Strategy
The content of this section is not part of the statutory audit of the annual financial statements but has undergone a separate limited assurance by our auditor.
The content of this section is voluntary, unaudited information, which was critically read by the auditor.
Our business
Our ambition is to be the preferred chemical company for enabling our customers’ green transformation. We aim to grow profitably and create value for our shareholders with our broad portfolio as well as our product and process innovations. Simultaneously, we are driving the change toward a stronger performance culture. We have incorporated sustainability topics into our strategy and business as well as into our assessment, steering and compensation systems. This principle is also embedded in our corporate purpose: We create chemistry for a sustainable future.
BASF supplies products and services to around 74,000 customers from various sectors in almost every country in the world. The majority of our customer portfolio spans the spectrum from large multinationals to medium-sized enterprises. Only a few of our products are marketed to end users directly. However, we focus on a business-to-business model and on being a partner for a wide range of downstream industries throughout the world. Our operating divisions are grouped into the Chemicals, Materials, Industrial Solutions, Nutrition & Care, Surface Technologies and Agricultural Solutions segments (see Business Review by Segment).
The Chemicals segment supplies BASF’s other segments and customers with basic chemicals and intermediates. In the Materials segment, we produce advanced materials and their precursors for the plastics and plastics processing industries. The Industrial Solutions segment develops and markets ingredients and additives for industrial applications. The Nutrition & Care segment produces ingredients and solutions for consumer applications such as human and animal nutrition, cleaning agents and personal care. In the Surface Technologies segment, we produced automotive OEM and refinish coatings, surface treatments, battery materials and catalysts until the end of 2024 (for more information on the future composition of the segment, see Organization of the BASF Group as of January 1, 2025). The Agricultural Solutions segment is an integrated solutions provider of seeds, traits, crop protection products and digital solutions for the agricultural sector.
Our business operations focus on the chemical industry. The table BASF sales revenue in 2024 by sector lists our sales revenue by sector. Taxonomy-aligned sales revenue is presented separately, see EU Taxonomy. None of our activities involve controversial weapons. We supply individual solutions for tobacco cultivation via the general product portfolio of our Agricultural Solutions segment. We are involved in the fossil fuel sector through our shareholdings in Wintershall Dea GmbH and Harbour Energy plc, London, United Kingdom. On September 3, 2024, the sale of Wintershall Dea’s exploration and production (E&P) business, excluding Russia-related activities, to Harbour Energy, agreed in December 2023, was completed. The E&P business consists of production and development assets, exploration rights and Wintershall Dea’s carbon storage licenses. In exchange, Wintershall Dea shareholders – BASF (72.7%) and LetterOne (27.3%) – received a cash consideration totaling $1.78 billion (BASF share: $1.29 billion), including a purchase price adjustment, and new shares issued by Harbour Energy equating to a total shareholding of 54.5% in the enlarged Harbour company (BASF share: 39.6%). With this divestiture, BASF took the decisive step toward achieving final separation from the oil and gas business (see Material Investments and Portfolio Measures). Wintershall Dea contributed €729 million to net income from shareholdings in 2024 (2023: €130 million) (see Acquisitions and Divestitures).
We generated sales revenue of €65,260 million in the 2024 business year (see Results of Operations). The following table shows the distribution of sales revenue among our customers’ sectors:
>20% |
Chemicals and plastics |
10–20% |
Transportation and automotive |
10–20% |
Agriculture |
10–20% |
Consumer goods |
<10% |
Construction industry |
<10% |
Electronics |
<10% |
Energy and raw materials |
<10% |
Health and nutrition |
We work with over 70,000 Tier 1 suppliers worldwide. They supply us with important raw materials, chemicals, investment goods and consumables, and perform a range of services. More information on our supplier relationships is provided in S2 Workers in the Value Chain. An overview of our workforce by region can be found in S1 Own Workforce, see Metrics. An overview of our business model and inputs, outputs and impacts on our most important stakeholders, as well as of our value chain, is described in a visual representation (see How We Create Value).
