We create chemistry for a sustainable future

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1 We create chemistry for a sustainable future BASF SRI Story November November 20, 2018 BASF Capital Markets Day

2 Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in the Opportunities and Risks Report from page 111 to 118 of the BASF Report BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. 2 November 2018 BASF SRI Story

Sustainable development UN Sustainable Development

frame Relevant sustainability topics as identified

Water Resources and ecosystems Responsible

the material aspects of BASF s businesses with the

focus areas for our strategic steering BASF

to our company purpose We create chemistry for a

3 Sustainable development UN Sustainable Development Goals and BASF s material aspects provide strategic frame Relevant sustainability topics as identified in BASF s materiality analysis: Energy and climate Water Resources and ecosystems Responsible production Employment and employability We matched the material aspects of BASF s businesses with the 17 UN Sustainable Development Goals to identify focus areas for our strategic steering BASF contributes to a wide range of the SDGs, living up to our company purpose We create chemistry for a sustainable future BASF particularly contributes to: 3 November 2018 BASF SRI Story

4 Our ambitious financial and non-financial targets BASF Corporate Strategy Growth Profitability Return Dividend Grow sales volumes faster than global chemical production Increase EBITDA before special items by 3% to 5% per year Achieve a ROCE 1 well above the cost of capital percentage every year Increase the dividend per share every year based on a strong free cash flow 22 billion of sales with Accelerator products 2 by 2025 CO 2 -neutral growth until Return on capital employed (ROCE) is a measure of the profitability of our operations. We calculate this indicator as the EBIT generated by the operating divisions as a percentage of the average cost of capital basis. ROCE is also the key performance indicator for determining the variable compensation for members of the Board of Executive Directors and all employee groups. 2 Accelerator products are products that make a particular contribution to sustainable development (sales 2017: ~ 15 billion) 4 November 2018 BASF SRI Story

5 CO 2 -neutral growth until 2030 Creating value to society and protecting our climate Absolute greenhouse gas (GHG) emissions Indexed (1990 = 100) 160 Paris agreement Global GHG emissions 140 World billion tons BASF million tons BASF GHG emissions BASF business as usual 2030 target No increase of GHG emissions Assumed policy shift 2 C scenario BASF carbon management Since 1990, we have doubled our production volumes and nevertheless cut our greenhouse gas emissions in halves BASF is committed to contributing to the Paris climate agreement Climate change and global warming are among the most pressing challenges of our time We will grow our production volumes without adding further CO 2 emissions 1 until 2030 We support the recommendations of the Task Force for Climate-related Financial Disclosure (TCFD) 1 Including other greenhouse gas emissions, translated into CO 2 emissions using the Global Warming Potential factor (IPCC). 5 November 2018 BASF SRI Story

6 Key measures to implement CO 2 -neutral growth Global carbon management program GHG emissions (million tons CO 2 equivalents), scope 1 and 2 Carbon intensity to be reduced by 30% Organic Growth To achieve this, we will execute a global carbon management program that involves 22 million tons 1 BASF 2018/ 2030 Verbund site South China Shift to CO₂neutral power Operational excellence New technologies further improvements of energy and process efficiency continued operational excellence measures shifting our energy mix towards renewable energies portfolio development a research program to develop breakthrough technologies for those basic chemicals which are most energy consuming 2 1 Preliminary figure 2018; final figure to be published separately in Accounting for more than half of the CO 2 emissions of the chemical industry in Europe 6 November 2018 BASF SRI Story

Resource efficiency BASF is committed to climate protection BASF uses carbon raw materials responsibly: 82% of carbon converted to products, 17% consumed for process energy and converted to CO 2, 1%

sold in 2017 avoided 570 million tons of CO 2 equivalents (thereof 6% attributable to BASF) 2 European emissions trading benchmarks show that our chemical plants operate at above-average energy

