CR Leaders: Dirk Voeste, Vice President, Sustainability Strategy, BASF

Dr. Dirk Voeste is Vice President of Sustainability Strategy at BASF SE, Ludwigshafen. Being in this position since 2012 he is responsible for BASFs sustainability strategy, the implementation into the business activities and decision making processes as well as sustainability stakeholder relation management. He is also heading the eco-efficiency analysis and sustainability evaluations.

In 1994 Dirk Voeste graduated with a Ph.D. in biotechnology and agricultural botany from University Bonn in Germany and a M.Phil. in Post Harvest Technology from the Cranfield Institute of Technology in England. After his studies he was the responsible scientist for the development of a closed equilibrated aquatic ecosystem in cooperation with NASA, USA. Since 1998 he has held various positions in the field of biotechnology, breeding and crop protection. Dirk joined BASF SE in 2001. He previously held responsibilities in research as well as in global marketing functions. Among others he was Head of Sustainability and Product Stewardship for the Crop Protection Division.

AccountAbility (AA): BASF is an industry leader in stakeholder engagement practices. What role did social media play in terms of sustainability practices more generally?

Dirk Voeste (DV): For BASF, social media is an integral part of innovative two-way communications. With its growing impact, social media provides an opportunity to intensify customer contacts and appeal to new target and stakeholder groups. BASF also aims to increase the company’s profile and strengthen the BASF brand. Ultimately, social media helps us implement our corporate strategy “We create chemistry for a sustainable future.” We put great emphasis on storytelling with concrete examples from a variety of perspectives and on our material strategic topics.

AA: BASF has updated and enhanced the approach for evaluating suppliers in terms of sustainability. Could you please elaborate on the value generated by this initiative?

DV: Our supply chain management aims to strengthen our suppliers’ awareness of our standards and expectations and shape their contribution to sustainable development in a transparent manner.

It is important for us that our suppliers adhere to environmental, social, and corporate governance standards. Further to our Supplier Code of Conduct which outlines BASF’s expectations on social and environmental compliance, we also provided employee training on sustainability-oriented supplier management to enhance our global supply chain management, reaching almost 750 employees last year.

BASF also participates in the “Together for Sustainability” (TfS) initiative of leading chemical companies for the global standardization of supplier evaluation and auditing. This initiative aims at developing and implementing a global program for the responsible supply of goods and services and improving suppliers’ environmental and social standards.

Risk matrices relating to country and product risks are also helping us identify suppliers with a high sustainability risk potential. If we discover a need for improvement, we support our suppliers in taking measures to fulfill our standards. If we cannot find any improvement after a defined timeframe, we may terminate the business relationship.

AA: BASF is a co-founder of the American Chemistry Council’s (ACC) Responsible Care Initiative. Could you please elaborate on how the Responsible Care Management System (RCMS) generates a business advantage for BASF?

DV: As co-founder of the Responsible Care Global Charter in 2006, we set ambitious goals for environmental and health protection, safety and security to drive improvement. BASF implemented our Responsible Care Management System (RCMS) in 2007, which applies to all BASF Group companies as well as those companies in which we hold a majority share. BASF’s RCMS comprises the global rules, standards and procedures for environmental and health protection, safety and security for the various stations along our value chain. Our regulations cover the transportation of raw materials, the activities at our sites and warehouses, the distribution of our products and our customers’ application of the products. We regularly conduct audits to monitor our performance and progress, and use the findings from these audits to drive continuous improvement.

Fostering awareness of workplace safety and safe behavior in every individual is a key component of our worldwide safety initiatives. We assess risks in all areas ranging from research and production to logistics, and how these risks could affect the environment and surrounding community, as well as our employees.

AA: What role do partnerships play in pushing BASF’s sustainability agenda further? What are some of the strengths and limitations of your partnerships?

DV: Aspects of sustainability are often part of broader, complex frameworks that are relevant not only globally, but very often at the regional or local level. For example, cooperating along the value chain with our suppliers and customers is a pre-requisite to improving our contribution to sustainability. In order to promote societal acceptance for our business activities, we engage in ongoing dialogue with a large group of stakeholders including customers, employees, shareholders, neighbors, workers’ representatives, politicians, NGOs, media and business partners.

This open exchange helps identify sustainability issues and improvement potentials at an early stage so we can take appropriate measures to limit business losses; at the same time, it lays the foundation for identifying market opportunities and turning them into product solutions.

AA: What do you feel are the two or three key issues where BASF can really make a difference for its stakeholders?

DV: Based on our portfolio, we have identified three global megatrends where we can make a strong contribution to sustainable development: 1) Resources, environment & climate; 2) Food & nutrition and 3) Quality of life. To maximize our potential in these three areas and enhance the long-term success of our customers, we are fostering R&D and innovation in more sustainable products and solutions. We invest around one-third of our total R&D expenditure – which in 2013 reached a record €1.8 billion – on projects aimed at increasing energy efficiency and climate protection.

AA: What would you say BASF is doing differently in the sustainability space compared to your competitors?

DV: Through the “We create chemistry” strategy established in 2011, BASF is placing an even stronger emphasis on its contribution to current and future sustainability needs. We strive for increased sustainability not as an end in itself but because this is also key to our long-term business success.

With innovative solutions we can differentiate ourselves in the marketplace while also helping solve the world’s most pressing environmental and social challenges. Developing our company in line with our corporate purpose requires us to explore business value while at the same time managing risks. To achieve this, we conduct an intense and open dialogue with a broad range of stakeholder groups.

If we consider our new “Sustainable Solution Steering” method, our portfolio evaluation has a very high level of transparency compared to peers in our industry. For example, we communicate on product applications which we identified as “challenged”, meaning those which raise sustainability concerns and for which we are currently developing action plans for improvement.

AA: Can you please elaborate on your strategic principles to align your business more closely with your customers’ sustainability needs?

DV: We want to offer products that meet our customers’ sustainability needs throughout the entire life cycle. This means not only developing new solutions, but also understanding the contribution our existing products and solutions make toward sustainability.

“Sustainable Solution Steering” is our way of assessing what this contribution is and how to describe it. It helps us provide customers with even better support on their sustainability demands and offer them suitable solutions. It provides a framework to systematically enhance our contributions to sustainability by identifying key drivers in our own industry, and our customers’ industries and by developing innovative solutions that contribute to these relevant issues.

Sustainable steering also enables further integration of sustainability into our strategic, R&D and customer support processes, allowing us to improve individual solutions and steer our entire portfolio.

AA: What do you see as the biggest sustainability challenges for the chemical industry today? How are you handling these at BASF?

DV: Issues like water scarcity are affecting consumer product development in several regions, especially in Asia and sub-Saharan Africa. In the US and Europe, on the other hand, consumer action groups are putting pressure on entire industries to include more sustainable ingredients in their products. Indeed, these trends are creating a profound shift in the demands of society and consumers. Today, topics like climate change, resource and cost efficiency as well as social topics like labor standards are very much in the minds of our customers and consumers.

New laws and standards regarding carbon emissions and other sustainability topics are being implemented and established all over the world. At the same time there is growing market uncertainty about the cost of raw materials and the availability of natural resources Increasingly, Consumers are holding brand owners and companies more accountable for the materials that go into consumer products and the way those products are made.

For BASF and for our customers, creating more sustainable products and solutions and working up and down the entire value chain is a prerequisite for long-term business success.