Our sustainability strategy
In September 2024, we communicated our “Winning Ways” strategy both internally and externally. The strategy revolves around our ambition to be the preferred chemical company to enable our customers’ green transformation (see Our Strategy). To support this ambition, we supply our customers with products that contribute to sustainability, either through their use by the customer or through their reduced carbon footprint. Many of our customers have set their own sustainability-related targets and are in the process of adapting their business models to reduce their emissions. They are doing so at various speeds and with varying priorities. Our customers also differ in terms of their willingness to pay higher prices for more sustainable products. Against this backdrop, we have adjusted our transformation approach: We want to prioritize projects where we already see rising demand among customers and a willingness to pay for more sustainable products (see Our Strategic Levers: Transform). We are also focusing on selected transformation projects that impact our license to operate (see The green transformation of our global value chain). In line with these principles, we plan to steadily advance our initiatives aimed at transitioning BASF to climate neutrality. We have increasingly invested in renewable energies to operate our plants. Our next step will be to focus on using more bio-based and recycled feedstocks in our existing plants. This will enable us to develop an increasing number of products with a reduced carbon footprint for our customers. As the markets for more sustainable solutions continue to grow, we intend to scale up and apply new technologies that we are currently piloting.
We continue to adhere to our global sustainability-related targets, which include using our TripleS method (Sustainable-Solution Steering) to streamline our portfolio. We have defined a new circular economy target: By 2030, we want to achieve €10 billion in sales revenue from products that contribute to the transition to a circular economy. The sustainability targets reported by BASF apply worldwide and refer to the BASF Group as a whole (for additional information, see Targets and Target Achievement). Our strategic approach covers the entire value chain, from responsible procurement of our raw materials to safety and resource efficiency in production all the way to more sustainable solutions for our customers.
As part of our new strategy, we are channeling our efforts into high-growth markets. We want to expand our organizational structure, our production sites and other research and development activities in the following seven countries: China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam. We are continuously optimizing our organizational structures, our production sites and our R&D activities worldwide.
Our Verbund concept involves using smart technology to link and control our plants. It creates more efficient value chains – ranging from basic chemicals to high value-added products – while enabling a more resource-efficient, carbon-optimized and reliably controllable production process. By-products from one facility are used as feedstocks elsewhere, for example. This saves raw materials and energy, avoids emissions, lowers logistics costs and leverages synergies.
We use a Differentiated Steering concept to control our operations, relying on industry-specific financial performance indicators (for more information, see Our Steering Concept), adapted governance structures, customized processes and independent Enterprise Resource Planning (ERP) systems. These measures create a more decentralized ownership and increase transparency regarding the divisions’ performance.
We want to be the preferred chemical company to enable our customers’ green transformation.
Upstream value chain
Procurement of bio-based and recycled raw materials
Renewable energy
Supplier management
- Code of Conduct
- Sustainability-related assessments
- Supplier CO2 Management Program
see E1 Climate Change
Own production
Gradual implementation of new processes
- Feed-in of bio-based and recycled raw materials
- Emission reduction
Secure, efficient processes
- Operational excellence
- Integrated Verbund structure
- Smart technology and automation
see E1 Climate Change
Downstream value chain
Steering the product portfolio with the TripleS method
- More products with sustainability benefits: Sustainable-
Future Solutions - More products that close or extend loops: Loop Solutions
see E5 Resource Use
and Circular Economy
Societal acceptance of our business activities (license to operate)
Sustainable steering of our product portfolio
Our product portfolio also changed in 2024 based on acquisitions and divestitures. The main changes are listed, see Material Investments and Portfolio Measures. The development of our product portfolio toward more sustainability is a critical lever in assisting our customers with their green transformation. We particularly rely on our TripleS method (Sustainable Solution Steering) which allows us to evaluate our product portfolio’s contribution to categories such as climate change mitigation, energy and resource efficiency and transitioning to a circular economy. As part of the TripleS method, we categorize our product portfolio into five segments, taking sustainability-related aspects into account: Pioneer, Contributor, Standard, Monitored and Challenged (see graphic). Initially, we review all products to identify any current or possible future negative impacts on sustainability topics. We consider minimum standards such as the BASF Code of Conduct, hazards and chemical exposure over the entire life cycle, expected regulatory trends and reputational risks for BASF. If our portfolio assessment identifies products with sustainability concerns, we classify them either as Monitored, or in case of significant concerns, as Challenged. Products identified as having no negative impacts are reviewed to determine whether they contribute to at least one of the following sustainability categories: climate change and energy, resource efficiency, circular economy, pollution reduction, water protection, biodiversity, zero hunger and poverty, health and safety. At the same time, the product should not negatively impact any of the other sustainability categories in a significant way. Products where neither a positive contribution to nor a negative impact on sustainability has been identified are classified as Standard. Products where a positive contribution has been identified are classified as either Contributor or Pioneer depending on their contribution level compared with the market standard.