7 Resource efficiency BASF is committed to climate protection BASF uses carbon raw materials responsibly: 82% of carbon converted to products, 17% consumed for process energy and converted to CO 2, 1% waste 1 22 million tons of CO 2 emissions by BASF worldwide expected in 2018 compared to million tons per year for one coal-fired power plant Customers use of BASF s climate protection products sold in 2017 avoided 570 million tons of CO 2 equivalents (thereof 6% attributable to BASF) 2 European emissions trading benchmarks show that our chemical plants operate at above-average energy efficiency MSCI ESG analysts recognized that BASF has the lowest emissions intensity amongst peers in the chemical industry (rating score AA) In 2017, BASF achieved CDP leadership status once again 1 BASF carbon mass balance calculation (2017, non-audited) 2 Based on the chemical industry standard of the International Council of Chemical Associations and the World Business Council for Sustainable Development 7 November 2018 BASF SRI Story

8 Verbund unique competitive advantage Actively managed in line with market requirements Nanjing Geismar Antwerp Ludwigshafen Freeport. Zhanjiang Kuantan Combined heat and power plants and integrated energy Verbund prevented 6.5 million tons of CO 2 emissions in 2017 Synergies in logistics and infrastructure, minimization of waste > 1 billion of cost savings per year 8 November 2018 BASF SRI Story

9 ChemCycling Enabling sustainable growth in a more circular economy Waste companies supply recyclers with plastic waste Plastic waste is converted into feedstock The waste is collected and sorted by waste companies Consumers and companies use and dispose of products 67 million tons of global plastic packaging waste 1 per year Feedstock can be used to create all kinds of chemicals and products in the BASF Verbund value chains, including new plastics Customers use these chemicals to make their own products Successful business proof in October Source: Ellen MacArthur Foundation November 2018 BASF SRI Story

10 Biodegradability Research platform for biodegradable and bio-based materials to access an emerging market Biodegradation: microorganisms metabolize polymeric material completely to CO 2, energy, water and biomass Biodegradable plastics for, e.g., consumer bags, mulch films, packaging, personal and home care Strong understanding of biodegradability in soil, marine and aquatic environments, including modeling of biodegradability Innovation platform provides Verbund advantages such as combining know-how in biodegradability and product development, technological leadership and engagement in stakeholder dialogue, global standards for biodegradability 8 million tons of plastics leak into the ocean each year 1 BASF well positioned to benefit from trend towards biodegradability 1 Source: Ellen MacArthur Foundation November 2018 BASF SRI Story

11 Sustainability along the entire value chain Our commitments Suppliers BASF Customers We source responsibly We produce safely for people and the environment We produce efficiently We drive sustainable products and solutions We value people and treat them with respect 11 November 2018 BASF SRI Story

We source responsibly Extend sustainability evaluations and improve sustainability performance in the supply chain Goal: to cover 90% of our relevant spend 1 with sustainability evaluations by 2025,

12 We source responsibly Extend sustainability evaluations and improve sustainability performance in the supply chain Goal: to cover 90% of our relevant spend 1 with sustainability evaluations by 2025, and 80% of suppliers improve their sustainability performance upon re-evaluation Supplier Code of Conduct rooted in internationally recognized standards such as the principles of the UN Global Compact and the International Labor Organization Engaged in more than 20 initiatives to improve sustainability performance and working conditions in the supply chain, e.g., Global Battery Alliance (GBA), Responsible Cobalt Initiative (RCI), Roundtable on Sustainable Palm Oil (RSPO) Founding member of the Together for Sustainability initiative for the joint evaluation of suppliers; 1,794 sustainability assessments and 441 audits carried out by member companies in 2017, thereof 513 assessments and 120 audits by BASF 246 BASF suppliers improved sustainability performance in 2017 when re-evaluated 1 Based on risk matrices, purchasers assessments and other sources 12 November 2018 BASF SRI Story

Global water stewardship Strong commitment to local water management Further increase of water stress areas expected worldwide (climate change, population growth and economic development) Growing

13 Global water stewardship Strong commitment to local water management Further increase of water stress areas expected worldwide (climate change, population growth and economic development) Growing competition among water users expected (e.g., households, agriculture, industry) In 2017, BASF was again awarded with the top A leadership grade for sustainable water management from CDP Goal: Introduction of sustainable water management at all Verbund sites and sites in water stress areas 1 by 2030 (status 2017: 45.2%) 1 Representing 93% of BASF s entire water abstraction 13 November 2018 BASF SRI Story

