CSR in BASF‘s Supply Chain: The Case of ChinaCE0A7C59...SupplyChain_China_27_04_05.pdfCSR in...
Transcript of CSR in BASF‘s Supply Chain: The Case of ChinaCE0A7C59...SupplyChain_China_27_04_05.pdfCSR in...
CSR in BASF‘s Supply Chain:The Case of China
Dr. Lother MeinzerDirector Sustainability CenterBASF AktiengesellschaftConference: How to manage ethical risk in ChinaApril 27th 2005
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BASF in a Nutshell
The world’s leading chemical company
Production sites in 39 countries
37,5 billion € sales in 2004
81,955 employees worldwide
Sustainable Development as business maxime
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Chemicals Inorganic specialties; electronic-grade chemicals; glues; resins; petrochemical feedstocks; plasticizers; amines; diols; polyalcohols; carboxylic acids; specialty intermediates
Plastics Styrene; styrene-based polymers and copolymers; capro-lactam and nylon; engineering plastics; polyurethane basic materials and polyurethane systems; specialty elastomers
Performance Raw materials for detergents, textile and leather chemicals; Products pigments; printing inks; fuel and lubricant additives;
automotive OEM and refinish coatings; industrial coatings; monomers; superabsorbents; adhesive raw materials; paper chemicals
Agricultural Herbicides, fungicides and insecticides; vitamins; Products & Nutrition pharmaceutical active ingredients; UV absorbers
Oil & Gas Crude oil and natural gas (exploration, production and trading)
BASF’s products
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AutomotiveEnergyAgriculture
> 15%
BASF’s sales by customer industry
Percentage of sales in 2003 from ongoing business including Oil & Gas
CarpetsCosmeticsDetergents and cleaning agents
Construction
< 5%
5 – 10%
Other industries: approximately 12% in total
Electrical/electronicsFurnitureHealthLeather
PackagingPaperPrintingTextiles
10 – 15%
Chemical (not for consumer goods)
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Global presence
Major production siteVerbund site
Nanjing(Start-up in 2005)
Kuantan
Geismar
Freeport
LudwigshafenAntwerp
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Growth Strategy for Asia
YeosuNanjing
Singapore
Shanghai
Kuantan
Chemical sites
Verbund sites
Position:Early positioning in high-growth markets enables profitable growthChemical markets in Asia Pacific expected to grow by 3.5–4% per year up to 2015Strong presence in China
Ambitious Targets:Strengthen our position as one of the top 5 suppliers in strategically relevant marketsGenerate 20% of group sales and earningsBuild a local manufacturing base that will secure 70% of regional sales by 2010
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BASF in China
YeosuNanjing
Singapore
Shanghai
Kuantan
Chemical sites
Verbund sites
China is BASF’s key market in Asia12 production plants with 4.000 employees10 subsidiaries and 9 joint venturesfocus on Eastern China: Shanghai, Nanjing, Guangzhou, Jilin and Shenyang5,6 billion Euro invested in Asia until 2005turnover in Asia/Pacific region counts up to 14 % of overall turnover
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Values and Principles
Our Values are binding for all employees.
Sustainable Profitable Performance
Innovation for the Success of Our Customers
Safety, Health, Environmental Responsibility
Personal and Professional Competence
Mutual Respect and Open Dialogue
Integrity
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Code of Conduct China
Industrial and Plant safety, protection of health and environmental conservationFair Trade and Competition LawDealing with business partners and representatives of government bodiesHandling company property and the property of our business partnersInsider knowledge and company powers: No exploitation for personal purposesTrue and fair financial reportingForeign Exchange ControlImport and export control regulationsMoney launderingSmugglingEmployee relation
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Supply Chain: From Raw Material to Customer
Supplier:
Raw Material
Technical Goods
Service
Logistic partner:
Tank Trucks
Rail
Bark
Customer
Purchase Produce Transport Sell
Contractor:
Repair Work
Transportation
Installation
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Safety Matrix: Assessment of Suppliers
Our suppliers:Comply with our Safety Matrix ConceptMeet safety, health and environmental protection requirements in accordance with Responsible Care® guidelinesDo not use child labor and forced labor as required by the principles of the Global CompactComply with our quality management requirements
Global Code of Conduct in Raw Materials Purchasing
A
B
C
Product risk
Supplier risk1 2 3
safearea I
safearea II low risk
potentiallyhigh risk
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Supplier Risk
As a result of stringent regulations and state verification measures, suppliers from OECD countries are initially allocated a low supplier risk (risk class 1). Suppliers from non-OECD countries are normally initially allocated to risk class 3, reflecting potentially the highest risk. Suppliers allocated to risk class 1 may, however, be downgraded to class 2or 3 if there are reasons to suspect a higher risk or if the risk is increased by specific circumstances. Conversely, responsible suppliers maybe upgraded to a class indication a lower risk.
