E.U. Taxonomy

In accordance with the E.U. Taxonomy Regulation and the supplementary delegated acts, the Nonfinancial Statement includes the proportion of the Group’s taxonomy-eligible and, for the first time, taxonomy-aligned turnover, capital expenditures and operating expenditures for 2022. This applies to the environ­mental objectives of climate change mitigation and climate change adaptation currently addressed in the E.U. tax­onomy. BASF activities that are not yet covered by the E.U. tax­onomy, and as such, are not relevant under the taxonomy, are generally reported as taxonomy-non-eligible in accordance with the delegated acts. These include large parts of BASF’s activities that may nevertheless be in line with the E.U.’s environmental objectives.

In order to derive the financial indicators, an analysis of our product portfolio identified the following economic activities within the meaning of the E.U. taxonomy under the environmental objective of climate change mitigation as relevant for BASF:

• Manufacture of batteries¹
• Manufacture of energy efficiency equipment for buildings¹
• Manufacture of hydrogen
• Manufacture of soda ash
• Manufacture of chlorine
• Manufacture of organic basic chemicals
• Manufacture of anhydrous ammonia
• Manufacture of nitric acid
• Manufacture of plastics in primary form

Compared with 2021, the activity “manufacture of carbon black” was no longer relevant in 2022 due to a plant shutdown.

To avoid double counting, assignment to an enabling activity is only made if a taxonomy-eligible product or project had not already been included under another activity. BASF products also enable the production of technologies for renewable energy or low-carbon mobility. However, since the E.U. taxonomy focuses on the manufacture of technologies and thus excludes precursors, we have classified these activities as non-eligible under the E.U. taxonomy.

In addition to our core business, the production of chemical products, we have identified further BASF activities that can be allocated to the following activities presented in the E.U. taxonomy: afforestation; electricity generation using solar photovoltaic tech­nology; production of heat/cool from bioenergy; production of heat/cool using waste heat; electricity generation from fossil gaseous fuels; high-efficiency co-generation of heat/cool and power from fossil gaseous fuels; production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system; close to market research, development and innovation. These activities made no material contribution² and were therefore generally classified as taxonomy-non-eligible. For the purposes of the templates set out in Annex XII to the Delegated Regulation 2021/2178, we would like to point out that we conduct activities in the areas of electricity generation, co-generation of power and heat/cool, and production of heat/cool from fossil gas. However, as presented above, these are not material. Furthermore, we would like to point out that we do not conduct any nuclear energy activities.

Buildings constructed and operated by BASF, traffic facilities and central water supply and wastewater management systems may also fall under the E.U. taxonomy’s description of activities in the areas “Water supply, sewerage, waste management and remediation,” “Transport,” and “Construction and real estate activities.” Potential contributions from such infrastructure-related activities that supported production were likewise immaterial and were generally classified as taxonomy-non-eligible.

BASF does not report any taxonomy-eligible activities under the environmental objective of climate change adaptation. This is firstly to avoid double counting with economic activities already recorded under the climate change mitigation objective. Secondly, in accordance with the notice issued by the E.U. Commission, a prerequisite for taxonomy eligibility under the adaptation objective is the submission of an investment plan for implementing adaptation solutions. BASF has not prepared any such plan.

Taxonomy-eligible turnover, capital expenditures and operating expenditures

We assessed the taxonomy eligibility of our turnover based on sales as defined and reported in the Consolidated Financial Statements of the BASF Group. Taxonomy-eligible turnover accounted for 13.3% of total sales in 2022. The largest contributions were from the activities “manufacture of plastics in primary form” and “manufacture of organic basic chemicals.” Taxonomy-eligible capital expenditures (including acquisitions and excluding goodwill in accordance with the E.U. taxonomy) accounted for 18.6% of the total investments reported in the Consolidated Financial Statements. capital expenditures on the “manufacture of organic basic chemicals” and in the “manufacture of batteries” made the greatest contribution. Operating expenditures include non-capitalized costs that relate to research and development,³ maintenance and repair, and short-term lease expenses. They are not reported in the Consolidated Financial Statements in this form. All of the capital expenditures and operating expenditures of a production facility with a tax­onomy-eligible activity are counted as taxonomy-eligible. Taxonomy-eligible operating expenditures accounted for 10.4% of total operating expenditures. The largest contributions were from the activities “manufacture of organic basic chemicals” and “manufacture of plastics in primary form.”