CSRinBASF‘sSupplyChain:TheCaseofChinaDr.LotherMeinzerDirectorSustainabilityCenterBASFAktiengesellschaftConference:HowtomanageethicalriskinChinaApril27th200523.09.20042BASFinaNutshellTheworld’sleadingchemicalcompanyProductionsitesin39countries37,5billion€salesin200481,955employeesworldwideSustainableDevelopmentasbusinessmaxime23.09.20043ChemicalsInorganicspecialties;electronic-gradechemicals;glues;resins;petrochemicalfeedstocks;plasticizers;amines;diols;polyalcohols;carboxylicacids;specialtyintermediatesPlasticsStyrene;styrene-basedpolymersandcopolymers;capro-lactamandnylon;engineeringplastics;polyurethanebasicmaterialsandpolyurethanesystems;specialtyelastomersPerformanceRawmaterialsfordetergents,textileandleatherchemicals;Productspigments;printinginks;fuelandlubricantadditives;automotiveOEMandrefinishcoatings;industrialcoatings;monomers;superabsorbents;adhesiverawmaterials;paperchemicalsAgriculturalHerbicides,fungicidesandinsecticides;vitamins;Products&Nutritionpharmaceuticalactiveingredients;UVabsorbersOil&GasCrudeoilandnaturalgas(exploration,productionandtrading)BASF’sproducts23.09.20044zAutomotivezEnergyzAgriculture15%BASF’ssalesbycustomerindustryPercentageofsalesin2003fromongoingbusinessincludingOil&GaszCarpetszCosmeticszDetergentsandcleaningagentszConstruction5%5–10%Otherindustries:approximately12%intotalzElectrical/electronicszFurniturezHealthzLeatherzPackagingzPaperzPrintingzTextiles10–15%zChemical(notforconsumergoods)23.09.20045GlobalpresenceMajorproductionsiteVerbundsiteNanjing(Start-upin2005)KuantanGeismarFreeportLudwigshafenAntwerp23.09.20046GrowthStrategyforAsiaYeosuNanjingSingaporeShanghaiKuantanChemicalsitesVerbundsitesPosition:Earlypositioninginhigh-growthmarketsenablesprofitablegrowthChemicalmarketsinAsiaPacificexpectedtogrowby3.5–4%peryearupto2015StrongpresenceinChinaAmbitiousTargets:Strengthenourpositionasoneofthetop5suppliersinstrategicallyrelevantmarketsGenerate20%ofgroupsalesandearningsBuildalocalmanufacturingbasethatwillsecure70%ofregionalsalesby201023.09.20047BASFinChinaYeosuNanjingSingaporeShanghaiKuantanChemicalsitesVerbundsitesChinaisBASF’skeymarketinAsia12productionplantswith4.000employees10subsidiariesand9jointventuresfocusonEasternChina:Shanghai,Nanjing,Guangzhou,JilinandShenyang5,6billionEuroinvestedinAsiauntil2005turnoverinAsia/Pacificregioncountsupto14%ofoverallturnover23.09.20048ActivatingGrowthPlatforminChinaNanjingstart-upin1stHY200523.09.20049ValuesandPrinciplesOurValuesarebindingforallemployees.SustainableProfitablePerformanceInnovationfortheSuccessofOurCustomersSafety,Health,EnvironmentalResponsibilityPersonalandProfessionalCompetenceMutualRespectandOpenDialogueIntegrity23.09.200410CodeofConductChinaIndustrialandPlantsafety,protectionofhealthandenvironmentalconservationFairTradeandCompetitionLawDealingwithbusinesspartnersandrepresentativesofgovernmentbodiesHandlingcompanypropertyandthepropertyofourbusinesspartnersInsiderknowledgeandcompanypowers:NoexploitationforpersonalpurposesTrueandfairfinancialreportingForeignExchangeControlImportandexportcontrolregulationsMoneylaunderingSmugglingEmployeerelation23.09.200411SupplyChain:FromRawMaterialtoCustomerSupplier:RawMaterialTechnicalGoodsServiceLogisticpartner:TankTrucksRailBarkCustomerPurchaseProduceTransportSellContractor:RepairWorkTransportationInstallation23.09.200412SafetyMatrix:AssessmentofSuppliersOursuppliers:ÎComplywithourSafetyMatrixConceptÎMeetsafety,healthandenvironmentalprotectionrequirementsinaccordancewithResponsibleCare®guidelinesÎDonotusechildlaborandforcedlaborasrequiredbytheprinciplesoftheGlobalCompactÎComplywithourqualitymanagementrequirementsGlobalCodeofConductinRawMaterialsPurchasingABCProductriskSupplierrisk123safeareaIsafeareaIIlowriskpotentiallyhighrisk23.09.200413SupplierRiskAsaresultofstringentregulationsandstateverificationmeasures,suppliersfromOECDcountriesareinitiallyallocatedalowsupplierrisk(riskclass1).Suppliersfromnon-OECDcountriesarenormallyinitiallyallocatedtoriskclass3,reflectingpotentiallythehighestrisk.Suppliersallocatedtoriskclass1may,however,bedowngradedtoclass2or3iftherearereasonstosuspectahigherriskoriftheriskisincreasedbyspecificcircumstances.Conversely,responsiblesuppliersmaybeupgradedtoaclassindicationalowerrisk.Category3:non-OECDcountriesCategory1:OECDcountries23.09.200414ProductRisk:InternationalstandardclassificationCategoryCCategoryBexplosiveverytoxictoxiccorrosiveextremelyflammableirritantoxidizingenvironmentallyharmfulharmfultohealthhighlyflammable23.09.200415C3:DecisionProcess23.09.200416Factoryvisit:FirstviewingEvaluationof:Production:Statusofplantandbuildings,cleanlinessandhygiene,employmentprotection...Environmentalprotection:effluenttreatment,emissionstoenvironment,wastemanagement...Qualitymanagement:labequipment,controlofprocesses,documentation....Qualityofmanagement:knowledgeofprovisions,safetytrainings,...Logistics:stock-keeping,acquisitionofrawmaterials,waterandenergy...23.09.200417•ToxicProduct•OpenSystem•PoorMaintenanceFacto