BASF in North America 2015 Report

BASF in North America2015 Report

Cover photo: Rick Stauff, Bemis Retail Solutions, right, and Daniel Termunde, Territory Development Manager, Performance Materials for BASF, take Innova, the first all-plastic shopping cart for a spin at a supermarket. The new cart, manufactured by Bemis, includes BASF’s Ultramid® to make it more durable. It requires less maintenance and is easier to recycle. The smooth-rolling cart also ensures a better experience for shoppers. Read more about BASF’s contribution on page 18.

On this page: Engineer Larry Nabatilan conducts an equipment check in front of the new formic acid plant in Geismar, Louisiana.

ChemicalsThe Chemicals segment consists of our business with basic chemicals and intermediates. Its portfolio ranges from solvents, plasticizers and high-volume monomers to glues and electronic chemicals as well as raw materi-als for detergents, plastics, textile fibers, paints and coatings, crop protection, and medicines. In addition to supplying customers in the chemical industry and numerous other sectors, we also ensure that other BASF segments are supplied with chemicals for producing downstream products.

Key data Chemicals (in million €)

2015 2014 Change in %

Sales 14,670 16,968 (14)

Thereof Petrochemicals 5,728 7,832 (27)

Monomers 6,093 6,337 (4)

Intermediates 2,849 2,799 2

EBITDA 3,090 3,212 (4)

Income from operations before special items 2,156 2,367 (9)

Income from operations (EBIT) 2,131 2,396 (11)

Performance ProductsOur Performance Products lend stability, color and bet-ter application properties to many every day products. Our product portfolio includes vitamins and other food additives in addition to ingredients for pharmaceuticals, personal care and cosmetics, as well as hygiene and household products. Other products from this segment improve processes in the paper industry, in oil, gas and ore extraction, and in water treatment. They furthermore enhance the efficiency of fuels and lubricants, the effec-tiveness of adhesives and coatings, and the stability of plastics.

Key data Performance Products (in million €)

2015 2014 Change in %

Sales 15,648 15,433 1

Thereof Dispersions & Pigments 4,629 4,501 3

Care Chemicals 4,900 4,835 1

Nutrition & Health 1,998 2,029 (2)

Performance Chemicals 4,121 4,068 1

EBITDA 2,289 2,232 3



Functional Materials & SolutionsIn the Functional Materials & Solutions segment, we bundle system solutions, services and innovative prod-ucts for specific sectors and customers, especially the automotive, electrical, chemical and construction indus-tries, as well as for household applications and sports and leisure. Our portfolio consists of catalysts, battery materials, engineering plastics, polyurethane systems, automotive and industrial coatings and concrete admix-tures as well as construction systems like tile adhesives and decorative paints.

Key data Functional Materials & Solutions (in million €)

2015 2014 Change in %

Sales 18,523 17,725 5

Thereof Catalysts 6,306 6,135 3

Construction Chemicals 2,304 2,060 12

Coatings 3,166 2,984 6

Performance Materials 6,747 6,546 3

EBITDA 2,228 1,678 33

Income from operations before special items 1,649 1,197 38

Income from operations (EBIT) 1,607 1,150 40

Agricultural SolutionsThe Agricultural Solutions segment provides innovative solutions in the areas of chemical and biological crop protection, seed treatment, and water management as well as solutions for nutrient supply and plant stress. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, better nutrition, and use as renewable raw materials.

Key data Agricultural Solutions (in million €)

2015 2014 Change in %

Sales 5,820 5,446 7

EBITDA 1,321 1,297 2



Oil & GasWe focus on exploration and production in oil and gas-rich regions in Europe, North Africa, Russia, South America and the Middle East. Together with our Russian partner Gazprom, we are active in the transport of natural gas in Europe. At the end of the third quarter of 2015, we exited the natural gas trading and storage business previously operated together with Gazprom and, in exchange, are expanding our oil and gas produc-tion in western Siberia.

Key data Oil & Gas (in million €)

2015 2014 Change in %

Sales 12,998 15,145 (14)

EBITDA 2,587 2,626 (1)



Net income 1,050 1,464 (28)

Creation of value added (in million €)

2015 2014

Business performance 72,981 77,058

1 Amortization and depreciation (4,401) (3,417)

2Services purchased, energy costs and other expenses (14,787) (13,259)

3 Cost of raw materials and merchandise (37,323) (42,978)

4 Value added 16,470 17,404

Use of value added

2015 2014

4.1 Employees 60.6% 53.0%

4.2 Government 9.4% 11.4%

4.3 Creditors 3.9% 4.1%

4.4 Minority interests 1.9% 1.9%

4.5 Shareholders (dividend and retention) 24.2% 29.6%

2 Value added results from the company's performance minus goods and services purchased, depreciation and amortization. Business performance includes sales revenues, other operating income, interest income and net income from shareholdings. Value added shows the BASF Group's contribution to both private and public income as well as its distribution among all stakeholders.

BASF Group 2015 at a glance

Value added 20152

4

1

2

3

2014:

4.1

4.2

4.34.4

4.5

Businessperformance

€72,981 million

€77,058 million

Economic data

2015 2014 Change in %

Sales million € 70,449 74,326 (5.2)

Income from operations before depreciation and amortization (EBITDA) million € 10,649 11,043 (3.6)

Income from operations (EBIT) before special items million € 6,739 7,357 (8.4)

Income from operations (EBIT) million € 6,248 7,626 (18.1)

Income from operations (EBIT) after cost of capital million € 194 1,368 (85.8)

Income before taxes and minority interests million € 5,548 7,203 (23.0)

Net income million € 3,987 5,155 (22.7)

Earnings per share € 4.34 5.61 (22.6)

Adjusted earnings per share € 5.00 5.44 (8.1)

Dividend per share € 2.90 2.80 3.6

Cash provided by operating activities million € 9,446 6,958 35.8

Additions to property, plant and equipment and intangible assets1 million € 6,013 7,285 (17.5)

Depreciation and amortization1 million € 4,401 3,417 28.8

Return on assets % 8.7 11.7 –

Return on equity after tax % 14.4 19.7 –

1 Including acquisitions

Innovation

2015 2014 Change in %

Research expenses million € 1,953 1,884 3.7

Number of employees in research and development at year-end 10,010 10,697 (6.4)

Employees and society

2015 2014 Change in %

Employees

Employees at year-end 112,435 113,292 (0.8)

Apprentices at year-end 3,240 3,186 1.7

Personnel expenses million € 9,982 9,224 8.2

Society

Donations and sponsorship million € 56.2 45.4 23.8

Safety, security, health and the environment

2015 2014 Change in %

Safety, security and health

Transportation incidents with significant impact on the environment 0 1 (100)

Process safety incidents per one million working hours 2.1 2.2 (4.5)

Lost time injuries per one million working hours 1.4 1.5 (6.7)

Health Performance Index 0.97 0.91 6.6

Environment

Primary energy use3 million MWh 57.3 59.0 (2.9)

Energy efficiency in production processes kilograms of sales product/MWh 599 588 1.9

Total water withdrawal million cubic meters 1,686 1,877 (10.2)

Withdrawal of drinking water million cubic meters 22.1 22.7 (2.6)

Emissions of organic substances to water4 thousand metric tons 17.3 18.7 (7.5)

Emissions of nitrogen to water4 thousand metric tons 3.0 3.2 (6.3)

Emissions of heavy metals to water4 metric tons 25.1 21.5 16.7

Emissions of greenhouse gases million metric tons of CO2 equivalents 22.2 22.4 (0.9)

Emissions to air (air pollutants)4 thousand metric tons 28.6 31.5 (9.2)

Waste million metric tons 2.0 2.1 (4.8)

Operating costs for environmental protection million € 962 897 7.2

Investments in environmental protection plants and facilities million € 346 349 (0.9)

3 Primary energy used in BASF's plants as well as in the plants of our energy suppliers to cover energy demand for production processes4 Excluding emissions from oil and gas production

Audits along the value chain

2015 2014 Change in %

Suppliers

Number of on-site sustainability audits of raw material suppliers 135 120 12.5

Responsible Care® Management System

Number of environmental and safety audits 130 121 7.4

Number of short-notice audits 68 73 (6.8)

Number of occupational medicine and health protection audits 53 48 10.4

BASF in North AmericaContent

About this reportThe “BASF in North America” Report is published annually as a concise document about the performance of our activities across the three dimensions of sustainability – economy, environment and society – in North America. The reporting period for this publication is the financial year 2015. This report also carries an overview of BASF Group along with its financial performance, prepared in accordance with the requirements of the International Financial Re-porting Standards (IFRS), and, where applicable, the German Commercial Code as well as the German Accounting Standards (GAS). The emissions, waste, energy and water use of consolidated joint operations are included pro rata, based on our stake. The employee numbers refer to employees within the BASF Group scope of consolidation as of December 31, 2015.

Welcome 7

Letter from the Chairman and CEO 7

The BASF Group 8

Our strategy 9Goals 10BASF in the regions 12BASF on the capital market 14

BASF in North America 16

Innovation at work 18

North America Executive Committee 20

Investments 22

Research & Development 23

Site spotlight: Geismar, Louisiana 24

Site spotlight: Freeport, Texas 25

Timeline North America 2015 26

BASF celebrates 150th anniversary in 2015 28

The anniversary year in North America 29

Sustainability 30

Environment, Health and Safety 32

Employees 40

Community relations and science education 42

Selected awards and recognition 45

Further information 46

7BASF in North America Welcome

2015 Report Letter from the Chairman and CEO

Dear reader,

In 2015, the market environment continued to be volatile and challenging. Oil prices averaged $52 per barrel, almost half the previous year´s figure. Growth rates for the global economy, industrial production and the chemical industry all lagged behind our expectations. Consequently, BASF’s full year results showed lower sales and earnings compared to the previous year.

Sales at companies headquartered in North America grew slightly in euro terms, but fell significantly in local currency terms. The sales increase was essentially due to positive currency effects in all divisions, which more than compensated for raw material cost-related price drops in the chemicals business – especially in the Petrochemicals division – as well as an overall slight decline in sales volumes. In 2015, our income from operations before special items decreased com-pared with the previous year, mainly as a result of unfavorable sales and margin developments in the Chemicals segment. A lower contribution also came from the Performance Prod-ucts segment. Considerable earnings improvement in the Functional Materials & Solutions segment and a slight increase in Agricultural Solutions partially offset the decrease.

Representing 20 percent of BASF Group’s sales, the North American region remains an attractive market due to its anticipated economic growth over the next decade, its stand-ing as the second largest chemical market in the world, and lower feedstock costs. However, given today’s challenging global market environment, it is essential that we build on the strengths of BASF and keep costs and cash under control while we go after the opportunities North America has to offer. With a keen focus on operational excellence, we will find addi-tional ways to increase efficiency in our operations.

BASF in North America will continue its focus on innovation, attractive market segments and cross-business initiatives, and on harnessing our team’s talent and know-how for even closer collaboration with our customers to grow together.

In 2015, BASF completed several key investments in the region. We began the production of formic acid in a new world-scale plant at our Geismar, Louisiana, site. We opened a new dispersions plant at our Freeport, Texas, site and in Theodore, Alabama, we completed a world-scale plant to produce chelating agent Trilon® M. We also started up a facility for new cathode research and chemical and process engineering capabilities in Beachwood, Ohio.

In July, we broke ground on a world-scale ammonia plant at our Freeport site through a joint partnership with Yara Interna-tional. Ammonia is an upstream chemical for the production of fertilizers, industrial applications, polyamides, polyurethanes, glues, and impregnating resins and amines.

BASF also celebrated its 150th anniversary in 2015. We held yearlong global activities to celebrate this milestone and to collaborate with our customers, the research community and partners to co-create ideas to help shape a sustainable future. The ideas generated will have a lasting legacy. We will contin-ue to pursue new ways of collaboration to address urgent global challenges and deliver on our corporate purpose to create chemistry for a sustainable future.

Best regards,

Wayne T. SmithChairman and CEOBASF Corporation

WelcomeLetter from the Chairman and CEO

8 The BASF Group BASF in North America

2015 Report

At BASF, we create chemistry for a sustainable future. As the world’s leading chemical company, we combine economic success with environmental protection and social responsibility. The approximately 112,000 employ-ees in the BASF Group work on contributing to the success of our customers in nearly all sectors and almost every country in the world. Our portfolio is arranged into five segments: Chemicals, Performance Products, Functional Materials & Solutions, Agricultural Solutions and Oil & Gas.

