Responsible sourcing is no longer limited to choosing a supplier with the right certificate.
For a global chemical company, it now involves tracing raw materials back through complex supply networks, examining environmental and human-rights risks, supporting suppliers that need to improve and determining whether renewable or circular alternatives can be introduced without disrupting production.
BASF’s latest responsible-sourcing activities show how this transition is taking shape across palm oil, coconut oil, castor oil and circular chemical feedstocks.
The company’s approach also demonstrates something procurement teams across the chemical industry are increasingly discovering: sustainability cannot be managed as a separate reporting exercise. It must be built into supplier selection, purchasing conditions, risk assessments, technical decisions and long-term supply relationships.
Traceability Comes Before Improvement
A company cannot properly manage a raw-material risk when it cannot identify where that material originated.
This is particularly important for palm oil and palm kernel oil. These renewable raw materials are widely used to manufacture ingredients for personal care products, detergents, cleaning formulations and other chemical applications. Their supply chains can extend from small agricultural producers to mills, processors, traders and chemical manufacturers.
In 2025, BASF traced 97.7% of its palm-based raw-material volume back to the oil-mill level. The company describes this level of visibility as an important contribution to supply-chain transparency and risk management.
Traceability does not automatically prove that every stage of the supply chain is sustainable. It does, however, give procurement teams a clearer foundation for identifying high-risk locations, examining sourcing practices and engaging suppliers where problems are found.
Without that visibility, sustainability commitments remain difficult to verify.
Certification Progress Has Not Followed a Straight Line
BASF’s 2025 results also reveal the practical difficulty of meeting responsible-sourcing targets when certified raw materials are not available in sufficient quantities.
The company reported that 79.2% of the palm oil and palm kernel oil it purchased during 2025 came from certified sources. That was significantly below the 98.1% recorded in 2024.
BASF attributed the reduction partly to limited availability of Roundtable on Sustainable Palm Oil-certified palm kernel oil. The company also said that the implementation of the EU Deforestation Regulation had contributed to shortages of materials suitable for the European market.
Rather than abandoning its commitment, BASF says it intends to continue increasing certified volumes where commercially and technically possible. RSPO certification remains its preferred standard.
The company has also moved its target for sourcing fully certified key palm derivatives to 2030. Those derivatives present an additional challenge because the palm material may have passed through several processing and transformation stages before entering a chemical formulation.
This is a useful reality check for the wider industry.
Responsible sourcing targets are necessary, but they cannot be achieved through procurement policy alone. Availability, regional regulation, supplier capability, segregation systems, certification capacity and commercial viability all influence whether a company can obtain compliant material at the required scale.
Responsible Sourcing Extends Beyond Palm Oil
BASF’s Care Chemicals business also uses other renewable oils, including coconut and castor oil, in products for cosmetics, personal care, detergents and industrial applications.
Each raw material presents a different set of sourcing risks.
Coconut supply chains often involve smallholders and geographically fragmented production. Responsible sourcing therefore requires more than checking the country of origin. It may involve certification, agricultural practices, working conditions and the economic resilience of farming communities.
Castor oil presents another distinct challenge.
India is central to the global supply of castor beans, while the oil itself is used across plastics, coatings, cosmetics, pharmaceuticals and several specialty chemical applications. BASF has participated in the Sustainable Castor Initiative, known as Project Pragati, since 2016.
The initiative brings BASF together with Arkema, Jayant Agro-Organics and the civil-society organisation Solidaridad. Its purpose is to address social, environmental, health and safety risks associated with castor cultivation.
Participating farmers receive training in areas such as:
Safer use of crop-protection products
Improved agricultural and cultivation practices
Soil protection and crop management
Occupational health and field safety
Personal protective equipment
Social and labour-related expectations
The work contributed to the development of SuCCESS, or Sustainable Castor Caring for Environment and Social Standards. The independently auditable framework covers 11 principles related to responsible castor production.
This approach goes beyond demanding compliance from farmers. It attempts to increase the capability of the supply chain to meet the required standard.
That difference matters.
A procurement system based only on supplier exclusion may remove an immediate risk from one company’s portfolio, but it does not necessarily improve conditions at the source. Supplier development, technical support and farmer training can create a more durable improvement.
Supplier Expectations Must Be Built Into Procurement
BASF’s wider procurement model requires suppliers to comply with applicable laws and internationally recognised environmental, social and governance standards.
Its Supplier Code of Conduct covers areas including:
Environmental protection
Human and labour rights
Child and forced labour
Occupational and social standards
Anti-discrimination
Anti-corruption
Expectations for subcontractors and upstream suppliers
BASF states that suppliers are evaluated on more than price and commercial performance. The company also examines environmental, social and governance factors and expects suppliers to promote similar principles within their own supply chains.
The company uses a risk-based approach rather than treating every supplier identically. Country risk, industry risk, material criticality and BASF’s ability to influence the supplier can all affect the level of scrutiny applied.
