Raw Materials

Raw materials are the starting point of our value creation. We want to use these resources efficiently and responsibly. As part of our activities to achieve greater sustainability, we are turning to recycled and renewable raw materials to replace fossil raw materials and reduce emissions along the value chain. Our focus is on a secure supply and a stable supply chain, in which our suppliers source and produce raw materials in line with environmental and social requirements. At the same time, our chemical products are raw materials for our customers and we want to increasingly offer them with a reduced carbon footprint.

Strategy and governance

Our strategy covers the entire value chain – from responsible procurement and the efficient use of raw materials in our own processes and recycling by-products to developing resource-saving solutions for our customers.

Fossil raw materials continue to be among our most important raw materials and sourcing and producing them causes greenhouse gas emissions, which contribute to climate change. We are trying to reduce these emissions by using recycled and renewable raw materials. However, these alternatives can also pose sustainability challenges, such as risks in the supply chain. We see one solution in a transition to a circular economy in which we want to decouple growth from resource consumption with process and product innovations.

BASF’s Verbund concept is key to making the use of raw materials in our own processes as efficient as possible: Intelligently linking and steering our plants and processes creates efficient value chains. By-products from one plant are used as feedstocks elsewhere. This saves raw materials and energy. At the same time, the Verbund offers numerous opportunities to use renewable and recycled raw materials. Going forward, we want to better leverage this potential.

The Corporate Center unit Corporate Development sets binding, Group-wide purchasing guidelines for the procurement of raw materials. They are supplemented by specific internal requirements, for example, on sourcing palm-based raw materials or certain mineral raw materials. We use a multistage control process to ensure compliance with these requirements. We systematically record short and long-term opportunities and risks caused by our purchase of raw materials as part of our general opportunity and risk management.

Alongside economic, environmental and social criteria, we also consider aspects such as product safety and supply security when selecting suppliers and raw materials. Our expectations of our suppliers are laid down in our Supplier Code of Conduct. We take a closer look at suppliers in critical supply chains, for example, for mineral raw materials and renewable resources as well as a number of pigments. Upstream stages of the value chain are assessed for serious sustainability risks and, if necessary, suitable remedial measures are introduced. In addition, we develop and test approaches in joint initiatives with suppliers and other partners to make the supply of raw materials more sustainable. Examples include our cooperative ventures and investments for recycling lithium-ion batteries for electric vehicles (see below) and our joint activities on certified sustainable supply chains for renewable raw materials such as palm, palm kernel and castor oil.

Resource efficiency and stewardship are also becoming increasingly important for our customers. That is why we are constantly working to switch to more sustainable raw materials and reduce the resources consumed in the manufacturing of our products, for example through more efficient processes and innovative technologies. This enables us to offer our customers more sustainable solutions, for example with a smaller carbon footprint or better biodegradability. Our products also improve resource efficiency and sustainability at many points along the value chain. For example, BASF additives increase the service life and mechanical recyclability of plastics, which saves fossil resources, reduces CO₂ emissions and enables a circular economy.

• More information on our supplier management
• More information on the circular economy

Fossil and petrochemical resources

BASF’s most important raw materials (based on volume) include gas and crude oil-based petrochemical products such as naphtha and benzene. We use liquid gas and natural gas as fuels to generate energy and steam, and as raw materials to produce key basic chemicals such as ammonia or acetylene. Naphtha is mainly fed into our steam crackers, where it is split into products such as olefins and aromatics. The olefins ethylene and propylene are both important feedstocks for BASF’s numerous value chains. We use aromatics such as benzene or toluene to manufacture engineering plastics, among other products. Thanks to a high degree of forward and backward integration, we can produce feedstocks for our value chains efficiently while conserving resources within the BASF Verbund. This increases supply security and strengthens our resilience to fluctuations in the supply chain. We source key raw materials from different suppliers to minimize supply risks. This also applies to natural gas, for which we are further diversifying our supplier structure due to the changed supply situation in Europe. For example, we have signed a long-term supply agreement for liquefied natural gas (LNG) from the United States starting in 2026. In the following years, the agreed delivery volume can cover about one third of BASF’s expected natural gas demand in Europe. In addition, we have reduced our demand through technical optimizations in the BASF Production Verbund and converted further power plants to bivalent operation – they can thus be operated with natural gas or heating oil. We are also continuously evaluating whether fossil and petrochemical resources can be replaced with nonfossil or recycled alternatives.