Organization of the BASF Group

▪ 13 divisions grouped into five segments ▪ Regional divisions, corporate units and competence

centers support our business

Since the beginning of 2015, 13 divisions divided into five segments bear operational responsibility and manage our 61 global and regional business units. The divisions develop strategies for our 84 strategic business units and are orga-nized according to sectors or products. The regional divisions contribute to the local development of our business and help exploit market potential. They are also responsible for optimizing infrastructure for our business. For financial reporting purposes, our divisions are organized into the following four regions: Europe; North America; Asia Pacific; and South America, Africa, Middle East. Three central divisions, six corporate units and 10 compe-tence centers provide services for the BASF Group in areas such as finance, investor relations, communications, human resources, research, engineering, and site management, as well as environment, health and safety.

Markets and sites

▪ BASF with companies in more than 80 countries ▪ Six Verbund sites and 338 additional production

sites worldwide

BASF has companies in more than 80 countries and supplies products to a large number of business partners in nearly every part of the world. In 2015, we generated 42% of our sales (excluding Oil & Gas) with customers in Europe. In addi-tion, 27% of sales were achieved in North America; 22% in Asia Pacific; and 9% in South America, Africa, Middle East. Based on the entire BASF Group, 52% of our sales were to customers in Europe, 22% in North America, 18% in Asia Pacific and 8% in South America, Africa, Middle East. We operate six Verbund sites and 338 additional produc-tion sites worldwide. Our Verbund site in Ludwigshafen is the world’s largest integrated chemical complex. This was where the Verbund principle was originally developed and steadily honed before being put into practice at additional sites.

Verbund

▪ Intelligent plant networking in the Production Verbund ▪ Technology and Know-How Verbund

The Verbund system is one of BASF’s great strengths. Here, we add value as one company by making efficient use of our resources. The Production Verbund, for example, intelligently links production units and energy demand so that waste heat can be used as energy in other plants. Furthermore, b y-products of one plant can serve as feedstock elsewhere. In this system, chemical processes run with lower energy consumption and higher product yield. This not only saves us raw materials and energy, it also avoids emissions, lowers logistics costs and makes use of synergies. We also employ the Verbund principle for more than pro-duction, applying it for technologies, knowledge, employees, customers and partners, as well. Expert knowledge is pooled into our global research platforms.

For more on the Verbund concept, see basf.com/en/verbund

Competitive environment

BASF holds one of the top three market positions in around 70% of the business areas in which it is active. Our most important global competitors include AkzoNobel, Clariant, Covestro, Dow Chemical, DSM, DuPont, Evonik, Formosa Plastics, Reliance, Sabic, Sinopec, Solvay and many hundreds of local and regional competitors. We expect competitors from emerging markets to become increasingly significant in the years ahead.

Corporate legal structure

As the publicly traded parent company, BASF SE takes a central position: Directly or indirectly, it holds the shares in the companies belonging to the BASF Group, and is also the largest operating company. The majority of Group companies cover a broad spectrum of our business. In some, we concen-trate on specific business areas: The Wintershall Group, for example, focuses on oil and gas activities. In the BASF Group Consolidated Financial Statements, 251 companies including BASF SE are fully consolidated. We consolidate seven joint operations on a proportional basis, and account for 32 com-panies using the equity method.

The BASF Group

9BASF in North America The BASF Group

2015 Report Our strategy

With the “We create chemistry” strategy, BASF has set itself ambitious goals in order to strengthen its position as the world’s leading chemical company. We want to contribute to a sustainable future and have embedded this into our corporate purpose: “We create chemistry for a sustainable future.”

In 2050, nearly 10 billion people will live on Earth. While the world’s population and its demands will keep growing, the planet’s resources are finite. On the one hand, population growth is associated with huge global challenges; and yet we also see many opportunities, especially for the chemical industry.

Our corporate purpose

▪ We create chemistry for a sustainable future

We want to contribute to a world that provides a viable future with enhanced quality of life for everyone. We do so by creat-ing chemistry for our customers and society and by making the best use of available resources.

We live our corporate purpose by: – Sourcing and producing responsibly – Acting as a fair and reliable partner – Connecting creative minds to find the best solutions for market needs

For us, this is what successful business is all about.

Our leading position as an integrated global chemical company gives us the chance to make important contributions in the following three areas: – Resources, environment and climate – Food and nutrition – Quality of life

We therefore act in accordance with four strategic principles.

Our strategic principles

▪ We add value as one company ▪ We innovate to make our customers more successful ▪ We drive sustainable solutions ▪ We form the best team

We add value as one company. Our Verbund concept is unique in the industry. Encompassing the Production Verbund, Technology Verbund and Know-How Verbund as well as all relevant customer industries worldwide, this sophisticated and profitable system will continue to be expanded. This is how we combine our strengths and add value as one company.

We innovate to make our customers more successful. We want to align our business even more with our customers’ needs and contribute to their success with innovative and sustainable solutions. Through close partnerships with cus-tomers and research institutes, we link expertise in chemistry, biology, physics, materials science and engineering to jointly develop customized products, functional materials, and sys-tem solutions as well as processes and technologies.

We drive sustainable solutions. In the future, sustainability will more than ever serve as a starting point for new business opportunities. That is why sustainability and innovation are becoming significant drivers for our profitable growth.

We form the best team. Committed and qualified employees around the world are the key to making our contribution to a sustainable future. Because we want to form the best team, we offer excellent working conditions and inclusive leadership based on mutual trust, respect and dedication to top perfor-mance.

Our values

▪ Creative ▪ Open ▪ Responsible ▪ Entrepreneurial

Our conduct is critical for the successful implementation of our strategy: This is what our values represent. They guide how we interact with society, our partners and with each other.

Creative: In order to find innovative and sustainable solutions, we have the courage to pursue bold ideas. We link our areas of expertise from many different fields and build partnerships to develop creative, value-adding solutions. We constantly improve our products, services and solutions.

Open: We value diversity – in people, opinions and experi-ence. That is why we foster dialog based on honesty, respect and mutual trust. We develop our talents and capabilities.

Responsible: We act responsibly as an integral part of society. In doing so, we strictly adhere to our compliance standards. And in everything we do, we never compromise on safety.

Entrepreneurial: All employees contribute to BASF’s success – as individuals and as a team. We turn market needs into customer solutions. We succeed in this because we take ownership and embrace accountability for our work.

Our strategy


Goals 2015 Report

Goals

We carry out our corporate purpose, “We create chemistry for a sustainable future,” by pursuing ambitious goals along our entire value chain. In this way, we aim to achieve profitable growth and take on social and environmental responsibility,

focusing on issues through which we as a company can make a significant contribution. We updated and revamped our goals to this effect in 2015.

Growth and profitability

In 2011, we set ourselves sales and earnings goals for 2015 and 2020 as part of the “We create chemistry” strategy. In October 2014, we announced that we would not reach the finan cial goals for 2015, primarily because gross domestic product and industrial and chemical production had grown at a considerably slower average rate from 2010 to 2015 than our strategy had anticipated. In September 2015, we reduced our expectations for the global economic environment from 2015 to 2020 (previous forecast in parentheses): – Growth of gross domestic product: 3.0% (3.2%) – Growth in industrial production: 3.5% (3.7%) – Growth in chemical production: 3.9% (4.0%)

As a consequence, we no longer adhere to the financial goals previously stated for 2020. Our aim for the years ahead is, on average, to grow sales slightly faster and EBITDA considerably faster than global chemical production, and to earn a significant premium on our cost of capital. Moreover, we strive for a high level of free cash flow each year, either raising or at least maintaining the divi-dend at the prior-year level.

Goal areas along the value chain

Suppliers BASF Customers

ProcurementGrowth and profitability; employees;production; product stewardship; energy and climate protection; water

Products and solutions

Procurement

2020 Goal Status at end of 2015

Assessment of sustainability performance of relevant suppliers 1 according to our risk-based approach; development of action plans where improvement is necessary 70% 31%

1 We define relevant suppliers as those showing an elevated sustainability risk potential as identified by risk matrices and with respect to corresponding country risks. Our suppliers are evaluated based on risk due to the size and scale of our supplier portfolio.

Employees


Proportion of women in leadership positions with disciplinary responsibility 22–24% 19.5%

Long-term goals

Proportion of international senior executives 2 Increase in proportion of non-German senior executives (baseline 2003: 30%) 35.6%

Senior executives with international experience Proportion of senior executives with international experience over 80% 82.9%

Employee development Systematic, global employee development as shared responsibility of em-ployees and leaders based on relevant processes and tools

The project has been implemented for around

60,000 employees worldwide.

2 The term “senior executives” refers to leadership levels 1 to 4, whereby level 1 denotes the Board of Executive Directors. In addition, individual employees can attain senior executive status by virtue of special expertise.


2015 Report Goals

Production

2025 Goals Status at end of 2015

Reduction of worldwide lost time injury rate per one million working hours ≤0.5 1.4

Reduction of worldwide process safety incidents per one million working hours ≤0.5 2.1

Annual goal

Health Performance Index >0.9 0.97

Product stewardship


Risk assessment of products sold by BASF worldwide in quantities of more than one metric ton per year >99% 67.8%

Energy and climate protection

2020 Goals Status at end of 2015

Covering our primary energy demand through the introduction of certified energy management systems (ISO 50001) at all relevant sites3 90% 39.5%

Reduction of greenhouse gas emissions per metric ton of sales product (excluding Oil & Gas, baseline 2002) –40% –34.6%

3 The selection of relevant sites is determined by the amount of primary energy used and local energy prices.

Water


Introduction of sustainable water management at all production sites in water stress areas and at all Verbund sites (excluding Oil & Gas) 100% 36.2%

Products and solutions


Increase the proportion of sales generated by products that make a particular contribution to susta-inable development (“Accelerators”) 28% 26.6%


BASF in the regions 2015 Report

Freeport

Geismar

São Paulo

Florham Park

Antwerp

Ludwigshafen

Nanjing

Hong Kong

Kuantan

Singapore

Regional centersSelected sitesVerbund sitesSelected research and development sites

Freeport

Geismar

São Paulo

Florham Park

Antwerp

Ludwigshafen

Nanjing

Hong Kong

Kuantan

Singapore


BASF in the regionsBASF Group sales 2015: €70,449 million; EBIT before special items 2015: €6,739 million

North AmericaSales1 (in million €) EBIT before special Employees2

15,665 1,425 17,471items1 (in million €)

South America, Africa, Middle EastSales1 (in million €) EBIT before special Employees2

4,397 378 7,323items1 (in million €)


2015 Report BASF in the regions

Freeport

Geismar

São Paulo

Florham Park

Antwerp

Ludwigshafen

Nanjing

Hong Kong

Kuantan

Singapore


Freeport

Geismar

São Paulo

Florham Park

Antwerp

Ludwigshafen

Nanjing

Hong Kong

Kuantan

Singapore


EuropeSales1 (in million €) EBIT before special Employees2

38,675 4,527 70,079items1 (in million €)

Asia PacificSales1 (in million €) EBIT before special Employees2

11,712 409 17,562items1 (in million €)

1 In 2015, by location of company2 At year-end 2015


BASF on the capital market 2015 Report

Stock markets were marked by a high level of volatility in 2015. This was largely a factor of fickle economic devel-opment, slowdown in the emerging markets and the threat of Greece’s payment default. In this volatile environment, the BASF share rose by 1.2%, trading at €70.72 at the end of 2015. We stand by our ambitious dividend policy and will propose a dividend of €2.90 per share at the Annual Shareholders’ Meeting – an increase of 3.6% compared with the previous year. BASF enjoys solid financing and good credit ratings.

