Limited Assurance Report of the Independent Auditor Regarding the Integrated Non-Financial Group Statement1

To the Supervisory Board of BASF SE, Ludwigshafen am Rhein

We have performed an independent limited assurance engagement on the integrated non-financial group statement of BASF SE, Ludwigshafen am Rhein (further “Company” or
“BASF”) according to §§ 315bof the German Commercial Code (HGB) (further „Report”) for the period from January 1 to December 31, 2020.

For the most significant non-financial steering KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“ a reasonable assurance engagement has been performed.

As described in the section “Supplier Management” BASF engaged the external provider EcoVadis to perform audits on suppliers to ensure compliance with environmental, social, and corporate governance standards of the “Together for Sustainability” (TfS) initiative. In addition, as described in the section “Responsibility for human rights” audits of Joint Ventures were performed by an external audit firm engaged by BASF to ensure compliance with working and social standards. The adequacy and accuracy of the conclusions from these external assessments were not part of our assurance engagement.

Management’s Responsibility

The legal representatives of BASF are responsible for the preparation of the Report in accordance with §§ 315b, 315c in connection with 289c to 289e HGB.

This responsibility of the legal representatives includes the selection and application of appropriate methods to prepare the Report and the use of assumptions and estimates for individual disclosures which are reasonable under the given circumstances. Furthermore, the legal representatives are responsible for the internal controls they deem necessary for the preparation of the Report that is free of – intended or unintended – material misstatements.

Practitioner’s Responsibility

Our responsibility is to express a conclusion on the Report based on our work performed within a limited assurance engagement and with reasonable assurance for the most significant non-financial steering KPIs.

We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engagements other than Audits or Reviews of Historical Financial Information” and the International Standard on Assurance Engagements (ISAE) 3410: “Assurance Engagements on Greenhouse Gas Statements” published by IAASB. Accordingly, we have to plan and perform the assurance engagement in such a way that we obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Report for the period from January 1 to December 31, 2020, has not been prepared, in all material respects, in accordance with §§ 315b and 315c in conjunction with 289c to 289e HGB. We do not, however, issue a separate conclusion for each disclosure. As the assurance procedures performed in a limited assurance engagement are less comprehensive than in a reasonable assurance engagement, the level of assurance obtained is substantially lower. The choice of audit procedures is subject to the auditor’s own judgement.

Within the scope of our limited assurance engagement, we performed amongst others the following procedures:

  • Inquiries of personnel on group level who are responsible for the materiality analysis to get an understanding of the process for identifying material topics and respective report boundaries of BASF SE
  • A risk analysis, including a media research, to identify relevant information on BASF SE sustainability performance in the reporting period
  • Reviewing the suitability of internally developed Reporting Criteria
  • Evaluation of the design and implementation of systems and processes for the collection, processing and monitoring of disclosures on environmental, employee and social matters, respect for human rights, and combating corruption and bribery, including the consolidation of the data
  • Inquiries of personnel on group level who are responsible for determining disclosures on concepts, due diligence processes, results and risks, the conduction of internal controls and consolidation of the disclosures
  • Evaluation of selected internal and external documents
  • Analytical evaluation of data and trends of quantitative disclosures which are reported by all sites on group level
  • Evaluation of local data collection and reporting processes and reliability of reported data via a sampling survey at the site Ludwigshafen am Rhein (Germany)
  • Alignment of disclosures in the integrated non-financial group statement with the respective disclosures in the consolidated financial statements and management report
  • Assessment of the overall presentation of the disclosures

For the most significant non-financial steering KPIs we conducted our work in the form of a reasonable assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised): “Assurance Engagements other than Audits or Reviews of Historical Financial Information”, published by IAASB. Accordingly, we have to comply with our professional duties and to plan and perform the assurance engagement in such a way that we, respecting the principle of materiality, reach our conclusion with a reasonable level of assurance. The choice of assurance procedures is subject to the auditor’s own judgement.

Within the scope of our reasonable assurance engagement we performed, amongst others, the following procedures:

  • A risk analysis, including a media research, to identify relevant information on BASF SE sustainability performance in the reporting period in relation to the KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“
  • Evaluation of the design and implementation of systems and processes for the collection, processing and monitoring of disclosures, including the consolidation of the data for the KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“
  • Performing control-based assurance procedures to assess the design and effectiveness of internal controls used to collect and process non-financial disclosures and data, including the consolidation of the data at group level for the KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“
  • Substantive assurance procedures using, in particular, internal and external documentation
  • Analytical evaluation of data and trends of quantitative disclosures for the KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“ which are reported by all sites to group level for consolidation
  • Evaluation of local data collection and reporting processes and reliability of reported data via a sampling survey at the sites Ludwigshafen am Rhein and Schwarzheide (Germany), Kuantan (Malaysia), Antwerp (Belgium), Port Arthur, Freeport and McIntyre (USA), Yeosu (South Korea).

In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the assurance engagement.

Independence and Quality Assurance on the Part of the Auditing Firm

In performing this engagement, we applied the legal provisions and professional pronouncements regarding independence and quality assurance, in particular the Professional Code for German Public Auditors and Chartered Accountants (in Germany) and the quality assurance standard of the German Institute of Public Auditors (Institut der Wirtschaftsprüfer, IDW) regarding quality assurance requirements in audit practice (IDW QS 1).

Conclusion

Based on the procedures performed and the evidence obtained for the limited assurance, nothing has come to our attention that causes us to believe that the integrated non-financial group statement of BASF SE for the period from January 1 to December 31, 2020 are not prepared, in all material respects, in accordance with §§ 315b and 315c in conjunction with 289c to 289e HGB.

In our opinion the most significant non-financial steering KPIs „Sales from Accelerator Products“ and „CO2 neutral growth“ of BASF SE for the period from January 1 to December 31, 2020 are prepared, in all material respects, in accordance with §§ 315b and 315c in conjunction with 289b to 289e HGB.

Restriction of Use/Clause on General Engagement Terms

This report is issued for purposes of the Supervisory Board of BASF SE, Ludwigshafen am Rhein, only. We assume no responsibility with regard to any third parties.

Our assignment for the Supervisory Board of BASF SE, Ludwigshafen am Rhein, and professional liability as described above is governed by the General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedingungen für Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in the version dated January 1, 2017 (https://www.kpmg.de/bescheinigungen/lib/aab_english.pdf). By reading and using the information contained in this assurance report, each recipient confirms notice of provisions contained therein including the limitation of our liability as stipulated in No. 9 and accepts the validity of the General Engagement Terms with respect to us.

Frankfurt am Main, February 23, 2021

KPMG AG
Wirtschaftsprüfungsgesellschaft

[Original German version signed by:]

Glöckner
Wirtschaftsprüfer [German Public Auditor]

ppa. Dollhofer

1 Our engagement applied to the German version of the integrated non-financial group statement 2020. This text is a translation of the Independent Assurance Report issued in German, whereas the German text is authoritative.