Environmental and Social Standards.
The BMW Group is a pioneer in terms of corporate due diligence in the supplier network. As early as 2008, we defined comprehensive preventive measures such as contractual obligations to comply with environmental and social standards and stipulated these for the first time when commissioning suppliers for the BMW i3. In 2014, these standards were expanded to include a multi-stage due diligence process covering the procurement of production materials for all vehicle models as well as for non-production-related goods and services. This includes, for example, the contractual obligation to extended environmental and social standards, human rights as well as management systems for occupational health and safety and environmental protection. Every supplier who has a direct business relationship with the BMW Group must contractually pass on these requirements to the respective sub-suppliers.
Commitment to local projects and compliance with environmental and social standards.
The BMW Group is implementing a wide range of measures to establish environmental and social standards for its supplier network. Compliance with defined sustainability requirements is a condition for the award of any contract and verified by means of various measures, including audits. We regularly offer in-depth training to complement this. In the case of critical raw materials, we are getting more involved in the supply chain and participating in concrete local projects as part of our due diligence, for instance. To protect natural resources, we are reducing our use of raw materials as far as possible and increasingly using recycled material instead.
As part of its corporate due diligence, the BMW Group is actively taking responsibility and participating in local projects, based on the principle of “empowerment before withdrawal”. In 2018, the BMW Group joined forces with other partners to create the cross-sector “Cobalt for Development” initiative in Congo. The aim of the project, which is implemented by the German Agency for International Cooperation (GIZ) is to develop and professionalise artisanal mining in the region.
The initiative trains artisanal cobalt miners. Coaching in additional income opportunities for families in artisanal mining areas also reduces the dependence on their children contributing to family income and enables them to attend school.
Eliminating infringements of human rights and environmental standards presents a particular challenge in the case of critical raw materials – for example, for lithium and cobalt, both of which are key components for production of battery cells. The company is therefore sourcing cobalt and lithium directly from the raw material supplier and making it available to battery cell suppliers. In this way, we achieve full traceability of the origin and mining methods of the material and transparency with regard to environmental and social standards. At the same time, we have reduced the use of cobalt in the cathode material in our current generation of battery cells to less than ten percent. The e-motor of the same generation requires no rare earths at all.
As part of a pilot project, the BMW Group used satellite data and big data analyses to achieve far-reaching supply chain transparency, all the way through to the origins of a raw material. The company needs this transparency to be able to track compliance with the strict environmental and social sustainability standards required throughout its supplier network. Based on a single raw material the company procures directly from five suppliers, it was possible to identify 50 subcontractors and 9,000 raw material sources. The results were then linked to data from satellites, geoinformation systems and supply chains, allowing the environmental impact to be monitored in selected regions of the world in real time.
Image: Supply chain mapping from the pilot project with sourcemap and satelligence. © Satelligence, Sourcemap
The BMW Group is the first automotive manufacturer worldwide to equip its cars with tyres using certified sustainable natural rubber and rayon, a wood-based material used to strengthen the tyres. The company will source 22-inch tyres in the first instance exclusively from Pirelli and, from August 2021, will use them in the BMW X5 xDrive45e Plug-in-Hybrid. Certification of the rubber plantations and the complex supply chain for natural rubber and rayon takes place in accordance with the strict standards of the independent Forest Stewardship Council ® (FSC ®). The use of tyres made of certified natural rubber is a pioneering achievement, helping preserve biodiversity and forests to counteract climate change.
As one of the founding members of the Global Platform for Sustainable Natural Rubber (GPSNR), the BMW Group is constantly working to further improve sustainability in the natural rubber supply chain since 2019.
BMW Group license number: FSC® N002012More information
The BMW Group is making raw materials considered to be so-called conflict minerals a special focus of its sustainability strategy. This includes ores where mining or trading is often associated with violations of environmental and social standards. Tungsten is an example of this: Today, it can be found in the vibration alarm of mobile phones and light bulb filaments, as well as drill and milling bits for industrial machinery used in producing cars.
The BMW Group has now created a closed-loop material cycle for this unique metal and is collecting old drill and milling bits at its plants in Germany and Austria for recycling. The secondary tungsten obtained in this way will then be used to manufacture new milling and drilling tools. This reduces the amount of tungsten required by seven tonnes per year. Compared to using primary tungsten, this also reduces energy consumption by 70% and CO₂ emissions by more than 60%.
The BMW Group and BASF SE commissioned a scientific analysis of the water use of different lithium mining methods in South America from the University of Massachusetts Amherst and the University of Alaska Anchorage in late 2020. The study will investigate the impact of lithium mining on local water resources and the surrounding ecosystems. The aim is to improve the scientific understanding of the relationship between fresh water and lithium brine aquifers, to evaluate different technologies and to reduce the uncertainty regarding their possible environmental impact. The study will provide companies with a scientific basis to make more informed decisions on sustainable lithium mining in Latin America in the future.
Sustainable raw material management.
Raw materials are the basis for every industrial production process. However, following the path taken by raw materials from the mine to the final product is highly complicated due to the multi-layered and dynamic global supply chain. This is primarily due to the interconnected trade and processing levels and raw materials trading on the exchange.
It is therefore a major challenge to implement sustainability standards from the extraction stage onwards. In light of this, the BMW Group concentrates on selected, relevant or critical raw materials and supply chains. We analyse and evaluate both the supply chains and the corresponding need for action and develop measures based on this, which we then implement together with our suppliers.
