Page Overview: BMW Group Supply Chain - Due Diligence
Nachhaltige Lieferkette

Due Diligence in the Supply Chain.

The BMW Group is committed to upholding environmental and social standards across our supplier network. This includes a particular focus on human rights, the associated environmental standards and our own ethical principles. A key point is the management of raw materials, where our priority is to ensure responsible extraction. Another important factor influencing human rights and the environment is the circular economy – because that will help make us less reliant on primary raw materials.

Ensuring transparency over intricate, dynamic supply chains and the traceability of flows of goods is extremely challenging. And yet both aspects are key prerequisites for our due diligence processes. That’s why we work constantly to strengthen collaboration with our partners in the supplier network. To help us do that, in the future the BMW Group will use the data ecosystem Catena-X, which allows data to be exchanged throughout entire value chains – securely, in standardised form, and with each company maintaining full control of their data.

We source components, materials and services from a large number of production and delivery locations, and our suppliers are bound by contract to meet our sustainability standards by ensuring the social and environmental due diligence specifications in our agreement are meet. The stipulations are set out in the appendix to our International Terms and Conditions/General Contractual Terms for Indirect Purchasing, in the BMW Group Supplier Code of Conduct.

If we have reason to suspect that a Tier 1 supplier of ours (holding a direct contract with us), or a sub-supplier (not holding a direct contract with the BMW Group) may be in breach of these standards, we launch preventive and remediation measures. These are systematically established in our processes.

Responsible supply chain management.

Nachhaltiges Lieferkettenmanagement

Our multistage due diligence process firmly establishes responsibility for the supplier network in all the relevant departments. Environmental and social standards are integral to component development, commodity strategies, procurement processes (where they are a prerequisite for awarding contracts), supplier development and our target system.

Due diligence in the supplier network. Our process.

When establishing corporate due diligence in our business processes, wherever possible we draw on standardised industry procedures and cross-sector initiatives that we have been committed to over the years. The application of standards allows us to reduce the amount of duplicate work, streamline our activities in the supplier network and increase the effectiveness of measures introduced as a result of our processes.

Geschäftsabläufe

To meet due diligence requirements, we use tools such as:

ONLINE-ASSESSMENTS.

Online assessments, based primarily on the standard sustainability questionnaire of the industry initiative Drive Sustainability

ONSITE-ASSESSMENTS.

Onsite assessments, such as the VAP audit of the Responsible Business Alliance (RBA), and the Responsible Supply Chain Initiative (RSCI) Assessment, which we co-developed in conjunction with the German automotive industry association VDA

Based on these assessments, we agree preventive and, if necessary, remediation measures with the supplier concerned. These must be implemented ready for production launch or by an agreed deadline. We also use standard procedures to respond to specific complaints and notifications of potential breaches.

In the automotive world, developing a product takes a long time, so the purchasing process lasts several years. This means due diligence may be carried out up to two years before the supplier is actually awarded the contract. During this time, we introduce comprehensive preventive measures and control mechanisms. In occupational safety, for example, individual preventive measures take several months to implement. For all these procedures and measures to succeed, perfect timing is essential: they have to be applied at exactly the right point in the purchasing process.

The Cluster Value Creation Strategy supports our overarching goals in purchasing, development and production. It sets out an extensive catalogue of relevant issues that cover the entire value creation process – including purchasing – so that we can develop the best possible solutions. We also define how potential and existing suppliers must implement the requirements and their corresponding measures to ensure environmental and social standards are met. Implementation can take years and includes aspects such as the certification of a production facility’s compliance before supplies begin. We also agree further levers with our suppliers, around CO2 reductions and a circular economy for components and component groups.

Targets relating to responsibility for due diligence in the supplier network and CO2 reductions are integral to the BMW Group’s target system and a direct part of the target agreements for our senior executives and managers.

