions vary worldwide for nanomaterials. For regulatory purposes, BASF supports the definition given by the International Council of Chemical Associations (ICCA). This states that nanomaterials are solid, particulate substances which are intentionally manufactured and have a weight-based cutoff of either 10 weight% or more of nano-objects or 50 weight% or more of aggregates or agglomerates consisting of nano-objects.
Naphtha is petroleum that is produced during oil refining. Heavy naphtha is the starting point for gasoline production. Light naphtha is the most important feedstock for steam crackers.
NMVOC (non-methane volatile organic compounds)
VOCs (volatile organic compounds) are organic substances that, at low temperatures, are present in the air as gas. These include some hydrocarbons, alcohols, aldehydes and organic acids. NMVOCs are VOCs from which methane is excluded.
The Occupational Health and Safety Assessment Series (OHSAS) comprises, among other things, the standard OHSAS 18001 which includes a management system for occupational safety. This system can be integrated into an existing quality and environmental protection management system and certified accordingly.
Patent Asset Index
The Patent Asset Index measures the strength of a company’s patent portfolio. It is made up of two factors: (1) portfolio size (the number of worldwide active patent families) and (2) competitive impact, which is the combination of technology relevance and market coverage (weighted by market size).
PBT chemicals are substances that fulfill the three following criteria: (1) persistent – they remain in the environment for long periods of time and degrade either slowly or not at all; (2) bioaccumulative – they build up or accumulate in an organism’s tissue or the food chain; (3) toxic – they are poisonous. PBT chemicals are considered Substances of Very High Concern by the European chemicals directive, REACH.
THF stands for tetrahydrofuran and is a starting compound for Polytetrahydrofuran (PolyTHF® ). PolyTHF® is an important component in the production of elastomer fibers, which are used in sports clothing, for example.
Ramsar Sites were defined in the Ramsar Convention of 1971. These are protected Wetlands of International Importance, such as lagoons, moors, lakes, rivers and marshlands.
REACH is a European Union regulatory framework for the registration, evaluation and authorization of chemicals.
Responsible Care refers to a worldwide initiative by the chemical industry to continuously improve its performance in the fields of environmental protection, health and safety.
There are two applications for generated profits: distribution to shareholders or retention in the company.
Return on assets
Return on assets describes the return we make on the average assets employed during the year. It is calculated as income before taxes and minority interests plus interest expenses as a percentage of average assets.
SEEBALANCE® refers to the Socio-Eco-Efficiency Analysis developed by BASF. This analysis considers the three dimensions of sustainability: environment, economy and society. This tool allows the assessment of environmental impact and costs as well as the societal impacts of products and processes.
Seed treatment products
Seed treatment products include crop protection agents and are applied with specific technologies directly onto the seed. This protects crops in the emerging stages against fungal diseases and harmful insects.
Special items describe one-time charges or one-time income that significantly affect the earnings of a segment or the BASF Group. Special items include, for example, charges arising from restructuring measures or earnings from divestitures.
Spot market (cash market)
A spot market is a market where an agreed deal including delivery, acceptance and payment occurs immediately, in contrast to forward contracts, where the delivery, acceptance and payment occurs at a point in time after the conclusion of the deal.
Stakeholders are persons or groups whose interests are interlinked with those of a company in a variety of ways. BASF’s stakeholders include shareholders, business partners, employees, neighbors and society.
A steam cracker is a plant in which steam is used to “crack” naphtha (petroleum) or natural gas. The resulting petrochemicals are the starting materials used to produce most of BASF’s products.
The precursor styrene is primarily for captive use (backward integration). Styrenic plastics are used in many areas, for example, in the construction, packaging, automotive, electrical and leisure industries.
Substitution refers to the use of one substance in place of another in order to reduce risks to people and/or the environment in a specific application.
The objective of sustainable development is to meet the economic, environmental and social needs of society without harming the development opportunities of future generations.
A swap is an agreement between two parties to exchange goods or payment flows in the future. In an interest swap, a fixed (variable) interest rate is exchanged for a floating (fixed) rate for an agreed nominal amount.
Toluene diisocyanate is a starting material for the production of polyurethane. It is used primarily in the automotive industry (for example, in seat cushions and interiors) and the furniture industry (for example, for flexible foams for mattresses or cushioning, or in wood coating).
TUIS is a German transport accident information and emergency response system jointly operated by around 130 chemical companies. The member companies can be reached by the public authorities at any time and provide assistance over the telephone, expert on-site advice or special technical equipment.
UNESCO protected area
UNESCO protected areas, or World Heritage Sites, are natural sites of exceptional value. These important habitats can be home to endangered plant and animal species.
A value chain describes the successive steps in a production process, from the raw materials through various intermediate steps to the finished product.
In the BASF Verbund, production facilities, energy flow, logistics and infrastructure are intelligently networked with each other in order to increase production yields, save resources and energy and reduce logistics costs. A significant factor in the Verbund concept is the Know-How Verbund, in which BASF employees engage in worldwide exchange and expert knowledge is pooled in technology platforms.
Water stress areas
Water stress areas are areas in which water represents a scarce resource, and where people abstract more than 60 percent of the water available. The most important factors leading to water scarcity are: low precipitation, high temperatures, low air humidity, unfavorable soil properties and high water abstraction rates.
White biotechnology is an area of biotechnology, also called industrial biotechnology, that uses microorganisms and/or enzymes to produce chemical products that are utilized in many levels of the value chain in the chemical industry. This involves, for example, the biotechnological production of chiral intermediates.