Portfolio Management Based on Sustainability Performance

• New goal to manage our product portfolio with the Sustainable Solution Steering method from 2019 onward
• As of 2018, Challenged products will be phased out within five years of initial classification

A significant steering tool for our product portfolio, based on the sustainability performance of our products, is the Sustainable Solution Steering method (see box below).

By the end of the 2018 business year, BASF had conducted sustainability assessments and ratings for 96.5% of its entire relevant portfolio¹ of more than 60,000 specific product applications – which account for €56.2 billion in sales. These consider the products’ application in various markets and industries. Because of increasing sustainability requirements on the market, we regularly conduct reassessments of existing product categories as well as of the relevant portfolio.

Accelerator products make a substantial sustainability contribution in the value chain. This is why we will pursue a new, ambitious goal from 2019 onward: We aim to make sustainability an even greater part of our innovation power and achieve €22 billion in Accelerator sales by 2025.

To achieve this goal, we will deeply integrate Sustainable Solution Steering into the research and development pipeline, in business strategies as well as in merger and acquisition projects.

We largely achieved our previous goal of increasing the proportion of sales from Accelerator products to 28% by 2020 at the end of 2018 (proportion of sales in 2018: 27.7%).

Portfolio management:
increase Accelerator sales and phase out Challenged products

Evaluating and transparently classifying our products enables us to systematically improve these in cooperation with our customers and at the same time, steer our product portfolio. Our aim is to increase sales from Accelerator products to €22 billion in 2025. We have identified substantial sustainability concerns for our Challenged products and are developing action plans. These action plans include research projects, reformulations or even replacing one product with an alternative product. At the end of 2018, action plans had been created for 100% of Challenged products. To systematically align our portfolio with contributions to sustainability, as of 2018 we will phase out all Challenged products within five years of initial classification as such at the latest. We strive to offer products that make a greater contribution to sustainability in their area of application to live up to our own commitments and meet our customers’ demands.

1 Figures for 2017 have been restated due to the agreement between BASF and LetterOne to merge their oil and gas businesses.