BASF share performance

▪ Stock markets fluctuate widely over course of year ▪ BASF share gains 1.2% in 2015 ▪ Ten-year development continues to clearly

outperform benchmark indexes

The weak euro and the European Central Bank’s (ECB) announced intention to purchase large amounts of additional bonds both provided the stock markets with a positive start to 2015. On April 10, 2015, new record highs were achieved as the German benchmark index DAX 30 closed at 12,375 points and the BASF share price at €96.72. As the second quarter progressed, concerns – especially about Greece’s financial solvency – led to share price losses. The second half of the year saw the market rebound as European finance ministers approved the third bailout package for Greece and the

eurozone produced robust economic figures. This was fol-lowed by considerable dips, due in large part to the weak economic situation in China and severe recession in Brazil. The further depreciation of the euro, positive economic devel-opment and speculation as to a renewed expansion of the ECB’s monetary policy initially led to a fourth-quarter boost in share prices, including the BASF share. Prices dropped again in December, however, after the ECB announced intentions to continue easing its monetary policy, a decision that disap-pointed many investors who had anticipated more expansive measures. BASF shares traded at €70.72 at the end of 2015, 1.2% above the previous year’s closing price. Assuming that divi-dends were reinvested, BASF shares gained 4.4% in value in 2015. This did not match the performance of the German and European stock markets, whose benchmark indexes DAX 30 and DJ EURO STOXX 50 gained 9.6% and 6.4% over the same period, respectively. As for the global industry indexes, DJ Chemicals fell by 3.3% in 2015 while MSCI World Chemi-cals declined by 0.6%. Viewed over a ten-year period, the long-term performance of BASF shares still clearly outperforms these indexes. The assets of an investor who invested €1,000 in BASF shares at the end of 2005 and reinvested the divi-dends in additional BASF shares would have increased to €3,195 by the end of 2015. This represents a yield of 12.3% each year, placing BASF shares above the returns for the DAX 30 (7.1%), EURO STOXX 50 (2.2%) and MSCI World Chemicals (7.4%) indexes.

BASF on the capital market

Change in value of an investment in BASF shares in 2015 (With dividends reinvested; indexed)

BASF share 4.4% DAX 30 9.6% MSCI World Chemicals –0.6%

DecNovOctSepAugJulJunMayAprMarFebJan90

100

120

130

110

140

90

100

120

130

110

140


2015 Report BASF on the capital market

Long-term performance of BASF shares compared with indexes(Average annual increase with dividends reinvested)

2010–2015 7.1%

9.2%

6.4%

7.7%

2005–2015 12.3%

7.1%

2.2%

7.4%

BASF share EURO STOXX MSCI World ChemicalsDAX 30

Weighting of BASF shares in important indexes as of December 31, 2015

DAX 30 7.4%

DJ Chemicals 5.9%

MSCI World Index 0.2%

Proposed dividend of €2.90 per share

At the Annual Shareholders’ Meeting, the Board of Executive Directors and the Supervisory Board will propose a dividend payment of €2.90 per share. We stand by our ambitious divi-dend policy and plan to pay out almost €2.7 billion to our shareholders. Based on the year-end share price for 2015, BASF shares offer a high dividend yield of around 4.1%. BASF is part of the DivDAX share index, which contains the 15 com-panies with the highest dividend yield in the DAX 30. We aim to increase our dividend each year, or at least maintain it at the previous year’s level.

Dividend per share1 (€ per share)

20152012 2013 20142010 20112009200820072006

1.951.951.70

2.20

2.60 2.70 2.802.50

1.50

2.90

1 Adjusted for two-for-one stock split conducted in 2008

Broad base of international shareholders

With over 500,000 shareholders, BASF is one of the largest publicly owned companies with a high free float. An analysis of the shareholder structure carried out at the end of 2015 showed that, at 16% of share capital, the United States and Canada made up the largest regional group of institutional investors. Institutional investors from Germany accounted for 9%. Shareholders from the United Kingdom and Ireland hold just under 11% of BASF shares, while institutional investors from the rest of Europe hold a further 21% of capital. Approx-imately 27% of the company’s share capital is held by private investors, most of whom reside in Germany. BASF is therefore one of the DAX 30 companies with the largest percentage of private shareholders.

Shareholder structure (by region)

1 Germany 36%

2 United States and Canada 16%

3 United Kingdom and Ireland 11%

4 Rest of Europe 21%

5 Rest of world 5%

6 Not identified 11%

Employees becoming shareholders

In many countries, we offer share purchase programs that turn our employees into BASF shareholders. In 2015, for example, around 21,600 employees (2014: 23,200) purchased employee shares worth about €60 million (2014: €62 million).

1

23

4

5

6

16 BASF in North America BASF in North America

2015 Report

BASF in North AmericaAt a glance

BASF Corporation is the largest affiliate of BASF SE. Headquartered in Florham Park, New Jersey, BASF Cor-poration is the second largest producer and marketer of chemicals and related products in North America (the United States, Canada, Mexico, Central America & the Caribbean).

BASF operates four of its five business segments in North America: Chemicals, Agricultural Solutions, Performance Products and Functional Materials & Solutions. The Oil & Gas segment does not operate in the region. Key industries served include chemicals, automotive, agriculture, construction, per-sonal care, health and nutrition, packaging and consumer products. The company has approximately 100 production and research and development sites throughout North Ameri-ca and operates Verbund sites in Geismar, Louisiana, and Freeport, Texas.

BASF operates approximately

100production and research and development sites in North America.

BASF in Canada is headquartered in Mississauga, Ontario. The company has approximately 670 employees at 11 pro-ductions sites and offices across the country. While employees work in roles ranging from production to finance, most work in customer-facing positions in sales and marketing. Management of BASF in Mexico, Central America and the Caribbean is headquartered in Mexico City, and oversees eight production sites. The company has approximately 1,300 employees who principally serve customers in the agriculture, automotive and construction industries.

Key sites in North America:

Florham Park, New JerseyFlorham Park is home to BASF’s North American headquar-ters, the regional business units Care Chemicals, Nutrition & Health, Intermediates, and Performance Chemicals, along with key support functions (Finance; Human Resources; Com-munications; Tax; Legal; Procurement; Supply Chain Services as well as Environment, Health and Safety).

Geismar, Louisiana The Verbund site in Geismar is the largest BASF manufactur-ing site in North America. It manufactures basic and specialty chemicals, intermediates and polyurethanes. In 2015, BASF began production at a world-scale formic acid plant at the site.

Freeport, Texas The second Verbund site in North America is Freeport. It is a leading producer of basic chemicals, intermediates and fiber intermediates. A dispersions plant opened at the Verbund site in February 2015. In July 2015, BASF and Yara International broke ground on a world-scale ammonia plant at the site.

Port Arthur, TexasBASF TOTAL Petrochemicals LLC is based in Port Arthur. BASF owns a 60 percent share and TOTAL owns a 40 percent share. BASF has responsibility for daily operations of one of the world’s largest steam crackers and a world-scale C4 ole-fins complex adjacent to the steam cracker.

Wyandotte, Michigan A variety of urethanes and specialty plastics for the automo-tive, furniture and electronic industries, as well as for a wide range of industrial applications, are developed and manufac-tured at the Wyandotte site.

Iselin, New Jersey BASF’s global Catalysts division is based in Iselin, along with its principal North American research and development facility. The Catalysts division is the world’s leading supplier of envi-ronmental and process catalysts.

Research Triangle Park (RTP), North Carolina The North American headquarters for the Crop Protection Division and the global headquarters for BASF Plant Science are located in RTP. It is also home to Global Strategic Market-ing Herbicides and Insecticides, the North American head-quarters for Crop Protection Regulatory Affairs, Global Insecti-cide R&D and Formulation Development.

Tultitlán, Mexico One of BASF’s largest manufacturing sites in Mexico is based in Tultitlán. It is recognized as one of the most important tech-nology and development centers for automotive coatings in the region.

Tarrytown, New York One of the biggest BASF research hubs in North America is in Tarrytown. It has a long history in the development of stabiliza-tion technologies, including groundbreaking work in thermal and light stabilizers.

Windsor, Canada The largest manufacturing site in Canada is located in Windsor. It produces both water-borne and solvent-based automotive paints and coatings, including brands like Glasurit®, R-M®, and LIMCO®. These products are used by major automotive manu-facturers and collision repair centers across North America.

17BASF in North America BASF in North America

2015 Report

BASF in North America

Sales by location of company

€15,665Employees, as of December 31, 2015

17,471

Freeport Geismar

FlorhamPark

Regional center

Verbund sites

Selected production sites

Selected research sites

Freeport

Geismar

São Paulo

Florham Park

Antwerp

Ludwigshafen

Nanjing

Hong Kong

Kuantan

Singapore


2015 Performance

In 2015, BASF’s sales in North America were €15.7 billion 1 ($17.4 billion) which represented a sales increase of 1 percent in euro terms (minus 15 percent in dollar terms) compared to 2014. Earnings (EBIT before special items) in North America fell to €1.4 billion ($1.6 billion) in 2015, a decrease of 9 percent in euro terms (minus 25 percent in dollar terms) versus 2014.

Sales in North America 1 (million €)

2015 15,665

2014 15,467

2013 14,573

1 Figures reflect sales by location of company.

18 Innovation at work BASF in North America

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Innovation at work How we contribute to the success of our customers

Our customers rely on BASF’s innovative solutions to meet their market demands. We work collaboratively with them to understand their needs and deliver results that optimize production, increase product performance and durability, and meet environmental and sustainability goals. Here are some examples of how we create chemis-try with our customers.

Bemis: Bye-bye to squeaky wheels

Bemis Manufacturing, a global maker of plastic products, re-cently partnered with BASF to create the best shopping cart in the industry: the Innova all plastic cart. BASF was involved in the project long before the first carts rolled into supermarkets. BASF provided technical expertise, a top-notch resin and our design software Ultrasim®. We also applied our ecoefficiency analysis to help Bemis engineers quantify and market the cart‘s key selling points. For store owners, the advantages of the new cart are lower maintenance costs, recyclability and a better experience for shoppers.

Rick Stauff, Bemis Retail Solutions, presents Innova, the first all-plastic shopping cart.

The Innova shopping cart requires less maintenance, and is easier to recycle. The smooth-rolling cart also ensures a better experience for shoppers.

Marine Industry: Helping to protect marine life with Synative

In recent years, the United States has increased regulations to lessen the environmental impact of lubricants in the shipping industry – such as those used for marine propulsion and steer-ing systems. The Synative® ES TMP ester base stocks contain a large amount of renewable raw materials, are biodegradable, and are nontoxic to marine organisms. Synative works effec-tively and in a more environmentally friendly manner than many comparable products. It helps protect marine life and is em-ployed in many applications subject to rigorous regulations.

BASF‘s Synative helps to reduce the environmental impact of lubricants in the marine industry.

19BASF in North America Innovation at work

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Tim O’Brien Homes: Higher energy efficiency and comfort

Milwaukee, Wisconsin-based Tim O’Brien Homes is incorpo-rating the BASF HP+ Wall System as a standard building technique for all of its newly constructed homes. The wall system features advanced wall-framing technology and com-bines two BASF products: Neopor®, a graphite-enhanced rigid foam insulation, and WALLTITE® HP+, a closed-cell spray-applied polyurethane. The integrated wall system deliv-ers exceptional control of heat, air and moisture while provid-ing increased structural integrity, comfort, energy efficiency and indoor air quality.

Center for Building Excellence

BASF solutions for the construction industry help to increase energy efficiency and durability, and accelerate the time to completion. To fully leverage this portfolio and to bundle our construction experience, BASF assembled the Center for Building Excellence (CBE), a group of experts in the practical application of building science. The CBE offers consultation that allows builders to increase sustainability of residential and commercial buildings while reducing material and labor costs.

Get in touch and learn more: http://www.construction.basf.us/cbe/index

Phone: +1 (888) 307-6602

Paints: Saving a step in the paint process with Acronal EDGE 4750

Acronal EDGE 4750 allows painters to apply primer and paint in one step.

Paint manufacturers want to offer products that can be applied in a short amount of time without compromising high quality and attractive appearance. BASF’s Acronal® EDGE 4750 dis-persion allows customers to combine the demands of both primer and top coat into a single paint. Acronal EDGE 4750 adheres well to surfaces and prevents stains from penetrating the paint while providing coverage, durability and stain resis-tance. Painters can eliminate a whole process step and still achieve the highest-quality results.

How can we create chemistry with you? Get in touch – see page 46

Tim O‘Brien Homes uses the BASF HP+ Wall System as a building construction standard.