The BMW supplier database documents results and information on abstract and concrete risk analyses as well as preventive and remediation measures. The contents of these measures are linked to the relevant supplier location and are the result of procedures and tools such as the online or onsite (RBA, RSCI) assessments. The database is a source system for applications for mapping procurement and purchasing processes, reporting and target management.

The BMW Group Supplier Code of Conduct sets out the company’s sustainability standards for its supplier network in greater detail. Updated in December 2022 in the context of the Act on Corporate Due Diligence in Supply Chains, it offers more concrete explanations of the guiding principles for the global supplier network outlined in the BMW AG Policy Statement on Respect for Human Rights and Corresponding Environmental Standards. It is an integral part of our Purchasing Terms and Conditions and details:

  • Our due diligence procedures
  • Key human rights and environmental risks (e.g. forced labour, slavery, occupational health and safety, handling of hazardous substances and waste) identified by risk analysis
  • Our requirements and expectations of suppliers to meet human rights and environmental requirements identified on the basis of risk analysis

The obligation to comply with the minimum requirements in this document is addressed in the invitation to tender and bindingly stipulated in the BMW AG Purchasing Terms and Conditions for production- and non-production-related goods and services.

The Purchasing Terms and Conditions of BMW Group supplier contracts contain specific clauses based on various external frameworks and specifications. These include:

  • The International Charter of Human Rights, consisting of the UN’s Universal Declaration of Human Rights (UDHR), the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR)
  • The UN Guiding Principles on Business and Human Rights
  • The ILO Declaration on Fundamental Principles and Rights at Work
  • The ILO Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) and ILO norm 169
  • The OECD Guidelines for Multinational Enterprises, and the Ten Principles of the UN Global Compact, which we signed in 2021

Based on these documents, the BMW Group has various expectations of its suppliers, which are listed in the following in-house standards:

Sustainability is a crucial component in the BMW Group’s corporate strategy. The Purchasing and Supplier Network division adopts a particular focus on compliance with environmental and social standards, human rights, the conservation of natural resources and the reduction of CO2 emissions in the supply chain.

The BMW Group has set itself comprehensive goals around the implementation of due diligence in the supplier network, which are reflected in the remuneration of senior executives and managers.

For example, if a supplier is potentially at risk of failing to comply with sustainability standards, we aim to support them as soon as we can with preventive measures. With direct component suppliers, we focus on corrective preventive measures to mitigate their potential environmental and human rights risks both when the contract is awarded and at start of production. We then follow up on the implementation of these measures with control mechanisms such as certifications and onsite assessments.

This code explains how we promote human rights and fair working conditions and implement the Core Labour Standards of the International Labour Organisation (ILO). Key focal points include a ban on child and forced labour, equal treatment of all employees, the right to health and safety in the workplace and freedom of association. The BMW Group Code on Human Rights and Working Conditions is written for our own employees as well as suppliers and authorised partners, and we actively communicate it.

This policy statement outlines our commitment to human rights and the associated environmental standards. It also outlines how we approach the issue in our dealings with our business partners. We want to be sure that fundamental rights are upheld not just in our own business but also in our global up- and downstream supply chains. To realise our aim, we stringently require our suppliers and business partners to abide by our standards – not just through our own contractual agreement with them but also through their agreements with their suppliers and partners in turn.

Commitment to initiatives.

We believe the only way to uphold environmental and social standards in complex and dynamic supplier networks is through standardisation and cooperation. That’s why we have long been committed to various industry-wide and cross-sector initiatives working to help make this happen. Our goal is to develop and standardise effective measures for ensuring responsibility for due diligence and apply them as an integral part of our business processes.

Key initiatives in the automotive industry include:

In 2020 we joined forces with other companies, associations, unions, NGOs and initiatives – in collaboration with the Federal Ministry of Labour and Social Affairs – to develop potential ways of improving the human rights situation along global supply and value chains of the German automotive industry.