Share of sales revenue generated by each TripleS segment in the 2024 business year
Taken together, the Pioneer and Contributor products make up our Sustainable-Future Solutions. Products allocated to these segments make a positive sustainability contribution in the value chain. They include, for example, bio-based and biodegradable polymers, which can be used as alternatives to synthetic polymers in personal care products, and high-performance insulating materials that save energy in their ultimate application. We are continuing our efforts to steer our portfolio even more toward sustainability with our “Winning Ways” strategy. By 2030, more than 50% of BASF’s sales in the scope of TripleS are to be attributable to Sustainable-Future Solutions. This target was adopted by the Board of Executive Directors in 2023 based on an analysis of BASF’s portfolio and our growth forecasts. When setting the target, we considered the startup of our Verbund site in Zhanjiang, China, for example. Our TripleS method and the associated target are based on clearly defined, transparent criteria concerning the respective sustainability topics (Environmental, Social and Governance, ESG), as described in our methodology manual. There is currently no general quantitative scientific framework for the steering of a product portfolio based on business performance and sustainability contribution that companies could use as a guide when setting targets.
In 2024, BASF sales revenue1 from Sustainable-Future Solutions products came to 46.3% (2023: 41.4%, our base year). We remain well on our way to achieving the target set. Together with the operating divisions, our Corporate Sustainability unit in the Corporate Center continuously tracks progress toward meeting the target based on our monthly reports of sale revenue. Any trends that are identified are recorded and documented as part of the annual operational planning process carried out by Corporate Finance. When collecting our TripleS data, we work on the assumption that we have taken all the latest relevant regulatory developments and all market developments into account. We are limited in the extent to which we are able to differentiate the contribution made by our products from the contribution made by competing products because the assessment is made on a qualitative basis and not on the basis of market studies. We use TripleS to review our product portfolio at least once every four years. The TripleS method was applied in 2023 and 2024 to more than 50,000 products from the relevant portfolio,2 which were assessed in terms of their applications as well as regional aspects. The portfolio relevant to TripleS comprises BASF Group’s sales revenue from sales products sold to third parties in the business year concerned. This excludes business that is not product-related, such as licenses or services.
We have integrated TripleS into the assessment of our research and development processes so as to incorporate the requirements formulated by the European Commission in its Safe and Sustainable by Design framework, among other things. Our use of TripleS creates transparency regarding the contribution to sustainability made by our product portfolio and future products developed by R&D. We are reviewing the sustainability-related challenges facing our products and steering our portfolio in the direction of more sustainable solutions. According to our methodology, in 2024, around €0.9 billion of our annual expenditure on research and development contributed to potential Sustainable-Future Solutions (2023: around €1 billion).
In the case of Challenged products, we develop action plans. These include research projects and reformulations to optimize products or replace them with alternatives. We are generally phasing out all Challenged products within five years of their initial classification. BASF has implemented global processes to ensure that products are only sold in markets where they have been approved. If a product is affected by a marketing ban or loses its approval in a particular market, the product is immediately reviewed and withdrawn from the market in accordance with local legal requirements. In general, products are phased out based on our voluntary commitments before they are impacted by bans. No products of significance for BASF were impacted by bans in the 2024 business year.
1 Of BASF’s €65.3 billion in sales in 2024, €54.5 billion is relevant for the TripleS evaluation. By the end of the 2024 business year, we had evaluated 98.3% of the relevant portfolio.
2 The definition of the relevant portfolio and further information can be found in the TripleS method manual at basf.com/en/sustainable-solution-steering.
This content fulfills the Disclosure Requirements of the European Sustainability Reporting Standards (ESRS). The ESRS Index gives an overview of the references to the ESRSs in this report.