20 North America Executive Committee BASF in North America

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North America Executive Committee

Teressa Szelest

President, Market & Business Development North America

Executive Vice President, BASF Corporation Matthew Lepore

General Counsel and Chief Compliance Officer, BASF North America

Senior Vice President, BASF Corporation

Manfredo Rübens

President, Regional Functions North America

Executive Vice President and Chief Financial Officer, BASF Corporation

21BASF in North America North America Executive Committee

2015 Report

Kenneth Lane

President, Global Catalysts Division

Executive Vice President, BASF Corporation

Judy Zagorski

Senior Vice President, Human Resources, BASF Corporation

Peter Eckes

President, Bioscience Research

Executive Vice President, BASF Corporation

For more details visit: www.basf.us/executive-profile

Wayne T. Smith

Member of the Board of Executive Directors, BASF SE

Chairman and Chief Executive Officer, BASF Corporation

22 Investments BASF in North America

2015 Report

InvestmentsGrowth potential in North America

North America represents about 20 percent of the sales of BASF Group. The region remains an attractive market because of its anticipated economic growth over the next decade, its standing as the second largest chemical mar-ket in the world, and low costs for raw material such as natural gas. In 2015, BASF started production in several new plants. With the construction of an ammonia plant in partnership with Yara International, BASF continues its investment in North America.

New plants for profitable growth

▪ Projects completed in Freeport, Texas; Geismar, Lousiana; and Theodore, Alabama

BASF started production in various new plants in 2015. In February, a new dispersions plant began operations at our Freeport, Texas, site. The acrylic emulsion polymers manufac-tured at the site are used for architectural coatings, construc-tion chemicals, adhesives and applications in the paper chemicals industry. The new plant created 25 full-time em-ployment positions. In November, BASF opened a formic acid plant in Geismar, Louisiana, making us the only producer of formic acid in North America. The product has a wide range of applications, includ-ing animal nutrition, household and industrial cleaning, oilfield drilling and gas exploration, and deicing airport runways and roads. BASF successfully started up a new plant in Theodore, Alabama, to produce our low environmental impact chelating agent Trilon® M (Trilomethylglycinediacetic acid). Trilon M is an alternative to phosphate in dishwashing machine detergents.

Investing in the future

▪ Groundbreaking for new ammonia plant with Yara In-ternational in July

▪ Ongoing investment in Beaumont, Texas; and Hanni-bal, Missouri

In 2015, Yara Freeport LLC was founded in 2015 as a joint partnership between Yara International and BASF and the companies broke ground on an ammonia plant at the BASF site in Freeport, Texas. Start-up of the plant is targeted for the end of 2017. Yara is the majority shareholder of the partner-ship with an interest share of 68 percent; BASF owns the re-maining 32 percent. Total capital investment for the plant is estimated to be $600 million and it has a capacity of approxi-mately 750,000 metric tons per year. Each party will off-take ammonia in accordance with its equity share. The plant will use hydrogen as a raw material, significantly reducing capital expenditures, maintenance and carbon dioxide emissions. Ammonia is used for the production of fertilizers, industrial applications, polyamides, polyurethanes, glues and impreg-nating resins as well as amines.

We are also investing more than $270 million to expand production capacity for dicamba and dimethenamid (DMTA) at the Beaumont, Texas, site and to upgrade production at a second location in Hannibal, Missouri. Both products are ac-tive ingredients used in herbicides. The additional production in Hannibal began in early 2016. Completion of the Beaumont expansion is expected in 2016 or 2017.

Stronger presence in research and development

▪ New research facility in Beachwood, Ohio ▪ Testing center for clinical and consumer testing

opened in Tarrytown, New York

In July, a facility for new cathode research and chemical and process engineering capabilities opened in Beachwood, Ohio. The new facility created more than 40 employment opportuni-ties. We also opened a new clinical and consumer testing center within our 160,000 square foot research and development fa-cility in Tarrytown, New York. The center is equipped with the most sophisticated clinical instrumentation available to analyze the effectiveness of BASF products for personal care applica-tions such as facial creams, lotions and hair care products. It allows BASF to produce clinical imaging for all market seg-ments within personal care. First clinical trials began in June.

The team in the new clinical and consumer testing center in Tarrytown, New York, evaluates new BASF products for personal care. Here, Clinical Scientist Tanya Uddin analyzes the skin of a test subject.

23BASF in North America Research & Development

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Research & DevelopmentNorth America is home to BASF’s Bioscience Research With innovative products and processes, BASF provides sustainable solutions for global challenges. Innovations based on effective and efficient research and develop-ment are an important growth engine for our company.

New solutions for agriculture, food and industri-al applications

▪ Bioscience Research drives BASF’s entire portfolio of biological and biotechnology activities

▪ BASF topped Patent Asset Index for seventh year in a row

BASF has a strong presence in research and development (R&D) in North America, with approximately 2,000 scientists working at 27 sites. In early 2015, our Bioscience Research relocated its headquarters to Research Triangle Park, North Carolina. It complements our two other global research plat-forms, Advanced Materials & Systems Research, located in Shanghai, China; and Process Research & Chemical Engi-neering, located in Ludwigshafen, Germany. As knowledge and competence centers, the platforms form the core of BASF’s global Know-How Verbund.

BASF facilities in Research Triangle Park, North Carolina, are an epicenter for biotechnology and crop protection research. The scientists Megan Andriankaja (left), Chris Perrin (center) and Amanda Holland (right) examine leaf growth in plants treated with BASF plant health products.

Bioscience Research in North America drives BASF’s entire portfolio of biological and biotechnology activities to provide innovative solutions for agricultural, food and industrial appli-cations. It is comprised of Crop Protection Research, Experi-mental Toxicology & Ecology, White Biotechnology and Plant Science.

– Crop Protection Research focuses on discovering new ac-tive molecules that can be developed into innovative insecti-cides, herbicides and fungicides for agriculture.

– Experimental Toxicology & Ecology develops, validates and applies testing strategies to evaluate the potential toxicity

and ecological impact of industrial chemicals and crop pro-tection products.

– White Biotechnology combines biotechnology and natural synthesis techniques to develop products such as vitamins, food and feed supplements, chiral compounds, and phar-maceutical and agricultural intermediates. These techniques increase efficiency and reduce raw materials, energy require-ments and carbon emissions as compared to conventional chemical processes. At our site in San Diego, California, scientists combine all aspects of industrial enzyme develop-ment. They are specialists in enzyme biochemistry; charac-terization; analytics; optimization and application of enzymes; high-throughput screening and automation; computational biology; genetic engineering of bacteria and yeasts for en-zyme expression; enzyme manufacturing including fermen-tation; downstream processing and stabilization.

– Plant Science uses plant biotechnology to better understand and enhance crops to support farmers in producing more with less input by increasing crop yields, providing drought resistance, and improving nutrition.

Our power of innovation is underscored by the approximately 1,000 patents we filed worldwide in 2015, topping the Patent Asset Index for the seventh year in a row.

An environment-friendly solution for oil recovery

In 2015, BASF successfully expanded the use of Pyrolase® enzymes for oilfield applications. Pyrolase is an environ-ment-friendly solution to improve oil recovery. The enzymes help to reduce residue damage. Our product Pyrolase HT tolerates high temperature and salinity and performs well in both acidic and basic solutions. This allows an even broader use in oil field applications.

Creating chemistry through collaborative innovation

For BASF, North America remains a strong innovation hub. It has the most active start-ups, a top talent pipeline and the highest investment funding for research and development globally. We leverage this unique landscape. For example, we partner with top institutions such as the California Research Alliance (CARA), representing the University of California, Berkeley; Stanford University, and the University of California, San Francisco, to solve the world’s most pressing global chal-lenges. This research network focuses on new inorganic ma-terials and applications. Additionally, BASF teams with the North American Center for Research on Advanced Materials (NORA), including scien-tists from Harvard University, Massachusetts Institute of Technology, and the University of Massachusetts Amherst.

24 Site spotlight: Geismar, Louisiana BASF in North America

2015 Report

Twenty-four production units, including North America’s only formic acid production facility, produce a wide range of chemicals that serve as building blocks for hundreds of everyday consumer and industrial products. Nearly 1,100 employees and about 500 contract employees work for BASF at the Geismar site. This Verbund site is among the largest employers in Louisiana and the largest BASF manufacturing site in North America.

Safety in the workplace and beyond

Best in class safety is a core value for BASF in Geismar. We are committed to maintaining safe operations and protecting employees, the community and the environment. We proac-tively address workplace hazards and eliminate at-risk behav-iors so employees maintain safe and reliable operations. By never compromising on safety, we strive to ensure every em-ployee, contractor and visitor returns safely home from work each day.

A growing asset in the region

Three major projects were completed at the Geismar site in 2015. The successful start-up of a world-scale formic acid production plant makes BASF the world’s largest producer of the versatile chemical and the first company to produce formic acid in North America. In addition, a new surfactants plant and a new polyurethanes systems house allow us to serve more customers in the pharmaceuticals, personal care products, textiles and automotive industries.

Jonathan Rayborn, Formic Acid Operator at the BASF Geismar site, stands within the new formic acid unit optimizing process flows to improve plant performance.

With its 24 production plants dedicated to operational excel-lence and continuous improvement, more than 2,000 acres of available land, and easy access to a network of pipelines, major highways, rail and water, the Geismar site is positioned for continued growth.

Community and workforce investment

In 2015, employee volunteers in Geismar built a monarch butterfly waystation and released 150 butterflies to celebrate the company’s 150th anniversary and its commitment to a sustainable future.

As the Geismar site and the local community continue to grow, so does the need for a diverse workforce. New and continued partnerships with academic organizations help build a pipeline of potential employees who are destined to work in the indus-try. In partnership with River Parishes Community College, we created the BASF TECH Academy for rising high school juniors and seniors. Delivered at no cost to students, the program in-troduces them to industries and potential careers in the fields of science and technology. In addition to the TECH Academy, we connect local students (ages 6-12) to chemistry through interactive, hands-on science with the BASF Kids’ Lab offered in museums and schools. More than 2,100 students and 1,800 members of the community participated in BASF Kids’ Lab programs in 2015. The Geismar site also donated more than $35,000 in academic scholarships to local top-performing high school and college students. As part of BASF’s 150th anniversary celebration, we en-gaged more than 40 employees from BASF sites across the Southeast states in an Employee Jamming Session where they brainstormed solutions to reduce food waste. In conjunction with the event, the Geismar site donated $25,000 to the local food bank to support the “BackPack” child nutrition program in Ascension Parish. This is a program designed to fight child-hood hunger by providing much-needed food items to students for the weekends and holidays between school days.

Site spotlight: Geismar, LouisianaPositioned for continued growth

25BASF in North America Site spotlight: Freeport, Texas

2015 Report

Site spotlight: Freeport, Texas An integrated approach to manufacturing BASF established its first U.S. manufacturing site in Free-port, Texas, in 1958. Currently, the site employs more than 850 people and nearly 850 contractors. As a Verbund site, Freeport is home to 25 plants that produce 24 different products used in food packaging, fertilizer, paints, glue stocks and diapers.

Angela Munoz, Production Technician at the Freeport site, pulls a sample at the oxo alcohols unit. Oxo alcohols are used, among others, in the production of fibers, wire enamels and plastics.

New ammonia plant

BASF’s continued investment in the Freeport site was evident in July 2015, when the company broke ground on a new am-monia plant, a joint partnership between BASF and Yara Inter-national. With an expected capacity of 750,000 metric tons per year, this world-scale plant will provide ammonia for the production of caprolactam, a key ingredient in the manufac-ture of nylons for carpet, textiles, film, monofilaments, wire and cable. The plant is expected to generate up to 550 jobs during peak construction, and operation will add approximately 35 full-time BASF positions at the plant. Production is expected to start in 2017.

Acknowledged environment, health and safety efforts

The Texas Chemical Council recognized the Freeport site with its Distinguished Service award and the Sustained Excellence in Caring for Texas award for accomplishments in safety per-formance, environmental stewardship and community out-reach programs. The United States Environmental Protection Agency and the Texas Commission on Environmental Quality commended the Freeport site for its proactive installation of a nitric acid recovery plant, which reduced our annual nitrate emissions to water by 92 percent since 2001. In addition, our air emissions were reduced by 48 percent and water emis-sions were lowered by 35 percent since 2001 while produc-tion increased by 54 percent during that same period. Most importantly, in 2015 we achieved a record low in the lost time injury rate for employees and contractors. The lost time injury rate is an indicator for workplace safety.

