We have been identifying possible violations of environmental standards and human rights by potential suppliers since 2014 and have made it a part of our procurement process.
The BMW Group monitors and evaluates sustainability risks in its supplier network constantly, for both potential and active Tier 1 supplier locations. We use various in-house and industry-standard external data sources to identify and assess abstract environmental and human rights risks, including country- and commodity-specific indicators and media analyses at company as well as site level. Concrete risk analyses for Tier 1 suppliers are carried out annually and as needed, and are additionally based on the results of the standardised online and onsite assessments. The onsite assessments are usually carried out by external third parties and/or BMW Group sustainability experts for quality assurance purposes.
Risk analyses with Tier n suppliers are based on supply chain mapping. For this reason the BMW Group works continuously to increase transparency over its own supply chain with the support of external databases, among other things.
Conducting regular risk analyses.
The BMW Group conducts comprehensive risk analyses of supplier sites, whether tendering or already active. Investigations are underpinned by two key cornerstones: first, regular risk analyses of Tier 1 suppliers, and second, as-needed analyses of both Tier 1 and Tier n suppliers. 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 analysis of Tier 1 supplier sites consists 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. This includes internal and external indicators as well as media analyses from which abstract indicators are 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 of production facilities. The RBA has now updated the risk map in conjunction with the BMW Group, in accordance with the Act on Corporate Due Diligence in Supply Chains. It is now available for all members to use.
On this basis, potential risks can be identified, and their probability, inherent severity and potential contribution to causation 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. This allows suitable procedures and control measures – such as online and/or onsite assessments/certifications – to be initiated during procurement, strategic decision-making and supplier development projects.
For Tier n suppliers in high-risk regions or dealing with high-risk commodities, the BMW Group has established control mechanisms. One important part of these is the onsite assessments of environmental and social standards at suppliers’ sites. These are carried out using industry-wide or cross-industry assessment programmes by the RBA along with the Validated Audit Programme (VAP) and the VDA’s Responsible Supply Chain Initiative (RSCI).
Findings from these concrete risk analysis procedures (i.e. the onsite and online assessments) provide the basis for prevention and remediation and complement the abstract risk analysis. This allows the actual level of risk at the site to be substantiated.
As part of the 2024 risk analysis for Tier 1 and Tier n suppliers, priority risks were identified from among the different risk types. Corrective actions were defined for each one, and the BMW Group is following up with the respective suppliers to ensure they are implemented.