Renewable resources

In addition to fossil resources, we employ renewable raw materials, mainly based on vegetable oils, fats, grains, sugar and wood. In 2023, we purchased around 1 million metric tons of renewable raw materials. We use these to produce ingredients for the detergent and cleaner industry and natural active ingredients for the cosmetics industry, for example. We further use renewable feedstocks such as biomethane and bionaphtha in our Verbund as an alternative to fossil resources. The mass balance approach allows us to attribute the amount of renewable raw materials used to a wide variety of end products. Examples include biomass balanced glues and impregnating resins for the woodworking industry such as Kaurit^®Zero and Kauramin^® Balance, various biomass balanced versions of Trilon^® and Sokalan^® products for the detergent and cleaner industries, biomass balanced tetrahydrofuran (THF) for the production of elastic fibers for the textile industry, a product range of biomass balanced engine coolants under the Glysantin^® brand and biomass balanced styrene as a precursor for numerous styrenics.

Our aim is to continuously increase the share of renewable raw materials in our value chains. Just as for fossil raw materials, we also consider economic criteria, aspects of supply security, process and product safety and the availability of various raw materials as well as the potential impact on sustainability along the value chain. Alongside positive effects such as reducing greenhouse gas emissions, these can also have negative effects, depending on the raw materials. We therefore take the protection of biodiversity and ecosystems into account when sourcing renewable raw materials and also include social factors such as working conditions and food security in our risk analyses. We carefully weigh up advantages and disadvantages, for example with life cycle analyses. At the same time, we seek dialog with our stakeholders to identify conflicting goals. We also take into consideration recognized certification standards in our decisions, such as the Roundtable on Sustainable Palm Oil (RSPO). For our biomass balance portfolio, we source renewable raw materials that are certified according to recognized standards such as the International Sustainability and Carbon Certification (ISCC) or the organization for sustainably produced biomass REDcert.

As part of our commitment to greater sustainability, we focus on supply chains that are relevant quantitatively and are involved where there is currently a lack of certification standards. We are also working on product innovations and on enhancing our production processes to improve the profitability and competitiveness of renewable resources. For example, we are developing innovative processes such as biocatalysis and fermentation for the production of vitamins and enzymes, and driving forward white biotechnology for the production of chemical components from renewable resources.

Palm oil, palm kernel oil and their derivatives are some of our most important renewable raw materials. We mainly use these to produce ingredients for the cosmetics, detergent, cleaner and food industries. We aim to ensure that palm-based raw materials come from certified sustainable sources. We have been a member of the RSPO already since 2004 and are involved in other national and international initiatives, such as the German Forum for Sustainable Palm Oil and the High Carbon Stock Approach organization. Based on our Group-wide Supplier Code of Conduct, we have outlined our expectations of suppliers in the palm-based value chain in an additional sourcing policy (BASF Palm Sourcing Policy). This addresses aspects such as forest and peat conservation, respect for human and labor rights, smallholder inclusion, and certification and traceability standards. As part of our supplier and risk management, we have used the internet platform palmoil.io to monitor deforestation activities and other possible breaches of regulations at our suppliers’ sites. For the first time in 2023, our Care Chemicals division published a comprehensive Responsible Sourcing Report, in which we will report annually on our measures and progress toward more sustainability and transparency in the palm value chain as well as further renewable raw materials value chains. It replaces the previously published Palm Progress Report.

