Strategy and Governance

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For explanations of BASF policies that we reference in more than one chapter, please see General Disclosures in the Sustainability Statement. These include disclosures regarding scope, accountability, impacts in the value chain, global applicability, accessibility to stakeholders and engagement thereof.

Human rights due diligence

The basis of our social responsibility is respect for human rights, including workers’ rights – in our own activities as well as in our business relationships. BASF is a founding member of the U.N. Global Compact and a member of the Global Business Initiative on Human Rights. Our long-term voluntary commitment guides our engagement in human rights. We are committed to respecting internationally recognized human rights in our own activities and promoting them along our value chains. We are very careful to neither cause nor contribute to human rights violations in our own business activities. BASF is also active in initiatives such as Together for Sustainability (TfS) and Responsible Care^®.

We consider human rights due diligence to be an important and comprehensive task and have set up our organization accordingly. That is why our responsibility for human rights has been in our Code of Conduct for many years and is set out in our Policy Statement on Human Rights.

Our corporate value “responsible” (see Our Strategy) includes striving to apply high standards for responsible labor and social standards as well as protecting health and safety worldwide. All employees and leaders are responsible for putting these standards into practice and respecting human rights. To fulfill this obligation, we developed a systematic, integrated and risk-based due diligence approach as well as clear processes for monitoring and managing human rights risks.

The implementation of human rights due diligence is an ongoing task requiring a robust management system and the corresponding organizational structure. Effective cross-functional collaboration with strong teamwork is an essential component. We want to ensure that we:

• Identify, weight and prioritize our human rights risks through scheduled and incident-related analyses
• Address risks with effective preventive measures and with appropriate remedial actions in the case of violations
• Integrate the actions into all relevant functions and operational processes and regularly review their effectiveness

The head of our legal and compliance organization also acts as Chief Human Rights Officer, who oversees the overarching risk management system and reports regularly to the Board of Executive Directors and the Audit Committee on human rights issues. The overarching governance of human rights due diligence at BASF is the responsibility of our Compliance unit. In addition, various specialist units are responsible for steering specific human rights topics. Experts in the fields of international labor and social standards, environmental protection, health and safety, as well as corporate security work on a risk-oriented basis to ensure that we respect the relevant human rights in our own activities.

We have integrated human rights-related assessments into our governance and decision-making processes, for example for investments and acquisitions. Our internal cross-unit Human Rights Expert Working Group, managed by the Compliance unit, facilitates close collaboration between the above mentioned specialist units, which also include specialists from the areas of Procurement, Legal, Human Resources, Sustainability, Communication and Government Relations. They regularly discuss the latest topics and developments related to human rights, provide support in the improvement of our internal processes, offer training and advise on challenging issues. Our concept also includes structured collaboration with the operating divisions to identify and actively address division-specific risks. Our Human Rights Advisory Council is a source of additional external human rights expertise for us. The Council, which comprises independent international human rights experts, meets several times per year. The trust-based dialog on human rights topics helps us to better understand different perspectives and to deal more openly with critical situations.

Human rights due diligence is an ongoing task for us. We therefore review our processes and measures in this area on a regular basis and improve them as needed. Our strategies relating to our workforce are in accordance with the following internationally recognized standards for responsible business conduct:

• United Nations’ (U.N.) Universal Declaration of Human Rights
• U.N. International Covenant on Civil and Political Rights
• U.N. International Covenant on Economic, Social and Cultural Rights
• Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO)
• Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy of the ILO
• The Ten Principles of the U.N. Global Compact
• U.N. Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises
• Responsible Care^® Global Charter of the International Council of Chemical Associations (ICCA)

As a global company with more than 100,000 employees around the world, we are exposed to a number of inherent human rights risks with regard to international labor and social standards, especially in countries with higher human rights risks. We have established clear principles, guidelines and processes to identify and address these risks accordingly.

