Our Strategic Action Areas

BASF’s strategic direction is based on a comprehensive analysis of our markets, competitors and the economic environment. We continuously monitor global trends and short-term developments and anticipate the resulting opportunities and risks. In doing so, we keep a close eye on the demands of our customers and the transformation of our company. The following six strategic action areas enable us to strengthen our leading position in a competitive environment.

Innovation

Innovation is the bedrock and driver of our success. BASF is a leader in the chemical industry with around 10,000 employees in research and development and R&D spending of around €2.1 billion in 2023. We want to further strengthen this position by driving forward our research activities, especially in agriculture, battery materials, polymer technologies and catalytic and biotechnological methods. Our research units are organizationally aligned with the needs of our customers. Customer-focused activities are directly integrated into the divisions. Research activities that are relevant to several operating divisions as well as Group-wide relevant topics are driven by the global division Group Research. In addition, we are pursuing and expanding our cooperations with customers, universities and research institutions.

We want to gear our innovation pipeline to sustainability – especially climate protection, circular economy and more sustainable products for our customers. This lays the foundation for future growth. We are working intensively on fundamental innovations for processes, products and business models, for example, for the low-emission production of basic chemicals, new battery materials and catalyst technologies, chemical recycling of plastics and textiles, and digital, climate-smart farming models. At the same time, we are developing new products and product improvements in all business units that can offer our customers sustainability and competitive advantages. These include surface solutions for the aviation and wind power industries, bio-based and biodegradable active ingredients for the cosmetics, detergent and cleaner industries, and engineering plastics based on renewable or recycled raw materials.

• More information on innovation

Good to know

Supercomputer enables new research approaches

In 2023, BASF commissioned a new supercomputer in Ludwigshafen, Germany. Quriosity is the world’s largest supercomputer used in industrial chemical research. It replaces the supercomputer that has been deployed since 2017. With three petaflops of computing power, the new supercomputer is considerably more powerful than its 1.75-petaflops predecessor. As the complexity of research projects is increasing, we have expanded our computing capacities accordingly.

In the personal care business area, for example, the supercomputer’s complex simulations help employees to precisely predict which cosmetic ingredients harmonize optimally together to achieve the desired effect. At an early stage in the development of crop protection products, the supercomputer uses molecular modeling to quickly identify suitable compounds that are effective and environmentally sound. However, the supercomputer is also used in projects outside of research and development, for example, to optimize plant components in production operations.

Sustainability

We believe that the economy, environment and society are inextricably linked and interdependent. In all three areas we want to create value with our products, solutions and technologies. Already in 1994, we pledged our commitment to sustainability and since then, have systematically aligned our activities with the principles of sustainability. We want to further strengthen our position as a pioneer for sustainable solutions. We see sustainability as an integral part of our strategy as well as our targets, steering processes and business models. In doing so, our aim is to be a responsible and attractive partner for our customers, develop new growth areas and lay the foundation for the long-term success of our company. Our approach covers the entire value chain – from the responsible procurement of our raw materials and safety and resource efficiency in production to sustainable solutions for our customers.

In this context, protecting the climate is of central importance for us. We have reduced our CO₂ emissions by around 60% since 1990 – at the same time, sales product volumes have increased significantly. By 2030, we want to reduce our absolute CO₂ emissions related to our production (Scope 1) and our energy purchases (Scope 2) by 25% compared with 2018. In 2023, we also set ourselves a target for our raw materials-related emissions (Scope 3.1) to be able to offer our customers an even wider range of products with a low carbon footprint. By 2030, we want to reduce these raw materials-related emissions specifically by 15% from the 2022 baseline. Furthermore, by 2050, we want to achieve net-zero greenhouse gas emissions for our production, our energy and raw materials purchases. To achieve our climate protection goals, we are relying on the use of renewable energy, taking targeted measures to avoid CO₂ emissions, working to close material cycles and working together with our suppliers to reduce emissions in the supply chain (see In Focus: Climate Change).