We purchased 159,798 metric tons of palm oil and palm kernel oil in 2023 (2022: 191,714). We again met our own voluntary commitment to source only RSPO-certified palm oil and palm kernel oil. This avoided more than 225,000 metric tons of carbon emissions compared with the procurement of conventional palm oil and palm kernel oil. As part of our voluntary commitment, we also aim to procure the main derivatives¹ based on palm oil and palm kernel oil entirely from certified sustainable sources by 2025. In addition, we maintained the RSPO supply chain certification of our sites for cosmetic ingredients. At the end of 2023, 25 production sites worldwide were certified by the RSPO (2022: 25).

We source most of our palm-based raw materials from Malaysia and Indonesia. As of the end of 2023, we were able to trace around 96% of our global palm footprint² to oil mill level (2022: 97%). Smallholders account for around one-third of the total volumes produced there. We are involved in local initiatives to expand our supplier base for RSPO-certified palm oil products while strengthening smallholder structures and sustainable production methods at local level. Since 2018 we have been working together with The Estée Lauder Companies, the RSPO and civil society organization Solidaridad in Indonesia. The project in the province of Lampung supported around 1,000 independent smallholders in improving their livelihoods and the sustainable production of palm oil and palm kernel oil. Upon completion of the project, the declared goal of certifying one-third of the participants of the program according to the RSPO Smallholder Standard was almost achieved (313 certifications). In 2023, BASF partnered with a leading natural cosmetics manufacturer and the Indonesian nonprofit organization Kaleka to support smallholders in Central Kalimantan. The aim is to promote regenerative agricultural methods as well as to help establish political framework conditions and regulations. We are also involved in a local project in Sumatra through the Forum for Sustainable Palm Oil (FONAP).

Also important for BASF, albeit at a much smaller scale, is castor oil. We use castor oil to manufacture products such as plastics and ingredients for paints and coatings, as well as products for the cosmetics and pharmaceutical industries. With the objective of establishing a certified sustainable supply chain for castor oil, we launched the Sustainable Castor Initiative – Pragati in 2016 together with the companies Arkema and Jayant Agro and with Solidaridad. The initiative aims to improve the economic situation of castor bean farmers in India and, at the same time, raise awareness of sustainable farming methods. Over 80% of the world’s castor beans are produced in India, mainly by smallholders. As part of Pragati, smallholder farmers receive training on topics such as cultivation methods, efficient water use, health and the safe use of crop protection products based on a specially developed sustainability code, SuCCESS. Since the project was initiated, more than 7,000 smallholders and over 27,000 hectares of land have been certified for sustainable castor cultivation. Yields from this land were 36% higher than average amounts for the region published by the local government for the 2022 / 2023 harvest cycle. In addition to SuCCESS, the Sustainable Castor Association (SCA), which was launched in 2019 by the founders of the Pragati initiative, has also developed a sustainability code for the wider supply chain. This will allow castor beans obtained from the program to be further processed into certified castor oil and derivatives and to be introduced into the downstream supply chain. In 2023, we again sourced certified sustainable castor oil from the program after our Düsseldorf-Holthausen site in Germany became the first chemical company in the world to be certified in 2021. The site supplies customers with the first certified products based on certified sustainable castor oil.

We are also driving the market transformation toward certified, sustainably sourced oleochemicals for another renewable raw material: coconut oil. We use coconut oil to manufacture ingredients for products such as detergents, cleaning agents and cosmetics. BASF is the world’s first chemical company to offer certified sustainable ingredients for personal care products based on coconut oil. Following our production site in Cassina Rizzardi, Italy, we successfully certified another site in Zona Franca, Spain, under the Rainforest Alliance Mass Balance Coconut scheme in 2023.

