Key driving factors and best practices for a sustainable supply chain
Sustainable supply chain management has remarkable potential to support China’s 30.60 goals. There are a broad range of optimisation approaches to reduce the environmental impact along the life cycle of a product, from the raw material to the end product. This seminar presented how to drive sustainability in global supply chain management and achieve ESG transformation together with suppliers. Attendees gained valuable insights and heard about best practice approaches:
Calibrating the 3Ps for a green supply chain
Daisy Chen of KPMG China, gave an overview on key driving factors and best practises for building a green supply chain. Businesses are facing the delicate balance of navigating and calibrating the interplay between the 3P – Planet, People and Profit. Although it’s going to be a challenge for many, companies need to balance different priorities to emerge as winners. Stakeholder expectations are a key sustainability driver: Consumers are changing consumption habits in favor of lower environmental impacts, employees place a greater emphasis on environmental issues, and company’s ESG efforts are already an integral element of investment decisions. It became clear that in addition to carbon emission management there are wider ESG considerations to be embedded in supply chain management to build a robust and resilient supply chain.
Chen took the automotive industry as an example to share best practices on how to engage suppliers and achieve end-to-end supply chain decarbonization. There are various roadblocks for supply chain decarbonization, such as data availability and uncertainty. Therefore, supplier engagement is key to drive ESG transformation through measures including procurement process optimization, performance tracking and assessment, or capacity building in a structured process. Digitization is an important enabler to empower companies on sustainable supply chain management. Enterprises are recommended to follow a green power strategy. Energy efficiency and reduction can result in real cost saving and sourcing green power is a key accelerator to drive decarbonization along the supply chain to fulfil the commitments for companies and its suppliers.
Net carbon-neutrality along the entire value chain
Ms. Wang Xiaohui, Mercedes-Benz Group China Ltd., spoke about Mercedes Benz’ commitment, targets and actions to drive sustainability in global supply chain management. “Ambition 2039” is the core element of Mercedes- Benz’ sustainable business strategy. The ambition is to make the entire fleet of new vehicles net carbon-neutral along the entire value chain and over the vehicles’ entire life cycle by 2039 – from technical development to the extraction of raw materials, to production, service life and recycling. On the way to “Ambition 2039” Mercedes Benz aims to at least halve lifecycle CO2 emissions per vehicle in this decade.
Wang introduced Mercedes Benz’ continuing BEV product launches in the Chinese market and described battery technologies and creating a circular economy for batteries as the biggest lever for CO2 reduction in supply chain and production. Together with their partners in the supply chain, Mercedes-Benz is pursuing the goal of offering net carbon-neutrality along the entire value chain. This is making carbon emissions and sustainability a key criterion for partner and supplier selection. In addition, it is a goal to achieve further resource conservation and detaching growth from resource consumption. An example for expanded use of sustainable material is 100% recycled polyester textile from PET in series production.
Finally, Wang recommended a structured four step decarbonization approach to SMEs: Understand the status quo, define vision and targets of sustainability, create a roadmap, and in the final step ‘bring it to the blood’ – execute, review and revise.
The keynote speeches were followed by a Q&A round that made clear that companies from different industries are facing similar challenges to achieve decarbonization along supply chains. We are happy to provide a platform for exchange of best practices from businesses for businesses!