Driving Decarbonization Together!
Sustainability doesn’t stop at company borders – that’s why we also consider our suppliers and business partners as part of our overall sustainability approach. We talked to Verena Buback, our Head of Sustainable Procurement, about our Supplier Decarbonization Program.
Over 40 % of our company’s greenhouse gas (GHG) emissions are emissions associated with purchased goods and services, meaning they occur upstream in our value chain. How do we cope with such emissions?
We have set very ambitious science-based climate targets to be met by 2030 which are in line with the Paris Agreement to limit global warming to 1.5 °C. This is an important milestone on our journey to become climate neutral by 2040. Reducing the emissions arising in our value chain is crucial to achieve our climate targets. To address the emissions related to purchased goods, services, and capital goods, we have launched the global Supplier Decarbonization Program in 2021. Through the program, we join forces with suppliers accountable for the majority of these emissions and aim to jointly identify reduction opportunities.
In practice, we collaborate with up to 57.000 different suppliers. Could you please elaborate a bit more on the approach of the Supplier Decarbonization Program?
Of course, we cannot work on this topic with all our suppliers at once. We have started to approach those suppliers who are responsible for a major share of our emissions in 2021 and increased the number of approached suppliers in 2022. Reducing GHG emissions in our supply chain is shared responsibility. Therefore, it is crucial to partner with suppliers and start taking measures from a common ground. To create this starting point, we approached the selected suppliers with a survey to understand their own decarbonization ambitions and already taken measures. We follow up with these suppliers in regular meetings to review the mutual starting point and discuss further targets and actions.
What are the biggest challenges your suppliers face and what specific measures do we offer to support their transformation?
The level of maturity of our suppliers with regards to decarbonization is very diverse. Some suppliers inspire us with their achieved emission reductions, or they already offer us newly developed greener product alternatives. Other suppliers are in a similar phase of sustainability transformation as our company and face similar challenges, such as how to enable suppliers to provide Product Carbon Footprint data or embed sustainability meaningfully as a future supplier selection or performance criterion. The biggest challenge I still see globally remains the need to raise awareness for the required transformation and the knowledge gap to execute it. To help build capabilities, we offer our suppliers free access to the Together for Sustainability Academy with numerous trainings on sustainability and decarbonization aspects. And we openly share our approaches and taken measures.
1. Data Availability
Dependency on suppliers to provide data which might be confidential regarding competitiveness and a lack of data sharing (options).
2. Data Accounting
Inconsistencies of different methods; complex supply chains; verification.
3. Lack of Direct Control
Suppliers need to be willing and able to reduce emissions. Our influence varies.
4. Cross-Sectoral Approach
Greener alternatives for suppliers and/or products need to be identified.
Need for training, knowledge, and time – on our side and the suppliers.
So in 2021, we paved the way for the Supplier Decarbonization Program with questionnaires & info material. In 2022, we have integrated the new decarbonization strategy into procurements regular work. What are your long-term goals for this program?
The long-term goal for the Supplier Decarbonization Program is to achieve and report reductions of emissions associated with the products we purchase. To reduce emissions, we need to continue to work with our suppliers and further strengthen our ability to jointly develop and source greener products and alternatives. With regards to emission reporting, we need to start building a true carbon accounting which reflects reduction measures taken by suppliers in our GHG reporting. To achieve this, we need to receive reliable Product Carbon Footprint data from our suppliers – which is still a challenge for many reasons.
Our long-term goals for sustainability go beyond GHG emissions. By 2030, we want to create sustainable and transparent value chains for our company. Sustainability encloses many more aspects beyond GHG emissions, and I expect the importance of sustainability to further increase. Procurement is actively leading the transformation of our supply chain towards a more sustainable one through own measures as well as by joining forces with peers across the industry through associations and initiatives. I see a long-term objective of high transparency of supply chain data and information across the full value chain, from the first supplier of a material up to the final customer.
One of these industry initiatives our company is actively involved in, is the aforementioned industry initiative Together for Sustainability (TfS). What is it? And what value does such teaming up with potential competitors have for our company?
TfS is a member driven organization within the chemical industry, launched over 11 years ago to set the standards for environmental, social and governance performance. One core benefit are supplier audits and assessments executed according to a joint standard resulting in less efforts for suppliers and TfS members to ensure sustainable supply chains. The most recent achievement of the currently 37 TfS member companies is the launch of a first-of-its-kind Product Carbon Footprint Guideline. It introduces a harmonized calculation approach for chemical materials while remaining fully compliant to globally accepted GHG accounting standards like ISO and greenhouse gas protocol.
One last personal question for both of you: How has your work on the program in the field of sustainability changed your everyday life? Have you changed habits regarding your personal carbon footprint?
I have analyzed my carbon footprint and which habits create the most emissions. No surprise, key drivers are energy consumption and mobility. So, I try to go more by bike or public transport and had solar panels installed on my roof. I also try to buy things second-hand to reduce waste. But there is still a lot of room for me to become more sustainable. I also note that for many products we use in our daily lives, green alternatives are scarce, so I count on the industry to develop new products and solutions meeting our needs in a much more sustainable way.
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