We mainly approach our responsibility to act in compliance with international labor and social standards using three elements: the Compliance Program (including the BASF Compliance Hotline, see G1 Monitoring adherence to our compliance principles), close dialog with our stakeholders (such as with employee representatives or international organizations, see also Engaging with employees and their representatives) and our requirements on adherence to international labor and social standards, applicable Group-wide.

Part of our central due diligence system is a global, risk-based management process, whereby we monitor relevant changes in national laws of the countries where BASF operates and evaluate them for compliance with international labor and social standards. The results of this comparison as well as any measures taken to implement our requirements on international labor and social standards are tracked and documented. The evaluation is carried out regularly for selected BASF Group companies based on country-specific risk assessments. If there is a heightened inherent risk of violations of workers’ and human rights in a country, the Group companies located there are evaluated more frequently. If national laws contain no or lower requirements compared to labor and social standards defined by BASF, action plans are developed to bridge these gaps. If conflicts with national laws or practices arise, we aim to uphold our values and strive to adhere to our internationally recognized standards, all while ensuring compliance with the laws of the respective country.

Individual elements of our requirements on international labor and social standards are audited internally (Responsible Care audits) at selected BASF Group companies. In addition, international labor and social standards are an integral part of the Corporate Audit unit’s compliance management audits (see G1 Corporate Audit). Furthermore, audits are performed on specific matters.

BASF’s international labor and social standards stipulate the fundamental principles and rights at work with regard to freedom, equity, security and dignity (see graphic):

These principles are applicable at BASF worldwide and are the responsibility of Corporate Human Resources, which reports directly to the Board of Executive Directors. We expect compliance from all leaders and employees and provide internal target group-specific training sessions on labor and social standards on a regular basis.

The following provides a more in-depth description of some of the fundamental principles and rights regarding international labor and social standards at BASF:

No child labor and no forced labor

BASF expressly prohibits any form of child or forced labor, including slavery and human trafficking. This is also specified in the BASF Group’s Policy Statement on Human Rights. These topics are part of our analyses and requirements because we operate in countries where forms of child and forced labor exist. To prevent incidents of child or forced labor within our company, we identify and address these risks and take the appropriate preventive measures (see Human rights due diligence). In 2024, there were no indications of individuals in our company being subjected to forced labor or child labor. Our disclosures on any incidents, complaints and severe human rights impacts can be found in the Metrics section.

No discrimination, harassment or other forms of workplace distress

The BASF Group’s Policy Statement on Human Rights contains our commitment to a fair, diverse and inclusive working environment characterized by mutual trust and respect as well as respectful interaction between all employees. This is also an integral component of our globally applicable Code of Conduct for all employees.

We are committed to equal opportunities whereby no one is at a disadvantage due to race, gender, age, skin color, nationality, disability, religion or worldview, sexual orientation, ethnicity, social status, marital status, gender identity or expression, political opinion, pregnancy, maternity, parental status or any other characteristics protected by law. This includes equal pay for equal work. We embrace the diversity of our employees.

We take the risk of discrimination very seriously and are aware that discrimination can occur in companies. At BASF, we expect human resources-related decisions to be made based on objective criteria. We do not tolerate discrimination, harassment or any other form of abuse. If, however, incidents come to our attention, for example via our grievance channels, we aim to act immediately and take the appropriate remedial actions (see Processes to remediate negative impacts and channels for own workers to raise concerns and Metrics). Based on external definitions such as those provided by the Federal Ministry for Economic Cooperation and Development, we consider individuals to potentially be at particular risk: people – especially women – belonging to minorities, nonemployee workers, people with disabilities, underage employees and expectant mothers and parents. In addition, employees with a migrant background may face a heightened risk of human rights violations and discrimination. This can manifest in various ways, such as the denial of rights, harassment, and unequal treatment when it comes to job applications or promotions.

