Supplier Management

Setting Standards for Good Relations

 

Our procurement function ensures the timely, global supply of goods and services at suitable market conditions, in the required quality and in accordance with the Group’s ethical, ecological and social standards.

Bayer regards adherence to these sustainability standards within its 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. For this reason, we apply not just economic standards, but also environmental, social and corporate governance (ESG) standards in choosing new suppliers or continuing our relationships with existing ones. These standards are defined in Bayer’s Supplier Code of Conduct, which is based on the principles of the United Nations Global Compact and our Human Rights Position.

To help our suppliers practice sustainability in their daily business, we have developed a Supplier Sustainability Guidance, which is based on the Supplier Code of Conduct. This document aims to provide concrete examples of good practices and benchmarks which suppliers can use, and references such as the regulatory framework and standards governing Bayer’s sustainability efforts.

In the areas of palm oil and soy we support the certified sustainable production of these raw materials as a purchaser of plant oil derivatives, which is especially important in Southeast Asia and South America. We are member of the renowned organizations “Roundtable on Sustainable Palm Oil” (RSPO) and “Round Table on Responsible Soy” (RTRS), and purchase so-called “credits” according to the quantities we use. The financial value of these credits rewards farmers who undertake to grow palm oil and 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 intensively 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.

At Pharmaceuticals, a number of 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 additionally purchase various steroids that are manufactured from diosgenin or its intermediate stages. This substance is usually obtained from yam grown in countries such as China. We also use raw materials such as water, glucose, yeast, soybean starch, castor oil and corn steep water in our fermentation processes.

Consumer Health 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.

Further information about sustainability in supplier management can be found in the Procurement section.

Promote Human Rights

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'.

We see ourselves as a responsible corporate citizen. We support the United Nations Universal Declaration of Human Rights and a number of globally recognized declarations for multinational corporations. We fully endorse the principles of the United Nations Global Compact Initiative, of which we are a founding member. We naturally also respect the sovereignty of individual states in implementing human rights.

Meeting due diligence obligations related to conflict materials

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. Between June 2018 and December 2018, Bayer questioned 212 (2017: 101) of its first-tier suppliers who could potentially be impacted by this issue. Of the suppliers for whom a result is available to us, 95% (absolute number: 145) (2017 total: 63%; absolute number: 97) are conflict-free. It was agreed with the suppliers that are not yet conflict-free that they must comply with the requirements. It is planned to evaluate the outstanding suppliers by June 2019.

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.

Tackling child labor in our supply chain

An important topic is tackling child labor in the seed supply chain of the Crop Science Division. Our position on child labor is unequivocal: Child labor is strictly prohibited at Bayer in accordance with the core labor standards of the International Labour Organization (ILO). We therefore also obligate our suppliers to strictly refrain from employing children.

Bayer has taken systematic action for years to prevent child labor in the cotton, rice and vegetable seed supply chain through its multi-level Child Care Program (CCP) which commenced in India in 2007 and has since been expanded to other countries. The primary objective is getting children off the fields of contract seed production farmers and into school.

Thanks to this diligent monitoring system, which is supported by local educational initiatives, we are achieving considerable success with eliminating child labor from our seed production activities. Our activities and progress is also validated during annual external audits.

The absolute number of child labor incidents in the production of cotton seed for Bayer (without Monsanto) declined in 2018 compared to the year before. In 2018, our product portfolio has changed significantly as a result of the Monsanto acquisition and divestments. Up to now we measured the success of our comprehensive program using the indicator “Child Labor Incidence in Relation to the Total Number of Laborers Monitored in the Production of Cotton and Vegetable Seed for Bayer”. In order to stay abreast of changes in our product portfolio and to harmonize the different approaches in preventing child labor, we plan to develop new indicators in 2019.

Bonuses and sanctions for suppliers
Suppliers who can verify that they strictly observe our ban on child labor receive a bonus. Graduated sanctions are applied for non-compliance. These range from written warnings to termination of the contract in the case of repeated non-compliance.

Supporting school education as a key element
Bayer regards school attendance not only as essential for children’s development but also as an effective tool for preventing child labor. We therefore also visit the parents of children we find working in the seed production fields to convince them of the importance of school education. We promote this in India, for example, with the Learning for Life initiative within our Child Care Program, which focuses on fostering scientific knowledge and general vocational training. This initiative covers everything from reintegrating children into the regular school system to vocational training measures increasing work readiness post school years.

Between 2005 and the end of 2018,our Learning for Life – initiative reached more than 6700 young people.

Raising awareness for continuous improvement
Raising awareness on child labor continuously requires widespread action within the agricultural sector and involvement of the national governments. Bayer remains committed to supporting collaborative stakeholder efforts to address best practices in seed production and especially raise action levels with respect to elimination of child labor.