BMW Group Supply Chain: an ESG Case Study
The BMW Group is a world-leading manufacturer of premium cars – including Rolls-Royce models – and motorcycles. Its 30 production sites helped fuel sales in 2022 of 2.4mn vehicles across 140 markets. It employs 149,500 people.
Ensuring compliance with ESG standards across its vast supplier network is “one of our declared aims”, the BMW Group says. “This specifically includes respect for human rights and responsible extraction of raw materials,” it adds.
Creating transparency around far-reaching, dynamic supply chains – and making goods flows traceable – are two of the most important requirements for meeting ESG targets.
This, says the company “is why we are constantly expanding our close cooperation with our partners in the supplier network”.
BMW explains that it sources components, materials and other services from a variety of production and delivery locations worldwide, and adds its ESG due diligence obligations associated with this “are set out for our suppliers in contractually binding sustainability standards”.
It continues: “When we identify risks at our direct suppliers we respond to these with preventive and corrective measures, as well as enabling activities.”
It explains that a multi-stage due diligence process “anchors our responsibility for the supplier network in all relevant areas of the BMW".
It adds that this process incorporates requirements relating to ESG issues as these affect “component development and product group strategies”, and that due diligence informs both the tendering process and supplier development strategies.
The company says it does the same for its indirect suppliers on “an ad-hoc basis”, adding that “these measures have been systematically anchored in our processes”.
BMW Group cutting use of raw materials
Naturally, automotive manufacturing involves a massive amount of raw materials, and BMW Group says it is “working on reducing our consumption of raw materials and increasing the use of secondary materials”.
(Secondary materials are materials that have been used, recycled and sold for use in manufacturing.)
“As part of our materials strategy, we constantly analyse and pay special attention to raw materials that could be linked to potential breaches of environmental and social standards,” the company adds.
It goes on to explains that the potential risks are highest “during the extraction and processing of 37 raw materials and raw material groups of relevance to the automotive industry”.
It says the biggest challenge here is “ensuring transparency and traceability within the ever-changing supplier network”.
To improve visibility the company leverages the Catena-X Alliance, an open data ecosystem for the automotive industry, designed to create data chains to enhance value chains.
“We are also working to reduce or eliminate our use of critical raw materials and have established raw material-specific sustainability standards for the relevant components,” it adds.
This, it says, “has already enabled us to gradually reduce the share of cobalt in battery cells to just under 10% at present”.
In addition, BMW Group adds it has sworn off using cobalt, nickel and manganese that are extracted via deep sea mining.
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