Supply Chain Sustainability
Procurement
Procurement Sustainability Tasks
2020.08.24
2. General trends
A changing world:
Regulatory environment will continue to tighten
Phase out of ICE is building momentum
2030
2025
Norway
Sweden
Public pressure due to
environmental
concerns is leading to
increased regulation.
2020-10-16
Denmark
The Netherlands
EU Green Deal – Focus on
climate action, but also
circular economy, air quality
and responsible supply
chains.
Volvo Car Group Sustainability Strategy -
Security class: Internal
Iceland
India
Slovenia
China – Mandatory
corporate and
product CO2 lifecyle
reporting from 2025.
Ireland
Ban on ICE sales
– Increasing
number of target
dates.
2035
2040
United
Kingdom
France
Action on urban pollution
– Low emission zones
likely to become zero
emission zones.
5
Our company purpose
Freedom to move in a personal,
sustainable and safe way
PERSONAL
We commit to develop and build the most personal
solutions in mobility - to make life less complicated
and to protect your freedom to spend time and
energy on the things that matter most. Our products
and services are personalised, familiar and luxurious.
SUSTAINABLE
We commit to the highest standard of sustainability
in mobility to protect the world we share. We are
authentic, responsible change-makers. Our ethical
values run through everything we do.
SAFE
We commit to pioneering the safest, most intelligent
technology solutions in mobility and everyday life to
protect what is important to people.
Connection with corporate sustainability strategy
Climate Action
Circular Economy
Ethical and Responsible Business
Ambition:
Ambition:
Ambition:
Be a climate
neutral company
by 2040
Be a circular
business
by 2040
Be a recognised
leader in
responsible
business
Reducing CO2 represents the highest
priority in our sustainability strategy. By
electrifying our cars, working with our
suppliers and addressing our global
operations we target carbon neutrality in
line with the Paris Agreement, with a focus
on short term action.
We will transition into a circular economy
by designing for value retention, resource
efficiency and by eliminating waste. To
become a truly circular business we will
develop offers optimizing the usage of our
products and components.
Our commitment to responsible business
conduct and ethical values run through
everything we do. We are committed to
fight corruption whereever we operate. By
offering a safe, motivating and an inclusive
workplace we want to be the employer of
choice. We make a wider difference by
engaging in partnerships to promote
sustainable development.
8
Ethical & Responsible Business
Ethical and Responsible Business
raw material
Ambition:
Responsible sourcing of metals & minerals, e.g.
conflict minerals and cobalt
Be a recognised
leader in
responsible
business
supplier compliance
Measure and evaluate the sustainability
performance of Volvo Cars suppliers
Our commitment to responsible business
conduct and ethical values run through
everything we do. We are committed to
fight corruption whereever we operate. By
offering a safe, motivating and an inclusive
workplace we want to be the employer of
choice. We make a wider difference by
engaging in partnerships to promote
sustainable development.
partnership
9
Make a wider difference and benefit through
collaboration, including internal communication
Two key pick up
The European Commission will propose new
rules on mandatory human rights and
environmental due diligence in EU
companies’ global supply chain
• DG Justice has launch a public consultation on
the initiative (European commission study)
• legislation be tabled in the first quarter of 2021.
Cobalt in DRC
Amnesty was highly critical of car
companies like VW, General Motors,
Chrysler, Daimler, Renault, and BYD,
which it says have taken “minimal action”.
Leather from Paraguay
Earthsight report: Earthsight has connected illegal clearances to leather used by
BMW and Jaguar Land Rover
Legal requirement
Brand Value
Key focus of ethical and responsible sourcing
Supplier compliance
• Direct suppliers
• DM + IDP
• Evaluation + training
Raw material compliance
• Critical raw material: Conflict mineral, cobalt, lithium, mica, REE
• Supplier chain from tier 1 to raw material
• Evaluation + training
Compliance business behavior within organization as the foundation of ethical and responsible sourcing
• Sourcing strategy
• Internal knowledge start from awareness
• Influence sourcing decision (process, supplier data)
2020-10-16
Volvo Car Group Sustainability Strategy -
Security class: Internal
11
Purpose: secure we source from compliance
Code of conduct for business partners
Suppliers’ risk mapping
Know where are risks
Suppliers self assessment
questionnaire includes
certificate
Suppliers have policy and
certificate as basic
What is our requirement as Geely group?
Compliance due diligence
Financial evaluation
No supplier on the sanction list
Suppliers are financially stable
Critical raw material check
Filed audit
Training
Know where are the critical raw
material and risks
Understand field practice if
compliance to mitigate risk
Make sure suppliers understand
and know how to act
Contract
2020-10-16
Volvo Car Group Sustainability Strategy -
Security class: Internal
12
Ethical and responsible business product direction and target 2020
Secure
compliant
business
behavior for a
responsible &
transparent
supply chain
•
•
•
critical raw material’s responsible sourcing and traceability
direct suppliers’ compliance via different assessment
methods (from direct suppliers to tier x)
suppliers including critical raw material suppliers’
compliance behavior shall be a fundamental criterial for
supplier choice
strengthening our responsible sourcing and supply
chain through:
In the sourcing process, ensuring that
sustainability performance has equal weight
as cost and quality.
