Integration of Sustainability

Strategy

• Ensuring business success tomorrow by creating value for the environment, society and business
• Taking advantage of business opportunities and minimizing risks

We achieve long-term business success by creating value for the economy, the environment and society. Sustainability is at the core of what we do, a driver for growth as well as an element of our risk management. That is why sustainability is firmly anchored into the organization, governance and our business models. We support our customers in being more sustainable and create new business opportunities that grow our customer relationships. Conducting our business in a responsible, safe, efficient and respectful way promotes societal acceptance of our business activities.

Our products, solutions and technologies contribute to achieving the United Nations’ Sustainable Development Goals (SDGs), for example, on sustainable consumption and production, climate action or fighting hunger. In this way, we want to make a lasting contribution to a viable future.

We have defined sustainability focus areas in our corporate strategy to position ourselves in the market and at the same time, meet the growing challenges along the value chain:

• We source responsibly
• We produce safely for people and the environment
• We produce efficiently
• We value people and treat them with respect
• We drive sustainable products and solutions

Relevant topics resulting from these commitments – such as energy and climate protection, portfolio management, supply chain responsibility, employee engagement, resource efficiency, responsible production and water – form the focal points of our reporting. We integrate these topics into our long-term steering processes to increase societal acceptance and take advantage of business opportunities. Here, we consider three dimensions of materiality: The relevance of sustainability topics to our business, the impacts of our business activities along the value chain on sustainability topics, and how important these topics are to our stakeholders.

We identify relevant topics and trends as well as potential opportunities and risks along our value chain through dialog with stakeholders, supported by continuous, worldwide big data analysis. In 2018, we also co-published a study identifying long-term sustainability trends between now and 2030, based on an analysis of more than 900 studies from academia, think tanks and market analyses.

Business success tomorrow means creating value for the environment and society, not just making a profit. This is why, in addition to our new financial targets, we have also set ourselves new nonfinancial targets on climate protection, a sustainable product portfolio, responsible procurement and engaged employees to steer our business into a sustainable future.

The Corporate Sustainability Board is BASF’s central steering committee for sustainable development. It is composed of the heads of our business, corporate and functional units, and regions. A member of the Board of Executive Directors serves as chair. We have also established an external, independent Stakeholder Advisory Council. Here, international experts from academia and society contribute their perspectives to discussions with BASF’s Board of Executive Directors, helping us expand our strengths and identify potential for improvement.

Our sustainability management helps to minimize risks and opens up new opportunities to market more sustainable products. We reduce potential risks in the areas of environmental protection, safety and security, health protection, product stewardship, compliance, and labor and social standards by setting ourselves globally uniform requirements. These often go beyond local legal requirements. Internal monitoring systems and grievance mechanisms enable us to check compliance with these standards: they include, for example, global surveys, audits and compliance hotlines. All employees, managers and Board members are required to adhere to our global Code of Conduct, which defines a binding framework for our business activities.

We systematically evaluate sustainability criteria as an integral part of our assessment processes when deciding whether to acquire or invest in property, plant and equipment or financial assets. These assess the economic implications and potential impacts on areas such as the environment, human rights or local communities.