Process Innovation
01/27/2025 | Process Innovation
The past decade has seen quite astounding advances in industry’s approach to sustainability, with many companies reporting that they’re not only on course to meet their net-zero targets, but are accelerating them by up to five years as they adopt ever-better practices. The halls of ACHEMA were awash with examples of how many of our blue-ship exhibitors are exceeding shareholder expectations, much to the envy of smaller businesses who may lack the resources, expertise and wherewithal to take the necessary long-term approach.
But there is compelling evidence that some of the bigger players are more than living up to their social responsibilities as industry exemplars by inspiring others to follow suit.
Schneider Electric have now been voted the world’s most sustainable company by Time magazine, not just for its own effort but the influence it has had on its entire supply chain.
Carbon emissions from their top 1,000 suppliers fell by 27 per cent since they launched a new programme of green measures. At the same time, 21 per cent of the company’s most strategic partners are confirmed to have met their “decent” work standards. Chief Sustainability Officer Lopez Diaz said "this holistic approach ensures ESG is integral to our business strategy and operations,” adding: “We care deeply about the impact we have throughout our ecosystem and the legacy we leave behind us. That’s why we’re determined to accelerate our sustainability program in its penultimate year and bring everyone along for lasting, positive impact.”
Pamela Fandel, who is Head of Corporate Sustainability, described a similar philosophy at Merck: “Sustainability is an integral part of our business and a core responsibility. As a leading science and technology company, we want to use our innovative strength to create shared value for both society and our company,” she said. “Our long-term goals are to support human progress for more than one billion people, to fully integrate sustainability into all our value chains and to achieve climate neutrality. Our sustainability impact goes beyond our operations. By integrating sustainability into our value chains, we’re driving change among our suppliers and our partners. Our growing portfolio of greener product alternatives empowers customers to make sustainable choices. And through external collaborations we’re catalyzing industry-wide change. We believe our science and technologies can address global challenges and create lasting value for our business, our stakeholders and society as a whole – and we hope to inspire others to join us on this journey.”
Similarly, Finland’s oil giant Neste, rated highly in LinkedIn’s careers sustainability ratings, has invested heavily in researching biofuels to pivot its whole corporation into a more sustainable future and bringing others along with them. They are clear about their “high standards” on green issues, insisting: “Our work is guided by the Neste sustainability vision which we have set ourselves aspirational targets for climate, biodiversity, human rights, as well as our supply chains and raw materials – issues that are all interlinked. Together with our partners we are aiming at a carbon neutral and nature positive value chain by 2040.”
Behind this movement are many big names. Google’s CSO Kate Brandt, who once served the Obama administration as sustainability lead, firmly believes that collaboration should be at the heart of all net zero which, in her words, “requires ecosystem change and these changes can only happen in partnership.” Despite the challenges, sustainability opportunities for small firms are vast. With smaller and flatter organizational structures, small businesses can often make quicker decisions and innovate more rapidly than their larger counterparts. They also tend to be more deeply embedded in their local communities, which can lead to more sustainable sourcing practices and stronger community ties.
But one drawback is they don’t have a duty to. Large companies meeting certain turnover, or employee number criteria are obliged to make public significant climate change mitigation and environmental actions.
But that doesn’t apply to SMEs which account for 99 per cent if the business community in the UK, according to London-based finance expert Mark Lumsdon-Taylor who asks: “Is that really the point?” He told All Things Business magazine: “Engaging with ESG and sustainability can not only help the planet and its people in so many ways, it can also help your business to be better, improve its profitability and secure its future sustainability. Surely no business needs to be mandated for that.”
It is estimated that up to 90 per cent of an organisation’s environmental impact lies in its value chain, both upstream within the produce supply chain or downstream in its use phase.
That’s why so many countries have introduced laws for supply chain sustainability that require businesses to report on due diligence.
The UK’s 2015 Modern Slavery Act, is one example. California’s Transparency in Supply Chain Act in 2010 is another.
The German supply chain Act, which came into effect in 2024, represents a very significant step, giving the government multiple enforcement options.
The EU Supply Chain Law goes a step further than the German model as it applies to far more companies: those with far fewer employees than the 3,000 under the country’s rules.
Many companies have made headway with a direct approach, Siemens, for example, estimates more than 90 per cent of its business helps customers with their own sustainability objectives.
The company estimates that the technology it provided in 2023 helped customers avoid 190 million tonnes of CO2 emissions – up almost a quarter on the previous year.
Chief People and Sustainability Officer Judith Weise said: “We’ve been making strong progress towards our ambitious sustainability targets. We are making an effective contribution toward combatting climate change and are driving the sustainability transformation of our customers and economies.”
A key plank of that thinking is that technology is the key to sustainable future, and given that people will develop this technology, it is investing hundreds of millions of dollars in training employees in the skills that will encompass technology and sustainability.
An example is the way it is using Xcerlerator, a digital business platform that gives clients access to a portfolio of connected hardware and software, something they describe as “a powerful ecosystem that helps you reach your sustainability goals”. More generally, they aim to minimize risks and leverage opportunities in their supply network with a management process that “focuses not only on quality, costs and availability, but also on our suppliers’ ability to innovate, and sustainability aspects."
“In addition, we have developed a system of suitable processes – detection modules – that allow us systematically to identify potential risks in our supply chain… we apply a risk-based approach. This framework makes use of both internal and external information sources that enable us to focus our risk mitigation activities where they are most needed."
Within this framework a customised action plan for the future is drawn up for any suppliers identified as high-risk. Possible actions include the initiation of a development plan, a sustainability audit or the phrasing-out of the suppliers.
Christoph Jaekel, Vice President Corporate Sustainability, of BASF described “a joint call to have a credible and auditable methodology in play along the value chain”. He added: “Our Supplier CO2 Management Program creates transparency amongst our suppliers about product-related CO2 emissions of our purchased raw materials. We offer support and share our knowledge of Product Carbon Footprint assessment methods and tools to suppliers and customers, also SMEs."
As a member of Together for Sustainability (TfS), BASF drives the standardization of PCF methodology and data exchange along chemical supply chains: "this initiative helps setting a reliable foundation for credible and verifiable greenhouse gas emission reduction measures.”
Sanofi has a simple philosophy that drives forward their collaborative approach: “Progress doesn’t happen without our people and our partners; united by the desire to make an impact.” Just as senior staff like these pictured taking part in a beach cleanup in Waterford, Ireland, they lead by example with projects such as their Energise and Manufacture 2030 programs intended to shift shared supply chains toward 100 per cent renewable electricity and reduced emissions, “We’re taking action as one company, and empowering people to do more to protect the planet. Every year, we invest €3 million in turning our employees’ ideas for sustainability into solutions that work,” they say.
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