Achieving Sustainable Supply Chain Transformation: How BMW reduced its carbon emissions by 1 million tonnes
Acquisition
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BMW recently released its FY22 annual report. A key part of its business strategy is the reduction of its supply chain carbon emissions by 20% by 2030. The report details how they have begun to realize its ambitious target. Following the release of its success so far, we’ve explored the key aspects of how BMW reduced carbon emissions by 1 million tonnes during FY22.
The 4 Pillars for Change
To achieve its targets, BMW has put in place 4 key pillars that govern its approach to emissions reduction in its supply chain.
1. Direct Contracting for Raw Material Suppliers
BMW takes a proactive approach by directly contracting with raw material suppliers, ensuring that their sustainable principles are not just verbal commitments but an integral part of their commercial model. By establishing these direct partnerships, BMW gains better control over greenhouse gas emissions (GHGs), and product specifications that substitute or eliminate harmful processes.
2. Carbon Reduction Measures in Commercial Contracts
BMW integrates carbon reduction measures into commercial contracts with suppliers. These contracts formalize the shared commitment to reduce carbon emissions throughout the supply chain by aligning financial incentives with transparency and traceability.
3. BMW Group Supplier Code of Conduct
To reinforce sustainability principles and ensure consistent adherence, BMW updated its Supplier Code of Conduct. This code outlines the expectations and requirements for suppliers to align with BMW’s sustainability goals, including carbon reduction measures. By setting clear guidelines, BMW encourages suppliers to adopt sustainable practices and actively contribute to carbon emission reduction efforts.
4. Supply Chain Training
Recognizing the importance of knowledge and awareness, BMW provides comprehensive training throughout its supply chain. From the procurement department to the lowest-tier suppliers, training initiatives focus on educating stakeholders about sustainable practices and the importance of reducing carbon emissions. This training plays a crucial role in fostering a collective understanding and commitment to sustainability throughout the supply chain.
Results Delivered!
Thanks to these strategic initiatives, BMW achieved a remarkable outcome in 2022, successfully reducing carbon emissions by 1 million tonnes in their suppliers’ production facilities. This significant reduction demonstrates the effectiveness of BMW’s holistic approach and the commitment of its supply chain partners to sustainable practices.
How can you replicate this success in your supply chain?
BMW’s success has been built on hard work and a consistent and structured approach. Their success, though, can be reproduced in your organization by applying the same approach BMW has undertaken.
- Assess and Prioritize: Investigate Your Emissions
Before embarking on your sustainability journey, conduct a comprehensive assessment to understand your emissions landscape. Identify and prioritize the emission sources within your supply chain that have the most significant environmental impact. This strategic analysis will help you allocate resources effectively and focus on high-priority areas for emission reduction. - Design for Integration: Create a Supply Chain Aligned with Sustainability
Streamline your supply chain processes and workflows to enable seamless integration of sustainable practices. Design your supply chain to facilitate the utilization of direct agreements with suppliers, ensuring the efficient implementation of sustainability measures. This strategic alignment sets the stage for streamlined adoption and maximizes the effectiveness of emission reduction efforts. - Secure Senior Buy-In: Enlist Executive Support for Swifter Progress
To drive meaningful change, secure senior management buy-in and support. Highlight the potential benefits and competitive advantages of sustainability initiatives to garner their commitment. With senior leadership backing, you can secure the necessary resources and streamline decision-making processes, accelerating progress and enhancing the overall success of your sustainability strategy. - Transparent Communication: Inform Suppliers about Your Targets
Effective communication is vital to engaging suppliers and fostering collaboration. Transparently share your emission reduction targets and emphasize the importance of working together to achieve shared sustainability goals. This transparency builds trust and alignment, encouraging suppliers to adopt sustainable practices and actively contribute to emission reduction efforts. A good example of transparent communication are Supplier Codes of Conduct - Empowerment through Training: Equip Suppliers with the Tools for Success
Empower your suppliers by providing comprehensive training programs focused on sustainable practices and actions required to achieve emission reduction targets. Equip them with the knowledge, resources, and best practices necessary to drive positive change. This training ensures a unified understanding of expectations and supports the successful implementation of sustainable measures throughout the supply chain. - Collaborative Partnerships: Foster Collaboration for Maximum Impact
Emphasize collaboration as the linchpin of your strategy. Cultivate strong partnerships with suppliers, engaging in ongoing dialogue and knowledge exchange. Collaboratively identify opportunities for emission reduction, co-create innovative solutions, and share learnings throughout the supply chain. By fostering a collaborative ecosystem, you leverage the collective expertise and resources of your partners, multiplying the impact of your sustainability efforts. - Direct Contracting: Target High-Priority Emissions and Contract Directly
To accelerate progress, target emissions-intensive areas in your supply chain and establish direct contracts with key suppliers involved. By contracting directly, you gain control over sustainability practices, enabling you to align goals and establish mutual commitments. This approach ensures a clear line of communication and facilitates the seamless implementation of sustainable measures. - Cultivate Confidence: Believe in the Potential for Success
Maintain a confident and proactive mindset throughout your sustainability journey. Draw inspiration from BMW’s remarkable achievements, recognizing that substantial emission reductions within the supply chain are indeed attainable. Uphold a strong belief in the transformative power of sustainability and remain committed to your goals. With dedication and strategic action, success becomes not only feasible but an inevitable outcome.
Conclusion
BMW’s commitment to carbon emission reduction in its supply chain is a prime example of industry’s push towards sustainability. By directly contracting with raw material suppliers, providing comprehensive training, establishing a Supplier Code of Conduct, and incorporating carbon reduction measures into commercial contracts, BMW successfully achieved a significant reduction in carbon emissions in their suppliers’ production facilities.
This achievement not only contributes to BMW’s overarching sustainability goals but also sets a positive example for other companies looking to transform their supply chains. By adopting similar strategies and collaborating closely with suppliers, businesses can make substantial progress in reducing carbon emissions, improving operational efficiency, and contributing to a more sustainable future.
Resources to help you deliver the same results...
Procuropedia – Sustainable Procurement
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Procuropedia – Greenhouse Gas Monitoring
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BMW supplier code of conduct
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BMW sustainability site
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BMW aluminum sourcing strategy approach
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