Engaged employees I am a proud ambassador for what BASF stands for BASF s employees and their engagement are key to enable our long-term business success 1 Our annual goal: More than 80% of our

14 Engaged employees I am a proud ambassador for what BASF stands for BASF s employees and their engagement are key to enable our long-term business success 1 Our annual goal: More than 80% of our employees feel that at BASF they can thrive and perform at their best In our last Global Employee Survey (2015), 73% of the participants indicated a high engagement In a brief Global Pulse Check 2018 (not comparable to survey of 2015), 83% of participants indicated high engagement To measure the engagement, we will Collect regular feedback of our employees as of 2019 Engage our employees in discussions on the results Identify improvement areas and drive follow-up activities Report on the current status in the BASF Report 1 Gallup 2016 Q12 Meta-Analysis: The 25% of the business units with the highest engagement scores show 21% more profitability than the 25% of the business units with the lowest engagement scores. 14 November 2018 BASF SRI Story

15 We create chemistry for a sustainable future Overview on sustainability goals and KPIs New Procurement Old Status New Old Status Energy & climate protection Sustainability evaluations of relevant 1 supply 90% 2 70% 3 56% 3 Absolute emissions of CO 2 equivalents 6 Constant 7 Suppliers with improved performance upon re-evaluation 80% Specific emissions 8 of CO 2 equivalents Further improvement 40% % 9 Employees Annual 2017 Introduction of ISO energy management system 10 90% 90% 54.3% Employees who feel that at BASF they can thrive and perform at their best >80% Water Women in leadership positions 22 24% 22 24% 20.5% Sustainable water management at Verbund sites and sites in water stress areas 100% % 45.2% Production Process safety incidents Lost-time injury rate (1.4 5 ) Product stewardship Annual Risk assessment of products 15 November 2018 BASF SRI Story Always comply >99% 76.2% Products & solutions Sales generated by Accelerators 12 in product portfolio 1 Based on risk matrices, purchasers assessments and other sources 2 Relevant spend 3 Relevant suppliers 4 Per 200,000 working hours including contractor working hours (ICCA) 5 Per one million working hours (VCI) 6 Million metric tons; emissions of N 2 O, CH 4, HFC and SF 6 translated into CO 2 emissions using the Global Warming Potential factor (IPCC). 7 Baseline 2018; approximately 22 million tons expected, final figure to be published in Per metric ton of sales products 9 Baseline 2002; excluding Oil & Gas 10 At all relevant sites (primary energy demand, local energy prices) 11 Enlarged GRI definition for water stress areas 12 Products with substantial contribution to sustainability 13 Equal to 15 billion 22 billion 28% 27.3% 13 Goal KPI

16 Sustainable Solution Steering Leverage our innovation power to achieve 22 billion in Accelerator sales by % 27.3% 4.3% 0.1% Substantial sustainability contribution in the value chain Meets basic sustainability standards on the market Specific sustainability issues which are being actively addressed Significant sustainability concern identified and action plan developed >60,000 product applications analyzed by 2017 ( 58.4 billion in sales, 98% of BASF s portfolio) 27.3% Accelerators 13,000 solutions for enhanced quality of life strong growth in their markets margins ~7 percentage points above the remaining product portfolio Goal: 22 billion of sales with Accelerator products by 2025 (2017: 15 billion) Integration in R&D pipeline, business strategies and M&A projects Within five years after a product has been classified as Challenged, we will stop selling it 16 November 2018 BASF SRI Story

3% Cost savings downstream Biodiversity and renewables Climate change and energy 68.