Since 2001, the annual rate of nitrate emissions to water of the Freeport site was reduced by

92%Community outreach

In 2015, employees participated in more than 140 community events, volunteered more than 600 hours, and supported nu-merous community organizations serving education, culture, human services, youth sports and the environment. Recogniz-ing the importance of science education for both innovation and workforce development, we partnered with local school districts, the community college, museums and others to offer science and design labs and various other educational pro-grams. For example, working with the Texas Minorities for Engineering, our volunteers organized Science, Technology, Engineering and Math (STEM) competitions and activities for more than 200 students in the area. The Freeport site and its employee volunteers were recognized with the Gold Award “Employers for Educational Excellence” by the State Board of Education.

150th anniversary donations

To commemorate BASF’s 150th anniversary in 2015, we do-nated 150 diapers for the first 150 babies born at the local hospital, enough food to feed 150 families for one day, 150 backpacks filled with school supplies for 150 homeless stu-dents, and 150 containers of paint for use at local United Way agencies. All donations included goods made with BASF products, thus demonstrating how our chemistry enriches the quality of life.

26 Timeline North America 2015 BASF in North America

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Timeline North America 2015

February 17New dispersions plant in Freeport

The BASF site in Freeport, Texas, opens its new dispersions plant which manufac-tures acrylic emulsion polymers used for architectural coatings, construction chem-icals, adhesives and applications in the paper chemicals industry. It creates 25 full-time jobs.

May 26Tackling challenges of urban living

As part of its 150th anniversary program, BASF hosts a week-long event in New York City, to address one of the world’s pressing future challenges: urban devel-opment to meet our growing population. Thought leaders, scientists, students and citizens gather to identify sustainable solutions. Amanda Burden, urban plan-ning expert and former New York City Planning Commissioner (2002-2013) gives a keynote on May 26.

June 5Winners of science competition announced

The winners of the BASF science compe-tition, which is part of the 150th anniver-sary co-creation program, are an-nounced. A team from the University of Minnesota pitched biodegradable poly-urethane foam and is rewarded with an all-expenses-paid trip to the BASF Inter-national Summer Course in Ludwig- shafen, Germany, in August.

June 23Science Symposium in Chicago

Under the banner of “Sustainable Food Chain – From Field to Table,” BASF hosts a Science Symposium in Chicago to ad-dress one of the world’s pressing future challenges: sustainable food to feed a growing world population. Eminent scien-tists, academics, and thought leaders from a variety of disciplines meet to dis-cuss how food production can be more sustainable along the complete supply chain. The symposium is part of a co-cre-ation program marking BASF’s 150th an-niversary.

May 1Wayne Smith is new Chairman and CEO of BASF Corporation

Teressa Szelest appointed as new regional President

Wayne T. Smith assumes his role as new Chairman and Chief Executive Officer of BASF Corporation. A member of the BASF SE Board of Executive Directors since 2012, Smith leads all activities within BASF’s North American business region and also has responsibility for the company’s global Catalysts, Coatings and Performance Materials business divisions.

Teressa Szelest is named President, Market and Business Development North America, located in Florham Park, New Jersey. Prior to this, she was Senior Vice President, Global Business Unit Hygiene in Ludwigshafen, Germany.

27BASF in North America Timeline North America 2015

2015 Report

July 27Groundbreaking for ammonia plant

BASF and Yara International break ground on an ammonia plant at the BASF site in Freeport, Texas. The plant will have a capacity of about 750,000 metric tons per year and will be owned 68 percent by Yara and 32 percent by BASF. BASF will use its share of ammonia from the plant to produce caprolactam, a key ingredient in the manufacture of nylons for carpet, textiles, film, monofilaments, and wire and cable.

July 6New research and development facility opened

BASF opens a new research and devel-opment facility in Beachwood, Ohio. In addition to the existing catalyst and bat-tery materials research, a $25 million in-vestment added new cathode materials research and chemical and process engi-neering capabilities. The new facility cre-ates more than 40 jobs.

November 11Production of formic acid starts

BASF begins production of formic acid at its new facility in Geismar, Louisiana, for customers in the North and South Ameri-ca markets. Formic acid is used in a wide range of applications, including animal nutrition, household and industrial clean-ing, oilfield drilling and gas exploration, and deicing airport runways and roads.

October 8Addressing water scarcity in Mexico

More than 600 customers and BASF em-ployees gather in an event in Mexico City to celebrate the 150th anniversary of the company. The challenge of water scarcity is addressed. A fountain design by Diego Rivera, one of the most famous Mexican painters, is presented to the participants.

October 28150 year celebration

More than 150 customers, politicians and BASF employees join a gala event in Guatemala to celebrate the 150th anni-versary of the company.

September 25Chris Hadfield and Ed Robertson celebrate with BASF

At an event to celebrate 150 years of cre-ating chemistry for a sustainable future in Canada, guests hear from Chris Hadfield, former astronaut and first Canadian com-mander of the International Space Sta-tion. They also enjoy a performance by Ed Robertson, lead singer and founding member of the iconic Canadian rock band Barenaked Ladies. The end of the night brings the two together for a cele-bratory musical collaboration.

28 BASF celebrates 150th anniversary in 2015 BASF in North America

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For 150 years, BASF has collaborated with customers, researchers and industry experts to develop innovative, sustainable products and solutions. This spirit of collab-oration was the focus of our anniversary year in 2015. We organized a world tour, called Creator SpaceTM, to bring together scientists, customers, employees and partners from all over the globe. An online platform was also de-veloped to continue the collaboration beyond 2015. Ideas focused on three main themes: urban living, smart energy and food. We call this “co-creation.” It is one way to fill our idea pipeline for the future and create value. The following examples highlight some of the contribu-tions.

U R B A N L I V I N G

A clean air app

How does growing urbanization affect our planet? And how can we as individuals lead a sustainable lifestyle? These were the questions addressed at the “Creatathon” in Shanghai. The idea: People engage in a highly creative activity for a sustained, uninterrupted period of time. In Shanghai, BASF invited six college teams to spend 24 hours devoting them-selves to developing an app-based, sustainable mobility solu-tion. The goal of the app was to help city dwellers minimize their carbon footprint by selecting the most environmentally friendly mode of transportation. In the end, first place went to the team from East China Normal University: With their “Carbon Coin” idea, consumers can cash in their personal contribution to sustainability as “currency” on an online platform – similar to emissions trading between companies.

The green way to go: Megacities like Shanghai are already home to over 20 million people today. That means public transit and other alternate modes of transportation will play an even greater role in reducing emissions in the future.

S M A R T E N E R G Y

The bus to the future

Environmentally friendly technologies, comfortable interiors, a lighter chassis – there was no lack of original ideas and visions at a joint customer innovation workshop. Together with experts from Daimler Buses, BASF employees from various fields discussed solutions for future bus challenges, ranging from special coatings and new lightweight engineering con-cepts to possibilities for preventing vandalism. This brain-storming gave rise to project ideas providing new inspiration for the bus of the future.

Safe and clean through the city: Participants at a joint workshop held by BASF and Daimler discuss new technologies and materials for making even more efficient and environmentally friendly vehicles in the future.

F O O D

Employees get involved

A community needs engaged citizens in order to thrive. BASF helped its employees carry out charitable projects through its global team competition, “Connected to Care.” Around 500 project proposals were submitted from around the globe; 150 of these received up to €5,000 apiece, amounting to a total of €700,000 in support. BASF also promotes employees’ volun-teer work outside of its anniversary celebrations, through vari-ous regional projects.

Global community: A new well for an orphanage in Cameroon – employ-ees around the world got involved in numerous projects addressing social needs.

BASF celebrates 150th anniversary in 2015A collection of impressions

29BASF in North America The anniversary year in North America

2015 Report

BASF employees are looking at exhibits made from renewable materials at the Creator Space tour stop in New York City. Source: Terreform ONE

Among the many events BASF hosted during its 150th an-niversary in 2015, the Creator Space™ tour in New York City was one of the most prominent. More than 650 ex-ternal guests proposed solutions to challenges related to urban living, using the example of Red Hook, Brooklyn, as a foundation. A white paper was published outlining five recommendations to improve the sustainability of Red Hook and other coastal cities across the globe. Also through the year, BASF employees brainstormed ideas for reducing food waste in a series of seven Jamming Ses-sions across the United States.

Dealing with a growing population in metropolitan areas

As part of the Creator Space design competition, BASF posed the question of how we can improve urban development in metropolitan areas as the population continues to grow. Groups composed of citizens, students, engineers and other participants were tasked with developing a design concept to address the ongoing and emerging trends. Overall, 650 exter-nal guests attended the event. The opening featured keynote

speaker Amanda Burden, former New York City Planning Commissioner under Mayor Bloomberg. A two-day summit focused on three areas: habitat, citizenship and resilience us-ing Red Hook as the case study neighborhood.

650external guests attended the Creator Space tour in New York City

Five potential solutions for Red Hook

The Red Hook neighborhood is marked by limited access to public transportation. Buildings in need of renovation, suscep-tibility to hurricane and flood damage, and a high level of socio-economic diversity all demand creative and practical solutions to support the neighborhood’s future. The winning design competition concept included an ingenious canal sys-tem and the idea to invigorate the local economy with “Made in Red Hook” product labels. A white paper entitled “Co-Cre-ating solutions for urban neighborhoods in coastal cities: A look at Red Hook, Brooklyn, NY” summarizes the ideas gener-ated from the Creator Space tour summit and design compe-tition and discusses five potential solutions in depth. These solutions will serve as a model for improving the quality of life for urban neighborhoods and protect Red Hook and other coastal cities from future natural disasters.

Jamming to reduce food waste

A co-creation activity involved 280 BASF employees in Jam-ming Sessions held in seven different locations throughout North America: Texas, Michigan, North Carolina, Louisiana, Toronto, Mexico City, and New Jersey. Employees collaborat-ed to address the following challenge question: “How can we sustainably reduce our food print?” The winning teams fo-cused on corporate citizenship and educational outreach through employee involvement at local public schools.

The anniversary year in North AmericaFocusing on urban development and food waste

Red Hook, Brooklyn, is susceptible to hurricane and flood damage. During the Creator Space tour in New York City, the participants of a design competition developed solutions to mediate these risks.

COASTAL PARK AND BUFFERSource: Terreform ONE

30 Sustainability BASF in North America

2015 Report

SustainabilityDriving decision-making and leadership

Together with our partners, we develop solutions to address global sustainability megatrends and improve the quality of life. Our customers increasingly expect con-sistent and innovative solutions that also contribute to a more sustainable future. They believe, as we do, that be-ing environmentally and socially responsible goes hand in hand with running a profitable business. Therefore, BASF has embedded sustainability into its corporate pur-pose: “We create chemistry for a sustainable future.”

Meeting our customer demands

By identifying key drivers and issues in our customers’ indus-tries, we are able to assess the sustainability contribution of each of our products in its specific application. We evaluate the entire value chain considering industry- and region-specific views in our markets. We strive to achieve a balance between the three dimensions of sustainability: Economy, Environment and Society. BASF aims to further increase the proportion of products and solutions that make a substantial sustainability contribu-tion in the value chain. A detailed analysis and transparent method we call Sustainable Solution Steering® allows us to both improve individual solutions and steer our entire portfolio. Each solution is assigned to one of four categories – Ac-celerator, Performer, Transitioner, Challenged – according to its level of contribution to sustainability. For the 2015 business year, BASF conducted sustainability assessments and ratings for 95 percent of our entire portfolio of more than 60,000 specific product applications. By 2020, we want to increase the worldwide sales share of Accelerators – those products that significantly contribute to sustainability – to 28 percent.

Some relevant worldwide numbers: – More than 60,000 solutions assessed – More than 60% of R&D budget spent on Accelerator projects in 2015

– 26.6% of BASF products analyzed (by sales) already make a particular contribution to sustainability

Some examples of Accelerator solutions

Automotive – BASF offers a broad range of Accelerators for the automotive industry. – Lightweight plastic materials to minimize the weight of cars, which results in higher fuel efficiency;

– Catalysts to decrease harmful exhaust emissions, thereby improving air quality;

– Integrated solutions to shorten the coating process by elim-inating the primer and a baking step. This lowers energy consumption, greenhouse gases and also emissions of vol-atile organic compounds (VOC);

– Innovative fuel additive packages to keep engine valves clean, thus reducing fuel consumption and exhaust emissions.

