INDUSTRY INSIGHTThought Leadership

A collaborative model for generating sustainable growth

Saori Dubourg, Member of the Board of Executive Directors, BASF, provides a new perspective for making investment decisions and optimizing system value

Your presentation at the Annual GPCA Forum focused on ‘a collaborative model for generating sustainable growth.’ What does this model entail, how is BASF implementing it, and why is it so important for chemical companies to grow – and be seen to be growing – sustainably?

Now more than ever we need to rethink the role of business in society and take a new perspective on value creation. The question we asked ourselves is whether it is still good enough to steer companies solely on profit maximization or if we should think beyond existing frameworks.

The chemical industry supports around 120 million jobs worldwide and invests heavily in training and educating people. This creates a significant engine to economic growth, as people macroeconomically drive purchasing power. Nonetheless, we still consider people and salaries as cost and not value factors.

Meanwhile, the paradigm of smart resource usage along the value chain, will move more and more to the centre for decision making. That’s why smarter decisions based on impact measurement is crucial for us. But it goes beyond the chemical industry.  Together with partners we founded the value balancing alliance to drive good growth and optimize our contribution to the environment, future generations and our shareholders.

Your current board responsibilities at BASF include the GCC and European regions. What are the main challenges facing the chemical industries in both regions, and are there similarities being faced by both? How should the industry tackle these challenges?

Volatility in the Chinese economy is affecting the chemical industry as a whole; a slowdown in demand in the Asia-Pacific markets is damping earnings in both the European chemical industry and for producers in the GCC. For producers in the GCC in particular, the emergence of cheap feedstock from other regions, such as the development of shale gas reserves in the US, has removed some of the traditional advantages.

Globally, the chemical industry will have to place even more emphasis on research-intensive solutions, drive forward technological progress and use the chances offered by digitalization.

In our new strategy we aim for both profitable and CO2-neutral growth and expect that other chemical industry players will follow our example.

While fossil raw materials will remain the most important feedstock for the global chemical industry in the medium term, the share of renewables is expected to rise. I am incredibly proud that together with ADNOC, Borealis and Adani, we are planning to build BASF’s first CO2-neutral site in Mundra, India. It will be 100% powered by renewable energy. Considering there is an abundance of sunlight in the GCC, I hope that GCC petrochemical producers will follow suit.

What is BASF’s growth strategy in the Arabian Gulf and MENA region over the next five years?

BASF has been active in the Middle East for over a century, supplying and customizing our solutions for almost every industry, mainly construction, chemicals and polymers, energy and resources, water, consumer goods, agriculture, and the feed and food industry. Our first office in the UAE was established in 1973.

At present, we have offices in Dubai, Abu Dhabi, Al Khobar and Cairo. In addition, we run a polyurethane system house in Dubai (a joint-venture with the Kanoo Group), a state-of-the-art production facility for customer-specific antioxidant blends (CSB) in Bahrain, and production sites for construction chemicals in the UAE, Saudi Arabia, Egypt, Jordan, and Oman. This shows our focus and commitment to the region and it also demonstrates how important the Middle East is for us.

The main driver of our new strategy is to focus even more on our customers. This means that we combine our unique expertise with our customers’ competencies and join forces with our customers and other business partners to jointly develop solutions that are both profitable and sustainable, and tailored to this region. We are also launching a series of measures that will, among other things, increase our transparency for our customers, enhance customer service and explore joint growth potential.

Can you highlight some of the successful partnership models BASF has developed or utilized to expand its portfolio, and what are some of the challenges in partnering with an often-diverse range of organizations on such complex processes?

On a global level, BASF co-founded the global Alliance to End Plastic Waste in January this year. The Alliance is made up of nearly forty companies, many of them global players. Together, we have committed over $1.0 billion with the goal of investing $1.5 billion over the next five years to develop, deploy and bring to scale solutions that will minimize and manage plastic waste and promote post-use solutions.

Concretely, this means that as BASF we are actively working on advancing and scaling up new technologies that make recycling and recovering plastics easier and create value from post-use plastics.

A local example from the Middle East is Project Circle: the Coalition of Innovation in Recycling towards a Closed Loop Economy. The coalition aims to achieve sustainable solutions to the problem of plastic waste in the UAE and deliver effective circular economy initiatives through a collaboration between the Ministry of Climate Change and Environment and the Environment Agency Abu Dhabi, NGOs – including WWF and GPCA – and cross-industry private sector partners.

We are proud to contribute to this partnership with our expertise on increasing the recyclability of plastics and through the lessons learned from our ChemCycling project in Europe. With chemical recycling, fossil resources for chemical production can be replaced with recycled material from plastic waste. This is how we create value for the environment, society and the economy.

Your previous responsibilities at BASF include leading a project on diversity and inclusion, and human resources. How successful has BASF’s diversity and inclusion program been so far, and what more is there to achieve? How, in your view, can chemical companies in the Middle East best promote diversity?

BASF started its D+I activities more than 10 years ago in 2008. Right from the start, a comprehensive approach was chosen, covering not only typical dimensions of diversity such as age, gender, sexual orientation and identity, cultural or ethnic background, religion or disabilities, but also aspects such as individual skills and competencies or professional background. We strongly believe that these aspects contribute to ‘Diversity of Thought’, which in turn is a major success factor for our business, and the backbone of the D+I business case.

An inclusive leadership style and culture is the prerequisite for making diversity work, so this is why our programs focus on diversity AND inclusion. This is true not only in Germany, but also in the Middle East.

Is BASF looking to potentially expand/consolidate the company’s portfolio through sales/acquisitions within the GCC region?

I believe that it is very clear that the chemical industry in the Middle East will be driven by forward integration, operational excellence, digitalization and sustainability. Transformative partnerships between local players and global players such as BASF will increasingly play a greater role. It is a very exciting time to be part of this.