“1+3”: Building a responsible value chain

By Lucy Li Jin Xiu (BASF), BASF SE
01:51 PM, April 06, 2012

In China, there are over 32,000 chemical enterprises and many more if we consider the entire supply chain. Over 90% of the related companies are small and medium-sized enterprises (SMEs), which contribute strongly to the overall economic activities of the country but often find it hard to mobilise enough resources to effectively practise sustainable development. Thus, BASF in 2006 initiated a program called “1+3”, which mobilises and supports its partners and suppliers in China to improve their corporate social responsibility (CSR).

BASF believes the effort of sustainability should involve the entire value chain. For example, the analysis of emissions and energy consumption should not be limited to only one single producer of a chemical, but should take into account the entire lifecycle of a product, from raw materials sourcing to disposal. If all suppliers and customers adopt green practices by maximising the "good inputs" and minimising the "bad outputs", then the whole supply chain would help in mitigating risks and speeding up innovations.

The “1+3” CSR project is now gradually building up a responsible value chain by spreading and sharing the principles and practices of sustainability. To date, 60 local and international companies in China are participating in the project, thus enhancing performance in, for example, environmental protection, health and safety (EHS) management.

InitiatorBASF
Project start
2008
Statusongoing
Region
China
Contact person
Jin Xiu-Lucy Li
Awards
-

Project benefit

  • With the initial aim to spread CSR along supply chain, it turned out also to be a win-win solution for an innovative business model.
  • CSR also strategically reduces the operational risks of all partners along the supply chain.
Anti-Corruption -
Business & Peace -
Development -
Environment x
Financial Markets -
Implementing UNGC Principles in your Corporate CSR Management x
Human Rights -
Labour Standards -
Local Networks -
Advocacy of global issues -
Business opportunities in low income communities/countries -
Project funding x
Provision of goods -
Provision of services/personal x
Standards and guidelines development x
  • Chinese Business Council for Sustainable Development (CBCSD)
  • Other multinational companies
  • Approx. 36 small/medium-sized enterprises
  • Golden Bee Development Center

What does “1+3” stand for?

The “1+3” CSR project was initiated by BASF in October 2006 as an innovative approach in supply chain management. It was launched as a program under the China Business Council for Sustainable Development (CBCSD). CBCSD is a coalition of leading Chinese and foreign enterprises registered and operating in China, established through the Ministry of Civil Affairs. It helps the World Business Council for Sustainable Development (WBCSD) shape the sustainable development agenda at the local level and also provides a platform for exchange and cooperation among businesses, government and social communities in China.

A CBCSD member company like BASF forms teams with three types of business partners: customers, suppliers and logistics service providers - mostly SMEs - with the aim of promoting sustainability and giving guidance for best practices or customised solutions. Each of the three selected partner companies then introduces the same concept to a further three business partners in its own value chain: A snowball effect is created.

BASF had six “1+3” partners participate in its first round, which concluded in July 2008. These were customers – Huafeng Group, Guangzhou Liby Enterprise Group Co., Ltd., Beijing Plaschem Trading Co. Ltd. and Zhejiang Kaipute Spandex Co., Ltd. – as well as a supplier – Zhejiang Qiming Pharmaceutical Co., Ltd. – and a logistics service provider – Sinochem International Corp. Currently, BASF is running the second round of the “1+3” CSR project.

 
Dr. Jürgen Hambrecht
Dr. Jürgen Hambrecht

“Difficult times especially show that companies which conduct their business sustainably and responsibly are more successful in the long-term. That is why sustainability is a firm part of BASF’s strategy: Long-term success is not possible unless the environment and society are treated carefully. We are therefore committed to implementing the principles of the U.N. Global Compact.”

Dr. Jürgen Hambrecht, BASF chairman of the board

Dr. Jürgen Hambrecht, BASF chairman of the board, sees sustainability as a key factor to ensure long-term economic success. This is crucial, as the concept needs commitment at the highest level. In China, BASF is the chair of the Association of International Chemical Manufacturers (AICM), which aims to promote safe and clean practices in the manufacturing, distribution and use of chemicals. In December 2006, BASF, along with other member companies, such as Bayer, Dow Chemical, Exxon Mobil, Merck Chemical, Degussa Cyprus, Romania Gate Haas, DSM and the Shanghai-based China Europe International Business School (CEIBS), invited the leaders of 25 Chinese chemical enterprises to participate in training on EHS topics. This meeting instilled in them a strong awareness of the importance of sustainability as well as an understanding of how it could be implemented throughout their businesses.

"Ambassador + expert": jointly ensuring sustainability

If you strive to address a complex topic like sustainability, you need to get a feeling for your partner’s specific needs. That is why the BASF team started its work on the “1+3” project by sending questionnaires out to the partners, which helped them identify their areas for improvement. An expert team was then set up for each partner according to the chosen area of cooperation. These teams consist of a representative of the relevant BASF business unit – the “ambassador” – and one BASF “expert” in the specific EHS topic. This could be pollution prevention or occupational health and safety, for example. The teams then develop a tailored plan on how to improve the partners' sustainability management capacity and how to integrate the concept into their corporate strategies.

For example, one common problem in China that “1+3” participants can address is a lack of knowledge on how to obtain a Material Safety Data Sheet (MSDS), which is obligatory in China and describes the chemical and physical properties of a material and provides advice on safe handling and use of the material.

