Limited Assurance Report of the Independent Auditor Regarding Sustainability Information1
To the Executive Board of BASF SE, Ludwigshafen am Rhein
We have performed an independent limited assurance engagement on the qualitative and quantitative disclosures on sustainability as reference in the GRI Content Index in the Online- “BASF Report 2021”, published under http://www.bericht.basf.com/2021/en, (further “Report”) of BASF SE, Ludwigshafen am Rhein (further “BASF”) for the period from January 1 to December 31, 2021.
It was not part of our engagement to review product or services related information, references to external information sources, expert opinions and future-related statements in the Report.
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. The adequacy and accuracy of the conclusions from these external assessments were not part of our limited assurance engagement.
Management´s Responsibility for the Report
The legal representatives of BASF are responsible for the preparation of the Report in accordance with the Reporting Criteria. BASF’s Report applies the principles and standard disclosures of the Standards of the Global Reporting Initiative (GRI), the Corporate Accounting and Reporting Standard (Scope 1 und 2) as well as the Corporate Value Chain Standard (Scope 3) of the Greenhouse Gas Protocol Initiative of the World Resources Institute and of the World Business Council for Sustainable Development (WBCSD), the recommendations of the European Chemical Industry Council (CEFIC), internally developed criteria for the evaluation method Sustainable Solution Steering as well as for the Health Performance Index as Reporting Criteria (further “Reporting Criteria”).
The responsibility includes the selection and application of appropriate methods to prepare the Report and the use of assumptions and estimates for individual qualitative and quantitative sustainability disclosures which are reasonable under the circumstances. Furthermore, this responsibility includes designing, implementing and maintaining systems and processes that are relevant for the preparation of the Report in a way that is free of – intended or unintended – material misstatements.
It is our responsibility to express a conclusion based on our work performed within a limited assurance engagement on the on the qualitative and quantitative disclosures within the scope of our engagement.
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 above mentioned sustainability information of the Company for the period from January 1 to December 31, 2021 has not been prepared, in all material respects, in accordance with the aforementioned Reporting Criteria. 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 assurance procedures is subject to the auditor’s own judgement.
Within the scope of our engagement, we performed, amongst others, the following procedures:
- Inquiries of personnel on corporate level, who are responsible for the materiality analysis, in order to gain an understanding of the processes for determining material sustainability topics and respective reporting boundaries of BASF.
- A risk analysis, including a media research, to identify relevant information on BASF sustainability performance in the reporting period.
- Reviewing the suitability of internally developed Reporting Criteria.
- Evaluation of the design and implementation of the systems and processes for the collection, processing and control of the sustainability disclosures included in the scope of this engagement, including the consolidation of the data.
- Inquiries of personnel on corporate level responsible for providing the data and information, carrying out internal control procedures and consolidating the data and information.
- Evaluation of selected internal and external documentation.
- Analytical evaluation of data and trends of quantitative information which are reported by all sites for consolidation on corporate level.
- Evaluation of local data collection and reporting processes and reliability of reported data via a sampling survey at the sites Ludwigshafen am Rhein and Düsseldorf (Germany), Antwerp (Belgium), Moerdijk-Ellba (Netherlands), Port Arthur and Freeport (USA), Kuantan (Malaysia) as well as Yeosu (South Korea).
- Review of the consistency of GRI Standards in-accordance with the reporting option ‘Comprehensive’ as declared by BASF with sustainability information the Report.
- Assessment of the overall presentation of the disclosures.
- Evaluation of the process for the identification of taxonomy-eligible economic activities and the corresponding disclosures in the Report.
The legal representatives have to interpret vague legal concepts in order to be able to compile the relevant disclosures according to Article 8 of the EU Taxonomy Regulation. Due to the innate risk of diverging interpretations of vague legal concepts, the legal conformity of these interpretations and, correspondingly, our assurance thereof are subject to uncertainty.
In our opinion, we obtained sufficient and appropriate evidence for reaching a conclusion for the assurance engagement.
Independence and Quality Assurance on 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).
Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the qualitative and quantitative disclosures on sustainability included in the scope of this engagement and published in the Report of BASF SE for the period from January 1 to December 31, 2021, have not been prepared, in all material respects, in accordance with the Reporting Criteria.
Restriction of Use/Clause on General Engagement Terms
This report is issued for purposes of the Executive Board of BASF SE, Ludwigshafen am Rhein, only. We assume no responsibility with regard to any third parties.
Our assignment for the Executive Board of BASF SE, Ludwigshafen am Rhein, and professional liability as discribed 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 the 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 22, 2022 KPMG AG
Wirtschaftsprüfungsgesellschaft [Original German version signed by:]
Wirtschaftsprüfer [German Public Auditor]
1 Our engagement applied to the German version of the BASF Report 2021. This text is a translation of the Independent Assurance Report issued in German, whereas the German text is authoritative.