We are focusing our product portfolio even more strongly on resource efficiency, climate change and energy as well as circular economy in order to meet the increasing sustainability requirements of our customers with innovative solutions and to comply with regulatory requirements. That is why we have updated our Sustainable Solution Steering (TripleS) methodology for steering the product portfolio based on sustainability criteria (see Our Sustainability Concept). We applied the new methodology for the first time in the 2023 financial year and developed a new key performance indicator, “Sustainable-Future Solutions” sales, which indicates the share of our products with a particular contribution to sustainability in the relevant sales. In addition, a digital solution enables us to calculate the carbon footprint of our approximately 45,000 sales products – from raw materials extraction to the factory gate (“cradle-to-gate”). This enables us to create transparency around the carbon intensity of our products and optimize our processes on this basis: We are increasingly using low-emission and renewable raw materials and are continuously expanding our product portfolio with a lower carbon footprint.

• More information on energy and climate protection and our carbon footprint
• More information on the circular economy

Production

The production and processing of chemicals is our core business. Our comprehensive product portfolio ranges from basic chemicals to custom system solutions. The strength of our company lies in the Verbund and its integrated value chains. This enables us to achieve reliable, efficient and CO₂-optimized production and leverages synergies in the development and application of new technologies and the use of digital solutions. At the same time, the Verbund is the foundation for meeting the increasingly diverse needs of our customers and markets with a differentiated offering.

Our strategy is to produce locally for local markets, close to our customers. We plan to invest €19.5 billion worldwide between 2024 and 2027 to expand our capacities based on market demand and to further increase the availability, efficiency and flexibility of our plants. In particular, we want to benefit from the strong growth of the chemical market in Asia (see “Portfolio”). Our global production footprint contributes to the regional diversification of our sales and earnings distribution, making it part of our risk management. It helps us to compensate for economic weaknesses and a lack of growth prospects in individual markets within the BASF Group. This currently applies to Europe and especially Germany, where high energy prices compared with other regions and a challenging regulatory environment are negatively impacting our competitiveness and growth.

• More information on our production sites and the Verbund structure

Digitalization

We want to leverage the diverse growth potential of digitalization, seize the associated opportunities to the benefit of our customers and strengthen our competitiveness. To achieve this, we promote digital skills among our employees, cooperate with partners and make digital technologies and ways of working an integral part of our business.

Digitalizing our plants and systematically analyzing data enables us to further automate processes. In this way, we steer the capacity, availability and efficiency of our plants in line with market conditions, for example, by simulating value streams within our Verbund structure or through predictive maintenance. Linking data from different sources and using artificial intelligence (AI) opens up numerous opportunities for us to manage our business more efficiently and improve our processes, for example, in logistics. Using AI also supports our transformation to climate neutrality and a circular economy, for example by automatically calculating product-specific carbon footprints or improving management of value chains.

The combination of products, services and digital offerings also creates new business models and advantages for our customers, such as in the automotive and personal care industry as well as agriculture. In addition, digitalization enables us to further strengthen our innovative power. In 2023, we started up our new supercomputer Quriosity, which is considerably more powerful than its predecessor of the same name. At the same time, we are working on new technologies such as quantum computing, for instance as a founding member of the Quantum Technology and Application Consortium (QUTAC). We are also involved in other digitalization initiatives such as the Catena-X network, where we are working with partners to develop a system for standardized data exchange in the automotive value chain. By using a standardized calculation logic for the product carbon footprint (PCF), we help to develop solutions that can reduce CO₂ emissions.

