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Page Overview: BMW Group - Responsibility - Suppliers

Supply Chain Management

Supplier management.

Global supplier network.

Our global supplier network makes a major contribution to value creation, quality and innovation and hence to the success of the BMW Group. Suppliers therefore have a significant impact on our sustainability performance and the sustainable development of society.

We work with around 13,000 suppliers in 70 countries. It is therefore essential that our partners fulfil the same environmental and social standards we set ourselves. The BMW Group Supplier Sustainability Standard, which requires compliance with internationally recognised human rights, as well as labour and social standards, forms the basis for this.

 

BMW Group employees talking to a supplier.

Our collaboration with our suppliers is based on a mutual understanding of product and production quality, security of supplies, competitive prices and innovation, as well as the continuous integration of our sustainability Faced with complex global supply chains, involving a large number of suppliers and sub-suppliers, these goals present a considerable challenge, but also a great opportunity.

To ensure a holistic approach to sustainability throughout our supplier network and guarantee continuous improvement, we focus on two main areas.

First, we manage and minimise risk, by identifying and analysing potential sustainability risks throughout the supply chain in a risk management process. since 2009, we have been asking suppliers to assess their sustainability management and related activities. Supplier production facilities that are at high risk of breaching sustainability requirements and facilities suspected of such a breach are subject to independent audits.
Second, we take advantage of opportunities and work with our suppliers to leverage potential, for example, in the area of resource efficiency, by training and enablingour employees and suppliers, as well as active involvementin initiatives and with stakeholders.

Our approach focuses, on the one hand, on ensuring broad application of sustainability standards through comprehensive risk management – i.e. at all our direct suppliers – and, on the other, through in-depth analysis of specific raw materials or supplies throughout the entire value chain.

The BMW Group recognises outstanding supplier innovations and development achievements with the BMW Supplier Innovation Award. 

Read more about how we work with suppliers to constantly improve and ensure sustainability throughout our supplier network. Learn about the tools and measures we use to minimise risks and exploit opportunities.

Supply chain due diligence.

Sustainability Risk Management is the most important measure to ensure the implementation of our sustainability standards in the supply chain. 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.

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.”

 

Downloads.

Carbon Disclosure Project (CDP).

We have been taking part in the Supply-Chain-Program of the CDP since 2014. In the year 2016, we have already achieved a CO2 reporting for 72% of the BMW Group purchasing volume by our suppliers. 

CDP is a global non-governmental organisation with the goal of reducing energy- and resource consumption and thus counter climate change. BMW and many more automotive OEMs are taking part in the CDP Supply Chain Program. In 2017, it was a total of 100 global enterprises with almost 10,000 inquired suppliers. By participating in this program, suppliers can record their resource consumption on a universally recognised platform, which is harmonised with the global climate discussion.

We annually invite suppliers to report their resource consumption, CO2 emissions and improvement potential to us via CDP. These suppliers are selected by their sales volume and emission- and consumption relevance. With the help of this report we can rate suppliers according to their efficiency, set impulses to save energy and resources as well as track their development over time. 

Thereby, the transparency of the supply chain is significantly improved. In the last two years, we have successfully integrated CDP supply chain into many buying processes. We continue to consistently pursue this integration and further the standardisation through the joint organisation of the European automotive industry “Drive Sustainability”. 

Currently, 21% of our overall turnover is already covered by a detailed scope-1 and scope-2 reporting by our suppliers. After the aspired coverage of the purchasing volume is expected to be met in 2017 the focus will shift towards the diffusion of the CO2 emissions in the supply chain (scope 3). Suppliers have already begun to transmit CDP supply chain to their suppliers to improve scope-3 transparency. On the basis of the progressive transparency the main focus is shifting more towards lowering absolute emissions within the supply chains (e.g. through increasing the percentage of renewable power generation and other measures). 

We consider the CDP-scoring between A and D as a valuable indicator on this path. In the medium-term, we aim at leading our suppliers at least to a B scoring (Climate Change Management) if they do not aim at Leadership-Level A themselves (status 2015 BMW average C, global average D). In 2016, 27% of our CDP-suppliers already reached an A or B scoring. An A-level score with an emission goal, which is compatible with the global 2-degree-goal (e.g. through SBTI) constitutes the absolute “golden standard”. This is the standard we apply to ourselves. 

 

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 pewter, 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.

FURTHER LINKS.

Conflict minerals.

Duty of care regarding conflict minerals.
To exclude the use of so-called “conflict minerals” and prevent the financing of conflicts as well as violations of human rights by the mineral trade, the BMW Group is pursuing the goal of creating complete transparency in the supply chains that handle conflict minerals by 2022. Furthermore, the BMW Group actively advocates for continuously increasing the share of minerals from certified smelters.

