Management and Corporate Governance

Our supplier management – setting standards for good relations

We exert considerable influence on society and the environment in many regions through our purchasing volume. In 2013, we purchased goods and services from about 107,000 suppliers in 138 countries for approximately €18.7 billion in total, and recorded these purchases in the group-wide reporting system. The procurement volume in Germany, the United States and Japan in 2013 accounted for nearly 67 percent of the expenditures in the countries of the OECD (Organisation for Economic Co-operation and Development), or about 54 percent of the Bayer Group’s total procurement spend. Brazil, India and China together accounted for about 72 percent of the expenditures in the non-OECD countries or about 14 percent of the total spend.

Sustainability in Procurement

Bayer regards adherence to sustainability standards within the supply chain as a crucial factor in the value chain. By acting responsibly in collaboration with our suppliers, we aim to minimize risks and create stable, long-term business relationships with our partners. It is also an important strategic lever for Bayer in safeguarding both its global competitiveness and the supply of materials and services. For this reason, the company applies not just economic standards, but also environmental, social and corporate governance (ESG) standards in choosing new suppliers or continuing its relationships with existing ones. These standards are defined in Bayer’s Supplier Code of Conduct, which generally forms the basis for our collaboration with suppliers. It is legally binding and integrated into electronic ordering systems and contracts throughout the Group. The Supplier Code of Conduct is based on the principles of the U.N. Global Compact and our Human Rights Position.

To participate in IT-based bidding processes, suppliers must give a binding assurance before submitting an offer in our supplier management system that they acknowledge Bayer’s Supplier Code of Conduct. This creates an important foundation for a business relationship aligned to sustainability We track our suppliers’ adherence to the Code of Conduct by monitoring their sustainability performance. This is done partly on the basis of on-site audits and partly through online supplier assessments carried out by a leading web based platform for sustainability performance monitoring (EcoVadis). The assessments are based on a web-based, modular questionnaire completed by the supplier, coupled with accompanying verification documents and 360° screening. Suppliers are selected for these assessments based on a combination of country and material risks and procurement volume.

Partnerships for a Sustainable Supply Chain

Together for Sustainability

In order to effectively address the wide-ranging challenges of a sustainable supply chain and to leverage synergies, we participate in two industry initiatives – the “Pharmaceutical Supply Chain Initiative” (PSCI) and “Together for Sustainability” (TFS), an initiative of the chemical industry that was co-founded by Bayer. Sustainability evaluations of suppliers are exchanged among the members, giving us access to additional assessments and audits of suppliers that also work with Bayer. This minimizes the administrative burden for both suppliers and the member companies. Both initiatives focus not only on performing evaluations, but also on providing support and training for suppliers.

More information about our supplier management can be found in the Integrated Annual Report 2013.

Last updated: December 4, 2014 Copyright © Bayer AG