This document discusses how BASF conducted a breakthrough product portfolio assessment to integrate sustainability into its business strategy and yield new value. Key points: - BASF analyzed over 60,000 product applications representing €66.3B in sales to categorize them based on their sustainability contribution. 23% were identified as "Accelerators" that substantially contribute to sustainability. - The assessment is changing BASF's business strategy by prioritizing the development of sustainable products classified as Accelerators, which represent over 60% of its research pipeline. - Integrating sustainability into investment decisions and portfolio management through sustainability screening is a major lever for BASF's long-term business success, profitable growth, risk mitigation and market

1. How a Breakthrough Product Portfolio Assessment is Changing
Business Strategy and Yielding New Value
Dirk Voeste, BASF @BASFCorporation

2. 150 Jahre
Dirk Voeste, Sustainability Strategy
Sustainable Metrics | October 7, 2015
How a Breakthrough Product Portfolio Assessment
is Changing Business Strategy and Yielding New Value

3. 150 Jahre
We create chemistry
for a sustainable future.

4. 150 Jahre
We create chemistry for a sustainable future
Our sustainability levers
Strategy &
organization
Assets &
operations
Business &
innovation
Stakeholder
& commu-
nication
Employees &
engagement

5. Our commitments along the value chain
Material
aspects
We
drive sustainable
solutions
CustomerBASFSuppliers
We produce safely
for people and
the environment
We produce
efficiently
We
source
responsibly
We respect people
and treat them fairly

6. We establish goals to address
sustainability along the value chain
CustomerBASFSuppliers
Evaluation of 70% of relevant
suppliers with regard to their
sustainability performance by
2020
Energy & climate protection
 Greenhouse gas reduction of 40% by 2020
 Energy efficiency: Introduction of certified energy
management system at all major sites
Increase the share of
Accelerators to 28% by 2020
Water
 Introduction of sustainable water management
at all relevant sites by 2025
Safety, health and security
 “Risk assessment” of products by 2020 >99%
 Transportation accidents by 2020 -70%
 Health Performance Index >0.9
 Lost-time injuries by 2025 -80%
 Red. of process safety incidents by 2025 0.5
Employees
 Women in leadership positions
 Non-German senior executives
 Senior executives with int. experience >80%

7. We screen all assets and investments
for relevant sustainability improvements
Sustainability
Team
Division
+
Result
Improved sustainability
in investments,
financial assets
and real estate
Sustainability statement
 Evaluates fit with
sustainability strategy &
criteria
 Identifies sustainability
opportunities or risks
 Suggests improvements

8. We use a holistic approach to assess
investments projects on sustainability
BASF´s
social
responsibility
BASF´s
corporate reputation
& brand credibility
BASF´s
environmental
protection
BASF´s
values & principles
„How we act“
BASF´s
economic
success
Market &
value chain?
Competitive
technology?
Attractive &
responsible
sourcing?
Suitable
location?
Fit to
strategy?
Beneficial use
& product
stewardship?

9. Sustainable Solution SteeringTM
“We drive Sustainable Solutions”
1,000+
action plans in place
60,000+
solutions assessed
>15 bn€ sales with products
contributing substantial to sustainability
Sustainability in
all business strategies
1,500+
sustainability experts
in extended networks
550+
industry applications assessed
by Eco-Efficiency Analyses
10,000+
own Life-Cycle Inventories

10. 150 Jahre
We integrate sustainability in our
business strategies
Step 1
Analysis of
sustainability needs
and trends in the value
chains
Step 2
Evaluation and
categorization of
product sustainability
performance in the
market application
Step 3
Development of
action plans for
strategies, R&D, and
market approach

11. 150 Jahre
We categorized all our products
into four categories
Substantial sustainability contribution
in the value chain
Meets basic sustainability standards
in the market
Specific sustainability issue which is
actively addressed
Significant sustainability concern identified
and action plan in development
2014
% of analyzed
sales to 3rd parties
TM

12. 150 Jahre
TM
We increase the sustainability
contribution of our solutions
 60,000 product applications analyzed
representing 66.3 bn € in sales
(data 2014)
 23% ranked as Accelerators:
- outgrow their markets
- deliver higher margins above average
- BASF´s R&D pipeline: >60% Accelerators
 74% classified as Performers
 <1% ranked as Challenged.
Individual action plans (implemented in 2015)
28%

13. 150 years
Sustainability yields new value
 Sustainability drives profitable growth
 Increased long-term business success
 market differentiation
 risk mitigation
 innovation
 Full integration in investment decisions
and portfolio management as major lever

14. 150 Jahre
150 years