Supplier Network & Raw Material Management: Embedding Due Diligence and Acting Responsibly.

Page Overview

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Within the purchasing and supplier network at BMW Group, upholding environmental and social standards is a fundamental principle. This includes a particular focus on human rights as well as compliance with ethical business principles.

Responsible sourcing of raw materials is a key priority, as car production relies on numerous mineral and organic raw materials. In BMW Group’s upstream supply chain, workers employed by suppliers may be exposed to potential negative impacts, both in component manufacturing and in raw material extraction and processing.

Another important contribution to human rights and environmental issues is made by the circular economy, which reduces the need for primary raw materials and their extraction. Environmental and social standards are integral to areas such as component development, commodity strategies, procurement processes (where they are mandatory for contract awards), supplier development and our target management process.

Ensuring transparency over intricate, dynamic supply chains and maintaining traceability of goods is extremely challenging – but it’s also a key prerequisite for our due diligence process. That’s why we work constantly to strengthen collaboration with our partners in the supplier network. Supply chain mapping is a risk-based approach that offers us greater transparency over our supply chain. In the future, BMW Group will also use solutions such as the Catena-X data ecosystem, which enables participating organisations to exchange data about their entire value chain in a secure and standardised manner, while maintaining full sovereignty over the data they provide.

BMW Group sources components, materials and other services from numerous production sites and distribution centres. Social and environmental due diligence obligations are outlined in the BMW Group Supplier Code of Conduct and act as minimum requirements for suppliers. Suppliers of production materials and motor vehicle components are subject to the BMW Group International Terms and Conditions for Production Material and Motor Vehicle Parts. Suppliers of non-production-related materials are subject to the General Contractual Terms for Indirect Purchasing.

Downloads

BMW Group Suplier Code of Conduct(pdf, 314 kB)

BMW Group International Terms and Conditions for the Purchase of Production Materials and Automotive Components(pdf, 650 kB)

General Terms and Conditions for Indirect Purchasing(pdf, 639 kB)

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Responsible
Raw Material Management.

For us at BMW Group, responsible raw material management is the result of our holistic approach, which encompasses business as well as environmental and social concerns. Raw material supply chains are multi-layered, dynamic and globally connected – and therefore highly complex. So, when it comes to raw material management, we actively pursue a preventive approach.

BMW Group systematically analyses widely known risks that are typically associated with the extraction and processing of raw materials, and draws up suitable measures based on findings. We support the responsible procurement of raw materials such as lithium or nickel for battery production, but also of other materials, like aluminum, copper or natural rubber, and have established preventive measures to mitigate potential risks.

In addition, we are involved in various initiatives aimed at consistently promoting responsible raw material management.

Raw material information and on-site projects

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Our Approach to Responsible
Raw Material Management.

To ensure environmental and social compliance, the BMW Group has established a multi-stage due diligence process for raw materials. This forms part of our company-wide sustainability and due diligence management system and complies with the OECD requirements for the fulfilment of due diligence.

Our involvement in multi-stakeholder initiatives allows us to actively help shape standards for the certification of raw material supply chains. In implementing those standards, we pursue a raw material and country-specific approach. On the overarching level, we are committed to the international scaling and harmonisation of standards to create a globally uniform and accepted basis for the certification of raw material supply chains. We are active in various initiatives.

For selected raw materials, the BMW Group also works in field projects with project partners and local stakeholders, pursuing the principle of empowerment before withdrawal. At the moment, those materials are cobalt, lithium, mica and natural rubber. The field projects follow predefined goals whose achievement is gauged by a set of key indicators.

Responsible Management
of the Supplier Network.

Requirements for the BMW Group and its suppliers are set out in the following targets and standards, which are established within the company:

In the Purchasing and Supplier Network division, compliance with environmental and social standards is very much in the focus, with a particular emphasis on human rights, the conservation of natural resources and reducing CO₂ emissions in the supply chain.

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 Code is directed at our own employees as well as suppliers and authorised sales partners, and we actively communicate it.

View Code(pdf, 4 MB)

This policy statement outlines our commitment to human rights and the associated environmental standards. It also sets out how we approach the issue in our dealings with our business partners – because we don’t just uphold these fundamental rights in our business; we work to ensure our global up- and downstream supply chains comply with them as well. Our business activities take into account the livelihoods and health of local and indigenous communities. To realise our aim, we require our suppliers and business partners to abide by our standards – including in relations with their own suppliers and partners.

View Declaration(pdf, 4 MB)

The Cluster Value Creation Strategy provides overarching support for the achievement of goals in Purchasing, Development and Production. It is the strategy for supplier development upstream of the BMW Group purchasing process and sets the framework for the prospective sourcing of components or component groups. Rigorously embedded within the strategy are a range of issues along the entire value creation process, procurement included. The implementation of requirements and measures that build on them is defined early on for both existing and prospective suppliers, to ensure environmental and social standards are met. Implementation can take several years, to allow production facilities, for example, to be certified in time for potential supplies to begin. The procurement strategy also sets out further levers around CO₂ reductions and the circular economy for components and component groups.

