Dirk Voeste Head of Corporate Sustainability Strategy SRI Conference Berenberg Paris March 28, 2017 We drive sustainable solutions Innovations for a sustainable future BASF SRI Story, March 2017 1
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These statements are based on current estimates and projections of BASF management and currently available information. Future statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such factors include those discussed in the Opportunities and Risks Report from pages 111 to 118 of the BASF Report 2016. We do not assume any obligation to update the forward-looking statements contained in this presentation. BASF SRI Story, March 2017 2
Sustainability along the value chain Focus on material aspects* Suppliers BASF Customers We source responsibly We produce safely for people and the environment We produce efficiently We drive sustainable solutions We respect people and treat them fairly BASF SRI Story, March 2017 * Material aspects include, for example, energy and climate, water, resources and ecosystems, responsible production and employment & employability 3
Partnerships drive sustainability Initiative Together for Sustainability Joint initiative of leading chemical companies since 2011 Standardized and shared supplier evaluations and audits Implementation of follow-up processes where needed Enhancing sustainability along the supply chain BASF SRI Story, March 2017 4
We source responsibly Our supply chain sustainability goals and KPIs 551 sustainability assessments initiated through an external service provider in 2016 104 raw material supplier sites audited on EHS in 2016 Goal: 70% of relevant suppliers evaluated with regard to their sustainability performance by 2020 (status 2016: 32%) Clear targets for supplier evaluation defined, development of action plans BASF SRI Story, March 2017 5
Sustainability along the value chain Suppliers BASF Customers We source responsibly We produce safely for people and the environment We produce efficiently We drive sustainable solutions We respect people and treat them fairly BASF SRI Story, March 2017 6
Verbund advantages reduce the environmental impact Geismar Nanjing Antwerp Ludwigshafen Freeport BASF Verbund avoided 3.8 million t of CO 2 emissions in 2016 1 billion of cost savings in 2016. Kuantan Efficiency drivers: steam and heat integration, process control and process integration BASF SRI Story, March 2017 7
Energy efficiency helps protect the climate New energy management system is being implemented x 2 Production volume doubled* / 2 Greenhouse gas emissions halved* Energy efficiency Energy efficiency was improved by 25% (status 2016) since 2002 New goal: Introduction of a certified energy management system (ISO 50001) at all relevant sites** by 2020 Greenhouse gas emissions Goal: By 2020, reduction of greenhouse gas emissions per ton of sales product by 40% (excl. Oil & Gas, vs. 2002) Greenhouse gas emissions halved and production volume doubled since 1990 BASF SRI Story, March 2017 * 2016 vs. 1990 ** Representing 90% of BASFs primary energy demand 8
Emissions to water significantly reduced New water stewardship concept is being established 85% Nitrogen 60% Heavy metals 80% Organic substances Emissions to water Goals achieved: emissions to water* reduced by 60-85% in the three main categories (2002-2015) New goal: Introduction of sustainable water management at all relevant BASF sites by 2025 (Verbund sites and sites in water stress areas**) Achieved goals set the basis for an enhanced integrated water stewardship BASF SRI Story, March 2017 * BASF operations excluding Oil & Gas ** Representing 92% of BASF s entire water abstraction 9
More ambitious goal for process safety Clear commitment to reduce incidents 2.0 PSI rate* in 2016 Process safety goal Reduction of Process Safety Incidents (PSI) in order to prevent severe impacts Global safety standards at all sites Goal: Reduction of the worldwide PSI rate to 0.5* by 2025 Continuous reduction of PSI minimizing risk of large or severe incidents BASF SRI Story, March 2017 * Per one million working hours 10
Sustainability along the value chain Suppliers BASF Customers We source responsibly We produce safely for people and the environment We produce efficiently We drive sustainable solutions We respect people and treat them fairly BASF SRI Story, March 2017 11
Sustainable Solution Steering Novel methodology to screen and steer our portfolio 27.2% Substantial sustainability contribution in the value chain Meets basic sustainability standards on the market >60,000 product applications analyzed ( 53.2 billion sales, 95.9% of BASF s portfolio) 27.2% Accelerators outgrow their markets 68.3% Specific sustainability issues which are being actively addressed deliver margins above the average represent majority of BASF s R&D pipeline 4.2% 0.3% Significant sustainability concern, action plan developed 68.3% Performers <1% Challenged products Increase the share of Accelerators from 23% in 2014 to 28% by 2020 BASF SRI Story, March 2017 12
Innovations for a sustainable future Examples with significant contributions to sustainability SLENTITE high-performance insulation material Trilon M alternative to phosphate for dishwashing detergents Acronal MB from biomass to dispersions ecovio biodegradable polymer solution Green Sense resource-efficient concrete production FWC Four-Way Conversion catalyst removes particulates BASF SRI Story, March 2017 13