In 2022 this cooperation delivered its first results, with the publication of a set of guidelines for ensuring the five key elements of human rights due diligence: policy statement, risk analysis, measures, reporting and complaints procedure. Entitled Instructions for the Five Core Elements. the guidelines form the framework for our due diligence programme and for the contents and requirements of our supplier contracts. They are a closed set of self-contained guidelines addressing the requirements of the German government’s NAP (national action plan for business and human rights - Nationaler Aktionsplan Wirtschaft und Menschenrechte der Bundesregierung) and also take into account and specifically highlight the requirements of the Act on Corporate Due Diligence in Supply Chains.

The BMW Group was a key contributor to these guidelines and follows their recommendations. We apply their standardised procedures, such as the online assessment of the Drive Sustainability initiative, and train our suppliers on Sector Dialogue guidelines as well.

This working group develops standardised methods and procedures, and we have been a part of it for many years. Over the last few, we have been a key contributor along with other manufacturers, suppliers and associations to the development of a standardised online assessment procedure for evaluating the sustainability performance of companies in the automotive supply chain. The assessment is carried out by the VDA’s Responsible Supply Chain Initiative RSCI e.V. It was piloted in 2022, and we have been implementing it ever since, with a focus on working conditions as part of our due diligence programme.

This industry coalition advocates responsible business conduct in global supply chains, and we have been represented on its Board of Directors since 2024. As part of the RBA, we have been involved in a range of initiatives over the years, including the Responsible Minerals Initiative (RMI), and we have adopted their procedures. Other RBA procedures we use include:

  • RBA Voices, a workers’ voice platform that includes worker surveys, onsite assessment support, mobile learning, and feedback and grievance reporting
  • RBA Validated Assessment Programme (VAP), the leading standard for onsite compliance verification and effective, shareable assessments conducted by independent, third parties

This initiative brings together automotive manufacturers who are jointly committed to improving sustainability in the automotive value chain, and we have been a member of it since 2011. Drive Sustainability is where we carry out the standard online assessment that we initiated in 2013. This procedure – and the compliance process behind it – evaluates suppliers’ organisational compliance with international provisions and standards as well as their internal guidelines and targets along the supply chain. In addition, Drive Sustainability regularly organises supplier training courses in different countries around the world to empower suppliers. The series of trainings tackles topics from the fields of social and environmental sustainability, business conduct and compliance, and supplier management. Content is based on the global guiding principles for sustainability in the automotive industry but tailored to meet the requirements of the country in which the course takes place. The idea is for local legislation, best practices and real-world examples to provide sustainable solutions and ideas for participants.

Circular economy.


At the BMW Group, the circular economy is very much in the focus as we strive to make cars that require fewer resources. Instead of letting raw materials go to waste, a circular economy aims to reuse any materials that we can recover from our own production process or after the end of the product lifecycle. So, by making the best possible use of these “secondary materials”, we keep resources circulating, utilise them for longer and preserve their value.

This opens up a whole range of opportunities, not just for industry as a whole but also for the automotive sector and the BMW Group as well: by reusing valuable resources, we can reduce the need for primary raw materials and therefore the impact of their extraction. Secondary materials also reduce the carbon footprint of our cars considerably.

Because of its wide-ranging potential, circularity is a strategic focus topic at the BMW Group, and we are working to come ever closer to realising our ideal of a circular economy. As we do so, we are examining every aspect of the value chain, from Design for Circularity, which increases the utilisation of secondary raw materials for parts and components, to the effective recycling of used vehicles. In addition, our venture capital arm, BMW i Ventures, invests in startups working on various circular solutions.

Kreislauf

Risk analysis.

The BMW Group monitors and evaluates sustainability risks in business relationships within the supplier network with potential as well as active supplier sites. We use various in-house and external data sources to identify and assess abstract environmental and human rights risks, such as country- and commodity-specific indicators and media analyses at company and site level. Risk analyses for Tier 1 suppliers include a standardised sustainability questionnaire (online assessment) and external audits (onsite assessments), while those for Tier n suppliers are based on supply chain mapping. The BMW Group strives continuously to increase transparency along the entire supply chain.