Category 3: non-OECD countries
Category 1: OECD countries
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Product Risk: International standard classification
Category C
Category B
explosive very toxic toxic corrosive extremelyflammable
irritant oxidizing environmentallyharmful
harmful tohealth
highlyflammable
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Factory visit: First viewing
Evaluation of:
Production: Status of plant and buildings, cleanlinessand hygiene,employmentprotection...Environmental protection: effluenttreatment, emissions to
environment, wastemanagement...Qualitymanagement: lab equipment, controlof processes,
documentation....Qualityof management: knowledgeof provisions, safetytrainings, ...Logistics: stock-keeping, acquisitionof rawmaterials, water and
energy...
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• Toxic Product
• Open System
• Poor Maintenance
Factory Visit: First Viewing
No purchasing possible!
Action Plan
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• Open System
• Personal Protection Equipment
• Defective Plant
Factory Visit: First Viewing
No purchasing possible!
Action Plan
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• Open System
• Toxic Product
Factory Visit: First Viewing
No purchasing possible!
Action Plan
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• Personal Protection Equipment
• Modernized plant
Factory visit: After Joint Action Plan
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Supply Chain: From Raw Material to Customer
Supplier:
Raw Material
Technical Goods
Service
Logistic partner:
Tank Trucks
Rail
Bark
Customer
Purchase Process Transport Sell
Contractor:
Repair Work
Transportation
Installation
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Assessment Principles of Construction Site Safety Performance (Nanjing)
Each construction area and contractor were individually assessed in the criteria agreed between General Contractor and BASF
There were also two overall assessments:- across all construction areas- average rating of the contractors
Ratings ranges from 1: very good to 5: very weak
1 - Very good 2 – Good 3 – Medium 4 – Weak 5 – Very weak
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Criteria for Assessment
PPE: Working with gloves, safety helmet, shoes and glasses; face shield; safety harness tied-offHousekeeping: Access to work area, laydown area, gas bottle managementExcavation: Barricade, signs, overload, holes coverageWorking at height: Scaffolding, lifeline and supports Electrical safety: Signage and access to switch box, cable safetyRigging: Pilling, cross working, protection nets, barricade, supervision; Crane inspection, permitConfined space/Hot work: Permit systemAdministration: Records and topics of safety talks, signatures, JHA, Emergency response, closing dateHealth: First Aid records, facilitiesEnvironment: Pollution and waste control, drainage, noise
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Example of EHS Assessment
Overall: 1.5 (previous: 1.9) Improvement vs last audit
Deterioration vs last audit
Criteria5 4 3 2 1
PPE 2.0 1.0Housekeeping 1.5Excavation 1.5Working at height 2.0 1.0Electrical safety 3.0 1.5Rigging 2.0Confined space/Hot work 1.5Administration 2.0Health 1.5Environment 1.0
Overall Assessment 1.9 1.5
Rating
1-very good 2-good 3-acceptable 4-poor 5-very poor
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Supply Chain: From Raw Material to Customer
Supplier:
Raw Material
Technical Goods
Service
Logistic partner:
Tank Trucks
Rail
Bark
Customer
Purchase Process Transport Sell
Contractor:
Repair Work
Transportation
Installation
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Distribution safety - Global goals
By 2012, we want to reduce transportation accidents by 70 percent compared with the value for 2003.
Group-wide „Transportation and Distribution Safety Guidelines“ that gobeyond legal requirements
Global network of distribution safety officers. They ensure that national and international procedures are observed for all shipments
Online Training Tools for employees and logistic partners
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Transportation and Distribution Safety in China
Global high standards also apply to China.
Groupwide „Transportation and Distribution Safety Guidelines“ were translated into Chinese and implemented Regional und local TDS advisers trained and qualifiedOnline training tool for staff and contractors developedAccident reporting tool implementedFirst audits along the lines of SQAS with transport companies performed
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Transportation and Distribution Safety in China
Global high standards also apply to China.
Assessment tool for road safety implemented, first audits performed„Safety Concept China“ for domestic transports by sea/inland waterwayInstallation of 24 hrs Emergency contacts