As part of our initiative against sexual harassment and discrimination, we launched a communication campaign in May 2024 at the Ludwigshafen site in Germany to raise awareness about the fact that discrimination and harassment have no place at BASF. This campaign will continue at additional BASF Group sites in 2025.

We take into account the unique challenges parents face, particularly with regard to the health and well-being of expectant and nursing mothers. Our goal is to protect their health and shield them and their children from harm (see maternity protection). We are committed to acting with particular care toward mothers and ensuring that they are treated with respect. Working women should be protected from all forms of discrimination related to their pregnancy or status as a mother.

An additional global requirement stipulates the promotion of diversity and inclusion within the BASF Group with a focus on the corporate value of “open” (see Our Strategy).³ It defines standards for a fair working environment and emphasizes the importance of equal opportunities and compliance with antidiscrimination laws. The objective is to establish a diverse and inclusive working environment in which our employees enjoy working. The requirement is supported through national or local actions.

When identifying leadership talents, we also take into account the promotion and appreciation of diversity, for example when it comes to women. Furthermore, we have committed to increasing the proportion of women in leadership positions to 30% by 2030.⁴ As of December 31, 2024, the proportion of women working in the BASF Group was 27.1%. The proportion of women in leadership positions with disciplinary responsibility worldwide was 29.3% (2023: 28.4%) as of December 31, 2024. BASF’s management reviews the status of this target achievement on a regular basis via a global dashboard.

• More information on diversity and inclusion at BASF
• More information on how we promote diversity, equity and inclusion

Effective recognition of the rights to freedom of association and collective bargaining

We recognize the right to freedom of association, promote collective bargaining and support social partnerships. All employees have the right to form, join or support legally recognized labor unions or other forms of worker representation in accordance with applicable legal regulations. This fundamental right should never be denied or restricted. BASF supports the rights of employees to participate in collective bargaining through their chosen labor organizations. We also do not tolerate any discrimination or retaliation against employees based on their membership, nonmembership or involvement in labor unions. For more information on the implementation of these principles, see the section Engaging employees and their representatives.

• More information on our Policy Statement on Human Rights and our human rights commitment and approach

In the following section, we discuss the material topics according to the results of our double materiality assessment.

Adequate wages

The Corporate Center’s Corporate Human Resources unit provides a globally consistent framework for employee compensation. We offer our employees appropriate, performance-related and market-oriented compensation, supplemented by attractive additional benefits. Compensation is based on global compensation principles according to position and function, market environment and performance. These principles are stipulated in three BASF Group-wide requirements (compensation by position and function, market-oriented compensation, performance-based compensation). Among other things, they serve to ensure that equivalent positions are compensated in a comparable way regardless of gender, ethnic background or any other characteristics, and that the local market conditions of the respective site and differences in employee performance are considered accordingly. In many countries and companies, our additional benefits exceed legal requirements and include, for example, company pension benefits, supplementary health insurance and share programs. We want to attract engaged and qualified employees and motivate them to achieve top performance with this comprehensive package that includes individual development opportunities and a good working environment. Our global compensation concepts help shape fair and competitive remuneration for employees in accordance with our requirements on international labor and social standards.

Skill development

Attracting and retaining the best employees is crucial to our success. Technological change is leading to new demands being placed on our employees. Demographic change is also increasing the effort involved in recruiting skilled employees. This can lead to skill gaps and vacant positions in the workforce. Both of these can result in lower employee motivation, posing new challenges for us when it comes to recruiting and retaining skilled employees. Skill development is a key instrument in this context. We want to boost employees’ satisfaction, productivity and innovative power through the ongoing improvement of their skills and expertise.

The Corporate Center’s Corporate Human Resources unit provides a globally consistent framework for employee skill development and leadership excellence. A Group-wide requirement defines our process for employee development and the corresponding instruments and responsibilities. It also defines the degree of freedom the divisions have in this process in order to ensure comparable conditions for employees and address the different needs in our organization. Employee development at BASF is based on the principle that all employees have the opportunity to expand their skills and experience through learning or changing positions and are supported in doing so. Learning takes place according to individual and job-specific requirements and can be accomplished in different ways: independent study during work hours, social learning through exchange with others or formal learning in settings such as training and further education courses. Additionally, our requirements on international labor and social standards prohibit discriminatory practices that could restrict or prevent the personal and professional development of employees based on inadmissible criteria.

