Schneider Electric Rethinks Supply Chains for Net Zero
While financial performance has historically been paramount for businesses, the modern manufacturing landscape requires organisations to focus equally as strategically on sustainability.
Procurement leaders worldwide, including those in the manufacturing sector, are navigating these new sustainability standards despite potential cost challenges.
At the forefront is Schneider Electric, where Chief Procurement Officer Ard Verboon promotes supplier and partner collaboration as key to achieving long-term supply chain sustainability.
Tackling emissions
Schneider Electric embarked on its sustainability journey by forging stronger partnerships with its suppliers.
"While challenging, we cannot afford to not make our supply chain more sustainable, and we wonât achieve it alone," says Ard. "Greater impact is made when we collaborate with our suppliers to work towards a common goal."
In 2021, the company launched The Zero Carbon Project, enlisting its top 1,000 global suppliers, contributing to 65% of Schneider Electric’s Scope 3 emissions.
The initiative encapsulates a 'roadmap to decarbonisation,' the core of the Zero Carbon Project:
- Analytics – quantifying carbon footprints, such as evaluating Scope 1 and 2 data and setting collection frequency.
- Ambition – setting both short and long-term emission reduction goals.
- Action – implementing planned priorities and determining key participants for sustainability measures.
This comprehensive project addressed emissions from the ground up, equipping suppliers with the necessary tools and training to reduce their carbon footprint.
To date, it has achieved a 42% reduction in global operational emissions on average and supported approximately 700 organisations in documenting their carbon impacts.
Ard continues: "Through this programme, we’re not only working towards our own sustainability commitment but multiplying our impact – suppliers feel encouraged and supported to do the same across their own ecosystems with their own suppliers, partners and customers."
More informed sourcing
Chief Procurement Officers (CPOs) need to broaden their focus beyond individual products, considering their company's overall impact through sustainable materials sourcing.
In particular, a reliance on natural resources for raw materials is becoming unsustainable given the pace of production and disposal by businesses.
The United Nation's 2024 Global Resource Outlook Report states: "The annual global extraction of materials has grown from 30.9 billion tonnes in 1970 to 95.1 billion tonnes in 2020."
It continues: "If we do not change, we could see resource use up by 60% from 2020 levels by 2060."
To address this, Ard encourages CPOs to adopt low-carbon materials, sustainable packaging, and cyclical sourcing.
He notes: "Take a moment and think back to the last time you ordered something, how many layers of packaging did it come with before you reached the item you bought?
"Now, imagine that across your organisationâs value chain. If this concerns you, I guarantee your customers are concerned about it as well."
Thus, procurement teams are urged to embed sustainable sourcing practices across their operations.
By 2025, Schneider intends that 50% of its products will be composed of low-carbon materials, with all packaging made from recycled cardboard.
The company also collaborates with suppliers to ensure the use of circular and low-COâ methods in plastics, steel, and aluminium extraction and processing.
Ethical Supply Chains
Schneider Electric conducts annual ESG reviews across its supplier networks to ensure ethical and environmental compliance.
"Since 2022, we have been building our Decent Work programme which aims to drive beyond regulatory framework practices, which provides training and resources to our supply base," says Ard.
Procurement professionals must remain acutely aware of their supplier partnerships, particularly those at risk of human rights violations.
In 2024, Schneider, in collaboration with the WageIndicator Foundation, enhanced its living wage strategy via a three-year partnership to facilitate more equitable wage decisions.
By collaborating with suppliers and other organisations, Schneider Electric’s procurement teams have exemplified how manufacturing innovations can be systematically applied throughout company processes.