At the BASF Coating Applications Research Center in Southfield, Michigan, technicians can precisely replicate the paint processes and conditions found in almost any automotive plant.

Packaging – BASF’s Accelerator products for packaging solutions protect goods and enhance the environmental foot-print of the materials used. – Polyamide films for flexible packaging enable less material use compared to rigid packaging;

– Water-based resins for flexible printing reduce air emissions compared to solvent-based technologies;

– Bio-based or compostable materials allow for improved en-vironmental performance in paper and plastic packaging. More information on our sustainability management is available here:

www.basf.com/sustainabilitymanagement

BASF products such as polyamide films, water-based resins and bio-based or compostable materials enhance the environmental footprint of packaging solutions.

31BASF in North America Sustainability

2015 Report

BASF, sustainability and sports

In 2015, BASF partnered with the New York Yankees, the New York Jets and the Seattle Mariners to engage fans and create a more sustainable game day. During the 2015 baseball and football seasons, BASF worked with staff at the teams’ stadi-ums to enhance the sustainability of waste management, re-cycling, composting and general stadium efficiency. More than 300 BASF employees volunteered to engage fans in discus-sions on how BASF creates chemistry for professional sports and how to reduce their home waste footprint.

Connecting creative minds

We shape conversations that envision and plan a more sus-tainable future. We are working to provide an enhanced quality of life for future generations by translating global socio-eco-nomic megatrends such as urbanization, climate change and resource scarcity into products, services and solutions. BASF is a leader in a number of consortia and groups such as the Corporate Ecoforum, the Sustainability Consortium, the Car-bon Disclosure Project, the Green Sports Alliance. Further-more, as of 2015 the BASF share has been listed for 15 con-secutive years in the Dow Jones Sustainability Index. We align our priorities and innovations with globally relevant networks including the World Business Council for Sustainable Develop-ment, the Millennium Development Goals and the U.N. Sus-tainable Development Goals.

The innovative chemistry in our Green Sense® Concrete incorporates recycled materi-als, requires less energy and water to produce and use, and outperforms conventional concrete in strength, durability and ease of flow.

Sneakers: Our polyurethane Infiner-gy® serves as the midsole in running shoes and provides unique shock ab-sorbing properties. The sole springs back to its original shape immediately following impact. As a result, runners use up less energy than before.

Pants: PolyTHF® is a building block for elastic spandex fibers that have a broad range of applications in textiles.

BASF’s plastic resins help improve seating designs, increase durabili-ty and minimize fatigue, wear and abrasion.

BASF develops, produces and markets a comprehensive range of products and services for the human and animal nutrition, pharmaceutical, flavor and fragrance industries. Human nutrition products include vitamins and carot-enoids, plant sterols, emulsifiers and omega-3 fatty acids.

With ecovio® BASF offers a compostable plastic that con-sists of the biodegradable BASF plastic ecoflex® and polylactic acid (PLA), which is obtained from renewable raw materials based on sugar. It can be used in bottles and packaging and will decompose in industrial com-posting facilities.

Our product Neopolen® P underlays artificial turf. Acting as a foam cushion that absorbs energy, it helps protect the joints of players. Textile manufacturers use our polyamide Ultramid® PA6 – also known as nylon – to produce swimwear and athletic wear.

Infographic: How BASF creates chemistry for professional sports.

Providing clean water to Mexican students

Through a cooperative effort among BASF Stiftung (BASF Foundation), the United Nations Human Settlements Program and the Mexican Institute of Water Technology (IMTA), 2,000 students in three school communities surrounding Mexico City now have regular access to clean water. The partners installed a tanker storage system to harvest rainwater and a facility that recycles wastewater, using organic treatment with bacteria developed by plants and algae. The rainwater is also used for toilet flushing and irrigation. Overall water consumption was reduced by 40 percent allowing the schools to save about $7,500 per year. The students and teachers were taught how to operate and maintain the facilities, providing an important lesson in resource conservation.

32 Environment, Health and Safety BASF in North America

2015 Report

Environment, Health and SafetyA culture of continuous improvement

We strive to provide our employees, partners and con-tractors with a safe workplace while ensuring that we protect our communities and the environment. This is why we foster a culture where employees recognize and con-trol exposures in all areas of our business. We supply es-sential products to the marketplace and provide custom-ers with exceptional product safety information. Opera-tional excellence and continual improvement are integral to our sustainable business growth.

Energy and climate protection

▪ Recognized by the American Chemistry Council 19 consecutive years for accomplishments in improving energy efficiency

BASF’s energy management process has been implemented at our manufacturing sites for many years. We focus on sus-tainable improvement by working toward global targets – to increase energy efficiency in production by 35 percent and reduce specific greenhouse gas emissions by 40 percent by the year 2020 (compared with 2002 baselines). A reduction of 1.2 percent in energy used per ton of product was achieved in the U.S. in 2015. This contributes to an approximate 13 per-cent reduction in energy used per ton of product since 2008, which was the first year that energy improvement projects were tracked. In 2015, BASF implemented a total of 15 energy efficiency projects at nine different production sites in the region. One such project was implemented at the BASF site in Monaca, Pennsylvania. When the site learned that the local coal-fired utility cogeneration plant would no longer provide steam, the site installed its own steam boilers. To reduce capital costs and improve energy efficiency, employees at the site focused on reducing the steam demand required to heat deionized water because this process was the single largest user of steam. As a result, steam usage at the site was reduced by 5 percent from the previous year. Sites in North America continue to demonstrate leadership in climate protection and energy reduction by implementing numerous projects each year and have been recognized by organizations such as the American Chemistry Council (ACC). In 2015, BASF received four ACC Responsible Care® Energy Efficiency Awards. BASF has been recognized for energy effi-ciency with 49 awards from the ACC over the last 19 years.

Emissions to air

▪ Commitment to reduce the carbon footprint through control of emissions and greenhouse gases

In 2015, emissions of greenhouse gases from BASF’s chemi-cal operations in the United States totaled 5.2 million metric tons, nearly a 4 percent decrease versus 2014. Moreover, total emissions to air declined 13 percent to 12,620 metric tons as

a result of general improvements in control efficiency across BASF sites in the region. One example, from Erie, Pennsylvania, demonstrates not only our continued commitment to reducing greenhouse gas emissions but also to finding value in materials that were once considered waste. The site uses isobutyl alcohol (IBA) in the production of a specialty catalyst; however, the process ulti-mately generates a significant amount of waste. Rather than sending the waste for incineration, a process that generates significant greenhouse gas emissions, site employees were able to identify a safe reclamation option for the IBA. As a result, 54 tanker trucks (approximately 314,000 gallons) of the material were sent to a company that extracted the IBA from the waste so it could be reused in production instead of incin-erated. The reclamation of the material resulted in emission avoidance of more than 1,000 metric tons of CO2 equivalents.

Air pollutants (without CH4):CO, NOX, NMVOC, SOX, dust, NH3/other inorganics (metric tons)

2015 12,620

1,753

1,213

2014 14,520

1,828

1,345

2013 14,809

1,797

1,290

USA Geismar Freeport

Greenhouse gas emissions (total):CO2, N2O, CH4, HFC, PFC, SF6 (1,000 metric tons of CO2 equivalents)

2015 5,158

885

1,064

2014 5,364

853

1,044

2013 5,242

1,020

1,019


33BASF in North America Environment, Health and Safety

2015 Report

Energy supply and efficiency

▪ Integrated processes result in energy efficiency op-portunities

The Verbund concept enables us to add value as one compa-ny through efficient use of our resources. This creates efficient value chains that extend from basic chemicals right through to high-value-added products such as coatings and crop protec-tion agents. In addition, the by-products of one plant can be used as the starting materials of another. In that manner, we save on raw materials and energy, minimize emissions, cut logistics costs and exploit synergies. This increases efficiency in our processes and benefits the environment, as it leads to lowered emissions from fossil fuels. In 2015, BASF in North America saw a slight decrease in electricity and steam con-sumption and a slight increase in natural gas consumption. The company continues to invest in and direct focus toward increasing the efficiency of technologies at all of our production sites. Energy supply and efficiency are always considered in the design phase of new production processes and plant modifications. In 2015, BASF concluded a project to enhance the efficiency of seven burners in the steam cracker at the BASF TOTAL Petrochemicals site in Port Arthur, Texas. Each burner now has better energy performance, uses less fuel to achieve the same output and produces lower mono-nitrogen oxide (NOx) emissions. The steam cracker transforms crude oil and natural gas into chemical building blocks for many consumer and industrial goods.

Environment, Health and Safety (EHS) Specialist Annette Springer and Production Engineer Eric Dixon stand at the top of the new formic acid unit in Geismar, Louisiana, reviewing process equipment for occupational safety.

Electricity consumption (total) (million MWh)

2015 3.50

0.75

0.83

2014 3.54

0.72

0.84

2013 3.57

0.72

0.86


Steam consumption (total) (million metric tons)

2015 14.02

3.51

2.72

2014 14.20

3.38

2.76

2013 14.60

3.09

2.80


Fuel consumption (central power plants and boilers) (million MWh)

2015 10.69

3.31

2.41

2014 10.55

3.44

2.08

2013 10.04

3.13

2.01



2015 Report

Water

▪ BASF water conservation projects are a priority throughout the region

Production sites use water as a coolant, solvent and cleaning agent, as well as an ingredient in many products. In 2015, 91.8 million cubic meters of water were supplied from outside resources to BASF sites in the U.S., an increase of approxi-mately 2.75 percent compared to 2014. Water used for pro-duction totaled 51.8 million cubic meters in 2015 (up nearly 9 percent over 2014). This rise was primarily the result of in-creased production at smaller sites that do not typically have water reclamation systems in place. Most of our larger sites have reclamation processes that allow the sites to reuse their water and reduce overall use. Water conservation efforts were expanded beyond pro-duction in 2015 to include research and development and of-

fice locations throughout the region. BASF sites in North America initiated numerous projects focused on drinking water efficiencies that yielded positive results. In 2015, the Freeport, Texas, site installed a new potable water system header that reduced losses from leakage. This modification resulted in a 20 percent reduction in drinking water use as compared to 2014. At our site in Louisville, Kentucky, discontinuing the use of water for equipment cleaning helped contribute to a 32 percent reduction in drinking water usage in 2015. In 2015, BASF completed a multi-year series of water risk assessments focused on identifying potential risks from re-leases of contaminated substances to waterways near pro-duction sites, and mitigating those risks. A robust water pro-tection concept that goes beyond regulatory requirements was developed. Protection measures include redundant monitoring and detection systems, and improved contain-ment.

Emissions to water (total) – Nitrogen(metric tons)

2015 1,163

226

147

2014 1,330

148

152

2013 948

71

91


Emissions to water (total) – Organic substances (COD)(metric tons)

2015 4,263

871

437

2014 4,059

1,080

389

2013 3,840

957

411


Emissions to water (total) – Heavy metals (metric tons)

2015 4.4

0.6

1.3

2014 4.4

0.7

0.6

2013 3.6

0.7

0.3


Water used for cooling (total)(million cubic meters)

2015 2,032

606

462

2014 1,780

572

462

2013 1,737

575

435



2015 Report

Water used for production (total)(million cubic meters)

2015 52

3

3

2014 48

4

2

2013 44

4

3


Water supply (total)(million cubic meters)

2015 92

23

8

2014 89

23

8

2013 87

23

8


Water supply by source (Verbund sites only) – Surface water (percent)

2015 85

96

2014 87

97

2013 77

99

Geismar Freeport

Water supply by source (Verbund sites only) – Groundwater (percent)

2015 15

3

2014 13

0

2013 23

0

Geismar Freeport

Waste management

▪ BASF is always looking for innovative ways to reuse and recycle materials rather than creating more waste.

We have dedicated experts that work with sites and waste management partners to evaluate how to prevent and recycle waste or use it as an energy source. These options take pre-cedence before treatment and disposal are considered. Re-gardless of the technology used to treat and dispose of waste, BASF prioritizes the safe handling of these materials to protect the environment. A team of employees at the BASF site in Clemson, South Carolina, sought a way to avoid landfilling a resin material. The material consisted of accumulated small components from multiple resin lines. After evaluating the material, the employ-ees concluded there were some customers who may be inter-ested in using it. As a result, the site was able to sell 79 tons of the material rather than having to dispose of it in a landfill.