Our leaders play an important role in the engagement and development of our employees. We have therefore stipulated in a Group-wide requirement how BASF defines excellent leadership based on our values and what behavior we expect from our leaders. We thus place particular emphasis on the desired leadership behavior in our leadership development and assessment.

We are currently adjusting our corporate requirements for leadership and employee development to reflect our new strategy. We are monitoring the implementation of these requirements through regular surveys of employees and leaders. This also provides us with feedback from our workforce on development opportunities (see Skill development, training and further education).

Recruitment of skilled employees

Due to the intense global competition for the best skilled employees and leaders as well as demographic change, especially in North America and Europe, there is a risk that vacant positions may not be filled or only with a delay. We also see the risk of not being able to reach, hire and retain enough talent.

The shortage of skilled employees in many industries is also making it more difficult to attract and retain staff. We are therefore stepping up our recruitment and onboarding efforts. This is particularly the case for people with expertise in the fields of IT, artificial intelligence, production, engineering or natural sciences. In addition, a tense macroeconomic situation combined with structural adjustments at BASF may have a negative effect on employee engagement and loyalty to the company.

The Corporate Center’s Corporate Human Resources unit provides a globally consistent framework for recruiting skilled employees and obtaining feedback. A global talent acquisition requirement stipulates how we position BASF as an employer and want to attract employees for our company. It defines the corresponding principles, roles and responsibilities and is aimed at all employees, including leaders (see Recruitment of skilled employees). We offer an attractive comprehensive package to be a compelling choice as an employer (see Adequate wages). We monitor compliance with the talent acquisition requirement via the Employee Voices survey which enables employees to express their feedback on their working environment and corporate culture.

By regularly conducting this survey we implement the global requirement to actively involve employees in shaping their working environment, thereby monitoring the implementation of many of the topics discussed above as well as the development of our employees’ engagement. For more information on this and how employees and their representation are generally involved in shaping their workplace, see Engaging with employees and their representatives.

Occupational safety and health

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We regard health and safety as our highest priorities and are aware of the material potential negative effects for our employees. To that end, the Corporate Center’s Corporate Environmental Protection, Health, Safety & Quality unit sets globally binding standards for occupational safety and health. Our safety and health management includes all employees worldwide. We have established comprehensive management and control systems based on the guiding principles of the global Responsible Care^® initiative of the International Council of Chemical Associations and focused on protecting the lives and health of all employees in the workplace. We also want to ensure compliance with our requirements through our control systems.

Our safety concepts are designed to provide highest level of protection for our employees in our company. At the same time, these concepts should ensure compliance with legal requirements. Our sites and Group companies are responsible for implementing and ensuring compliance with both Group-wide requirements and local guidelines. They are supported in this task by global networks of experts. The Corporate Center’s Corporate Environmental Protection, Health, Safety & Quality unit reports directly to the Board of Executive Directors and conducts regular audits to review compliance with guidelines, while sites and Group companies implement these guidelines locally. We follow a risk-based approach and continuously update our requirements. For this reason, we also maintain a dialog with government institutions, associations and international organizations.

Due to our many years of expertise in the field of occupational safety, we place a particular focus on employees who handle hazardous substances and operate complex assets and machinery due to their work in laboratories or production plants. We have set ourselves clear goals to reduce the potential risk for our employees to a minimum (see Global targets). We have comprehensive actions in place for this, which are described from Occupational safety and health onward.