Portfolio

We are steering our portfolio toward innovation-driven growth areas. Following major acquisitions in recent years (battery materials, engineering plastics, agricultural solutions), we plan to further develop our portfolio through smaller, bolt-on acquisitions in the future. Major divestitures (pigments, construction chemicals, paper and water chemicals, kaolin minerals) in previous years were followed by the carve-out of the emissions catalysts and precious metals services business into the new BASF Environmental Catalyst and Metal Solutions (ECMS) entity and the divestiture of BASF’s nickel-based catalysts production site in De Meern, Netherlands, to IQatalyst B.V. In addition, at the end of 2023, BASF, LetterOne and Harbour Energy plc (Harbour) signed an agreement to combine the businesses of Wintershall Dea and Harbour. With this agreement, large parts of Wintershall Dea’s exploration and production business will be transferred to Harbour – a major step toward achieving our announced strategic goal of exiting the oil and gas business.

At the same time, we are strengthening the basis for our organic growth with investments. In 2023, BASF began construction of the third expansion phase of the production plants for methylene diphenyl diisocyanate (MDI) at its Verbund site in Geismar, Louisiana. Together with Yara, we are also evaluating the development and construction of a production plant for blue ammonia¹ using carbon capture and storage (CCS) in the U.S. Gulf Coast region. We are enhancing our range of fragrances and flavors in Europe at the Ludwigshafen site in Germany, with additional plants for menthol and linalool scheduled for startup in 2026. At our site in Chalampé, France, we are building a new hexamethylenediamine (HMD) plant and we are expanding our polyamide 6.6 production in Freiburg, Germany. In 2023, we started up an expanded complex for ethylene oxide and ethylene oxide derivatives at the Verbund site in Antwerp, Belgium. In addition, a new world-scale production plant for alkylethanolamines will be built there by 2024. The Asian market will play a key role in our future growth. With a share of around 50%, China is already by far the world’s largest chemical market and is a key driver of growth in global chemical production. We have a strong production, sales and innovation base in Asia, and in particular in China, which we will continue to expand. Our largest project is the new Verbund site in Zhanjiang in the southern Chinese province of Guangdong, which we are planning from the outset as a pioneer for sustainability. Once completed, Zhanjiang will be our third-largest Verbund site after Ludwigshafen and Antwerp. The implementation of the project is on schedule. Following the startup of the engineering plastics plant in 2022, a plant for the production of thermoplastic polyurethanes came onstream in 2023. The focus in Zhanjiang is now on the step-by-step establishment of the Verbund structure, starting with the construction of a steam cracker along with downstream plants for the production of petrochemicals and intermediates as well as plants for surfactants and citral. In addition, since 2022 we have been expanding our Verbund site in Nanjing, China, which we operate together with Sinopec. A new tert-butyl acrylate plant came on stream there by the end of 2023 and we have expanded production capacities for several products in the Petrochemicals and Intermediates divisions.

We also reached important milestones in our global battery materials and battery recycling business in 2023. This includes investments to increase our production capacities and to establish innovative recycling concepts in the three key regions of Asia, North America and Europe: In June 2023, we opened Europe’s first colocated center for battery materials production and battery recycling² at the Schwarzheide site in Germany. At our U.S. site in Battle Creek, Michigan, we will offer cathode active materials from recycled metals on a commercial scale from 2024. We are also currently expanding the capacity for cathode active materials of BASF Shanshan Battery Materials Co., Ltd. in China and the new production lines at the Changsha and Shizuishan sites will gradually be put into operation. In Onoda, Japan, work to expand production capacities for cathode active materials at BASF TODA Battery Materials LLC has been underway since the end of 2022. This is scheduled for startup in the second half of 2024.

• More information on material investments and portfolio measures

Employees

Our employees are key to BASF’s success. That is why we believe that it is important to have an attractive total offer package and an inspiring working environment that fosters and develops employees’ individual talents and enables them and their teams to perform at their best. We are pursuing three action areas to make our high-performance organization even more so: empowerment, differentiation and simplification of structures and processes. At the same time, we encourage and promote a leadership culture that empowers our employees to respond to customer needs quickly and efficiently with a solution orientation. We value diversity in people, opinions and experience as being crucial to creativity and innovation. We embrace bold ideas, help our employees to implement them and learn from setbacks. This is founded on an open feedback and leadership culture based on mutual trust, respect and dedication to top performance.

• More information on employees