Plants also form the basis of many other products in our portfolio for cosmetics. These include our biopolymers, which we have been offering under the Verdessence™ brand, and our bioactives. Through sustainable sourcing practices, we aim to preserve ecosystems and enable sustainable management for the people whose livelihoods depend on them. For example, we have already been combining economic, environmental and social aspects for several years in our holistic procurement initiatives for argan (Morocco), rambutan and galanga (both Vietnam). With the Responsibly Active program, we are bundling our existing activities.

• More information on biodiversity
• More information on our voluntary commitment to palm oil products and the Responsible Sourcing Report
• More information on the Responsibly Active program

Case study

Responsibility for bioactives

With the Responsibly Active program, we are bundling our activities in the area of bioactives to protect natural resources, to improve the working conditions of people along the supply chain and to reduce the impact on the climate and environmental footprint in production. We have made concrete progress:

As part of full traceability in the botanical supply chain, for example, we have developed a digital tool that tracks every step of argan oil production. Thanks to developments such as these, our Care Chemicals division is able to trace 98% of its botanical supply chains to the country of origin and 42% to the source.

In another project, we worked with suppliers and nongovernmental organizations to support women and small businesses along the moringa³ supply chain through training.

Recycled feedstocks

Recycling is playing an increasingly important role due to limited resources, growing sustainability requirements in the markets, and regulatory developments. In a challenging environment with limited availability of alternative raw materials, we still aim to process 250,000 metric tons of recycled and waste-based raw materials in our production plants annually from 2025, replacing fossil raw materials.

A focal point of our activities here is the chemical recycling of plastics. This technology complements mechanical recycling and can help to reduce the amount of plastic waste that is disposed of in landfills or thermally recovered. Chemical recycling breaks down plastics into their building blocks or converts them into basic chemicals. Different methods are used to achieve this.

In our ChemCycling^® project, our technology partners use the pyrolysis process to extract pyrolysis oil from mixed plastic waste or end-of-life tires, which are not mechanically recycled as of yet. We feed the pyrolysis oil into the BASF Verbund as a substitute for fossil raw materials and manufacture new products from it using the mass balance principle. Our customers can process these mass balanced products in the same way as conventional products. Our portfolio of Ccycled^® products now comprises around 240 products, which our customers use for a wide range of applications – from food packaging and transport cases for temperature-sensitive drugs to high-performance plastics for the automotive industry and functional textiles. In order to expand our customer portfolio with mass balanced Ccycled^® products, we signed a new cooperation agreement with our partner Pyrum in 2023. This provides for a conditional loan of initially €25 million. It is intended to serve as startup financing for the planning, project development and construction of at least three new Pyrum plants, each with an annual capacity of 20,000 metric tons of end-of-life tires. BASF intends to use the pyrolysis oil produced in the new plants as a recycled raw material in production.

In addition, BASF continues to drive forward the recycling of foams from used mattresses. Using a process developed by BASF, the raw materials can be recovered from flexible polyurethane foams to produce new mattresses. Thanks to this new process, in 2023, our cooperation partner NEVEON was able to produce new polyurethane foams from the polyol recovered for the first time on a metric ton scale. The mattresses produced with this material contain 80% recycled content in the polyol component. Approximately 100 mattresses produced using this process are used exclusively in BASF’s own business hotel René Bohn in Ludwigshafen, Germany.

We have many years of experience and a high degree of specialization in recycling precious metals such as platinum, palladium and rhodium. They are used in mobile emissions catalysts as well as in process and chemical catalysts. We primarily use the precious metals recovered in this way as feedstocks to manufacture new products for the automotive, chemical, electronics and green hydrogen industries. The carbon footprint for recycled precious metals is up to 90% lower than for primary metals from a mine.