Sustainability goals Overview and status 2016 Procurement Goal 2020 2016 Product stewardship Goal 2020 2016 Sustainability performance assessment of relevant suppliers 70% 32% Risk assessment of products 2) >99% 75.4% Employees Goal 2021 2016 Women in leadership positions 22-24% 19.8% Long-term goal 2016 Non-German senior executives 36.4% Senior executives with international experience >80% 84.6% Production Goal 2025 2016 Process safety incidents 1) 0.5 2.0 Lost-time injury rate 1) 0.5 1.4 Energy & climate protection Goal 2020 2016 Greenhouse gas emissions 3) 40% 37.2% Introduction of ISO 50001 energy management system 4) 90% 42.3% Water Goal 2025 2016 Sustainable water management at Verbund sites and sites in water stress areas 100% 42.6% Products & solutions Goal 2020 2016 Proportion of sales generated by Accelerators 5) in product portfolio 28% 27.2% Annual goal 2016 Health Performance Index >0.9 0.96 1) Per one million working hours 2) For products >1 metric ton per year 3) Per metric ton of sales products; excl. Oil & Gas, baseline 2002 4) At all relevant sites (primary energy demand, local energy prices) 5) Products with substantial contribution to sustainability BASF SRI Story, March 2017 14
Value-to-Society: BASF s economic, social and environmental contribution Approach Value contribution 2015 Impact categories Financial and nonfinancial effects Full supply chain Indirect suppliers Direct suppliers Own operations Customer industries Direct customers in industries supplied by BASF Economic Social Profits, amortization, depreciation Taxes, wages and benefits, human capital, health and safety Environmental Air and water emissions, GHGs, solid waste, land use, water consumption Monetary assessment of the positive and negative impacts Contribution from BASF procurement Impact of BASF s direct suppliers and their supply chains Contribution from BASF Contribution from BASF operations sales Impact of our customers in their industries We deliver a significant net positive value contribution along the value chain BASF SRI Story, March 2017 15
We create chemistry for a sustainable future Sustainability is a core part of our strategy and fully integrated into our management systems We pursue an integrated approach together with all our stakeholders along the value chains Sustainability creates growth opportunities in the market By 2020, Accelerators will represent 28% of our sales BASF SRI Story, March 2017 16
BASF SRI Story, March 2017 17
Carbon efficiency Responsible use of raw materials by the chemical industry Growing world population needs access to energy, housing, healthcare and food Consumption of resources has to be reduced in order to limit global warming to <2 C Chemistry as enabler for low-carbon technologies (e.g., lightweight parts, battery materials, insulation, etc.) BASF uses raw materials responsibly: ~80% of carbon converted to products, ~20% needed for processes* Continuous efficiency improvements 22 million tons CO 2 emissions by BASF in 2016 compared to 10-30 million tons p.a. for one coal-fired power plant Chemical industry: only ~10% of global consumption of fossil resources** BASF SRI Story, March 2017 *BASF carbon mass balance calculation (2016, non-audited) **IEA 2015 18 20% CO 2 80% products
SLENTITE High-performance insulation panel for construction Slentite Slentite Slentite PU aerogel as solid panel with best in class thermal insulation Flexible scope of design thanks to very slim panel (25-50% less than industry standard) Construction solution for reduced energy consumption Perspective Strong growth potential in a market of 1.3 billion 1930 1950 1990 2020 1990 Start of production in a few years BASF SRI Story, March 2017 19
Trilon M Chelating agent for more sustainable detergents and cleaners Trilon M alternative to phosphate for automatic dish washing Fast growing global market demand driven by regulatory changes and consumer demand 2015: Start-up of a new Trilon M world-scale plant in Alabama, USA 2016: Expansion and flexibilization of production facilities in Ludwigshafen. Compared with alternative chelating agents Trilon M Is readily biodegradable and shows high performance Meets eco-label requirements Has better eco-toxicology profile BASF SRI Story, March 2017 20
Acronal MB From biomass to dispersion for premium paints First BASF binder for interior paints based on the biomass balance approach launched in 2016 91% of interviewed professional painters in Germany see an increase in sustainability aspects in tenders Renewable Feedstock Fossil BASF Verbund production steps Allocated Products Conventional Replacing fossil raw materials with renewable feedstock at the beginning of the production process Less greenhouse gas emissions Enabling interior paints that combine environmental responsibility with uncompromising premium quality BASF SRI Story, March 2017 21
Epotal and Ecovio paper coatings From a Challenged product to a business opportunity 1. Identification of the Challenged product: Polyfluorinated substances as coatings for paper packaging (environmental concern) 2. Development of action plan: Start of a research project 3. Launch of Accelerator product substitution: Recyclable Epotal and biodegradable ecovio paper coating BASF SRI Story, March 2017 22 SRI Conference Nov. 2016 22
High Environmental Impact Low Green Sense concrete technology Contributing to sustainable construction BASF s Green Sense Concrete system consists of: 1. Innovative admixture products 2. Concrete mix services 3. Eco-efficiency analysis BASF s Green Sense Replaces up to 78% of cement with recycled materials* Reference Concrete 45% less CO 2 emissions* 26% less energy needed High Total Cost of Ownership Low Applied in the construction of landmark projects, e.g., One World Trade Center, NYC BASF SRI Story, March 2017 * Data based on 1 m 3 compared to a reference mix 23
Four-Way Conversion catalyst (FWC ) FWC reduces emission of gaseous pollutants and particulates HC CO NOx Particulates Leading position: Global mobile emissions catalysts patents* 150 100 N 2 CO 2 H 2 O FWC Combines a 3-way conversion catalyst with integrated filter on a ceramic substrate Reduces gaseous emissions Precious metal-based catalytic coating removes exhaust gases from engine emissions** Removes particulates Filters & combusts particulates Complies with emissions limits Helps OEM meet EU 6c regulatory standards 50 0 BASF Competitors FWC introduced in 2013 Sustains BASF s leading technology position BASF SRI Story, March 2017 * 2009 2013 ** Hydrocarbons, carbon monoxide, nitrogen oxides 24