Integration of Sustainability

Strategy

• Sustainability further integrated into governance, compensation systems and business models

We achieve long-term business success by creating value added for the environment, society and the economy. Sustainability is at the core of what we do, a driver for growth and value as well as an element of our risk management. That is why sustainability is firmly anchored into the organization as part of governance, compensation systems and business models.

Based on our corporate strategy and the global targets derived from this, we steer the sustainability targets (CO₂-neutral growth until 2030 and achieve €22 billion in Accelerator sales by 2025) as most important key performance indicators. We have established the necessary steering mechanisms and control systems at Group level. Carbon management bundles our global activities to reduce greenhouse gas emissions. We use the Sustainable Solution Steering method to manage our product portfolio. To assess the sustainability performance of our products and identify solutions that make a substantial sustainability contribution in the value chain (Accelerator products), we regularly reassess our product portfolio.

In addition to the two climate protection and Accelerator sales targets, we have also set ourselves further sustainability targets on responsible procurement, engaged employees, women in leadership positions, occupational health and safety, process safety and water management.

As a co-founder of the U.N. Global Compact and a recognized LEAD company, we contribute to the implementation of the United Nations’ Agenda 2030 on an ongoing basis. Our products, solutions and technologies help to achieve the U.N. Sustainable Development Goals (SDGs), especially SDG 2 (Zero hunger), SDG 5 (Gender equality), SDG 6 (Clean water and sanitation), SDG 8 (Decent work and economic growth), SDG 9 (Industry, innovation and infrastructure), SDG 12 (Responsible consumption and production) and SDG 13 (Climate action). The SDG focus areas are prioritized by internal experts. In doing so, they assess the impacts and positive contributions of our products, our corporate targets and strategic action areas. The contribution of our activities is measured using the Value to Society approach. This assesses our positive and negative impacts on the environment, society and the economy.

We evaluate key sustainability topics with our comprehensive materiality analysis. The graphic shows how we identify and assess relevant topics. Here, we take into account topics that we have an impact on, topics that have an impact on us, and topics that our stakeholders consider important.

The relevant topics identified based on the three dimensions of materiality include climate and energy, resource efficiency and waste, health and safety / product stewardship, emissions to air and soil, and responsibility along the value chain.

Our organizational and management structures

We are constantly working to broaden our positive impact on key sustainability topics and reduce the negative impact of our business activities. The Corporate Development unit, which is part of the Corporate Center, has steered the integration of sustainability into core business activities and decision-making processes since 2020. Global steering of climate-related matters is also bundled in this unit, such as coordinating measures to reach our climate protection target and steering the target on making our product portfolio more sustainable.

The Board of Executive Directors and the Supervisory Board are regularly briefed on the current status of individual sustainability topics. In addition, the Board of Executive Directors is informed about sustainability evaluations in business processes, for example, in the case of proposed investments and acquisitions. It makes decisions with strategic relevance for the Group and monitors the implementation of strategic plans and target achievement. The Corporate Sustainability Board, which is composed of heads of business and Corporate Center units and regions, supports the Board of Executive Directors on sustainability topics and discusses operational matters. A member of the Board of Executive Directors serves as chair.

We also established an external, independent Stakeholder Advisory Council (SAC) in 2013 and a Human Rights Advisory Council (HRAC) in 2020. In the SAC, international experts from academia and society contribute their perspectives to discussions with BASF’s Board of Executive Directors. The HRAC is led by our Chief Compliance Officer. It comprises external human rights specialists and internal experts, who advise senior management. This help us to build on our strengths in how we handle human rights and address potential for improvement.

We systematically evaluate sustainability criteria, including the effects of climate change, as an integral part of decisions on acquisitions and investments in property, plant and equipment or financial assets. In this way, we not only assess economic dimensions, but also the potential impacts on areas such as the environment, human rights or the local community. We evaluate both the potential impacts of our activities as well as which effects we are exposed to.