BASF in China - Setting International Health, Safety and Environmental Standards

Table of Contents

1. Introduction

2. BASF
2.1. History
2.2. Health, Safety and Environmental Policy
2.2.1. Responsible Care
2.2.2. Eco-Efficiency
2.2.3. The Global Compact Initiative

3. BASF in China
3.1. Environmental and Social Conditions
3.2. Overview of BASF’s Activities

4. The Joint-Venture
4.1. The Chinese Partner – SINOPEC
4.2. BASF-YPC Company Limited
4.3. HSE Standards
4.4. Critical Evaluation

5. Conclusion and Personal Opinion

6. Bibliography

1. Introduction

As soon as one has forgotten the latest news about some tragic accident in some coal mine in China with hundreds of injured workers and dozens of casualties, there are other bad news from far east talking about the contamination of rivers following explosions in one of China’s numerous chemical plants.

At first glance, these incidents might seem to be a simple consequence of the People’s Republic’s rapid economic growth; people are forced to work harder and longer hours and machines are operated at full capacity. Besides, safety and environmental regulations are rather loose in China compared to a country like Germany and oftentimes local officials tend to bend the already loose rules in order to create growth.

It is estimated that more than 1,600 German companies have settled in China in order to position themselves in time in an enormous market and in order to benefit from the Republic’s booming economy with annual growth rates of 7 – 8 % and overall low investment costs and.^[1]One German multinational sticks out from the crowd of these German enterprises rushing into the Chinese market not only for the volume of its overall investment, but also for its strict health, safety and environmental (HSE) policies that go far beyond existing regulations – BASF. The company’s joint venture with SINOPEC, one of China’s biggest chemical companies, is its largest single investment in Asia featuring one of its most modern production sites.

In this paper I will give a short overview of BASF’s HSE policies and the current environmental and social situation in the People’s Republic of China before describing the joint venture of BASF and SINOPEC in consideration of environmental protection and the situation of the work force employed by the two chemical giants.

2. BASF

2.1. History

BASF – formerly registered as “Badische Anilin- und Soda-Fabrik” – was founded in Mannheim, Germany, in 1865 by Friedrich Engelhorn for the production of coal tar dyes. With the development of an indigo dye in 1867, the development of the Haber process in 1912 that enabled BASF to synthesize ammonia and the addition of fertilizers to its product range in 1913, the company soon had built up a monopoly in the chemical sector. Due to its leadership position in the chemical market, production capacities needed to be expanded and thus two new plants in Oppau and Leuna were built. In 1925, BASF became part of IG Farben and added rubber, fuel and coatings to its portfolio. During the Third Reich BASF cooperated with the Nazi regime and took advantage of forced laborers. During the Second World War the company’s premises in Ludwigshafen were almost completely destroyed. After the allies had dissolved IG Farben in 1945, BASF was reestablished as an independent company in 1952 when the reconstruction of its main plant was finished. During Germany’s economic miracle, synthetics such as nylon and Styropor® were added to BASF’s product portfolio. In the 1960s, production capacities were expanded abroad and plants built in Argentina, Australia, Belgium, Brazil, France, United Kingdom, India, Italy, Japan, Mexico, Spain and the United States, accompanied by a change in corporate strategy which placed greater emphasis on higher-value products.^[2]Nowadays, BASF’s portfolio includes chemicals, plastics, performance products, agricultural products, fine chemicals, crude oil and natural gas. The company has customers in more than 170 countries and production sites in 41 countries in Europe, North America, South America and Asia. In 2004 its approximately 82,000 employees produced a turnover of € 37.5 million, turning it into the world’s leading chemical company.^[3]

2.2. Health, Safety and Environmental Policy

“We combine economic success with environmental protection and social responsibility.”^[4]– BASF puts a great emphasis on sustainable development, which is – among financial and strategic marketing goals – one of its four strategic guidelines. BASF’s employees commit themselves to “strive for Sustainable Development”. This rather general statement is concretized in the company’s principles regarding safety, health and environmental responsibility: “Economic considerations do not take priority over safety and health issues and environmental protection.” All staff is urged to pay attention to and create awareness of these issues with the objective of creating added value. Not only stresses BASF the importance of a “minimized impact on mankind and the environment during production”^[5], but it also strives to support the efforts of its suppliers and customers for environmental-friendly policies.

Moreover, BASF strives for going “beyond the requirements of current legislation” concerning plant safety and workers health.

By 2012, BASF aims at reducing emissions to air and water, occupational and transportation accidents and at increasing information to ensure safe handling of chemicals. The company is committed to the 1997 Kyoto Protocol and has already reduced its greenhouse gas emissions by 61 % between 1990 and 2002 and sets its target to reduce these emissions by another 10 % by 2012 compared to 2002.

In order to improve employee safety, BASF has developed an “Occupational Medicine and Health Protection Program” which includes eight performance standards that apply worldwide. To ensure these standards are carried out, internal occupational health audits are conducted on a regular basis.

In the following, three different programs carried out by BASF to ensure the compliance with its standards shall be introduced.

2.2.1. Responsible Care ®

The Responsible Care initiative was developed by the Canadian Chemical Producers’ Association in 1986 in response to public concerns about health and environmental issues. It has been adopted by chemical associations and their members in over 40 countries. They commit themselves to continuously improve their operations and products in all aspects of health, safety and environmental issues and to openness in communications about their activities and their achievements in order to earn public trust and confidence. The key areas of Responsive Care are environmental protection, product stewardship, occupational health and safety, process safety and emergency response, distribution safety and dialogue.

BASF has established a Competence Center Responsible Care that sets goals, oversees implementation and monitors the meeting of targets. Besides that, the company has revised its system of regular site audits to make performance and improvements more transparent.

2.2.2. Eco-Efficiency

The eco-efficiency analysis was developed by BASF in 1996 for the purpose of harmonizing economy and ecology. It compares similar production processes, products or system solutions under aspects of economic efficiency and environmental impact. The analysis takes into account the total costs as well as the consumption of resources and energy, emissions to air, water and soil and the overall risk potential. Thus it is applied in order to use as few materials and energy as possible during the production process and to keep emissions as low as possible while at the same time reducing production costs for the benefit of the customer.

2.2.3. The Global Compact Initiative

The Global Compact Initiative was established in 2000 by the United Nations (UN) in order to bring companies together with UN agencies, non-governmental organizations, corporations, international business and labor associations as well as representatives from science and politics to support universal environmental and social principles. BASF is one of the founding members and commits itself to promoting and implementing the Compact’s ten principles in the areas of human rights, labor, environment and anti-corruption.

In 2002, BASF joined the UN Development Program, the UN Staff College and the International Chamber of Commerce in a project that encourages collaboration between business, politics and civil society in developing and transition companies in South America, Asia and Africa.

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^[1]Über 1600 deutsche Unternehmen in China

^[2]www.wikipedia.org

^[3]BASF – Facts and Figures 2005, p. 1

^[4]BASF – Facts and Figures 2005, p. 1

^[5]all quotations taken from BASF Vision, Values, Principles