100% transparency of cobalt and 3TG
supply by 2020.
Sustainability assessment of all direct
material suppliers by 2020.
To achieve our ambition, we need build up our partnership and
collaborate for win-win
YYYY.MM.DD
Presentation title, Full name, Security Class: Proprietary
Picked up from sustainability strategy Oct 2019 Board material
14
Highlights of actions to ensure responsible supply chain
Understanding and improving supplier sustainability performance
100% DM suppliers have
a sustainability rating
based on SAQ
(IDP data based on SURFI to be
developed)
• To understand if a supplier has
policy and certificate as
fundamental sustainability
instruction document
Apply sustainability audit
to high risk suppliers
(Update strategy to request
suppliers take the responsibility and
before SD )
• To understand if a supplier’s
filed practice is in line with
provided policies and local
laws, understand the gap with
our code of conduct for
business partners
Compliance due diligence
check towards 100%
suppliers (DM+IDP)
Critical raw material’s
responsible sourcing and
traceability (start from
100% transparency of
conflict minerals 2020)
• To understand if a supplier is on
any countries’ sanction list or
with any reversed media
records
• To understand where critical
raw material (cobalt, mica,
lithium, REE) sourced from, and
sourcing condition
Highlights of actions to ensure responsible supply chain
Blockchain technology applied for cobalt
•
•
•
Trace cobalt from battery to raw material via blockchain
Extend the traceability to mining at DRC to secure responsible cobalt
Apply recycleled cobalt for P319 from CATL
Responsible business alliance Compass Award
Blockchain LG-Chem supply chain
Highlights of actions to ensure responsible supply chain
Sustainability Tech Show for suppliers in APAC
•
•
•
95 supplier high level (VP +) from 84 key suppliers
100+ product solutions from the companies for the tech show
Great brand promotion and advertising value RMB 15million
Climate Action & Circular Economy
18
We must act now:
18% of aspired CO2 target per car are envisaged to stem from
supply chain efforts
Ton
CO₂e
40
35
30
65%
36 ton
Average CO₂e emissions
per vehicle over its lifetime
25
2018
2025
20
15
54%
18 ton
10
30%
17 ton 39%
13 ton
5
0
Tailpipe emissions
Raw materials
and suppliers
5%
7%
2,9 ton 2,2 ton
Total operations
incl. Logistics
19
CO2 ton per car in supply chain
25
≈25 ton/car
20
≈17 ton/car
≈45 %
15
≈13 ton
10
Target 25%
reduction
per car
2018-2025
5
0
2018
2019
Forecasted level of CO2 emissions per car in
supply chain incl action plan
2020
2021
2022
CO2 emissions with no actions incl volume growth and BEV mix
2023
2024
2025
Identified actions in the supply chain to lower CO2 emissions to
new target at 12 ton/ car by 2025.
Main drivers: renewable energy, reduce CO2 impact in material
production & energy efficiency
Climate Action & Circular Economy
Supplier CO2 footprint
Monitor upstream emissions from the supply
chain and track improvement towards 2025
Renewable Energy
Implement the target of 100 % renewable
energy among Tier 1 by 2025. Target for Tier 2 +
Other emission reduction activities
21
Supplier commitments to contribute to the 25 %
reduction target by 2025. Global sourcing of low
emission suppliers. Supplier logistic.
Climate Action & Circular Economy
Recycled Content
Steel, Aluminum and Plastic
(general 25 % target, 40 % aluminum)
Closed-loop incl battery lifecycle
25 % closed loop of steel scrap and 40 % closed
loop of aluminum scrap from VCC plants.
Supplier waste reduction
22
4 % supplier waste reduction per year
till 2025 (baseline 2020)
2. General trends
Let’s increase profits while reducing environmental impact
Profitability
Making better use of
resources and products
can lead to substantial
new revenue streams and
cost savings. Estimated
that adoption of circular
economic principles in
Europe could lead to net
economic benefit of
€1.8 trillion by 2030.
Market for sustainable
business models increasing
e.g. car sharing schemes.
Renault already a leader
in circular economy.
Remanufactured parts
operation generates
€100 million p.a, and uses
70% less and 80% less
energy compared to using
only virgin parts.
Time
2020-10-16
Volvo Car Group Sustainability Strategy -
Security class: Internal
23
Highlights of actions taken to reduce CO2
Steering supplier selection towards target fulfillment