Performance of regular risk analyses.

The BMW Group conducts comprehensive risk analyses on supplier sites, whether tendering or already active. Investigations are underpinned by two key cornerstones: regular analyses of Tier 1 suppliers on the one hand, and as-needed analyses of Tier 1 and Tier n suppliers on the other. The latter are carried out based on tip-offs and complaints from the whistleblowers’ and complaints procedure. To find out more, click here.

 

Regular risk analyses of Tier 1 supplier sites consist of an abstract and a concrete component:

To identify and evaluate abstract risks to human rights and the environment, we investigate from several perspectives, including the country, business purpose, commodity group, location and corporate perspectives, based on internal and external data sources. This includes various internal and external indicators and media analyses through which abstract indicators can be identified.

One example is the standardised risk map of the Responsible Business Alliance (RBA). This incorporates external indicators and relates them back to the results of global concrete risk analysis from worldwide onsite assessments at production facilities. In conjunction with the BMW Group, the RBA has updated the risk map in accordance with the Act on Corporate Due Diligence in Supply Chains and made it available for all members to use.

Based on the risk map, potential risks can be identified, and their probability, inherent severity and potential contribution to causation can be shown. To integrate the risk analysis into our purchasing processes, we award a sustainability risk score, which appears on monitoring dashboards for our specialist purchasers to use. On this basis, suitable procedures and control measures (e.g. online and/or onsite assessments) can be launched during procurement, strategic decision-making and supplier development projects. 

For concrete risk analyses with Tier n suppliers, depending on the degree of risk and responsibility (contribution to causation, degree of influence) at the site concerned, the BMW Group also uses a series of procedures and controls, some of which are identical to those outlined above. These include the standardised online assessment of the Drive Sustainability initiative as well as onsite assessments by the RBA, the Responsible Supply Chain Initiative (RSCI) and BMW employees working in conjunction.

Findings from concrete risk analyses (onsite and online assessments) provide the basis for preventive and remediation measures. By comparing them with those from the abstract risk analysis, the actual level of risk at the site can be substantiated.

The BMW Group has defined a set of Minimum Requirements at Site Level for its supplier network. These are based on the findings of risk analyses and outline the implementation of preventive measures to mitigate potential negative impacts, for example on the supplier’s employees. Underpinning them is the online assessment of the Drive Sustainability initiative, which we continue to enhance in cooperation with other automotive manufacturers. The application of standards allows us to reduce the amount of duplicate work and operate more effectively.  

The online assessment requires Tier 1 suppliers to provide information on their sustainability practices but also on their preventive and remediation measures and control mechanisms (e.g. ISO certifications). In some situations, the same is required of Tier n suppliers as well. The information they provide is then verified by an independent third party for accuracy and completeness. With new suppliers, details are gathered during the procurement process; with existing suppliers, information is updated on a regular basis.

If the online assessment reveals any shortfall from our requirements, the specialist purchasers and the supplier concerned agree preventive measures, which are then followed up with a deadline. For more on preventive measures, click here.

Since 2021 we have been using the cross-industry audit programme of the RBA, primarily for major supplier sites. With both initiatives, members share their audit results on platforms to avoid multiple checks on the same supplier and increase acceptance among audited companies as a result.

When we identify a supplier as having a high abstract risk, we carry out additional inspections at their site, normally through independent assessors and in some cases through our own. To do this, we are committed to the Responsible Business Alliance (RBA) and the German Association of the Automotive Industry, VDA. Within the VDA, we have developed an assessment programme in conjunction with other carmakers and suppliers specifically for the automotive industry, which is dominated by medium-sized companies. The programme has been implemented by the specially established Responsible Supply Chain Initiative (RSCI) since 2022.

Complaints procedure and whistleblower system.