BASF developed tailor-made programs according to “1+3” partners’ specific requests, ranging from seminars and training to site visits and implementation. Through these, partners started to see the bigger picture of how and where to improve their EHS areas in a systematic way. BASF also provided training for a Road Safety Quality Assessment System (RSQAS), which is a preventive program to strengthen the safety and reliability of chemical transportation in China.

von Dreesen

Practice what you preach - Interview with Dr. Ulrich von Dreesen

ll experts agree that the inclusion of the value chain is crucial for the further sustainability development in Asia. We spoke with Dr. Ulrich von Deessen, President Competence Center Environment, Health and Safety, BASF SE about BASF’s sustainability strategy and their experiences in China. more[...]

In so-called “Eyes for Safety” visits, the six BASF expert teams first went to inspect each partner’s production site in order to get a picture of the partner’s EHS status and make it aware of the areas which might have been overlooked. Then, the BASF experts and the partner’s EHS managers together identified priority cooperation areas. “The BASF visit provided good insight for our middle management on environmental protection and safety management,” said Mr Zhang Qiming, the Board Chairman of Zhejiang Qiming Pharmaceutical Co. Ltd. after an “Eyes for safety” visit.

In the implementation phase, the project groups also provide training to address common issues faced by all companies. Every project group also reviewed one of their partner’s reform strategies.

Sustainability solutions are usually implemented over a long-term period. This is why “1+3” aims to accompany our partners beyond the first year. In order to help our partners to ensure sustained improvement in their sustainability practices, BASF offers self-assessments in the form of a questionnaire asking about their improvement progress, which are then quickly addressed by BASF experts. This proved to be a very helpful tool for our partners to view their implementation as a long-term process and to ensure continuous improvement.

During a “1+3” sustainability self-assessment seminar in July 2008 in Shanghai, senior executives from six “1+3” partners and the BASF project team attended a roundtable discussion. BASF experts presented detailed analysis on their six Responsible Care (RC) systems and best practices. This trust-filled sharing not only of good experiences but also of challenges and related problem-solving techniques with regard to practical implementation of sustainability aspects is another fruitful result of the whole project. All participating companies are committed to continue to implement their social responsibility objectives by putting more sustainability ideas into practice.

The fruits of the “1+3” sustainability project

All participating companies are committed to continue implementing their social responsibility objectives by putting more sustainability ideas into practice at the conclusion event to '1+3' project in July 2008.
Photo: BASF
All participating companies are committed to continue implementing their social responsibility objectives by putting more sustainability ideas into practice at the conclusion event to '1+3' project in July 2008.
Photo: BASF

Improving value chain competitiveness and creating new customer relations:
By disseminating the “1+3” ideas and values to more partners, BASF continually broadens the platform for dialogue with them and puts an innovative customer relationship into practice. Mutual trust is established between the two parties, effectively laying the foundation for a long-term strategic partnership. This not only strengthens BASF's inter-departmental cooperation, but also reduces risk in its value chain.

Raising awareness of sustainability amongst participating enterprises and satisfying their developmental needs:
As China’s economy is increasingly integrated into the global economy, actively practising sustainability and integrating it into business practices has been essential to maintain core competitiveness. In this respect, BASF’s six partners all believe that the “1+3” project was just what they needed. They have benefited from the free access to advanced sustainability management techniques from a large multinational corporation such as BASF. The six enterprises have integrated the “1+3” concept into their corporate strategies by improving their employees’ workplace safety and their companies’ surroundings as well as strengthening dialogue with various stakeholders. They have also held seminars themselves on process safety management systems or sustainability practices. One partner has even submitted a proposal to the National People’s Congress aiming to promote the “1+3” concept. At the same time, the six partners have kept focused on emissions reduction in the production process and promotion of the sustainability concept in their own supply chains.

Role-model effect:
In January 2008, the United Nations Global Compact named the BASF “1+3” CSR project a case study that was then shared among members and enterprises worldwide. In China, Zhai Qi, executive secretary-general of the China Business Council for Sustainable Development (CBCSD), believes that “1+3” has already become a model for the dissemination of sustainability principles throughout the Chinese economy because it has proved particularly successful among small and medium-sized companies.

The snowball effect goes on…

After the successful implementation of the “1+3” CSR Project, BASF launched the "Golden Bee" concept with China WTO Tribune to further promote sustainability in China. The analogy of honeybees was chosen because the bees naturally create a win-win situation. BASF, together with China WTO Tribune and China Ocean Shipping (Group) Company, announced the "2007 Golden Bee CSR China Honor Roll" in April 2008. Sixty of the 205 participating enterprises were honoured as pioneers and role models, based on their corporate governance, overall business performance and CSR practices.

The 1+3 program

BASF firmly believes that shouldering sustainability challenges leads to stronger competitiveness. Since China’s ambitious sustainable development goals cannot be achieved by large companies alone, BASF hopes that more local enterprises will gradually join in to share their sustainability practices with a large number of small and medium-sized companies along their supply chain – just like a bee disseminating pollen. Following this model, the partners benefiting from their involvement in the project would commit to continuing the “1+3” model – which means the number of partners will soon triple, and so on. If this process continues to replicate itself, a new paradigm can be created. The practice of the “1+3” model could influence all businesses and eventually the entire society.

 
 

This project description was originally presented in the Global Compact International Yearbook 2009.

About the Authors
Jin Xiu, Lucy Li
 
BASF SE

About BASF

BASF is the world’s leading chemical company. With about 111,000 employees, six Verbund sites and close to 370 production sites worldwide we serve customers and partners in almost all countries of the world.

Products

The BASF portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas.

 
The views expressed in this article are the author's own and do not necessarily reflect CSR Manager's editorial policy.
 
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