BASF Report 2021 Management’s Report – We Source Responsibly 109 We Source Responsibly In this section: Supplier Management As a global business, we have a responsibility to manage our supply chain carefully. We connect with our Raw Materials suppliers to source responsibly. Our partnerships with suppliers are based on mutual value creation, as well as a reliable supply of raw materials, technical goods and services at competitive prices. Supplier Management Strategy this program, we want to systematically gather data on upstream GRI 102, 103, 204, 308, 403, 407, 408, 409, 414 Scope 3 emissions to identify medium-term measures for opti- SUPPLIERS BASF CUSTOMERS Our partnerships with suppliers are based on mutual value creation, mization (see page 130). We make our suppliers’ contribution to as well as a reliable supply of raw materials, precursors, technical sustainable development transparent for us and for our stakeholders. BASF sources a wide range of raw materials, precursors, goods and services at competitive prices.2 In doing so, we want to For more information on suppliers, see basf.com/suppliers technical goods and services. Our suppliers are an important generate long-term benefits for both sides. Our sustainability- part of our value chain. Our objective is to secure competitive oriented supply chain management is an integral part of our advantages through our professional procurement struc- risk management. We have defined our standards and processes in Global targets tures, to establish stable and reliable supply chains, and at a global guideline. We are continually refining and optimizing this to the same time, meet high ethical and environmental stan- respond to changes in the regulatory environment and new require- We actively promote sustainability in the supply chain and have set dards. Together with our suppliers, we want to improve ments resulting, for example, from new laws and initiatives at national ourselves ambitious targets for this: By 2025, we aim to have con- sustainability in the supply chain and minimize risks. and international level. Procurement management systems such as ducted sustainability evaluations for 90% of the BASF Group’s 2 guidelines and targets are set centrally and are binding for all relevant spend and will develop action plans where improvement is At a glance employees with procurement responsibility worldwide. necessary. In addition, we aim to have 80% of suppliers improve their sustainability performance upon re-evaluation by 2025. In €43.5 billion 85% Our risk-based approach aims to identify and evaluate sustainability 2021, 85% of the relevant spend had been evaluated. Of the sup- matters in our value chains as best possible to improve sustain ability pliers re-evaluated in 2021, 74% had improved. Both global targets global procurement spend of relevant spend1 covered by together with our suppliers. We regularly review and document are embedded in the target agreements of persons responsible for sustainability evaluations progress based on the risk level. Employees with procurement procurement. ▪ Sustainability-oriented supply chain management responsibility receive ongoing training in sustainability-oriented ▪ Global targets to increase sustainability in the supply chain supplier management and responsible procurement. In 2021, 250 BASF employees received such training. Worldwide procurement ▪ Supplier Code of Conduct creates transparency ▪ Risk-based approach with clearly defined follow-up processes Our expectations of our suppliers are laid down in the global Our more than 70,000 suppliers make an important contribution to Sup plier Code of Conduct. This creates clarity around the standards our value creation. We work in long-term partnership with compa- to be met. We count on reliable supplier relationships and nies from different industries around the world. They supply us with support our suppliers in implementing our requirements. In 2021, raw materials, precursors, investment goods and consumables, we also launched the Supplier CO Management Program. With perform a range of services and are innovation partners. 2 1 We understand relevant spend as procurement volumes with relevant suppliers. We define relevant suppliers as Tier 1 suppliers showing an elevated sustainability risk potential as identified by our risk matrices, our purchasers’ assessments or other sources. 2 BASF considers all direct suppliers of the BASF Group in the business year concerned as Tier 1 suppliers. These are suppliers that provide us with raw materials, investment goods, consumables and services. Suppliers can be natural persons, companies or legal persons under public law.