17 Sustainable Solution Steering BASF s Accelerators contribute to the UN Sustainable Development Goals Sales shares of contributing Accelerators (%) Primarily addressed SDGs 27.3% Cost savings downstream Biodiversity and renewables Climate change and energy 68.3% Emission reduction Resource efficiency Water Health and safety 4.3% 0.1% Hunger and poverty (including double nominations) 17 November 2018 BASF SRI Story

18 Innovations for a sustainable future Examples with significant contributions to sustainability SLENTITE high-performance insulation material Formic acid runway and road de-icing Acronal MB from biomass to dispersions Cetiol Ultimate emollient for personal care Priaxor fungicide Synative ES TMP sustainable marine lubricants 18 November 2018 BASF SRI Story

19 We drive sustainable solutions Systematic sustainability performance assessments since 1996 Eco-Efficiency Analysis SEEBALANCE Carbon Footprint AgBalance Investment evaluation Sustainable Solution Steering Advanced IT solutions for customers Value-to-Society Corporate 1996 Portfolio and digital solutions Products in the value chain 19 November 2018 BASF SRI Story

Value-to-Society: changing the perspective Assessing and valuing the impact of BASF

, climate change, mitigation costs) Holistic view along the entire value chain

20 Value-to-Society: changing the perspective Assessing and valuing the impact of BASF s business activities on the well-being of people From traditional reporting of input and output (e.g., raw materials, CO 2 emissions) to outcome and impact valuation (e.g., climate change, mitigation costs) Holistic view along the entire value chain Consistent assessment in monetary terms Positive impacts Negative impacts Aligned with existing standards, pragmatic and audited by KPMG 20 November 2018 BASF SRI Story

21 Value-to-Society: a comprehensive assessment Economic, social and environmental impacts in monetary terms based on a PwC model Contributions to gross domestic product (value added) Contributions to society beyond gross domestic product Net income Amortization Depreciation Wages Taxes Human capital Health & safety Air emissions Water emissions Water consumption GHG Land use Waste Economic Social Environmental Impact categories Consistent application at corporate, project, and product level Value chain Corporate level: production cycle supply chain, own operations, customer industries Project and product level: use phase and end-of life integrated on a case-by-case basis 21 November 2018 BASF SRI Story

22 BASF s Value-to-Society 2017 Net positive contribution to sustainable growth in each step of the assessed value chain Full external supply chain 1 Own operations Customer industries 2 Net income Amortization Taxes Wages & benefits Human capital Health & safety Air emissions GHG Land use Waste Water consumption Water emissions billion Value contribution from BASF procurement Value contribution from BASF operations Value contribution from BASF sales 1 Indirect suppliers, direct suppliers 2 Customers in industries supplied by BASF 22 November 2018 BASF SRI Story

Benefits of Value-to-Society Complementary information to demonstrate relevance and interdependencies Positioning Progress monitoring Decision making Communication

Value-to-Society results 2013-2017 Alternative sites for investment project Net income Taxes Wages & benefits Community development Health & safety Water pollution Water

23 Benefits of Value-to-Society Complementary information to demonstrate relevance and interdependencies Positioning Progress monitoring Decision making Communication Reporting Advocacy Over time Industry benchmark Relevance of impacts Risk exposures Business opportunities Strategy development Value contribution at country level Value-to-Society results Alternative sites for investment project Net income Taxes Wages & benefits Community development Health & safety Water pollution Water consumption Waste Land use GHGs Air pollution Required data accuracy and granularity, maturity level of methods 23 November 2018 BASF SRI Story

24 Impact valuation gains momentum It is not a question of if, but rather when impact valuation is implemented in management accounting Business examples WBCSD Redefining Value, FReSH Impact Valuation Roundtable Embankment Project Increasing number of companies is piloting in all sectors First companies go public Disclosure CDP (formerly Carbon Disclosure Project) Reporting schemes started the discussion The Conference Board Standardization Natural Capital Protocol Social & Human Capital Protocol ISO and Impact Management Project First uptake by EU Commission s Sustainable Finance 24 November 2018 BASF SRI Story

We create chemistry for a sustainable future Sustainability is a core part of our strategy and fully integrated into our management systems Sustainability creates growth opportunities We assess our

25 We create chemistry for a sustainable future Sustainability is a core part of our strategy and fully integrated into our management systems Sustainability creates growth opportunities We assess our contribution to a sustainable development and to the UN SDGs along the entire value chain BASF is committed to contributing to the Paris climate agreement we use the resources of this planet responsibly Our Value-to-Society approach assesses and values the impact of BASF s business activities on the well-being of people 25 November 2018 BASF SRI Story

for reduced energy consumption Strong growth potential in a market of 1.

