Sustainability in action: Why Scope 3.1 emissions have top priority in K?rber's supply chain management

I don't know about you, but if there's one thing that has made a lasting change in my personal shopping behavior, it's this: I pay close attention to where products come from. Not just at the supermarket, but with other things as well. Where do the goods come from? What routes have they taken? Can their origin be traced and verified? What applies to me and my purchases also applies on a large scale to K?rber - the Group for which I have been COO/CTO for five years.

It directly addresses an issue particularly close to my heart: Sustainability. Embedding it in our corporate strategy and implementing it consistently in all our business processes are among my foremost tasks - covering environmental, social, and corporate governance aspects. One of our main goals in the environmental dimension is the reduction of our CO2e emissions and the energy consumption. We have been putting everything to the test with our ambitious goal of becoming carbon neutral by 2025 within our own production. Be it how sustainable we work, how we already go beyond with our innovative products and solutions, or where and how we source our materials.

Find out where we currently stand in our?Sustainability Report 2022.

Scope 3.1: One of our main levers in reducing CO2e?

As an international technology group, we can achieve the most regarding the environmental dimension of sustainability by reducing CO2e emissions. CO2e because it is not just carbon dioxide that contributes to climate change, but many other greenhouse gases such as methane and nitrous oxide. CO2e is a measure of the global warming potential of all greenhouse gases developed by the United Nations' Intergovernmental Panel on Climate Change (IPCC).

Scope 3.1, which encompasses emissions from the production of purchased goods and services, is one of our focus areas for reducing CO2e emissions. It includes the production or extraction of raw materials, manufacturing, and transportation up to our "front gate”. In essence, Scope 3.1 includes emissions arising from Tier 1 suppliers, those directly providing us with materials. Therefore, I consider it an immensely important step to integrate our sustainability goals into supplier management.

Sustainable supply chains are no one-way street?

At K?rber, we continue to address this issue with the highest priority. After all, we work with around 10,000 suppliers in 80 countries worldwide and source about 50 percent of our Group production. To put this into perspective, approximately 40 percent of our CO2e emissions in our upstream and downstream value chains are generated from purchased goods and services and are therefore not directly under our control.?

This is what makes capturing and reducing these emissions so challenging. Robust, future-proof, and sustainable supply chains are not a one-way street. They can only be successful if everyone works together. We partner with our suppliers through active dialogue, knowledge sharing, and supplier development to systematically measure and reduce CO2e emissions.

K?rber's Procurement & Supply Chain Management?plays a key role here. Using digital platforms such as the cloud-based software IntegrityNext , we assess new and existing suppliers regarding their sustainability practices, particularly their carbon footprint practices and reduction targets and measures ensuring continuous and transparent control of our supply chains.

Taking responsibility: CSR assessment is a must

We require suppliers to regularly provide us with detailed information about their business and sustainability practices if they wish to do business with us or want to do so in the future. In addition to meeting the essential requirements set out in the Supply Chain Act (i.e., human and labor rights, anti-corruption, and anti-bribery), this enables us to also monitor all our suppliers with regard to their CO2e footprint and reduction targets.

K?rber only considers suppliers who undergo this CSR self-assessment. And only those who meet our sustainability standards are considered suppliers. Moreover, suppliers with evidence of excellent sustainability practices have a clear competitive advantage.?

Simply put, if two suppliers offer a similar price and quality, the one with the higher sustainability rating gets contracted.?

What lies ahead??

We are aware that constantly checking and collecting as much information as possible about our suppliers is not a perfect solution. And that it is never really possible to cover everything.

The interplay with other factors that are becoming increasingly relevant is important. For example, regional sourcing will play an increasingly important role for us in the future. Wherever possible, we already source raw materials, preliminary or semi-finished products, and other goods for our production sites in their respective regions. Not only will this simplify logistics, but it will also significantly reduce our carbon footprint.?

Particularly concerning purchased parts for our machines and services, we increasingly focus on our suppliers' product CO2 balance. In addition to price and quality, they will have to submit information on the CO2 value of their goods. As a result, we can work more closely with our suppliers to reduce CO2 emissions and make our own products more sustainable – it's quite simple: less risk in our supply chains means less risk for our customers.?

It's worth it?

There is no denying it: We must do everything possible to live more sustainably. This applies to our personal lives as well as our professional and business lives. Companies, in particular, have a significant role to play. They need to be, if not pioneers, then at least enablers so that sustainability is taken into account in all areas of life. This also affects how we do business at K?rber, where we have long been working intensively on sustainable solutions. In the medium and long term, this will give us a clear competitive advantage.?

In the future, many more decision-makers and regulators must let themselves be questioned - and rightly so: Where do all the goods and products we surround ourselves with and consume daily originate? It is up to us not to let them off the hook. Even if we start on a small scale, as I do, by paying closer attention to the product labels in the supermarket and changing our shopping habits.

?What do you think? What will the future of sustainable supply chains look like?

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