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Strategic Sustainability Focus Areas
Bayer works continuously to strategically evolve sustainability topics in procurement. In the coming years, increasing importance will be placed on environmental and human rights requirements throughout the supply chain and on the Supplier Inclusion & Diversity Program.
Improving Sustainability Practices in the Supply Chain
Already in 2020, we stipulated that all strategically important suppliers must present an EcoVadis assessment of at least 45 of 100 points (“green” assessment) or a comparable audit result. All potential new suppliers with a procurement spend of more than €250,000 will be additionally examined in advance with regard to sustainability aspects. We have also implemented plans to monitor the progress of the various sustainability focus areas using indicators and to define appropriate targets. More information on this see here.
Climate Protection in the Supply Chain
Climate protection is a key element of Bayer’s strategy and is supported by our Supplier Code of Conduct. In 2020 we joined the Science-based Targets initiative and have set ourselves targets to significantly reduce our absolute greenhouse gas emissions – those from our own operations (scope 1 and 2) as well as those that we inherit via our supply chain (scope 3).
As part of our Science-based Targets commitment, we will reduce absolute scope 3 GHG emissions from purchased goods and services, capital goods, fuel and energy related activities, upstream transportation and distribution, and business travel 12.3% by 2029 from a 2019 base year.
Through CDP Supply Chain, we ask our strategically important suppliers and those who account for a significantly high proportion of our scope 3 emissions to disclose their climate protection program with Bayer. We aim to learn more about their greenhouse gas emissions and our share of their emissions, attributable to the goods and services sourced by us. We also look at their reduction targets and use of renewable electricity. Furthermore, we aim to identify potential for reducing greenhouse gas emissions among our suppliers and incorporate this potential into our supplier development efforts.
In 2022 we started using EcoTransIT World – like our biggest transport and logistics partners and various industrial companies. This software is used for automatic calculation of transport-related greenhouse gas emissions. Bayer also became a member of the EcoTransIT World Initiative who is geared toward continuously evolving and harmonizing the methods for determining emissions in the transport sector worldwide.
Sustainable Palm Oil and Sustainable Soy Supply Chains:
Bayer’s net-zero deforestation as well as the human rights commitment along the value chain includes the ambition to source sustainable palm (kernel) oil and soy derivatives. Bayer believes in sustainable value chains with the focus on sustainable production, transparency, traceability and certification. Our activities are aligned with the elements of the Accountability Framework. We collaborate with our partners and suppliers to further decrease our environmental footprint and set social and ethical standards.
To ensure the conservation of renewable natural resources as well as the reduction of CO2, suppliers shall promote the application of broadly recognized sustainability standards and certifications that have been developed by multiple stakeholders. In 2022 we have been disclosing our palm and soy oil activities in the CDP Forest Questionnaire and received a B rating. Additionally, we have been answering the WWF Palm Oil Scorecard.
In terms of sustainable palm oil, we support the certified sustainable production of these raw materials as a purchaser of plant oil derivatives, which is especially important in Southeast Asia but also other regions. We are member of the “Roundtable on Sustainable Palm Oil” (RSPO), and since 2017 we are buying RSPO credits according to the quantities we use. In addition we at Bayer have decided to move from the RSOP credit system towards the RSPO Supply Chain Certification, the RSPO Mass Balance Certification. We understand the complexity of our value chains, therefore we drafted a trajectory for change targeting to achieve 50% Mass Balance certification in 2022, in 2023 60%, in 2024 70%, in 2025 80%, in 2026 90% and in 2027 almost 100% certified sustainable palm (kernel) oil. We invite all stakeholders to follow and support in this process.
In terms of sustainable soy, we support the certified sustainable production of these raw materials as a purchaser of plant oil derivatives, which is especially important in South America but also other regions. We are member of the “Round Table on Responsible Soy” (RTRS) and buy RTRS credits according to the quantities we use. The purchase of these credits rewards farmer who grow soy in a legal and ecologically, socially and economically sustainable way and who demonstrate this as part of an audited certification process. Crop Science also cooperates with the RTRS to provide mutual support in the certification of Brazilian soybean producers according to the high ecological, social and economic criteria of the RTRS. Further information about our Crop Science food chain partnerships, certification and projects with the RTRS can be found here.
In terms of other plant-based materials, at our Pharmaceuticals division, hormones are synthesized based on sterols that result during the production of plant oils from soybeans, for example, as well as during wood processing. We also purchase steroids that are manufactured from diosgenin or its intermediate stages. This substance is usually obtained from yam grown in countries such as China. Our Consumer Health division uses extracts of plants to manufacture plant-based pharmaceuticals. We take great care in the cultivation and extraction of raw materials, which are performed according to local or international standards, e.g. the GACP (Good Agricultural and Collection Practice) guidelines.
Promoting Human Rights in the Supply Chain
We unequivocally promote the realization of human rights. We firmly believe that respect for people is essential to achieving lasting business excellence. The main areas we address are: 'Employees and working conditions', 'Harassment and discrimination', 'Freedom of association and collective bargaining', 'Child labor', and 'Health and safety'.
For further information on Bayer’s management approach regarding Human Rights, please visit Human Rights Website.
In 2022, we concentrated on providing training to our Procurement employees and our suppliers in respecting human rights in the supply chain and on enhancing procurement processes in order to comply with the requirements of the German Supply Chain Due Diligence Act (SCDDA). In the agriculture industry, seed producers are subject to particular risks, especially with regard to respecting human rights. We performed a deep dive of human rights risks along our seeds supply chain and started to enhance our measures to prevent and mitigate such risks. In 2023, we plan to continue improving our procurement processes and take additional measures aiming to respect human rights in our supply chain.
As the procurement of minerals originating from unstable regions of the world can contribute to the financing of conflicts and the violation of human rights, we work to ensure that so-called conflict materials are procured responsibly.
As such, additional verification processes were established for the fulfillment of further international regulations such as those requesting companies to disclose the origin of certain raw materials. This concerns, for example, so-called conflict minerals from regions such as the Democratic Republic of the Congo or neighboring countries. We use the Conflict Minerals Reporting Template to survey our relevant suppliers in order to identify the use, sources and origins of certain minerals in our supply chain. From regular exchanges of information with other companies, we derive measures for timely initiation of process improvements. Thereby, we support our customers in fulfilling the due diligence requirements regarding the origin of certain raw materials in their supply chain. Suppliers who do not meet these requirements are immediately notified that these standards must be complied with and suitable measures initiated.
Explicit expectations of our suppliers are spelled out in our Supplier Code of Conduct. Suppliers shall ensure that products supplied to Bayer do not contain metals whose raw materials originate from conflict regions that directly or indirectly help to finance or support armed groups and cause or foster human rights abuses.
Diversity in Our Supply Base
Bayer is committed to inclusion and diversity, which is reflected in the ambitious goals that were announced in early 2021. It recognizes that its employees and supply base should reflect the diversity of its customer base and foster an environment where differences are valued and celebrated. Bayer’s commitment to economic development through its Supplier Inclusion & Diversity Program is one of the ways in which it supports its mission, “health for all, hunger for none.”. Bayer’s Supplier Inclusion & Diversity Program advocates for small and diverse suppliers and provides opportunities for their growth and development.
The Bayer Supplier Code of Conduct encourages suppliers to engage with diverse owned business and to support Bayer’s I&D goals.