For this purpose, we are also active in cross-industry initiatives supporting sustainable dealings with raw materials. In line with this, we have been supporting the Aluminium Stewardship Initiative (ASI) since December 2012. As a material used in lightweight design, aluminium plays an important role because it is considerably lighter than steel. The goal of ASI is to establish a standard for responsibly produced aluminium across the entire value chain: from responsible company management to compliance with environmental standards to social standards.
From a sustainability perspective, in addition to aluminium, steel as a raw material is also a focal point. Steel is proportionally the most widely-used raw material in our vehicles. Its production is highly energy intensive and therefore responsible for the largest portion of CO₂ emissions in the manufacturing phase. For this reason, we are developing measures together with our suppliers to increase the transparency of the supply chain and to unlock CO₂ potential.
Due to regulatory demands, the issue of conflict minerals is of major relevance. According to the current legal position, the raw materials tin, tungsten, tantalum and gold are conflict minerals. The extraction of these minerals helps finance ongoing civil wars in the Democratic Republic of the Congo and its neighbouring states. To prevent the financing of armed groups via these minerals, legislation was introduced in the USA – the so-called Dodd Frank Act. In that country, all companies listed on the US stock exchange were required to disclose whether these conflict minerals were necessary for the production or functioning of their products, as well as whether they were extracted in the DR Congo or its neighbouring states.
Renewable raw materials.
Traditionally, some products in the automotive industry contain natural materials. In the current discussion about limited oil-based resources and the importance of product sustainability, their proportion is constantly increasing. Natural materials are sustainable and offer advantages over oil-based primary materials in a life cycle assessment. However, when using natural materials, we should always consider their origins. Renewable raw materials grow in forests, plantations and on fields, where BMW’s sustainability standards must also be guaranteed. One possibility is the use of certificates and seals, which already exist on the world market for a large number of products, particularly in the lumber and food industry. Taking sustainability certificates into account when selecting materials guarantees compliance with basic principles with respect to social, environmental and compliance issues and is recognised worldwide.
In 2013, the BMW Group became the first car manufacturer to incorporate wood that was certified as sustainable into its products: The BMW i3’s interior trim made from fine eucalyptus is certified by the well-known Forest Stewardship Council (FSC).
We will continue and intensify these efforts to develop a sustainable and transparent supply chain for natural materials by engaging in dialogue and cooperation with our suppliers and NGOs and by participating in industry initiatives.
Supply chain due diligence.
In accordance with globally accepted guidelines and principles, the „BMW Group supplier sustainability policy“ sets out the core sustainability requirements for all suppliers of BMW Group as well as for their suppliers (sub-suppliers). The requirements are specified accordingly, e.g. in the purchasing conditions for direct and indirect material, which are legally binding.
Sustainability Risk Management is an important measure to ensure the implementation of our sustainability standards in the supply chain. Basically, it consists of three different steps:
1. Identifying risks.
The BMW Group uses a specific sustainability risk filter to identify risks. This filter considers regional as well as product-specific risks. These risks can be country specific social risks, e.g. child or compulsory labour. We also consider health and safety risks caused by dangerous process materials and substances as well as ecological risks like the harmful interference with nature and emissions.
2. Conduct self-assessment.
Every production- and delivery location of the supplier has to conduct a self-assessment before nomination by filling out an industry-specific sustainability questionnaire regarding the implementation of ecological-, social- and governance standards. Among other things, information about compliance with human rights, the prohibition of compulsory labour and resource-saving use of materials is collected. Furthermore, the existence of an environmental management system according to ISO 14001 or EMAS is examined. These and other aspects are relevant criteria for the awarding decision.
3. Conducting assessments and audits.
Sustainability violations can be identified at supplier locations through the sustainability risk filter, media-screening and/or the sustainability self-assessment questionnaire. These selected locations are then checked and qualified through independent sustainability audits or sustainability assessments of the BMW Group. Sustainability audits are conducted by external auditors while the sustainability assessments are executed by employees of the BMW Group.
Additionally, the BMW Group uses the following tools, to become aware of potential sustainability violations in the supply chain:
- Media screening (e-listening): an IT-tool which continuously searches the web for sustainability violations in connection with (potential) BMW suppliers.
- Human Rights Contact Supply Chain: a grievance mechanism available via phone +49 (0)89 / 382-71230 and email (email@example.com) to directly report sustainability violations in the supply chain of BMW Group.
Furthermore, we are conducting in-depth supply chain assessments to safeguard specific supply chains. These assessments are conducted around products, which have been defined as sustainability light house projects and have been prioritized in terms of risk. The goal of these supply chain assessments is to establish transparency from the BMW Group up to the suppliers of raw materials (supply chain mapping). In addition, we aim at evaluating and improving the sustainability performance along the entire n-tier supply chain by applying the above mentioned three-step sustainability due diligence process. Supply chain assessments enable us to react quickly to possible sustainability violations and detect supply risks early. The gained insights on e.g. specific sustainability industry initiatives or sustainability standards serve as input for commodity and nomination strategies, product and series strategies as well as communication and marketing strategies.
Improve supply chain performance.
The goal of our Due Diligence process is to avoid sustainability violations and to improve sustainability performance of our supply chain in the long run. Based on the corrective actions from self-assessments, audits and onsite assessments as well as its integration in our procurement process, we enhance the performance of our suppliers continously. Capacity building measures for supplier development like trainings and events support this development. A progress report based on selected key performance indicators is available under downloads.