Total amount of waste (metric tons)

2015 639,920

59,071

181,186

2014 595,189

44,500

159,379

2013 608,621

46,082

178,065


Water supply by source (Verbund sites only) – Drinking water (percent)

2015 0

0.9

2014 0

1.5

2013 0

1.2

Geismar Freeport


2015 Report

Recycling of waste (recycling and thermal recovery) (percent)

2015 12

20

14

2014 13

21

14

2013 11

19

11


Disposal of waste (Verbund sites only) – Incineration (percent)

2015 44

41

2014 60

37

2013 53

35

Geismar Freeport

Disposal of waste (Verbund sites only) – Landfill (percent)

2015 36

18

2014 19

21

2013 28

22

Geismar Freeport

Disposal of waste (Verbund sites only) – Underground Storage (percent)

2015 0

26

2014 0

28

2013 0

32

Geismar Freeport

Deb Jenco reviews cargo work in a warehouse at BASF’s site in Kankakee, Illinois, as part of her role to daily assess safety habits.


2015 Report

Occupational health and safety

▪ Exposure Reduction program focuses on personal safety, process safety and environmental protection

BASF recognizes and controls exposures in all areas of our business. These exposures may come in the form of unsafe conditions or at-risk behaviors that may lead to injuries. Al-though the lost time injury rate for employees remained con-sistent between 2014 and 2015, BASF did see this rate drop for contractors who are working at BASF North America sites. In fact, the 0.3 lost time injury rate is down 50 percent from two years ago. The reduction in contractor lost time injury rates has been driven by our Contractor Safety Steering Team and its commitment to hiring the safest contractors while also providing them with the support needed to operate safely while working at BASF facilities. Three years ago, BASF implemented an Exposure Reduc-tion Program (ERP) for employees and contractors to ensure they have the skills to positively impact personal safety, pro-cess safety and environmental compliance. Employees and supervisors receive coaching on how to adjust behaviors and reduce exposures to hazards. The program encourages em-ployees who observe a colleague demonstrating at risk-be-havior to speak up and help them determine a safer way to proceed. Likewise, employees are encouraged to comment on positive behaviors. Fourteen sites and eight business units in North America were trained in the Exposure Reduction Process in 2015 and more than 12,000 peer-to-peer observa-tions took place. An instrumental factor in bringing about culture change is the continued development of safety leadership, which is also addressed by the ERP. During 2015, more than 1,400 leaders participated in safety leadership development activities. These leaders are committed to improving their skills and providing a safe workplace for all employees and contractors.

Lost time injury rate, BASF and leasing employees (per million working hours)

2015 0.9

1.2

0.5

2014 0.9

0.4

1.1

2013 0.6

0.0

0.6


Lost time injury rate, contractors(per million working hours)

2015 0.3

0.9

0.4

2014 0.5

0.4

0.0

2013 0.6

0.5

0.5


Process safety

▪ Reducing process safety incidents reduces risks to employees and surrounding communities, and in-creases reliability of our production plants

Our commitment to Responsible Care® and the Responsible Care Management System means we are continuously searching for ways to learn from the past and improve our process safety programs moving forward. A strong process safety culture is only successful through full commitment from all levels of the organization. We use a multi-dimensional set of metrics to evaluate the process safety of our facilities and identify opportunities for improvement throughout the entire product lifecycle. It starts the moment raw materials arrive at our production sites, and continues through the manufacturing process and transporta-tion of the material to customers, ensuring that everyone along the way has the information they need to handle the products safely. Events in which a protection system could not or did not function as intended are investigated through root cause analysis. Any process errors identified are corrected to ensure that no single trigger will lead to unacceptable consequences. The lessons learned from near-misses and incidents are incor-porated into safety training and used in regularly shared com-munications. We aim to reduce the amount of hazardous chemicals stored as inventory at sites, and wherever possible use pipe-line delivery of materials to reduce the number of truck ship-ments of raw chemicals.


2015 Report

Responsible Care Management

▪ Ensuring compliance with regulations and our standards

BASF is a member of the American Chemistry Council (ACC) in the United States and the equivalent national organizations in Canada and Mexico. The Responsible Care® Management System (RCMS) is the fabric of how we operate. The objec-tives of RCMS are: – to achieve compliance with regulatory and BASF requirements,

– operate safe and environmentally sound facilities, – produce safe products, – meet Responsible Care and sustainability commitments, – and result in a business advantage for our partners.

Adherence to the processes in RCMS drives continuous im-provement in performance and increases the efficiency and effectiveness of EHS-related activities. 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 our guidelines and requirements are constantly updated.

Emergency response

▪ Risk assessments, training, drills, and skilled teams ensure BASF is prepared in the event of an emergency

BASF has a global emergency network that is headquartered in Ludwigshafen, Germany. Within North America the regional emergency response team is focused on assessing, planning, and preparing for incidents that we actively try to avoid. A significant effort is placed on emergency preparedness at BASF because it is a critical component of our business oper-ations. Sites throughout the region perform risk assessments of processes, materials and activities at the site to understand the types and severity of emergencies that may occur. These assessments are used to develop site-specific emergency re-sponse plans for training and incident response. BASF has a regional response strategy that incorporates all of the individu-al site plans. Each year, regional drills are coordinated between sites, businesses and the BASF headquarters in Florham Park, New Jersey. The purpose of the drills is to test our corporate inci-dent support team, site emergency teams, communications systems and other logistics that are critical during emergen-cies so that if an incident occurs, the teams are prepared and the systems operate as planned.

The BASF Geismar site recently switched from manually cleaning equipment with highly pressurized water to an automated solution that involves a robot. This technology helps keep employees safe and improves safety performance at the site. The photo shows operator Shane Dugas in a demonstration to local high school students.


2015 Report

Security

▪ Training partnerships with local community responders

BASF sites are continuously assessing security risks and mak-ing adjustments when necessary. Our sites work closely with national and local emergency planning commissions, law en-forcement agencies and fire departments on security matters. On an ongoing basis, sites work with our corporate security team to hold mutual aid drills that include local community re-sponders. The chemical process control rooms at our largest facilities feature advanced computer technology, which includes fail-safe mechanisms and security controls that are enacted auto-matically in the event of an emergency.

Chemical transportation safety

▪ Ensuring safe storage and distribution of products and transport of waste

Transportation and warehouse safety includes the receipt of raw materials; the storage and distribution of chemical prod-ucts among BASF sites, our contracted warehouses and customers; and the transportation of waste from our sites to appropriate disposal facilities. Our Global 2020 goal is to re-duce the worldwide number of transportation accidents per 10,000 shipments by 70 percent compared with baseline 2003. North America’s 2015 performance was nearly 90 per-cent of the 2020 target for the region.

2020 Goal

Reduce the worldwide number of transportation accidents per 10,000 shipments by 70%

compared with baseline 2003

Occupational medicine and health protection

▪ In 2015, “Mission Nutrition” educated BASF employ-ees on how to improve their health by adopting nutri-tious diets

BASF global health management serves to promote and main-tain the health and productivity of our employees. In our direc-tive and requirements, we stipulate globally mandatory stan-dards for health protection. A global network of experts sup-ports implementation of these requirements through a stan-dardized process. Regularly scheduled occupational medicine and health protection audits are performed in order to monitor and improve our performance. In 2015, BASF conducted more than 20,000 exams at 191 North American sites. The region also achieved more than 98 percent compliance with required medical examinations, and audits were performed at 14 BASF sites.

BASF measures global performance in health protection using the Health Performance Index (HPI), which has five compo-nents: recognized occupational diseases, medical emergency drills, first aid training, preventive medicine, and health promo-tion. In 2015, BASF achieved a global HPI of 0.97 out of a possible 1.0.

In 2015, approximately

80%of U.S. sites and

100%of Canadian and Mexican sites participated in “Mission Nutrition”.

Every year BASF focuses on providing employees with valu-able information though health programs that are offered to all employees. In 2015, the global health campaign “Mission Nu-trition” taught employees how important the right mix of foods are in order to stay healthy. A nutritious diet helps us maintain a healthy weight and improves our ability to avoid diseases like Type 2 diabetes, cardiovascular issues, and even joint prob-lems, which are often the consequence of poor diets. In 2015, approximately 80 percent of U.S. sites and 100 percent of Canadian and Mexican sites participated in “Mission Nutrition.” Our global health campaign also contributed to BASF’s volun-tary commitment to the United Nations’ Global Nutrition for Growth Compact.

Product stewardship and regulatory affairs

▪ BASF recognized as industry leader in meeting re-quirements of Global Harmonization System

In 2015, BASF achieved regulatory milestones with regard to product stewardship and regulatory affairs. By June 1, manu-facturers and importers such as BASF were required to re-classify chemicals and update all safety data sheets (SDS) and labels to reflect the North American Global Harmonization System (GHS) regulatory formats. Labels and SDS for 27,000 North American-produced and imported products and inter-mediates were classified and released. Labeling to meet GHS requirements was managed for more than 1.5 million items in North America. Organizations such as the Society for Chemi-cal Hazard Communication, The American Chemistry Council and the Chemical Industry Association of Canada identified BASF as an industry leader in achieving this major milestone.

40 Employees BASF in North America

2015 Report

EmployeesEnabling, inspiring and engaging our people for today and tomorrow

At BASF, we create chemistry through the power of con-nected minds. Nearly 17,500 employees in North America discover and develop new solutions to solve some of the world’s toughest challenges: how to ensure an adequate food supply, available energy, housing and improved quality of life for a rapidly growing world population. Un-derstanding their importance to us, we provide employees with what they need to be their best.

Forming the best teams to help them grow

▪ Employees are key to our success ▪ We attract, develop and retain top talent

Lifelong learning and development opportunities, competitive benefits and compensation, and a safe, reliable and inspiring work environment – through our compelling total offer, “you@BASF,” we give employees the support they need to be their best. We are continually seeking top talent for opportunities across a wide range of roles including engineering, sales and marketing, research, development, and technology just to name a few. In addition, we are actively engaged in hiring and developing the next generation of technicians and skilled labor needed to sustain the growth of American manufacturing.

Search current vacancies: http://basf.us/careers

BASF employees in North America (As of December 31, 2015)

1 United States (includes Puerto Rico) 15,492

2 Mexico, Central America and the Caribbean 1,302

3 Canada 677

More than

1,500new hires in 2015

1

23

17,471 employees

As part of BASF’s 150th anniversary program, 280 employees from seven locations across North America participated in Jamming Sessions where they developed solutions to the challenge of reducing food waste. The photo shows a team of BASF employees in Houston.

41BASF in North America Employees

2015 Report

Creating value through diversity and inclusion

▪ We value the differences in our workforce ▪ Through partnerships, we help to advance the roles

of women and minority students

At BASF, we believe in the power of diversity and inclusion to create rich connections with our people, our customers, and our communities. Individuals with different backgrounds and experiences bring new ideas and perspectives to the table. Diversity makes us stronger, and leveraging our differences enables us to bring the best of BASF to everything we do. BASF draws talent from a variety of sources, including leading universities, community colleges and technical pro-grams, historically black colleges and universities, outreach through diversity career associations, partnerships to hire vet-erans, and referrals from our employees. We partner with or-ganizations such as the National Association of Manufacturers’ (NAM) “Step AHEAD” program to advance women in manu-facturing and the American Chemical Society Scholars pro-gram for minority students.

New approaches to workforce readiness

▪ Involvement in all stages of skills development, from grade school to high school to college

Workforce development and planning is strategically focused on the science, technology, engineering and math (STEM) disciplines, which are critical to innovation and growth at BASF. We seek to engage potential employees early on when they are considering options for future employment. Our ap-proach includes: – Developing students’ foundational skills to prepare them for high school, college and careers by offering hands-on chemistry experiences through the BASF Kids’ Lab, Science Academy and TECH Academy signature science programs and supporting promising students with educational grants.

– Sponsorship of the Texas Alliance for Minorities in Engineer-ing’s mobile science on wheels education and the Chemical Educational Foundation’s “You Be the Chemist Challenge®” programs. Please see page 42 for more information on BASF’s science education programs.

