BASF taps into sustainability as a means of cutting costs

By Simon Pitman

- Last updated on GMT

Related tags: Asia-pacific, Better, BASF

BASF was hard hit by the global downturn in 2009 and is turning to sustainability measures as a means of cutting costs and getting the business back on track.

The Germany-based global chemicals giant, which supplies a wide range of ingredients as well as materials for packaging to the personal care industry, has outlined its sustainability initiatives in its 2009 report.

The report meets the Standards of Global Reporting Initiative (GRI) for sustainability reporting, which dictates that the information is independently verified and meets transparency requirements. Indeed, the GRI awarded BASF an A+ rating.

One example from the report is the assessment of the company’s operations at its Ludwigshafen manufacturing site in Germany, which outlined energy efficiency improvements that would save the company €10m.

Significant cost saving from energy efficiencies

The report also outlined further energy efficiency savings totaling €25m at its seven major production facilities in the Asia-Pacific region, while similar measures already implemented at its facilities in North America in 2008 have already saved €4m.

As well as cutting down on costs, BASF says that the measures will also help to significantly cut back on its carbon footprint, in turn serving to increase the company’s sustainability.

In 2009 BASF was listed in the Dow Jones Sustainability Index and also topped the Materials sector of the Carbon Disclosure Leadership Index.

The new sustainability measures and subsequent savings will help the company to improve its bottom line following one of its toughest years on record.

Global downturn hit BASF hard in 2009

Full year group sales fell 19 per cent to €50.7bn compared to the figure for 2008, while net income fell 51.6 per cent to €2.91bn, a figure that reflected particularly tough trading conditions concerning heavy industries during the first six months of the year.

During the financial year, the company’s care chemicals division, which serves the personal care segment, posted a 5.5 per cent dip in sales to €3.40bn, while volumes dipped 9 per cent. The company said that the performance of this category was also impacted by the integration of the Ciba business.

Looking to the current financial year the company did say that it was encouraged by the improving trend in its earnings seen in the fourth quarter and said that this trend is likely to lead to a ‘significant rise’ in earnings during 2010.

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