Measuring Value Added by Sustainability and Harnessing Business Opportunities

• Value to Society: Method for assessing economic, environmental and social impact of business activities along the value chain

We take advantage of business opportunities by offering our customers innovative products and solutions that contribute to sustainable development. We ensure that sustainability criteria are automatically integrated into our business units’ development and implementation of strategies, research projects and innovation processes. For example, we analyze sustainability-related market trends in customer industries to systematically seize new business opportunities.

We want to measure the value proposition of our actions along the entire value chain, aware that our business activities are connected to both positive and negative impacts on the environment and society. We strive to increase our positive contribution to society and minimize the negative impacts of our business activities.

To achieve this, we need to even better understand how our actions impact society and the environment. We already have many years of experience of this from evaluating our products and processes using methods such as Eco-Efficiency Analysis, the Sustainable Solution Steering portfolio analysis, or BASF’s corporate carbon footprint. We have completely revised our SEEbalance^® method with respect to how social aspects are assessed. In a new, qualitative assessment, we analyze and evaluate relevant social issues along the value chain. Our assessment is guided by standards such as those issued by the World Business Council for Sustainable Development (WBCSD) or the Roundtable for Product Social Metrics.

BASF has also developed a method with external experts to perform a monetary assessment of the economic, ecological, and social impacts of its business activities along the value chain – the Value to Society approach. It enables a direct comparison between financial and nonfinancial effects of our business activities on society and illustrates interdependencies.

We also evaluate the usefulness of this method as a basis for strategic assessments and decisions in various projects, for example, by analyzing the impacts of alternative sites, business units, plants or forecasts. The results of these assessments are also helpful in our discussions with stakeholders.

We contribute our approach and expertise to current debates on the monetary value of the economic, environmental and social impact of business decisions. We share our experiences in networks and initiatives such as the Impact Valuation Roundtable or the Embankment Project for Inclusive Capitalism. As part of this project to promote sustainable governance, financial market participants, companies and other stakeholders developed metrics and methods to measure the long-term value created by companies more comprehensively. A reporting framework was published in late 2018. We are also involved in the corresponding standardization processes within the International Organization for Standardization (ISO).