• More information on occupational health and safety

Secure employment

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The Corporate Center’s Corporate Human Resources unit is responsible for the aforementioned requirements regarding the BASF International Labor and Social Standards. These apply globally, and all leaders and employees are expected to comply with them. We monitor adherence to the requirements through a global risk-based management process for international labor and social standards at BASF (see Human rights due diligence). We recognize that stable employment and working conditions are crucial for our employees. A tense macroeconomic situation combined with structural adjustments within the company may unsettle employees, leading to lower engagement and employee retention to the company as well as unplanned staff turnover. The principles outlined in the following section serve as the foundation for employment at BASF. They align with our core principles and rights concerning international labor and social standards at BASF. In the context of secure employment, we additionally uphold the rights to freedom of association and collective bargaining as well as the right to maternity protection. These principles are described here.

Clearly defined working conditions

A clearly defined and mutually agreed-upon employment relationship forms the foundation of a fair and trusting collaboration between the company and its employees. It should establish the rights and responsibilities of both parties, helping to prevent conflicts and misunderstandings. Our goal is to inform employees in an easily accessible and understandable manner about their working conditions, for example regarding compensation, benefits, working environment and learning and development opportunities. We aim to ensure that both parties are aware of their obligations and treat each other with trust and respect. A global talent acquisition requirement, also overseen by Corporate Human Resources, stipulates that all current and potential future employees must be informed of their working conditions. We monitor compliance with this requirement via the Employee Voices survey, which among other things measures our employees’ engagement.

Fair dismissal

BASF acknowledges every individual’s right to social security. We are aware of the risks associated with a sudden loss of employment and income, which can lead to precarious situations for employees and their families. To counteract this, we strive to adhere to internationally recognized principles for fair dismissals. This includes engaging in dialog with the relevant employee representatives or unions to ensure that employees are treated fairly and respectfully.

Fair disciplinary measures

Disciplinary measures must be fair, proportionate and conducted with respect for the dignity of all involved. This means considering the personal circumstances of employees and their families when deciding on how BASF responds to misconduct. Disciplinary measures should never be arbitrary or discriminatory. We foster a culture of fairness even in cases of misconduct. This approach helps us resolve compliance incidents and disputes (see also the following section).

Engaging with employees and their representatives

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Openness is one of BASF’s corporate values. That is why our stakeholder dialog is based on honesty, respect and mutual trust.

Trust-based cooperation with employee representatives is an essential component of our corporate culture (see Our Strategic Levers: Win). Our open and ongoing dialog lays the foundation for balancing the interests of BASF and our employees, even in challenging situations. Dialog formats differ depending on region and the subject matter of the discussion. There are dedicated committees that discuss topics identified as material in the sense of the ESRSs. Employee representatives are involved according to local legal conditions. Dialog results can be used to implement actions, which also address the material impacts in this area. Operational responsibility for the involvement of and dialog with employee representatives lies with the management of the relevant Group company or its equivalent depending on the company’s legal form. BASF maintains constructive relationships with employee representatives which is reflected in trust-based cooperation. BASF provides the necessary human and financial resources for this dialog. There are numerous agreements with employee representatives that are applied according to local conditions in countries or Group companies. By aligning committee structures with local and regional situations, we take into account the different challenges and legal conditions for each site. In this context, we address a wide range of topics in areas such as working conditions and health and occupational safety. Involving employee representatives gives BASF deeper insight into employees’ key interests and perspectives. We consider agreements such as the successful renegotiation of the 2024 collective agreement for the chemical industry in Germany, in which BASF representatives took part, to be a positive result of this dialog. The BASF Europa Betriebsrat (BASF Works Council Europe) addresses cross-border matters in Europe. In South America, we foster the dialog with employee representatives in the Diálogo Social. It most recently took place in 2023, and the next exchange is scheduled for early 2025.

