Letter from the Chairman of the Board of Executive Directors BASF Report 2021 To Our Shareholders – Letter from the Chairman of the Board of Executive Directors 8 At BASF, we have an ambitious dividend policy. Our free cash flow of €3.7 billion reflects our financial strength. Therefore, we will propose to the Annual Share- holders’ Meeting a dividend of €3.40 per share, representing an increase of 10 euro cents compared with the previous year. We want to be an attractive investment and reliably create value for you, our shareholders. The development of our share price in 2021 remained well below our expectations, despite our very good » operating performance and targeted strategic devel- At BASF, we have an op ment. Given that we believe that BASF is signifi- cantly under valued on the capital market, we decided ambitious dividend on January 4, 2022, to buy back own shares in the policy. amount of up to €3 billion. What makes us so confident about the value of BASF? What are our priorities for the transformation to climate neutrality and the further development of our company? As the largest chemical company in the world, we are leaders in our industry. We are ambitious. This applies especially to the transformation to climate neutrality. We want to show that this transformation and competitiveness are not mutually exclusive. Our global responsibility for sustainable development is anchored in our corporate purpose: We create chemistry for a sustainable future. 2021 was a very successful business year for BASF. Despite the ongoing coronavirus pandemic, widespread supply bottlenecks, and increasingly higher Effective climate protection and scarce resources are the central challenges energy and raw materials prices, we achieved record levels of sales and earnings. of our time. We want to reduce our CO2 emissions worldwide by 25% by 2030 We achieved an EBIT before special items of €7.8 billion. Our sales volumes were compared with 2018. Our 2050 target is net zero emissions. These are very five percentage points above the 6% growth in the global chemical industry and ambitious goals. It is the biggest transformation in the history of the chemical we raised prices by 25%. This enabled us to once again earn a premium on our industry and for BASF, considering that our production is energy intensive and cost of capital in 2021. Our economic development confirms that we are on the that we want to continue to grow at the same time. The energy transformation will right path with our strategic direction, our adapted organizational structure and make great demands on us. But we are confident that we will succeed! our ongoing cost discipline. We can only reach climate neutrality if we completely transform our production by replacing energy sources based on fossil fuels with electricity from renewable resources. That will require entirely new processes and technologies and the