Harnessing Business Opportunities and Measuring Value Added by Sustainability

  • Product Carbon Footprints (PCFs) for around 45,000 sales products by the end of 2021

We take advantage of business opportunities by offering our customers innovative products and solutions that support their sustainability goals. We ensure that the business units automatically evaluate and take into account relevant sustainability criteria when they develop and implement strategies, research projects and innovation processes.

We want to measure the value proposition of our actions along the entire value chain. We are aware that our business activities have an impact on the environment and society, and so we strive to increase the positive contribution and minimize the negative effects of our business activities.

To achieve this, we need to continually improve our understanding of 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 Analyses, the SEEbalance® Socio-Eco-Efficiency Analysis, our Sustainable Solution Steering portfolio analysis, or BASF’s corporate carbon footprint.

Identifying and assessing sustainability topics1, 2
Identifying and assessing sustainability topics (flow chart)

1 Our stakeholders also confirmed the materiality of the nonfinancial topics that the Value to Society approach identified as having an impact along the value chain.

2 Quantitative thresholds for defining material topics have not been set due to the complexity of the assessment methods used for each dimension of materiality. The final list of topics is based on an expert comparison of the results of all the assessment approaches described.

BASF also plans to make the individual carbon footprints for around 45,000 sales products available by the end of 2021 with the help of a new, in-house digital solution. PCFs comprise all product-related greenhouse gas emissions that occur until the BASF product leaves the factory gate for the customer: from the purchased raw material to the use of energy in production processes (Scope 1–3). Calculating PCFs creates transparency for our customers and partners, enabling us to develop plans together to reduce CO2 emissions along the value chain up to the end product.

We want to understand the value we contribute to society and make this transparent. However, there are still no uniform, global standards for measuring and reporting on companies’ overall impact that cover economic, environmental and social aspects of business activities along the value chain. This is why we developed the Value to Society approach in 2013 together with external experts. It allows us to better understand our contribution to a sustainable future. In addition, we can use it to compare the significance of financial and nonfinancial impacts of our business activities on society and show their interdependencies.

Our Value to Society approach3, 4

(figures in billion €)

Our Value to Society approach (flow chart)

3 Value to Society results are calculated annually following the publication of the BASF Report. Consequently, the results shown in the BASF Report 2020 are based on the figures for the 2019 business year (“human capital” category currently only assessed for BASF production).

4 The net income of BASF’s production presented in the Value to Society is calculated using the BASF Group’s net income, adjusted for the interest result, the other financial result and noncontrolling interests.

The results illustrate the positive contributions and negative effects, both at BASF and in our value chains. Positive factors include taxes paid, wages, social benefits, employee training and our net income.4 Negative contributions include environmental impacts such as carbon emissions, land use and emissions to air, soil and water, as well as health and safety incidents. We aim to increase the positive contributions of our business activities along the value chain and minimize the negative impacts. The Value to Society approach also enables us to continually monitor our progress. It complements existing concepts for assessing risks and business opportunities by providing a macro perspective.

We share our experiences in networks and initiatives such as the Impact Valuation Roundtable and are involved in the corresponding standardization processes within the International Organization for Standardization (ISO). We are also a founding member of the value balancing alliance e.V. (vba), a cross-industry initiative. The vba is working to develop an accounting and reporting standard that makes the value companies provide to society transparent and comparable. The aim is to present the financial, ecological, and social impacts of business activities on the basis of a standardized framework. The vba is supported by the E.U., major auditing firms, the Organisation for Economic Co-operation and Development (OECD), leading universities and other partners. BASF is currently one of the pilot companies testing the method using its own business data. The vba receives the results of our evaluation to enhance and refine the Value to Society method.