Schneider Electric: Unlocking Supplier Collaboration

Though businesses of the past were judged primarily on financial success, companies today are fighting to become sustainable organisations.

Procurement leaders around the world are adapting to these new standards, particularly as sustainable platforms and resources can often come with higher costs.

Schneider Electric and its Chief Procurement Officer Ard Verboon argue that collaboration with suppliers and partners is vital long-term supply chain sustainability. 

Tackling emissions

Schneider began working on its sustainable goals by creating a closer partnership with its suppliers.

"While challenging, we cannot afford to not make our supply chain more sustainable, and we won’t achieve it alone," says Ard. "Greater impact is made when we collaborate with our suppliers to work towards a common goal."

In 2021, Schneider Electric launched The Zero Carbon Project, a collaboration involving its top 1,000 global suppliers – which make up 65% of the company's Scope 3 emissions.

The organisation created a 'roadmap to decarbonisation', which encapsulates the heart of the Zero Carbon Project:

• Analytics - how Schneider and its suppliers quanitify their carbon footprints, eg evaluating data regarding Scope 1 and 2, establishing frequency for collecting
• Ambition - targets for emission reduction should look at short term and long term goals
• Action - create a plan and start implementing it, examining what needs to be prioritised and who should be involved

The project tackled emissions from the ground up, providing suppliers with tools and training to reduce their carbon footprint in their own journeys.

It has already achieved 42% in average global operational emissions reduction and supported approximately 700 organisations in understanding and laying out their carbon footprints.

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

CPOs must consider their materials sourcing, thinking about the company's holistic impact, rather than simply one product at a time.

Raw materials sourcing relies on natural resources, but the speed at which businesses are producing and discarding these materials is proving unsustainable.

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 combat this, Ard advocates CPOs switching to low-carbon materials, sustainable packaging and cyclical sourcing.

He adds: "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 organisation’s value chain. If this concerns you, I guarantee your customers are concerned about it as well."

Procurement teams need to reprioritise purchasing decisions so they can integrate sustainable sourcing practices into their entire systems.

Schneider committed to 50% low-carbon materials in its products by 2025 and only using recycled cardboard in all its packaging. 

Moreover, it has been working with suppliers to ensure all extraction and processing of plastics, steel and aluminium uses circular and low-CO₂ methods. 

Ethical supply chains

Schneider undertakes annual ESG reviews across it supplier base to ensure suppliers are adhering to ethical and environmental practices. 

Ard adds: "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." 

Procurement must be hyper-aware of the suppliers they are working with, identifying those that are at high-risk of human rights abuses. 

In 2024, Schneider improved its living wage approach with the help of the WageIndicator Foundation, forming a three-year partnership which allows Schneider and its suppliers to make better decisions regarding wages. 

Through a series of collaborations with suppliers and other organisations, Schneider's procurement teams have shown how innovative solutions can be implemented throughout the company's processes.