With the rapidly growing market for electric vehicles, there is also an increasing need for recycling lithium-ion batteries. As a leading producer of battery materials with local production capacities in the three main markets – Asia, Europe and North America – BASF has in-depth expertise in battery chemistry and process technology. We are utilizing these competencies to address battery recycling as an additional growth market in cooperation with partners along the value chain (see Our Strategic Action Areas). In this way, we want to ensure that valuable metals remain in the production cycle for as long as possible. This conserves resources and significantly reduces the carbon footprint of cathode active materials compared with the industry standard. At our site in Schwarzheide, Germany, a new plant for the production of black mass from spent lithium-ion batteries and battery production waste will be built in the course of 2024, as well as a prototype plant for a metal refinery, which is scheduled for completion in early 2024. This will allow for the development of new operating procedures and optimization of technology to deliver superior recovery rates of metals, such as lithium, nickel, cobalt and manganese, from the black mass. In addition, we will produce cathode active materials from recycled metals on a commercial scale at our U.S. site in Battle Creek, Michigan, from 2024. This will reduce the carbon footprint of cathode active materials by around 25% compared with the use of primary metals. These are used in the lithium-ion battery cells from our partner Nanotech Energy. Together with Nanotech Energy, American Battery Technology Company (ABTC) and TODA Advanced Materials Inc. (TODA), we are aiming to establish a local battery value chain in a closed cycle.

• More information on the circular economy

Good to know

The mass balance approach

Many BASF value chains start in syngas plants or steam crackers, where fossil resources, mostly natural gas and naphtha, are converted into hydrogen and carbon monoxide or important basic chemicals such as ethylene and propylene. These are used to create thousands of products in the BASF Verbund.

In addition to fossil raw materials, we feed alternative raw materials into the Verbund that come from bio-based and chemically recycled sources, such as bionaphtha, biomethane and pyrolysis oil. These alternatives are used in place of fossil feedstocks for our mass balance products. As fossil, bio-based and recycled feedstocks are processed simultaneously, the raw materials cannot be directly physically assigned to resulting derivatives. However, through monitoring by independent third parties such as TÜV Nord on the basis of recognized certification systems, such as REDcert² or ISCC PLUS, it can be verified that an adequate amount of alternative raw materials has been used for the amount of mass balance sales product. This ensures that fossil raw materials are saved with every sale of these certified products.

Mass balanced products are identical in quality to conventionally produced products, but the use of alternative raw materials contributes to sustainability, for example, through fewer carbon emissions and lower demand for fossil raw materials. This method has already been applied to over 1,400 BASF products including engineering plastics such as polyamide as well as superabsorbents, dispersions and intermediates.

We share our expertise in numerous stakeholder platforms, including the World Business Council for Sustainable Development (WBCSD), Together for Sustainability (TfS) and nova-Institute’s Renewable Carbon Initiative, to harmonize and standardize different attribution methods and certification schemes for mass balance products.

• More information on the mass balance approach

Mineral raw materials

We procure a number of mineral raw materials, which we use to produce automotive and process catalysts or battery materials for electromobility, among other products. We are continually improving our products and processes to minimize the use of primary mineral raw materials.

Responsible sourcing of mineral raw materials is important to BASF as we are aware of the challenges in the supply chain and our due diligence. We have implemented the E.U. Conflict Minerals Regulation. This defines supply chain due diligence for tin, tantalum, tungsten and their ores as well as gold (3TG) imported into the E.U. from conflict-affected and high-risk areas (CAHRAs).

In addition, BASF is committed to responsible and sustainable global supply chains for other mineral raw materials. These include cobalt, a key component in the production of battery materials. We have organized our cobalt supply chain according to established sustainability guidelines such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals. Our goal is to not purchase cobalt from artisanal mines as long as responsible labor, social and environmental standards cannot be verified.