To fulfil our incident-related due diligence obligations with Tier 1 and Tier n suppliers, we use a range of different instruments and channels. These include the Supply Chain Response Team, the BMW Group Human Rights Contact, the standardised complaints procedure RBA Voices, and media screening. Our aim is to ensure our business activities have no negative impacts on human rights or the environment and that any substantiated tip-offs or notifications are remedied by agreeing corrective measures. To help us do this, we use our own and existing instruments, which are available not only to our own employees but also to suppliers and other third parties.

If a supplier refuses to implement the corrective measures, we may make the necessary changes to the supply chain. We may also temporarily suspend business relations with them, if necessary, while risk mitigation is carried out. Business relationships are only terminated if there are no other effective means at our disposal and we cannot exert any more influence.

We use automated web crawlers to carry out global media monitoring and identify potential and actual risks with Tier 1 and Tier n suppliers.

The BMW Group also uses supply chain assessments to identify risks with Tier n suppliers located downstream in the value chain, between Tier 1 suppliers and raw material extractors. Here, impacts are determined by supply chain mapping and with the help of media and logistics data, among other things.

Various complaints procedure are in place to allow in-house and external whistleblowers to flag up potential human rights violations and associated breaches of environmental standards. This allows us to identify and address risks early on and, if needed, to provide suitable remedial support. Confidentiality and the protection of whistleblowers is our top priority, and grievances can be reported anonymously. In keeping with our Group-wide policy, we do not take any steps to identify anonymous informers.

As well as our established grievance channels of BMW Group Compliance – including the SpeakUP Line and ombudsperson (for more information, click here) – we operate supply chain-specific complaint channels for whistleblowers to use.

In addition to our own complaints procedure, since 2021 we have been using the standardised application of the Responsible Business Alliance (RBA). In addition, as part of a working group of the automotive industry’s Sector Dialogue, we have been working to develop a complaints procedure to serve the entire sector since 2020.

Overview of complaints procedure (simplified), according to Section 8 of the Act on Corporate Due Diligence in Supply Chains

Compliant process

As part of the complaints procedure, we use metrics to gauge potential and actual sustainability violations in our supplier network and the risk they could pose to human rights and the environment in the future.

Prevention and remediation.

Prävention und Abhilfe

In selecting our Tier 1 suppliers, we use standardised procedures that are integral to our procurement process to address and work on expectations around human rights and the environment. These procedures include the Drive Sustainability online assessment and the onsite assessments of the Responsible Business Alliance and the Responsible Supply Chain Initiative.

The BMW Group Supplier Code of Conduct is an integral part of our purchasing terms and conditions. When signing contracts with our Tier 1 suppliers, we obtain their assurance that they will comply with and address our senior management’s requirements around human rights and environmental standards along the supply chain. By signing a contract with the BMW Group, suppliers enter an obligation to implement the necessary preventive or remedial measures by the time production begins or by an agreed deadline. They also confirm that, depending on the degree of risk, they will ensure their sub-suppliers comply with our agreements and take follow-up action accordingly. As part of our internal target management system we assess how far the externally validated preventive measures have been implemented when production commences. We also offer our suppliers due diligence training on this and other relevant measures and verify the documentation of courses carried out by the supplier for their respective area of business.

Another important preventive measure for ensuring Tier 1 suppliers comply with human rights standards is the agreement of suitable contractual control mechanisms, such as onsite assessments, ISO certifications on environmental and occupational protection systems, and their risk-based implementation.

KEY PREVENTIVE MEASURES AND CONTROL MECHANISMS.

Tier 1 suppliers.

Tier 1 suppliers are suppliers that hold contracts directly with the BMW Group.

Suppliers with more than 500 employees must have a social and environmental sustainability manager and a code of conduct.

Those with more than 1,000 employees must publish a sustainability report and have a dedicated employee to oversee sustainability risk management.

Tier 1 suppliers with more than 50 employees must have a policy on working conditions and human rights for their business area. This must address key topics such as child labour, young workers, salaries and benefits, working hours and modern slavery. They must provide suitable training on all of these issues for their staff.

