REFRAMING OLD VALUES
Chairman of the Board of
Chemicals. The word has a certain ring to it. At German-based BASF Group it is inherently positive. It is what they do; how they contribute to the needs of a growing world population. Nevertheless, to many other people it’s at best a black box of
terms and products they do not really understand, and often chemicals are seen as downright dangerous.
“If you produce cars and can get people excited about the new model – it’s quite easy to explain what you do as a company. When you produce chemicals, your products are by nature hard to understand and they often require special training to use,” says Kurt Bock, Chief Executive Officer of BASF.
That is why Bock really likes sustainability: the emergence of sustainability as a concept and as a measure of the economic, environmental and social performance of a company has actually made it a lot easier for the chemicals sector and BASF to explain how they contribute.
“It gives us an opportunity to communicate what we are doing and what BASF is all about. There is a mutual understanding of the three dimensions of sustainability that makes it a lot easier for us to engage in conversations on what we do,” he says.
“When students ask what we do, they might not be all that interested in working for us if I tell them that we make chemicals, and that we are really good at doing that efficiently and safely. But if I explain how these chemicals can increase crop yields, improve energy efficiency, or make better batteries for electric cars, then we get an entirely different discussion,” says Bock.
BASF has built on that, seeing the emergence of sustainability as an opportunity for the company. It has adopted several pioneering ways of reporting on sustainability performance. It was one of the first companies to adopt an integrated approach
to its annual reports, and the first company to come up with a global CO2 balance for its products that compares the greenhouse gas emissions caused by production to the savings created via their use. Recently, BASF has screened approximately 60,000 of its solutions with regard to their sustainability impact. It does this to develop a more sustainable product range and help customers choose more sustainable solutions.
“We’re a big supplier to the personal care and cosmetics industry, for example. It’s very important for our customers to understand what raw materials they are using and what impact they have,” says Bock.
He emphasizes that these initiatives have been possible because the concept of sustainability is very long-standing at BASF. Many of the company’s success stories are based on addressing a societal need. Likewise, thinking for the long term and balancing the interests of many societal stakeholders are integral parts of the BASF business culture. “The concept of sustainability is not something fundamentally new to a company that was established 150 years ago and is still in business and still growing. I think it was an almost natural development. It makes a great deal of sense to keep in mind that what we are doing is not just for today, but also for tomorrow,” says Bock.
The company’s position in the business landscape is in many ways conducive to this way of thinking. As a research-based chemical company, BASF is accustomed to operating with business cycles of 20 to 25 years from research to product retirement,
sometimes longer. Furthermore, the company’s products are often far from the end user, forcing BASF to consider a much longer part of their value chain in its strategy.
But it is not just the business landscape that puts BASF in a good position to introduce sustainable business practices. “The corporation’s roots in Germany also play a great part,” says Bock. “If you want to make money in Germany, you have to keep the interests of other stakeholders in mind. There is a strong conviction in German society – and one that’s shared by big business – that you have to balance interests and cannot be one-sided in what you do.”
BASF has been a pioneer in integrated reporting on its financial, environmental and social performance since 2007. This kind of reporting and the transparency it brings are key elements for the advancement of corporate sustainability, says Kurt Bock:
“Integrated reporting provides us with a platform and a generally accepted standard that we can use to provide more transparency to the public. In the chemical industry, success depends on gaining and maintaining the confidence of the public. You can only achieve that by providing the utmost transparency.”