BASF Report 2021 Management’s Report – Raw Materials 112 Raw Materials Our expectations of our suppliers are laid down in our Supplier Code recyclability of plastics, which saves fossil resources and avoids CO 2 GRI 102, 103, 203, 301, 304, 308, 413, 414 of Conduct (see page 109). We take a closer look at suppliers in emissions. SUPPLIERS BASF CUSTOMERS critical supply chains, for example mineral raw materials, renewable For more information on our supplier management, see page 109 onward resources such as palm kernel oil, a number of pigments and highly For more information on the circular economy, see page 44 In 2021, BASF purchased a total of around 35,000 different toxic substances. Upstream stages of the value chain are assessed raw materials from more than 6,500 suppliers. Using resources for serious sustainability risks and, if necessary, suitable remedial as efficiently and responsibly as possible and the concept of measures are identified. In addition, we develop and test approaches Fossil and petrochemical resources the circular economy are firmly embedded in our strategy to make the supply of raw materials more sustainable in joint and our actions, for example, by our Verbund structure and initiatives with suppliers and other partners. Examples include our BASF’s most important raw materials (based on volume) include gas the increased use of renewable and recycled feedstocks. We cooperative ventures and investments to recycle batteries (see and crude oil-based petrochemical products such as naphtha and expect our suppliers to source and produce raw materials page 30) and our joint activities on certified sustainable supply benzene. We mainly use liquid gas and natural gas to generate responsibly. chains for renewable raw materials such as palm, palm kernel and energy and steam, and to produce key basic chemicals such as castor oil. ammonia or acetylene. Naphtha is mainly fed into our steam cracker, At a glance where it is split into products such as ethylene and propylene – both BASF’s Verbund concept is key to making the use of raw materi- important feedstocks for numerous value chains. We use aromatics 35,000 1.3 million als in our own processes as efficient as possible: Intelligently linking such as benzene or toluene to manufacture engineering plastics, different raw materials and steering our plants and processes creates efficient value chains. among other products. Thanks to a high degree of forward and purchased metric tons By-products from one facility are used as feedstocks elsewhere. backward integration, we can produce many feedstocks for our renewable raw materials This saves raw materials and energy (see page 128). At the same value chains efficiently while conserving resources within the BASF purchased time, the Verbund offers many opportunities to use renewable and Verbund. This increases supply security and reduces dependence recycled raw materials. We want to better leverage this potential on external supply sources to just a few key raw materials. We ▪ BASF’s Verbund concept enables the efficient use of resources going forward. For example, we are driving forward chemical recy- source these from different suppliers to minimize supply risks. TM ▪ Recycled and renewable raw materials are gaining in importance cling of mixed plastic waste and used tires in our ChemCycling ▪ Numerous projects to improve supply chain sustainability project (see page 115). As part of our efforts to improve sustainability, we are continuously investigating whether fossil and petrochemical resources can be Resource efficiency and stewardship are also becoming increasingly replaced with non-fossil alternatives. We carefully consider eco- important topics for our customers. That is why we are constantly nomic, environmental and social aspects, as well as other important Strategy working to reduce the resources consumed in the manufacturing of criteria like supply security and product safety. Our aim is to increase our products, for example through more efficient processes, inno- the share of renewable and recycled feedstocks in our value chains. Our strategy covers the entire value chain – from responsible vative technologies and the use of renewable and recycled raw This brings with it challenges and compromises in the supply of both procurement and the efficient use and recycling of raw materials in materials. This enables us to offer our customers solutions that energy and resources for carbon-based organic chemistry. For our processes to developing resource-saving solutions for our cus- make a greater contribution to sustainability, like a smaller carbon example, the use of renewable energy can involve additional costs, tomers. We want to decouple growth from resource consump- footprint and better biodegradability. Our products also improve our which can have an impact on competitiveness. Another area of tion with process and product innovations to accelerate the shift customers’ resource efficiency and sustainability in many areas. For conflict arises, for example, when the increased consumption of toward closed-loop value creation systems. Alongside economic, example, BASF additives increase the service life and mechanical renewable raw materials leads to greater land use. We raise aware- environmental and social criteria, we also consider aspects such as ness of these trade-offs through close dialog with our stakeholders. product safety and supply security when selecting suppliers and raw We are also involved in sustainability initiatives to develop and imple- materials. ment solutions in cooperation with partners.