Sourcing sustainably

We spent over 9 billion euros in 2008 on products and services. This considerable purchasing spend provides us with an opportunity to influence the sustainability of our own supply chain.

We are guided by international environmental and social standards when it comes to purchasing decisions. In order to ensure a consistent approach throughout our company, we introduced a Supplier Code of Conduct in 2007. This was revised in September 2008 following dialog with our suppliers.

To ensure that the Code is workable, we set up a multidisciplinary team with experience across a range of procurement responsibilities. The Code covers:

• laws and ethical standards (including labor and human rights)
• health and safety
• business continuity planning
• improper payments and bribery
• the environment
• business partner dialog

This Code is part of all new contracts with suppliers. Early in the procurement process we request that our suppliers commit to the Code before proceeding. To support its implementation, we have developed guidance notes for our procurement teams and trained more than 500 of our buyers on the content of our Code in 2008.

Our Code alone cannot ensure compliance, but it provides a solid foundation for engagement with suppliers so that our expectations are clear.

We are continuing sustainable sourcing initiatives

In 2007, we launched a global program to systematically review our major purchasing categories and to negotiate more environmentally- friendly alternatives. In 2008, we introduced a standardized environmental "request for information" form that facilitates the understanding of ecological standards within our supplier base, and which provides the basis for discussing alternatives.

We are also continuing sustainable sourcing initiatives such as fleet procurement, "greener" IT, and paper sourcing. At the beginning of the 2005, we underlined our commitment to using recycled-paper products by becoming a member of Germany's Initiative Pro Recyclingpapier. Our Procurement organization, for example, has significantly increased the percentage of recycled and sustainably-sourced paper it purchases, in line with the guidance in our Corporate Paper Policy, to over 80% in 2008.

Another aspect of our program is to challenge our employees to think about how their purchases impact the environment. For example, in 2008 we held a "Green Purchasing" Information Day at our Corporate Headquarters in Bonn. It showcased more environmentally-friendly options for a range of items such as "green" energy, stationery products made from recycled materials, and environmentally-friendly cleaning supplies.

In December 2008, we announced measures to improve the environmental credentials of our company car fleet for our executives in Germany. Under the new guidelines, executives are set maximum CO₂ emission limits for each category of car and offered incentives to downgrade to a more CO₂ efficient car. They also have the opportunity to choose a season rail ticket ( BahnCard 100 ) instead.

We will continue to use our considerable purchasing power to help influence our supply chain, and to help us realize our CO₂ efficiency targets and broader sustainability goals.