27 SLENTITE High-performance insulation panel for construction PU aerogel as solid panel with best in class thermal insulation Flexible scope of design thanks to very slim panel (25 50% less than industry standard) Construction solution for reduced energy consumption Strong growth potential in a market of 1.3 billion Slentite SLENTITE First boards from pilot plant are being commercialized Start of large scale production in November 2018 BASF SRI Story

Formic acid Runway and road de-icing Better biodegradability than conventional products Less corrosive than conventional products, reduced impact on the surrounding flora, not hazardous to animals

28 Formic acid Runway and road de-icing Better biodegradability than conventional products Less corrosive than conventional products, reduced impact on the surrounding flora, not hazardous to animals Reduced water treatment demand and costs Enabling ecoefficient de-icing Key customers won In Europe, all big airports are now using formate salts, the salt of formic acid 28 November 2018 BASF SRI Story

Acronal MB From biomass to dispersion for premium paints First BASF binder for interior paints based on the biomass balance approach launched in 2016 Replacing fossil raw materials with renewable

29 Acronal MB From biomass to dispersion for premium paints First BASF binder for interior paints based on the biomass balance approach launched in 2016 Replacing fossil raw materials with renewable feedstock at the beginning of the production process Less greenhouse gas emissions Enabling interior paints that combine environmental responsibility with uncompromising premium quality Renewable BASF Verbund production steps Feedstock Fossil Products Allocated Conventional 91% of interviewed professional painters in Germany see an increase in sustainability aspects in tenders 29 November 2018 BASF SRI Story

Cetiol Ultimate Ultra-fast spreading emollient for face/body/sun care and color cosmetics 100% renewable-based and volatile emollient (cosmetic ingredient used for protecting and moisturizing the

30 Cetiol Ultimate Ultra-fast spreading emollient for face/body/sun care and color cosmetics 100% renewable-based and volatile emollient (cosmetic ingredient used for protecting and moisturizing the skin) Replacement of volatile silicones and substitution of cyclomethicone possible Easier to use than volatile hydrocarbons Readily biodegradable Gives more flexibility in the development of natural cosmetic concepts for improved skin feel New formulation textures and claims Breakthrough innovation, awarded with innovation prizes 30 November 2018 BASF SRI Story

Priaxor Foliar fungicide for soybeans, turf and oilcrops Xemium -based fungicide for foliar application Key component of integrated resistant management programs Dual mode of action, advanced disease

31 Priaxor Foliar fungicide for soybeans, turf and oilcrops Xemium -based fungicide for foliar application Key component of integrated resistant management programs Dual mode of action, advanced disease control Consistent performance improves crop quality and yield Delivers proven benefits of AgCelence for plant health (larger and greener leaves, stronger stems and improved tolerance to crop stress) Broad crop fit allows the use in minor crops, supporting small holders business Key product in BASF s fungicide portfolio 31 November 2018 BASF SRI Story

Synative ES TMP Environmentally acceptable marine lubricants Superior lubrication performance, excellent stability Lower impact on the aquatic environment Excellent biodegradability Renewable content

32 Synative ES TMP Environmentally acceptable marine lubricants Superior lubrication performance, excellent stability Lower impact on the aquatic environment Excellent biodegradability Renewable content of >80% One of few products to enable the formulation of environmentally acceptable lubricants for marine with EU Ecolabel and OSPAR 1 listing Key customers won Considerable growth potential, depending on future regulation 1 Oslo/Paris convention for the protection of the marine environment of the North-East Atlantic 32 November 2018 BASF SRI Story

2013 Autumn Conference

KEPLER CHEUVREUX 2013 Autumn Conference Paris, September 18, 2013 1 Kepler Cheuvreux 2013 Autumn Conference September 18, 2013 September 18, 2013 2013 AUTUMN CONFERENCE 1 STRATEGY MOVING FORWARD AS SCHEDULED