To be commissioned, relevant suppliers with more than 500 employees must have an ISO 45001-certified occupational health and safety management system. ISO 45001 is a global standard designed to integrate occupational health and safety protection into everyday corporate and business practice and demonstrably reduce the risk of injury, accidents and work-related illness among staff. It stipulates a series of requirements for what it calls an ‘occupational health and safety management system’, while also offering suitable instruments and measures to implement it. As soon as the management system is established and ready for certification, an independent assessor audits it to ensure it meets all the specifications. The audit process takes place not just once but annually, as part of an onsite assessment in the company seeking certification. Methodological aspects such as depth of testing, scope and required competence are officially defined in an international set of rules. To ensure the norms are fulfilled, the assessors inspect not just the processes but also examples of their implementation. In addition, the audit examines the implementation of process descriptions and the fulfilment of legal and other requirements.

With accredited ISO 45001 certification, various processes are examined, assessed and confirmed, including:

  • Safety standards in the provision and maintenance of places of work, work stations and work equipment
  • Suitability of protective measures against the effects of chemical, physical or biological substances
  • The presence of measures to prevent excessive physical and mental fatigue, especially caused by inappropriate work organisation with regard to working times and breaks
  • Adequate training and instruction of employees

Tier 1 manufacturing suppliers with more than 50 employees must have an environmental protection policy and environmental control mechanisms in place, such as a certified environment management system.

They must demonstrably commit to integrating active environmental protection into their business and continuously enhancing their environmental performance. For this reason, suppliers are not commissioned unless they have an environment management system in place that has ISO 14001 or equivalent certification.

The global ISO 14001 norm aims to establish active environmental protection as a fixed part of corporate practice and everyday business in order to continue improving companies’ environmental performance. To achieve this, it stipulates that an environmental management system must integrate environmental aspects effectively and sustainably into every area and process of a company. The general guidelines on implementation list suitable tools and measures for practical implementation of ISO 14004. When the management system is established in the company and ready for certification, it is audited and verified, again by an independent assessor. Audits are carried out annually to ensure all norms are met. They are mainly carried out onsite, at the certifiable facility. Methodological aspects such as depth of testing, scope and required competence are officially defined in an international set of rules. To ensure compliance with the norms, the assessors inspect not just the processes but also examples of their implementation in business processes. In addition, they carry out spot checks to ensure legal and other requirements are fulfilled.

Accredited ISO 14001 certification examines, assesses and confirms various aspects, including:

  • The establishment of environmental targets at strategic or operative level to improve systems or performance
  • The introduction of operational control measures for dealing with environmental issues
  • Monitoring and measuring to assess environmental performance and achievement of desired outcomes
  • Continuous preservation and acquisition of new knowledge and skills around environmental issues
  • Communication to raise awareness or provide transparency and reassurance to interested parties

Tier 1 suppliers with more than 500 employees must publish a sustainability report and a code of conduct.

You will find a full list of requirements here.

Tier n suppliers.


Tier n suppliers operate in upstream stages of value creation and do not have a direct contractual relationship with the BMW Group. This means that we can only reach them via the obligations of our Tier 1 suppliers.

Tier 1 suppliers with more than 1,000 employees are required to implement preventive measures to manage Tier n suppliers. This includes providing them with sustainability requirements around identified risks relating to human rights and working conditions, e.g. child labour, young workers, remuneration and benefits, working hours and modern slavery (i.e. slavery, servitude, forced labour and human trafficking), freedom of association and collective bargaining, the rights of minorities and indigenous peoples, and occupational safety risks.

Tier 1 suppliers with more than 1,000 employees must require their suppliers to manage environmental issues such as air and water quality, chemical management, waste prevention, biodiversity, land use, deforestation and environmental control mechanisms.