Together with BMW Group, Samsung SDI Co. Ltd., Samsung Electronics Co. Ltd., Volkswagen AG, Stihl AG & Co. KG and GIZ, we have been involved in the cross-industry Cobalt for Development initiative since 2018. It aims to improve working and living conditions for artisanal miners in the Democratic Republic of Congo. To achieve this, the initiative offers programs such as training on important environmental, social and governance aspects of responsible mining practices. In 2023, mining cooperatives continued to receive trainings on topics such as occupational safety and environmental management. Furthermore, together with local nongovernmental organizations and Bon Pasteur/the Good Shepherd International Foundation, GIZ is supporting local communities to develop stable sources of income as an alternative to mining. Residents are trained, for example, in farming during the dry season, learning a trade, starting a business and using financial resources effectively. As a result, households have increased their income by 36% and are better able to cope with crises or shortages. Around 3,000 people are already benefiting from this. The pilot project has also financed the construction and equipment of a school, provided educational training for teachers and developed teaching materials. Today, 600 children are taught in a new school building.

BASF is currently exploring an investment to develop a nickel-cobalt refining complex in Indonesia together with Eramet, a global mining and metallurgy company, to supply cathode active materials to the growing electric vehicle market. BASF has not yet decided whether this project will be implemented. Part of the evaluation process is an intensive review and assessment of environmental, social and governance risks (ESG).

We are also involved in various German and international initiatives to strengthen sustainability and innovation in the value chain for batteries. For example, we are a partner in a consortium led by the system change consultancy Systemiq that has received funding of €8.2 million from the German Federal Ministry of Economics and Climate Action to develop a digital product passport for batteries. This aims to address the requirements of the E.U. Battery Regulation and both capture data that maps information about the origin of raw materials and create the basis for an efficient circular economy. Close cooperation with the Global Battery Alliance (GBA) is also intended to ensure the global compatibility of the digital battery passport. Cofounded by BASF in 2017, the GBA has over 150 members and promotes dialog between business, governments and civil society. It develops the steering tools aiming to establish a sustainable and responsible battery circular economy by 2030. Following the publication of the Greenhouse Gas Rulebook in 2022, the GBA unveiled a revised edition in 2023 as the result of a public consultation. As the first framework of its kind, it contains around 80 specifications and rules for the globally harmonized – and therefore comparable – accounting of greenhouse gas emissions along the battery value chain. As an impartial platform, GBA strives to facilitate a consensus between the relevant stakeholders. The aim of this and further rulebooks is to create transparency for comprehensive and standardized reporting of ESG topics on the basis of broad acceptance.

Together with BMW Group, Mercedes-Benz AG, Fairphone B.V., Daimler Truck AG and Volkswagen Group, we have also been a member of the Responsible Lithium Partnership since 2021. It advocates for the responsible use of natural resources in Chile’s Salar de Atacama, home to the world’s largest lithium reserves and a significant portion of global production. To this end, GIZ was commissioned to organize a local multistakeholder platform on the water-related opportunities and risks of lithium and copper mining and other economic activities and to promote action plans. BASF participated in a study organized by BMW together with experts from the University of Alaska and the University of Massachusetts to investigate hydrological conditions in the Salar de Atacama. The results of this study are incorporated as an important component of the Responsible Lithium Partnership’s work.

Another mineral raw material that BASF processes is mica.⁴ As a base for effect pigments, it is mainly used in the production of coatings and seed coatings. BASF is conscious of its social responsibility with regard to mica sourcing and applies high standards which, among other things, exclude child labor. Suppliers are asked to source mica in accordance with our Supplier Code of Conduct. As an active member of the Responsible Mica Initiative (RMI), we advocate for the eradication of child labor and unacceptable working conditions, specifically in India’s mica supply chain. The initiative focuses on labor standards, strengthening local communities and legal frameworks. As RMI’s most recent progress report shows, activities in the relevant regions of India have already led to improved income and living conditions. These include improved access to clean drinking water through the installation of pumps and filtration systems and improved access to health care through doctors’ visits in villages and enrollment in public health insurance plans.

• More information on responsibility for human rights, labor and social standards
• More information on the Cobalt for Development project
• More information on the Global Battery Alliance
• More information on the Responsible Mica Initiative