Lessons from BASF

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The following is an excerpt from "Long-Term Thinking in a Short-Term World."

In the early 1990’s, chemical company BASF decided to stop producing several plastic products. The products contained a type of flame retardant that, when incinerated, was suspected to cause the formation of toxic dioxins. The products were highly successful and the decision to remove them from the marketplace left a thriving market open for competitors. But BASF was determined.

Carles Navarro, president of BASF Canada, was then in sales and his job included recommending those products to customers for different applications. Navarro vividly remembers his shock at the company’s decision to stop production and sales:

“Less than six months after receiving an initial heads-up from management, the product was completely pulled from the market. There was literally nothing to offer our customers and we had lots of internal debate over our competitors’ ongoing use of similar flame retardants. We also received several complaints from customers who were expecting us to continue to supply the product.”

BASF counseled the sales team on how to explain the decision to customers and emphasized that substitute products were in development. And after two years BASF did in fact return to the market with alternative solutions, using a different chemistry.

Today, BASF maintains its commitment to sustainable products and works to improve customer experience during transitions and minimize any short-term impacts to business.

BASF recently announced its Sustainable Solutions Steering program, which classifies products by their sustainability profile (Figure 1) and then uses this categorization to steer its product portfolio. Less sustainable “challenged” products must be removed or substantially improved, ideally to become “accelerators” or market-leading products with substantial contributions to sustainability. Accelerators include lightweight plastics for the auto industry and water-based resins to reduce volatile organic compound emissions in packaging materials. Substitutions might have short-term costs, but they guarantee business sustainability in the long run.

BASF Product Categorization

Figure 1

BASF analyzes and proactively monitors the products in its portfolio. It communicates the categories and any changes to its customers, so that they are aware of potential changes in availability.

Lesson

Prioritizing sustainability can cause disruption if long-term investments haven’t yet shown results. Careful strategy and open communication can protect a company’s interests in the short term and through its transition.

BASF’s Sustainable Solution Steering is described in more detail at https://www.basf.com/en/company/sustainability/management-and-instruments/sustainable-solution-steering.html

This case study is an excerpt from the NBS report, Long-Term Thinking in a Short-Term World.