Evaluations are conducted through mechanisms including EcoVadis assessments, Together for Sustainability audits and selected Responsible Care audits. When weaknesses are identified, corrective-action plans and follow-up reviews are used to track improvement.
In 2025, BASF reported that 100 sustainability audits were conducted at raw-material supplier sites on its behalf. It also received EcoVadis assessments for 257 suppliers considered to have potential sustainability risks.
The model combines four elements:
Define the expectation. Suppliers need clear environmental, ethical and social requirements.
Identify the risk. Procurement teams must know which materials, countries and suppliers require greater attention.
Verify performance. Questionnaires alone may be insufficient where the exposure is significant.
Correct or escalate. Findings must lead to improvement plans, commercial consequences or, in serious cases, termination of the relationship.
Collaboration Can Reduce Repeated Supplier Assessments
BASF is also a founding member of Together for Sustainability, an initiative created by chemical companies to improve and standardise sustainability assessments across the industry.
Under the model, suppliers can be assessed using a shared framework rather than repeatedly completing different questionnaires and audits for every customer. Participating procurement teams can use recognised assessment information through a common system.
This offers two potential benefits.
First, it reduces duplicated work for suppliers serving multiple chemical companies.
Second, it creates greater consistency in how environmental, social, labour and governance performance is evaluated.
For responsible sourcing to scale across the chemical industry, this type of shared infrastructure may be essential. Thousands of suppliers cannot practically respond to entirely different assessment methods, evidence requests and audit expectations from every customer.
Standardisation does not remove the need for company-specific due diligence, but it can make the underlying process more efficient.
Circular Feedstocks Are Becoming a Sourcing Decision
Responsible sourcing is also beginning to influence the type of carbon and feedstock entering chemical manufacturing.
In 2024, BASF and Encina Development Group announced a long-term agreement for the supply of circular benzene produced from post-consumer plastic waste. BASF intends to use the chemically recycled material within its Ccycled product portfolio.
This expands the procurement question beyond whether a conventional feedstock was sourced responsibly.
Companies must now also consider:
Whether recycled or renewable feedstocks are available
How their origin and chain of custody will be verified
Whether the material meets process and purity requirements
How circular content will be allocated and documented
Whether supply is sufficient for commercial production
How sustainability claims will be supported
Circular sourcing therefore requires close coordination among procurement, R&D, production, quality, sustainability and regulatory teams.
A material may appear attractive from a sustainability perspective but still require extensive technical qualification before it can enter a chemical process. Similarly, a technically suitable material may not support a defensible sustainability claim if its sourcing and allocation records are inadequate.
Procurement Partnerships Can Enable Lower-Carbon Production
BASF’s work with Siemens Energy provides another example of procurement supporting a wider production transition.
In March 2025, BASF commissioned a 54-megawatt proton-exchange-membrane water electrolyser at its Ludwigshafen site. The system was built in cooperation with Siemens Energy and has an annual production capacity of up to 8,000 metric tonnes of hydrogen.
The electrolyser is integrated directly into the site’s chemical-production infrastructure. Hydrogen produced using renewable electricity can be supplied through the existing hydrogen network and used as a raw material for chemical products with a reduced carbon footprint.
BASF estimates that the project has the potential to reduce greenhouse-gas emissions at the Ludwigshafen site by up to 72,000 metric tonnes annually.
Although this is a manufacturing project, it also illustrates the strategic role of sourcing and supplier collaboration.
The transition to lower-carbon chemicals depends not only on laboratory innovation. It requires companies to procure new technologies, secure alternative energy and feedstock inputs, establish qualified partnerships and integrate them into existing production systems without compromising continuity.
What Other Chemical Companies Can Learn
BASF’s approach does not suggest that responsible sourcing has become simple or that every target has been achieved.
Its 2025 palm-certification result shows the opposite. Even a large global organisation can face shortages, regulatory complications and limited availability of materials that meet the preferred sustainability standard.
The more important lesson lies in how responsible sourcing is being managed.
It is increasingly treated as a continuous operating system built around:
Supply-chain traceability
Material-specific sourcing policies
Supplier codes and contractual expectations
Risk-based assessments and audits
Corrective-action management
Smallholder and supplier development
Cross-industry assessment frameworks
Circular and renewable feedstock qualification
Collaboration between procurement and technical teams
For chemical companies, the challenge is no longer deciding whether sustainability belongs in procurement.
The challenge is converting broad commitments into repeatable sourcing decisions that can survive technical review, supplier disruption, regulatory scrutiny and commercial pressure.
Turn Industry Developments Into Better Technical Decisions
Responsible sourcing, circular feedstocks and supply-chain transparency are changing how chemical companies select materials, qualify suppliers, manage compliance and plan future products.
Keeping up with these developments is useful. Knowing how to apply them within R&D, procurement, regulatory, quality and manufacturing decisions is what creates business value.
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Whether your team is responding to new sourcing requirements, evaluating alternative raw materials, strengthening regulatory capability or preparing for the next shift in chemical manufacturing, the platform is designed to help turn industry knowledge into practical action.
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