We require Tier 1 suppliers with more than 100 employees to communicate our sustainability requirements to their suppliers (Tier 2) via their general terms and conditions, supplier training, their code of conduct, sustainability guidelines and/or their own corporate website. The aim is to make Tier n suppliers aware of the BMW Group’s sustainability requirements.

 

Implementing measures.

We have been identifying potential environmental and human rights risks at prospective suppliers’ sites since 2014. The risks are now an integral part of our procurement process, and corrective preventive measures to mitigate risks are agreed when contracts are awarded. This has enabled us to identify risks with some supplier sites prior to the contract, such as insufficient preventive measures in occupational health and safety, reporting and environment management. According to our investigations, the majority of supplier sites launching production in 2023 implemented the preventive measures or provided justified evidence for not doing so by the required deadline. Preventive measures that are still outstanding must be implemented as soon as possible.

Training suppliers and employees.

As well as stipulating required preventive measures, the BMW Group offers a wide range of training courses for purchasing staff, in-house process partners and suppliers. The courses raise awareness of environmental and social standards by explaining interdependencies and making our requirements clear. Our aim is to actively join forces with partners at the beginning of the supply chain, breaking new ground together in the process:

  • We offer mandatory and optional training courses to ensure our purchasing staff are familiar with the topic of sustainability.
  • For those requiring a more in-depth knowledge of sustainability issues , we offer standardised supplier training across the industry via Drive Sustainability. Between 2013 and 2023, this was able to train over 450 sustainability officers from across the supplier network on issues such as freedom of association, discrimination, occupational health and safety, remuneration and working hours.

BMW Group-specific supplier training courses are often carried out at supplier events. The BMW Group Supplier Event 2022, for example, was an opportunity to talk to 230 suppliers about important aspects of environmental and social sustainability. The BMW Group also offers certification courses for suppliers twice a year, not only to familiarise them with the latest science and our own position on sustainability but also to empower them. Further BMW Group-specific training courses are carried out as part of our comprehensive RE:DRIVE SUSTAINABLE SUPPLY CHAINS programme for employees and suppliers, which has been running since 2022.

Effectiveness analysis.

At the BMW Group, we evaluate effectiveness based on two cornerstones: functionality tests and performance assessments.

FUNCTIONALITY TEST.

The functionality test assesses the due diligence tools and procedures used in the supply chain, such as risk analyses, complaints procedures and preventive and remediation measures. Any shortcomings are revealed by annual reviews. In 2023, for example, concrete risk analysis and global audits carried out jointly by the BMW Group and the RBA were fed back to the RBA country risk list. The BMW Group and the RBA are also working to enable this kind of feedback at commodity group level, based on NACE Codes. (NACE Codes are a European classification system used to identify and classify business activities and sectors.) When the project has been successfully rolled out, results will be shared with all RBA members. This holistic approach will bring about a continuous improvement process within the framework of due diligence.

SUCCESS MEASURING.

In contrast, the performance assessment applies specifically to preventive and remediation measures and allows the BMW Group to identify strategic implications and make effective improvements to targeted due diligence measures. A core part of this process is the IOOI (Input-Output-Outcome-Impact) method, which aims to develop a better understanding of interrelations between measures and their effects and enable better monitoring of improvements by suppliers. IOOI is used in certification courses, for example, and allows the BMW Group to trace the effectiveness of its supplier training. In 2023, for instance, an empirical survey of selected suppliers was carried out with the University of Ulm and the Berlin University of Applied Sciences (HTW) to identify how certification courses might be improved in the future. Another example is RBA Voices, which provides an additional tool for following up online assessments and ensuring that the agreed preventive and remediation measures are effective when implemented.

Thanks to the BMW Group’s holistic approach, effectiveness analysis is a key tool for reviewing and enhancing the efficacy of due diligence processes.

Contacts.

The BMW Group is ready to rise to the key challenges of our time. Social, environmental and due diligence standards are crucial in our supplier network. If you have any questions or suggestions regarding our supplier network, get in touch. We’ll be happy to tell you more about our approaches and goals.