In accordance with locally applicable legal conditions, our employees have the right to form, join and support legally recognized unions or employee representation. These are entitled to represent employees and their interests, for example in collective bargaining. BASF upholds these rights and has embedded them in the Group-wide requirements on adherence with international labor and social standards. We are also committed to social dialog with employee representatives where freedom of association is not guaranteed under national law to the same extent as in European legal systems. In such cases, individual Group companies use alternative dialog formats, such as informal meetings where employees can exchange ideas.

In the case of organizational changes, if restructuring leads to the elimination of positions, or in the case of other codetermination-relevant topics, we involve employee representatives in accordance with existing participation rights to consult on socially responsible solutions. Meetings take place regularly as well as on a case-by-case basis in which employee representatives are informed of general topics such as the current economic situation. This would also apply if structural adjustments or other adverse effects on employees were to arise due to our transition to climate neutrality. We also rely on our leaders to explain changes regarding organizational changes or structural measures. BASF supports affected employees, for example, with the development of their skills and finding other positions within our company. Our aim is to act in accordance with the relevant legal regulations, existing agreements and company conditions.

We involve employees in corporate processes by offering dialog on company topics using various internal communication channels. We use these to inform them of upcoming company changes and engage them in discussions about them. For example, we generally hold a quarterly global information event with members of the Board of Executive Directors which employees can participate in on-site or virtually. Following a presentation of strategically important content by the Board of Executive Directors, employees have the opportunity to ask questions.

To actively involve employees in shaping their working environment, we are committed to multiple feedback instruments. Their use is stipulated in a global requirement which is overseen and implemented globally by Corporate Human Resources. We employ two key instruments. The FEEDback&forward format provides leaders with regular feedback from their employees so that they can reflect on their leadership behavior. Additionally, all employees are invited on a regular basis to give feedback on their working environment and the corporate culture as part of our Employee Voices survey. We provide dedicated human resources as well as financial resources as needed for these surveys. The results of Employee Voices are communicated to employees, leaders, the Board of Executive Directors, the Supervisory Board and others using various dialog formats (see previous paragraph). The organizational units’ results are evaluated centrally and aggregated to provide leaders with concrete indications of positive feedback and improvement potential. Results are evaluated using statistical and qualitative analytics and discussed between leaders and employees, for example in workshops. This allows questions to be clarified and necessary measures to be discussed. Through a decentralized approach, we can address the multifaceted needs of our organization with different strengths and areas of development. The results can also be considered in strategic decisions. For example, the 2024 survey indicated that processes were perceived to be too complex or bureaucratic. This was one reason we focused on simplifying processes and empowering employees with greater accountability in our new strategy (see Our Strategic Levers: Win). Overall, we are satisfied with the results of the survey for the 2024 business year. We nearly achieved our target of exceeding 80% employee engagement in our company with 79% (see Targets and Target Achievement).

In accordance with locally applicable legal conditions, we offer employees the opportunity to become involved with one of our many Employee Resource Groups. That includes groups of individuals who potentially experience more frequent discrimination. For example, there is a global resource group for women at BASF, various groups for people in the LGBTQI+ community and local networks for people living with disabilities. All interested employees can get involved in these networks.

As part of the 2024 Employee Voices global survey, we again used the inclusion index as a relevant point of reference for the inclusion of our employees and provided our leaders with suggestions for follow-up measures.

Processes to remediate negative impacts and channels for own workers to raise concerns

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BASF’s Compliance Hotline serves as a grievance mechanism and is open to all BASF employees as well as external stakeholders, particularly workers in our value chains. For more information on how the issues raised and addressed are tracked and monitored, see G1 Monitoring adherence to our compliance principles. In addition to our grievance mechanisms, employees can reach out to their leaders, their compliance officers or the human resources department as well as their respective employee representatives to ask questions or raise concerns about potential misconduct.

Our compliance training program, which includes regular global and local information campaigns as well as details about our Compliance Hotline, is mandatory for all employees worldwide. Training and informational offerings that provide specific knowledge on human rights and international labor and social standards to various target groups worldwide also cover compliance topics and the BASF Compliance Hotline.