The BMW Group supplier database documents findings and information on abstract and concrete risk analyses and preventive and remedial measures . The contents of these measures concern individual supplier sites and result from tools and procedures such as online assessments (sustainability questionnaires) and/or onsite assessments (Responsible Business Alliance, RBA, Responsible Supply Chain Initiative, RSCI). The database is a source system for applications for mapping procurement workflows and processes, and for reporting and target management.

The BMW Group is fully aware of its responsibility to ensure a sustainable future and has defined clear strategic guidelines to govern responsible business conduct. For certain focus topics, it has also produced policies outlining the scope of its involvement, scope of applicability and measures to support due diligence, traceability, complaint and monitoring systems, and material-specific requirements.

To the BMW Group Anti-Deforestation Policy.(pdf, 338 kB)

To the BMW Group Biodiversity Policy.(pdf, 1 MB)

The BMW Group’s high-level commitment to sustainable natural rubber(pdf, 221 kB)

Commitment to Initiatives.

To integrate due diligence into its business processes, wherever possible the BMW Group relies on standardised procedures developed by industry-wide and cross-sector initiatives. We firmly believe the only way to uphold environmental and social standards in complex and dynamic supplier networks is through standardisation and cooperation. Standardisation allows us to reduce duplicate activities in the supplier network and increase the effectiveness of measures developed on the basis of due diligence procedures.

Key Cross-Industry Initiatives are:

BMW Group Supplier Code of Conduct.

The BMW Group Supplier Code of Conduct was updated in December 2022, against the backdrop of the Act on Corporate Due Diligence in Supply Chains. It offers more concrete explanations of the guiding principles for the global supplier network set out in the Policy Statement on Respect for Human Rights and Corresponding Environmental Standards.

Our Due Diligence Process.

Clear roadmap for the BMW diligence process, showing the development phases and strategic goals.

Our multi-stage due diligence process locates responsibility for environmental and social standards in supply chains in the relevant BMW Group departments.

Our procurement process integrates standardised procedures, such as the Supplier Code of Conduct and the Drive Sustainability initiative’s industry-wide sustainability questionnaire. Where risks are identified, the online assessment is used at the sites of parts suppliers and suppliers of non-production-related materials. Procedures include risk-based onsite assessments according to the standards of the Responsible Business Alliance (RBA) and the Responsible Supply Chain Initiative (RSCI) of the VDA. We also use standardised procedures to handle grievances and tip-offs relating to potential violations.

In the automotive world, developing a product takes a long time, so the purchasing process takes several years too. This means due diligence may be carried out up to two years before the supplier is actually awarded the contract. We use this time to implement comprehensive preventive measures, control mechanisms and corrective action, if needed. Individual preventive measures for occupational health and safety certification, for example, take several months to implement.

Training Suppliers and Employees.

To achieve a positive preventive impact, the BMW Group provides mandatory training for its in-house purchasing staff on an as-needed basis. We also offer optional courses on sustainability in the supply chain for purchasers, process partners and suppliers. In addition, documentation of Tier 1 supplier training for their own area of business is reviewed. These courses explain the interdependencies between environmental and social standards as well as the BMW Group’s expectations and due diligence measures. Participants are made aware of the importance of due diligence in the supply chain and learn how to detect and mitigate risks.

Since 2022 the BMW Group has been conducting dedicated training courses for employees and suppliers as part of the comprehensive RE:DRIVE SUSTAINABLE SUPPLY CHAINS enablement programme. This is regularly updated and improved and primarily focuses on issues around three key topics: environmental and social standards in the supplier network, CO₂ reductions and the circular economy.

In addition, twice a year the BMW Group offers an optional certification course for suppliers. This has been available since 2013 and aims to communicate the latest research discoveries as well as our own self-image around the issue of sustainability, and to empower our suppliers. Industry-wide training courses are also available to suppliers from initiatives like the RBA, in which the BMW Group is involved. They are among the accompanying measures in the execution of the onsite assessment at suppliers’ sites and aim to increase their effectiveness. Follow-up support is also available, from courses that help suppliers implement their measures.

Further Information.

Contacts.

The BMW Group is meeting the key challenges of our time. Social, environmental and due diligence standards are crucial in our supplier network.

We’ll be happy to tell you more about our approaches and goals.

Contacts

sustainability.supplychain@bmwgroup.com

Supplier Network & Raw Material Management: Embedding Due Diligence and Acting Responsibly.

Downloads

Responsible
Raw Material Management.

Our Approach to Responsible
Raw Material Management.