Supply chain management
- Code of Conduct for suppliers includes environmental protection and compliance with human and labor rights, antidiscrimination and anticorruption policies
- Around 30,000 different raw materials purchased from more than 6,000 suppliers
Our suppliers are an important component of our value chain. For BASF, sustainability-oriented management of our suppliers is a significant factor for growth and added value. Together with our suppliers, we aim to create value and minimize risks.
Stations along the value chain
Both new and existing suppliers are selected and evaluated not only on the basis of economic criteria, but also on environmental, social and corporate governance (ESG) standards. Our Supplier Code of Conduct is based on internationally recognized guidelines, such as the principles of the United Nations’ Global Compact Initiative, the International Labor Organization (ILO) conventions and Responsible Care. The Code of Conduct comprises environmental protection and compliance with human and labor rights, as well as antidiscrimination and anticorruption policies.
In 2012, BASF purchased a total of around 30,000 different raw materials from more than 6,000 suppliers.
We aim to further minimize supply chain risks and provide information on the opportunities offered by sustainable business practices. In 2012, we recruited more participants for the “1+3” project begun in 2006, in which suppliers pledge to pass on our sustainability standards to at least three of their cooperation partners in the supply chain. We provided sustainability training to 134 employees in procurement around the world in 2012.
Depending on risk potential, we conduct on-site supplier audits. Risk matrices help us to identify high-risk suppliers based on country and product risks. Based on this risk analysis, we conducted onsite audits of a total of 210 raw material suppliers in 2012 to assess environmental, health and safety issues. If we discover a need for improvement, we call for corrective actions. We perform a follow-up audit a few months later. If we do not register improvement, we terminate the business relationship. This occurred in six cases in 2012.
To check their compliance with international labor and social standards, new suppliers from non-OECD countries are required to submit a self-assessment. A total of around 750 suppliers received our questionnaire for this purpose in 2012, and it was completed by around 70%. In order to do business with us, a company must complete and sign the questionnaire, and no key issues – such as the elimination of child labor – may remain unresolved. Should we suspect that labor and social standards are not being met, we reserve the right to conduct an external audit and, if necessary, we refrain from a business relationship with that supplier. If we find that certain products show room for improvement in the area of sustainability, the supply chain is subject to an intense analysis. This enables us to provide suppliers with concrete recommendations.
BASF participates in the “Together for Sustainability” initiative of the leading chemical companies to standardize suppliers’ self-assessments and auditing worldwide. The initiative has developed a globally uniform supplier questionnaire, as well as standardized criteria for supplier audits and examination processes, in order to simplify the retrieval of sustainability-related information, especially for suppliers.