Responsible Conduct Along the Value Chain

We want to contribute to a world that offers a viable future with enhanced quality of life for everyone. That is why sustainability is firmly anchored in our corporate purpose, our strategy, our targets and our operating business. It is at the core of what we do, a driver for growth and an element of our risk management. We pursue a holistic approach that covers the entire value chain – from our suppliers and our own activities to our customers.

The graphic depicts the different stations along the value chain. The topics in each chapter address the station shown in light blue. (here: Suppliers, BASF, Customers) (graphic)

We contribute to a sustainable development and to the United Nations’ Sustainable Development Goals (SDGs) in many different ways. For instance, our innovations, products and technologies help to better use natural resources, produce enough food, enable climate-smart mobility, reduce emissions, or increase the capabilities of renewable energy. Alongside these positive contributions, our business activities also have negative impacts. For example, we create CO2 emissions and procure raw materials, the sourcing of which by our suppliers involves a potential risk of human rights violations. This is why we are constantly working to broaden our positive impact on key sustainability topics along our value chains and reduce the negative impact.

The graphic depicts the different stations along the value chain. (graphic)

Strategy

  • Comprehensive management and monitoring systems to uphold our responsibility to the environment and society

We are committed to doing business in a responsible, safe, efficient and respectful way. Our actions are guided by our corporate values and our global Code of Conduct. We comply with and in some cases exceed the applicable laws and regulations with voluntary commitments. We stipulate binding rules for our employees with standards that apply throughout the Group. In doing so, we consider, respect and promote internationally recognized principles such as the 10 principles of the U.N. Global Compact, the Universal Declaration of Human Rights, or the Core Labor Standards of the International Labor Organization (ILO).

We want to ensure that we act in line with the applicable laws and uphold our responsibility to the environment and society with our comprehensive management and monitoring systems. Our global Responsible Care Management System covers environmental protection, health and safety. We meet our responsibilities with respect to international labor and social standards chiefly through three elements: the Compliance Program (including internal and external compliance hotlines), close dialog with our stakeholders (such as with employee representatives or international organizations) and the guideline on compliance with international labor norms, which applies Group-wide. This guideline specifies what the issues in our global Code of Conduct mean for our employees.

Our business partners are also expected to comply with prevailing laws and regulations and to align their actions with internationally recognized principles. We have established appropriate management and control systems, for example, for working with our suppliers.

We are involved in numerous initiatives to drive forward sustainability in general and, specifically, as this relates to our value chains. These include the World Business Council for Sustainable Development (WBCSD) and OECD’s Business for Inclusive Growth (B4IG) initiative, as well as networks with thematic focus like the Alliance to End Plastic Waste (AEPW), the Global Battery Alliance (GBA) or the Roundtable on Sustainable Palm Oil (RSPO). In addition, we realize a wide range of projects – often together with partners – for example, to improve sustainability in the supply chain, to promote a circular economy model or on the responsible use of crop protection products.

Responsibility for human rights

  • Human rights topics coordinated and steered by Corporate Compliance
  • Creation of an independent Human Rights Advisory Council for trust-based dialog and consultation

BASF acknowledges its responsibility to respect internationally recognized human rights. For many years now, we have engaged in constructive dialog on human rights with other companies, nongovernmental organizations, international organizations and multi-stakeholder initiatives to better understand different perspectives and address conflicting goals. BASF is a founding member of the U.N. Global Compact and a member of the Global Business Initiative on Human Rights (GBI), a group of globally operating companies from various sectors. The initiative aims to ensure implementation of the U.N. Guiding Principles on Business and Human Rights. We are confronted by the fact that there are states that do not honor their obligation to protect human rights. People are particularly at risk in such countries and companies’ ability to act is often limited. Nevertheless, we are committed to our values – including and especially there – and contribute to the respect of human rights.

We have embedded this into our Code of Conduct and our human rights position. All employees and members of management bodies are responsible for ensuring that we act in accordance with our Code of Conduct and our human rights position. We uphold our standards worldwide, including where they exceed local legal requirements. We avoid causing or contributing to adverse human rights impacts through our own operations.

