Corporate and Managerial Responsibility : Basf

Introduction

BASF SE is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. The company was established in 1865 and was originally known as Badische Anilin-und Soda-Fabrik (Translated in English as: Baden Aniline and Soda Factory). As of today, the name, BASF is a registered trademark and the company is listed on the Frankfurt Stock Exchange, London Stock Exchange, and Zurich Stock Exchange with over 400,000 shareholders. The institutional shareholding comprises 15% from United States and Canada, 11% from Germany, 12% from United Kingdom and Ireland and 17% from the rest of Europe. Almost 26% is held by private investors, most of whom reside in Germany and of whom nearly 6% reside in the greater Ludwigshafen area. (BASF, 2012)

The BASF Group has subsidiaries in the fields of Chemicals, Plastics, Performance Products, Functional Solutions, Agricultural Solutions and Oil and Gas in more than 80 countries and operates six integrated production sites and 370 other production sites in Europe, Asia, Australia, Americas and Africa. BASF has customers in over 200 countries, supplies products to a wide variety of industries employing nearly 111,000 people, and in 2011 posted sales of €73.5 billion and income before special items of approximately €8.4 billion (BASF, 2012).

BASF has 6 major operations sites known as "Verbund" in Ludwigshafen (Germany), Antwerp (Belgium), Freeport, Texas (USA), Geismar, Louisiana (USA), Kuantan (Malaysia), Nanjing (China) that operate as integrated chemical complexes producing various chemicals interlinked in terms of production processes (BASF, 2012).

The company has a strong Asia growth focus promoting its products in the critical markets of China and India where it has huge production facilities. As part of its growth strategy, BASF divested its entire stake in the consumer product segment so as to focus solely on chemical manufacturing, which the company considers its core strength.

As part of its purpose statement, BASF states three key factors namely economic success, social responsibility and environmental protection that gel perfectly into its value statement of being 'Creative,' 'Entrepreneurial,' 'Open' and 'Responsible.' The company is the founding member of the United Nations Global Compact LEAD initiative and is committed to promoting and implementing the Compact's Ten Principles concerning the safeguarding of human rights, labor and environmental standards and anti-corruption. Nearly all of BASF's partnership projects with public sector organizations and NGOs are carried out under this project (United Nations Global Compact, 2012) (BASF, 2011).

Potential Issues

Being a global corporation, BASF attracts attention from opinion makers and activists, especially given the industries in which BASF operates, such as chemicals and agricultural biotechnology. These are industries that are high on the list of concerns for activist organizations like Greenpeace and Friends of the Earth. BASF acknowledges these aspects of its business and works at improving its reputation and also its track record of social responsibility in these respects. Several components of the BASF organization are vulnerable and should be monitored to avoid incidents, including but not limited to: worker safety, environmental and social issues, and genetic engineering.

Worker safety is of paramount importance. BASF is moving production into lower wage countries where regulations regarding safety of the work environment are not as well established. BASF needs to work hard at exceeding local standards in this respect and be seen as a leader in this field.

In shifting towards developing countries for its production plants, BASF should assess and mitigate potential environmental and social issues. In the last few years, advocacy groups like Greenpeace have attacked BASF in this respect. Opening plants that are deemed polluting by Western standards will undermine what is otherwise considered responsible policy. A move towards more environmentally friendly and sustainable chemical projects is ongoing at BASF but legacy issues within the firm and its partnerships could prove problematic.

BASF is a major player in the Genetically Engineered (GE) business. The use of transgene technologies is widespread in the agro-industry, however acceptance is not homogenous. While acceptance of GE crops is widespread in the U.S.A. and Latin America, Europe is not as open to these developments. The recent controversy over field tests of a GE potato variety clearly illustrates European hesitance towards genetically engineered crops (VILT, 2011). BASF is retreating from the European GE market because of issues with public opinion and advocacy demonstrations. However, the market is evolving and is too great to overlook. Transgene technologies in agriculture represent a major threat to the company that will need to be addressed further.

Stakeholders

The company defines such stakeholders as being "customers, suppliers, employees, investors, scientists, government and community representatives, the media, opinion leaders, churches, and members of nongovernmental organizations" (BASF, Stakeholder Dialogue). BASF has a communications strategy and regularly conducts surveys to evaluate relations with each of the groups of stakeholders.

BASF has had historically strong ties to its local communities, starting from its headquarters in Ludwigshafen. There, it was actively involved in the rebuilding of the town after World War II. BASF has set up 75 Community Advisory Panels (CAP) at its largest plants. CAP consists of individuals that live near the chemical plants and who meet regularly and focus on mutual interests.

Using standardized questions on topics relating to the workplace, BASF continually keeps abreast of its employees attitudes on topics such as leadership and innovation. Responding to the results, the company introduced measures aimed at improving the working environment. Business units also regularly conduct surveys on the customers to establish the expectations they have and to understand where BASF can differentiate from the competition (BASF, Stakeholder Dialogue).

BASF, a listed company, has a dedicated investor relation's team which offers in-depth details of their roadmap for the creation of sustainable value. It does this with the active participation of shareholders and the community at large. BASF maintains active dialogue with political groups and trade associations to ensure business growth and continuity. It achieves this through its liaison