What are conflict minerals?
The raw materials of tin, tungsten, tantalum and gold can originate from the Democratic Republic of Congo and its neighbouring states where violent conflicts are financed by their sale. In these countries, the raw materials are frequently extracted under conditions that lead to violations of human rights.

What are tin, tungsten, tantal and gold used for?
The four minerals of tin, tungsten, tantalum and gold are used in many products, primarily in the electronics industry, and are thus elements of a number of vehicle components. 

What is the Dodd-Frank Act about and what does the new mineral regulation which the European Parliament implemented at the start of 2017 entail? To what extent is the BMW Group affected?
The Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is a law that was passed in the USA in 2010. It requires all companies listed in the US to account for the minerals used in the production of vehicle components. Products of which the origin cannot be reliably determined must be identified as not conflict-free. The BMW Group is not affected by this law as the company is listed on the German stock exchange (DAX).

The regulation implemented by the European Parliament at the start of 2017 is also expected to prevent the financing of conflicts and violations of human rights by the mineral trade. The law requires that all direct EU importers of raw materials subject their supply chains to a duty of care assessment. We are also not affected by this regulation as the BMW Group does not import any raw materials into the EU. So-called conflict minerals can therefore only reach the products of the BMW Group indirectly, i.e. via numerous supplier and production steps. 

What role do conflict materials play in the BMW Group?
Taking into account the sustainability strategy and in the interests of our stakeholders, conflict minerals are becoming increasingly relevant for the BMW Group. The BMW Group therefore voluntarily undertakes to only use raw materials of which the extraction, transport and trade neither directly or indirectly contribute towards the financing of conflicts and violations of human rights.
Our goal is to create full transparency in the supply chains that handle conflict minerals by 2022. On the basis of this transparency, we intend to continually increase the share of minerals from certified, conflict-free smelters.

What is the BMW Group doing to achieve this goal?
On the one hand, our activities are focussed on direct suppliers (1) and, on the other hand, the support of initiatives (2) that promote the sustainable trade of minerals worldwide.

1: Our goal is to prevent the financing of armed conflicts. Within the course of the procurement process, we therefore inform all potential parts suppliers about our sustainability standards and systematically request that they complete a sustainability questionnaire on conflict minerals and regularly update it following assignment. This way we ensure more transparency and freedom of conflict in our supply chains on an continual basis. The sustainability standard of the BMW Group is available to the public atsupplier sustainability policy

2: The BMW Group joined the “Conflict Free Sourcing Initiative” (CFSI, http://www.conflictfreesourcing.org) of the Electronic Industry Citizen Coalition in 2017, which helps companies promote the sustainable management of conflict minerals with the aid of standardised tools and standards. The Conflict-Free Smelter Programme (CFSP) aims at encouraging smelters to undergo audits and become certified in order to guarantee a duty of care in the management of conflict minerals.

In addition, the BMW Group has implemented numerous measures based on the “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” of the OECD (Organisation for Economic Co-operation and Development). These include a strategy that empowers companies to respond to identified risks.

Furthermore, the BMW Group organises information events and provides training courses for employees and suppliers in order to increase awareness of conflict minerals.

If you have any queries, please write to: conflictminerals@bmwgroup.com.

Projects.

Sustainable Kenaf.

Sustainable kenaf project.
Sustainable kenaf project.
 Sustainable kenaf project.
Sustainable kenaf project.
Sustainable kenaf project.

Supplier Innovation Award – sustainability.

Every two years, suppliers are awarded with the BMW Supplier Innovation Award for exceptional innovations in six categories, one of them being sustainability. Innovations represent the foundation of the BMW Group’s economic success and a sustainable future of the company. The BMW Group recognises the global sustainability challenges as a chance to develop innovative products and services. In this context, suppliers constitute important partners and contribute significantly to the implementation of new developments. Therefore, the BMW Group would like to honour this cooperation in due form with the Supplier Innovation Award.

The winners of the BMW Supplier Innovation Award 2015. This was the third time the BMW Group bestowed the award on supplier companies to honor their most innovative developments.

The award ceremony was held under the patronage of Klaus Draeger, Board Member Purchasing and Supplier Network at BMW AG.

About 200 top suppliers, eight awards and two innovative new cars took center stage at the ceremony for the BMW Supplier Innovation Award 2014.

In the year 2016, the BMW Group awarded the company Huntsman Polyurethanes with the Supplier Innovation Award in the category ‘sustainability’. The polyol and formaldehyde scavenger developed by Huntsman reduces total emissions from soft foams in the vehicle interior by factor ten. Huntsman is the only supplier to meet the BMW Group’s ambitious requirements for moulded foams. 

Supplier Innovation Awards.

Further information.

Press release Supplier Innovation Award 2016.