Our Corporate Compliance unit is responsible for steering human rights topics and developing binding policies. A group of internal experts from various specialist units – environment, health and safety, sustainability, legal, procurement, human resources and supply chain – and the operating divisions works closely together to coordinate measures across units. This expert working group provides support and advice in challenging and critical situations, on the development of internal processes, and on the creation of information and training offerings, among other things. Together with our Human Rights Advisory Council, it ensures that we can meet our due diligence obligations.

We established the Human Rights Advisory Council to systematically integrate external expertise. Its members include independent international human rights experts. The trust-based dialog on human rights topics helps us to better understand critical perspectives and to deal more openly with dilemmas. At the same time, the renowned external experts show us where we have potential for improvement and help us to build on our strengths in how we handle human rights. The council is chaired by our Chief Compliance Officer. Meetings are also attended by employees from Corporate Sustainability and Corporate Compliance. Other representatives, for example, from the operating divisions or procurement, are invited depending on the focus topics. Its composition allows the Human Rights Advisory Council to provide an external perspective on our processes and contribute this in discussions with senior management. Similarly, the Stakeholder Advisory Council brings outside views to discussions with the Board of Executive Directors. We see assuming our human rights responsibilities as a continuous process. This is why we continuously review our policies and processes and update them if necessary.

In 2020, we conducted a comprehensive review of our human rights management system and the related processes. The review showed that we have achieved important milestones in the area of human rights and in terms of our due diligence processes. These include the introduction of explicit questions on due diligence aspects in the risk analyses conducted by business units, standard supplier assessments or evaluations of investment projects. The analysis, which was discussed with the Board of Executive Directors, did however also reveal potential for improvement that we have ambitions to pursue, such as awareness of human rights topics within our organization. Continued efforts are needed to help all employees better understand how these topics are relevant to our daily work. In addition, we want to expand our due diligence process to more effectively identify challenges at different stages of our value chain. A human rights risk assessment is to be more systematically incorporated into strategy development for our procurement units. We also want to further strengthen our grievance mechanisms and introduce a standardized global hotline and reporting system in 2021. In consultation with the Human Rights Advisory Council, Corporate Compliance is developing specific measures for improvement together with the expert group and the relevant units. Awareness-raising measures are currently being developed, including training concepts and content to make employees more conscious of human rights.

We want to ensure that our actions do not have a negative impact on human rights. We have long used monitoring and management systems to identify potential and actual negative impacts. Our measures and criteria for monitoring and observing human rights are integrated into supplier assessment processes and our global monitoring systems for environmental protection, safety and security, health protection and product stewardship. They are also integrated into the evaluation of investment, acquisition and divestiture projects, assessments along the product life cycle, and systems to monitor labor and social standards. Aspects of human rights related to site security, such as the right to liberty and security of person, are a component of the global qualification requirements of our security personnel. Respect for human rights is a mandatory element of any contract with service providers of the BASF Group who are active in this area.

As an international company, we are a part of society in the countries in which we operate and have business relationships with different partners around the world. We have trustful working relationships with our partners (joint venture partners, contractors, suppliers, and customers), expect them to comply with internationally recognized human rights standards and to demand the same of their partners further along the value chain. For instance, we contractually agreed with our two joint venture partners in the Chinese region of Xinjiang that the basis for joint activities is the BASF Code of Conduct and the requirements embedded in it to respect human rights and relevant labor and social standards (such as the exclusion of forced labor and discrimination in hiring, promotion and dismissal practices). We review this on a regular basis with audits. The most recent audits on compliance with labor and social standards at our joint ventures were performed in the first half of 2020, despite the challenges posed by the coronavirus pandemic. The audits were conducted with the support of a well-known external auditor. They reviewed the implementation of measures agreed in previous internal audits and again verified compliance with BASF’s requirements regarding international labor and social standards.

We support our partners in their efforts to meet their respective responsibilities. This is because we can only meet our goal of eradicating human rights abuses along our value chains if we work together. We have defined our expectations in a binding Supplier Code of Conduct.

Employees and third parties around the world can report potential violations of laws or company guidelines to our compliance hotlines. Since 2020, employees have also been able to contact specialists directly via a new internal online platform or the corresponding app. In 2020, 261 human rights-related complaints were received by phone as well as by post and e-mail. All complaints received were reviewed and forwarded to the relevant departments for in-depth investigation. If justified, appropriate measures were taken.

We report on our global targets, monitoring systems and measures to integrate human rights topics into our business activities in publications such as this report and online.