EU Taxonomy

The EU taxonomy serves as an instrument within the framework of the EU Green Deal by providing a common classification system for sustainable economic activities.

In accordance with the EU Taxonomy Regulation and the supplementary delegated acts, the (Consolidated) Sustainability Statement includes the share of the Group’s taxonomy-eligible and taxonomy-aligned sales revenue, capital expenditures (capex) and operating expenditures (opex) for the reporting year 2025, applying the new reporting tables from Delegated Regulation (EU) 2026/73.

The low coverage of BASF’s activities in the EU taxonomy and the reporting criteria currently used, at present provide a picture of BASF’s potential sustainability contribution that is only of limited informative value.

BASF activities that are not yet covered by the EU taxonomy, and as such, are not relevant under the taxonomy, are 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 EU’s environmental objectives as they substantially contribute to avoiding CO₂ emissions within BASF and for BASF products. We use our TripleS methodology to systematically analyze the environmental performance of all BASF products (see General Disclosures).

To derive the aforementioned financial indicators, we analyzed our product portfolio from our main business and identified the following economic activities under the EU taxonomy’s six environmental objectives as being 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

• Manufacture of active pharmaceutical ingredients (API) or active substances

To avoid double counting, the 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 manufacture of renewable energy technologies as well as low-emission mobility. However, since the EU taxonomy focuses on the manufacture of technologies and thus excludes precursors, we have classified these activities as non-eligible under the EU taxonomy.

We identified additional activities outside of our main business – the production of chemical products – and assessed their materiality in terms of their contribution to sales revenue, capital or operating expenditures. For the 2025 reporting year, we also assessed the economic activity high-efficiency cogeneration of heat/cool and power from fossil gaseous fuels as relevant with respect to the environmental objective of climate change mitigation, and the treatment of hazardous waste as relevant with respect to the environmental objective of pollution prevention and control.

BASF does not report any taxonomy-eligible activities under the environmental objective of climate change adaptation. Firstly, in this way, we avoid double counting with economic activities already included under the environmental objective of climate change mitigation. Secondly, in accordance with the notice issued by the European Commission, a prerequisite for taxonomy eligibility under the adaptation objective is the submission of an investment plan for implementing adaptation solutions. BASF does not currently have any such plan within the meaning of the EU Taxonomy Regulation.

Taxonomy-eligible sales revenue, capital and operating expenditures for all six environmental objectives

We assessed the taxonomy eligibility of our sales revenue based on sales revenue excluding the discontinued coatings business, in line with the presentation in the Consolidated Financial Statements of the BASF Group (see Note 7). When taking all six environmental objectives into account, our taxonomy-eligible sales revenue accounted for 12.7% of the total sales revenue in 2025. The largest contributions were from the activities manufacture of plastics in primary form and manufacture of organic basic chemicals, both of which are assigned to the environmental objective of climate change mitigation. Taxonomy-eligible capital expenditures (including acquisitions and excluding goodwill in accordance with the EU Taxonomy Regulation) including expenditures from the discontinued coatings business up to the date of signing the transaction agreement, accounted for 18.8% of the total capital expenditures reported in the Consolidated Financial Statements. Capital expenditures on the manufacture of organic basic chemicals and in the manufacture of plastics in primary form made the greatest contribution. These two activities likewise support the environmental objective of climate change mitigation. Operating expenditures include non-capitalized costs that relate to research and development², maintenance and repair, and short-term lease expenses. We follow the definition of operating expenditures set forth in the EU Taxonomy Regulation; operating expenditures are not disclosed in this form in our Consolidated Financial Statements. The discontinued coatings business was not included for 2025, in line with the procedure for sales revenue. All of the capital and operating expenditures of a production facility with a taxonomy-eligible activity are counted as taxonomy-eligible. Taxonomy-eligible operating expenditures accounted for 13.0% of the total operating expenditures. The largest contributions were from the activities manufacture of organic basic chemicals and manufacture of plastics in primary form. Both activities fall under the objective of climate change mitigation.

Taxonomy-aligned sales revenue, capital and operating expenditures

The taxonomy-eligible activities identified by BASF can be classified as taxonomy-aligned if they make a substantial contribution to one of the six environmental objectives and do no significant harm to other environmental objectives and, at the same time, ensure minimum social safeguards. As in the prior year, the material contribution and the harm to other environmental objectives were reviewed in a three-step process. The first step involved a two-part analysis based on BASF’s internal product databases:

• The manufacture of products was analyzed with respect to the use of critical substances listed in Appendix 12³ to Commission Delegated Regulation (EU) 2026/73 to ensure that they do not result in significant harm to the EU taxonomy’s objective of pollution prevention and control. This also included use in the production process. Experts assessed and documented in each case that no other suitable alternative substances or technologies were available on the market.

• Plastics in primary form were analyzed with respect to the share of renewable raw materials in the product. They were only considered further if the share was at least 5% and thus potentially made a substantial contribution to climate change mitigation through partial or complete production from renewable raw materials. Shares allocated using mass balance approaches (see E5 Resource Use and Circular Economy) are not taken into account here because their acceptance under the EU taxonomy has not yet been definitively clarified. For this reason, BASF products based on chemically recycled raw materials were not considered further in the assessment either. Mechanical recycling did not play any role for BASF in this context.