– Attracting students entering high school to skilled job paths by going beyond standard career discussions to clarify mis-conceptions about pay, lifestyle, and job availability.

– Maintaining a nested partnership with community colleges where we are highly engaged in curriculum advisory boards, offer faculty externships and provide site tours.

A compelling offer for our candidates and team members

▪ Support for teleworking and flexible hours ▪ Engaging employees and their families to help them

get healthy

Our strategy to create a compelling total offer starts with lis-tening to employees and understanding their needs at every stage of their career and life. An example of this is our program “Designed to Fit.” It allows options from teleworking to flexible hours that enable employees and managers to find the right fit for the individual and the team, based on business need. BASF recently revised its wellness program (“Healthy YOU”) with new ways to engage employees and their families and to get them healthier. It now consists of two complemen-tary programs: “Virgin Pulse” leverages social media and gamification to get employees active and allows them to earn reward points for doing so. “Prevent” is an online weight loss coaching program. Our employee recognition program (“Recognizing YOU”) rewards achievements and behaviors that drive our growth strategy.

Learn more about our total offer: www.basf.us/total-offer

Our North American headquarters in Florham Park, New Jersey, offers a contemporary architectural design that promotes innovation and collaboration. In the photo: Camille Miller, Customer Care Team Lead, and José Antonio Carranza, Marketing Communications Manager.

42 Community relations and science education BASF in North America

2015 Report

Community relations and science educationCreating chemistry in the community

We actively support the communities in which we operate. BASF adds value, creates economic opportunity and contributes to the overall quality of life.

Helping future leaders grow

▪ BASF‘s award-winning science education programs and funding for schools across the region stimulate science, technology, engineering and math (STEM) learning and support workforce development

▪ We focus on science education as today’s students will be the thinkers, innovators and leaders of the fu-ture

Over the past five years, BASF has engaged more than 300,000 schoolchildren (grades K to 12) in science education programs throughout North America. These programs include Kids’ Lab, the BASF Science Academy, the BASF TECH Academy, a special science-themed edition of Kids X-Press Magazine, and national sponsorship and participation in the Chemical Educa-tional Foundation’s You Be The Chemist Challenge®. BASF’s Kids’ Lab is a fun, hands-on chemistry program specifically tailored to engage students (ages 6-12) early on, when they are most curious about the workings of the world. In 2015, more than 28,000 students participated regionally in the program. BASF Canada expanded the reach of Kids’ Lab to the Hospital for Sick Children where they created chemistry with children from the hospital’s Epilepsy Classroom, which caters to the individual learning and social-emotional needs of children who have intractable epilepsy.

The BASF Science Academy provides an intensive chemistry and business experience for outstanding high school seniors to set the stage for higher education and potential future ca-reers at BASF. Students who graduated from the Science Academy have successfully gone on to become BASF sum-mer interns and BASF Professional Development Program candidates. In addition to the United States, the BASF Science Academy is available to students from Mexico, Central Ameri-ca and the Caribbean. In 2015, the first student from Guate-mala attended the program. The BASF TECH Academy, piloted in Geismar, Louisiana, offers students in the 11th and 12th grades hands-on activities reinforcing skills needed in technical disciplines and allows them to interact with industry professionals who provide in-sight into potential careers. The academy supports BASF’s workforce development objectives. Also in 2015, BASF encouraged approximately 3,000 stu-dents from 11 states to participate in the You Be the Chemist Challenge. The program, sponsored at both the national and local level by BASF, is an exciting question-and-answer com-petition that allows students to test their knowledge of chem-istry concepts and real-world applications as they compete to represent their state on a national level.

More than

28,000 students were reached by the BASF Kids’ Lab in 2015.

Participants of the 2015 Science Academy work with cosmetic chemist Kanchan Zade (second from left), to create original eye shadow mixtures. The students are wearing lab coats which they tie-dyed at the beginning of the program.

43BASF in North America Community relations and science education

2015 Report

Partial list of the donations made by BASF in North America in 2015:

– The company continued its yearly commitment toward a $1 million donation to Louisiana State University’s (LSU) College of Engineering to establish a sustainable living laboratory, the first of its kind at LSU and in the Southeast region.

– BASF also provided the second, $100,000 installment in its five-year $500,000 pledge to the Brazosport Center for the Arts and Sciences.

– A BASF-led golf outing benefitting the Children’s Spe-cialized Hospital Foundation in New Jersey resulted in a $350,000 contribution.

– $100,000 in science education grants were devoted to support STEM education in public schools throughout New Jersey.

– BASF granted $100,000 to the Chemical Educational Foundation to support science education and the National You Be The Chemist Challenge®.

– $200,000 was given to CropLife Foundation for pesticide safety education.

– BASF provided $75,000 to Feeding America, a national network of foodbanks.

– $185,000 was presented to Future Farmers of America to support agriculture education.

– In Canada, BASF committed $50,000 to the St. Lawrence College Campus in Cornwall, Ontario, in support of the renovation of the school’s chemistry laboratory.

A young student from Texas conducts an experiment, in a Kids‘ Lab that BASF volunteers brought to the Children‘s Museum of Houston.

Finally, 2015 saw the publication of the sixth science-themed edition of the Kids X-Press Magazine. Kids X-Press is a non-profit organization dedicated to improving literacy by publishing articles, poems and other materials created by children between the ages of 6 and 18. The BASF edition fo-cuses on science literacy and has a circulation of 33,000 copies distributed to schools, museums and BASF employees in North America. Selected articles are translated into Spanish and French.

Creating chemistry in the community

▪ Advancing science education; environment, health and safety, and quality of life in our communities

▪ BASF employees as natural extension into the local communities

▪ Together with our neighbors, we foster open commu-nication and a mutual focus on shared goals

A prominent example of our involvement in local communities is the participation of more than 500 BASF employees and their family members in the Houston “Be The Match Walk+Run” in September 2015. The “Be The Match” organization brings people who have blood diseases such as leukemia and lym-phoma together with life-saving donors through their bone marrow registry. Numerous BASF employees and family mem-

bers have joined the registry as donors and some have been selected as a match, giving time and hope to recipients. Also in 2015, our Coatings facility in Windsor, Ontario, celebrated its 30th anniversary by opening its doors to more than 120 community stakeholders, employees and their fami-lies. Visitors toured the facility, and learned about the products manufactured at the site, and the company’s priorities for health, safety and security. Children also had the opportunity to explore chemistry at a BASF Kids’ Lab. Beyond volunteering and outreach, BASF continually sup-ports communities through charitable contributions.

U R B A N L I F E

New York’s next trendy neighborhood?How can we improve urban development and the housing situation in metropolises like New York, where the population is booming? This was the question posed to involved citizens, students, engineers and other participants of a design competition in New York that BASF hosted on the occasion of its 150th anniversary. The assignment: How might Van Brunt Street in Red Hook, Brooklyn, look like in the future? The winning concept included an ingenious canal system and the idea of invigorat-ing the local economy with a “Made in Red Hook” product label. Read more on page 29.

Watch videos of our tour stop in New York by searching youtube.com for “BASF Red Hook”

During BASF‘s Creator Space tour in New York City, students, engineers and other guests designed solutions to the resiliency challenges faced by Red Hook, Brooklyn.

45BASF in North America Selected awards and recognition

2015 Report

Selected awards and recognition

Dow Jones Sustainability World Index (DJSI World) BASF is included in the DJSI World for the 15th consecutive year.

Climate Disclosure Leadership Index (CDLI)BASF is among the leading companies reporting on climate protection and water.

General Motors Supplier of the Year BASF received the award 11 times since 2002.

Honda Corporate Citizenship Award Recognizing BASF for an exceptional commitment to social responsibility and leadership

Forbes America’s Best Employers ListBASF is ranked 14th overall and second in the Construction, Oil & Gas, Mining & Chemicals category of the Forbes America’s Best Employers 2015 List.

Among Canada’s Top 100 Employers Mediacorp Canada Inc. cited BASF Canada for employee development programs and commitment to fostering an inclusive, innovative and family-friendly workplace.

A Top 50 Company for Diversity We are among the “Top 50 Companies for Diversity,” as recognized by DiversityInc, for the third year in a row.

One of the best places to work for lesbian, gay, bisexual and transgender individualsBASF has been named one of the “Best Places to Work for LGBT Equality” by the Human Rights Campaign (HRC) Foundation.

Top 50 Employer for Equal OpportunityMinority Engineering Magazine ranked BASF as a “Top 50 Employer for Equal Opportunity” in 2015.

Work-Life Progress Seal of DistinctionWorldatWork’s Alliance for Work-Life Progress recognized BASF with its 2015 Seal of Distinction.

46 Further information BASF in North America

2015 Report

Further information

Regional contacts

BASF Corporation North America Headquarters100 Park AvenueFlorham Park, NJ 07932 Phone: +1 (973) 245-6000

BASF Canada100 Milverton Drive, 5th floorMississauga, ON L5R 4H1Phone: +1 (866) 485-2273

BASF Mexico, Central America & CaribbeanInsurgentes Sur 975Col. Ciudad de los Deportes03170 Mexico, D.F.Phone: +52 (55) 5325-2600

Care Chemicals Phone: +1 (973) 245-7838

IntermediatesPhone: +1 (973) 245-5764

Nutrition & HealthPhone: +1 (973) 245-6145

Performance Chemicals Phone: +1 (973) 245-5238

Address for the businesses named above: BASF Corporation100 Park AvenueFlorham Park, NJ 07932

Bioscience Research BASF Corporation26 David DriveResearch Triangle Park, NC 27709Phone: +1 (919) 547-2000

CatalystsBASF Corporation33 Wood Ave Iselin, NJ 08830Phone:+1 (732) 205-5933

CoatingsBASF Corporation26701 Telegraph Road Southfield, MI 48033Phone: +1 (248) 827-4670

Construction Chemicals BASF Corporation23700 Chagrin BoulevardBeachwood, OH 44122Phone: +1 (216) 839-7800

Crop ProtectionBASF Corporation26 Davis DriveResearch Triangle Park, NC 27709Phone: +1 (919) 547-2000

Dispersion & PigmentsBASF Corporation11501 Steele Creek RoadCharlotte, NC 28273Phone: +1 (704) 588-5280

MonomersBASF Corporation1609 Biddle AvenueWyandotte, MI 48192Phone: +1 (734) 324-6697

Performance MaterialsBASF Corporation1609 Biddle AvenueWyandotte, MI 48192Phone: +1 (734) 324-6660

Petrochemicals BASF Corporation1111 Bagby StreetSuite 2600Houston, TX 77002Phone: +1 (973) 245-6014

New address as of fall 2016: BASF Corporation11750 Katy FreewayHouston, Texas 77079Phone: +1 (973) 245-6014

Business contacts

Further information

You can find this publication on the internet at www.basf.us/reports

General inquiries:Tel: +1 (973) 245-6000 or +1 (800) 526-1072 (toll free) or visit www.basf.us

Publisher:BASF Corporation, 100 Park Avenue, Florham Park, NJ 07932

Corporate Media Relations:Maureen Paukert, Tel: +1 (973) 245-6077 Donna Jakubowski, Tel: +1 (973) 245-6260

Sustainability: Charlene Wall, Tel: +1 (973) 245-6438

Investor Relations: Ingo Rose, Tel: +1 (973) 245-6232

Social media

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BASF supports the worldwide Responsible Care® initiative of the chemical industry. This report is printed on FSC® certified real art paper.

For more information on BASF in North America, visit www.basf.us, www.basf.com.mex or www.basf.ca

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Alisha Anderson, operator at the formic acid/acetylene unit, inspects a railcar at the BASF Geismar site prior to shipment. With the opening of the new plant in November 2015, BASF became the only producer of formic acid in North America. The product has a wide range of applications, including animal nutrition, household and industrial cleaning, oilfield drilling and gas exploration, and deicing airport runways and roads.

We createchemistrythat helps people loverush hour.

By 2050, over 70% of the world’s population will probably live in cities. That is why we are co-creating solutions that will help cities of the future to improve the lives of their citizens, like public transport systems that support modern lifestyles. When cities work harder for you, it’s because at BASF, we create chemistry.

Share our vision at wecreatechemistry.com

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BASF in North America 2015 Report

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