In the second step, it was assessed whether the potentially taxonomy-aligned products make a substantial contribution to climate change mitigation in accordance with the activity-specific criteria. Among other things, the greenhouse gas emissions of European and non-European plants to produce soda ash and nitric acid were compared with the average values of the most efficient plants under the EU emissions trading system. For the production of hydrogen, chlorine, ammonia and plastics in primary form, the comparison was with the activity-specific quantitative criteria, such as the energy or emission intensity of a product. This was based on a digital solution developed by BASF to determine product-specific CO₂ emissions (see E1 Climat Change). With respect to measuring capital expenditures for the manufacture of emission-free hydrogen at our Ludwigshafen site (construction of a proton exchange membrane electrolyzer), a funding commitment from the German Federal Ministry for Economic Affairs and Energy was taken into account, as was a study on greenhouse gas emissions in hydrogen production carried out by the German environmental agency (Umweltbundesamt, UBA). In addition, we reviewed whether the activity of manufacture of active pharmaceutical ingredients made a substantial contribution to the environmental objective of pollution prevention and control by comparing it with the activity-specific criteria of the products.

Finally, in the third step of the process, it was assessed whether the products identified caused significant harm to the other environmental objectives. This included an analysis of risks arising from climate change using climate risk and vulnerability assessments. At sites with material climate risk, the existence of adaptation solutions was additionally analyzed and evaluated. The avoidance of significant harm to water and marine resources⁴, biodiversity and ecosystems⁵, and pollution prevention and control were assumed for production plants in Europe based on comprehensive and uniform regulatory requirements and additionally ensured through data queries. The taxonomy alignment of non-European plants was assessed on a case-by-case basis. This was based on joint assessments by local and central experts using the evidence of local production requirements submitted.

The criteria for minimum social safeguards as a further pillar of taxonomy alignment in accordance with Article 18 of the EU Taxonomy Regulation were reviewed for all activities across the BASF Group that involve the four core topics of human rights (including labor rights), corruption/bribery, taxation and fair competition. The review was independent of the step-by-step process for the contribution to climate change mitigation and harm to other environmental objectives criteria. Minimum social safeguards were ensured by a systematic, integrated and risk-based approach to safeguarding our human rights due diligence obligations (see G1 Business Conduct), by global labor standards (see S1 Own Workforce), and by the BASF Supplier Code of Conduct (see S2 Workers in the Value Chain), among other things.

Taxonomy-aligned sales revenue accounted for 1.5% of the total sales revenue defined and reported in the BASF Group’s Consolidated Financial Statements in 2025 (see Note 7), with the greatest contribution coming from the manufacture of batteries (1.0%). Taxonomy-aligned capital expenditures (including acquisitions and excluding goodwill in accordance with the EU taxonomy) accounted for 0.5% of the total investments reported in the Consolidated Financial Statements. A substantial contribution of 0.3% was identified with respect to capital expenditures for the manufacture of organic basic chemicals (additions to property, plant and equipment). We also invested in the construction of a proton exchange membrane (PEM) water electrolyzer for the production of emission-free hydrogen, which was commissioned in 2025. Taxonomy-aligned operating expenditures accounted for 1.6% of the total operating expenditures, with the largest contribution coming from the economic activity of manufacture of batteries (0.9%). There were no substantial changes to our taxonomy-aligned sales revenues and operating expenditures compared to the prior year. The decline in taxonomy-aligned capital expenditures is mainly due to lower investments in the manufacture of batteries.

The taxonomy-aligned portion of BASF’s economic activities remains considerably lower than the taxonomy-eligible portion due to various factors. For instance, only a small proportion of plastics in primary form contain renewable raw materials in an amount above the threshold value (5%). The proportion of taxonomy-aligned activities is additionally reduced by the fact that many plants exceed the benchmarks used by the EU taxonomy. For example, the use of renewable energies is disregarded as a result of the strict requirements for calculating emissions in European emissions trading. Among other things, our steam cracker investment at our Zhanjiang, China site was assessed as not taxonomy-aligned even though it contributes to avoiding a considerable amount of CO₂ emissions. In addition, plants that are not subject to emissions trading and thus cannot be assessed using the specified criteria were generally classified as not taxonomy-aligned. For the assessed economic activity of manufacture of active pharmaceutical ingredients, the focus of taxonomy alignment is on newly developed substances that constitute a suitable replacement for existing products that do not meet the criteria for biodegradability. This resulted in established active ingredients with multiple benefits for human health being assessed as not taxonomy-aligned.

• For more information on sales revenues, see Note 7 to the Consolidated Financial Statements
• For more information on capital expenditures, see Note 14 to the Consolidated Financial Statements

1 Enabling activities as defined in the EU Taxonomy Regulation.

2 Taxonomy-eligible expenses for research and development are derived using the criteria applicable to the economic activity of close-to-market research, development and innovation (for example, having a Technology Readiness Level of at least 6).

3 Generic criteria for DNSH to pollution prevention and control regarding use and presence of chemicals

4 Protection of water and marine resources is assumed at sites that do not use or treat water.

5 A radius of three kilometers around production sites was defined for the analysis of biodiversity-sensitive areas.