Procurement drives Goodyear's latest ESG move
Manufacturers are always looking for ways to reduce the use of fossil fuels, searching for more sustainable, environmentally friendly systems, which can also produce products that will last longer for the consumers.
Researchers at Goodyear previously found that soybean oil can help reduce the amount of petroleum used in tyres, whilst also extending the tyres tread life. The company has now announced a new sustainable soybean oil procurement that reflects its strong commitment to the responsible sourcing of raw materials.
Through this policy the company believes that it can help guide processors, farmers and different members of the supply chain to establish practices and make sound environmental and social decisions related to the growing, harvesting, and processing of soybeans.
"Goodyear's use of soybean oil is growing, and we want our actions to make a difference in the lives of soybean farmers and others in the soybean supply chain," said , VP and Chief Procurement Officer. "Our new policy will help guide us as we work with processors, farmers, and others to strengthen the sustainability of the global soybean supply chain."
Goodyear's 2020 use of soybean oil increased 73% over 2019 usage, making progress toward its long-term goal of full petroleum oil replacement in its products by 2040.
Key components of the policy
The policy applies to all soybean-based materials sourced by Goodyear operations worldwide and Goodyear expects suppliers to apply these policy components throughout their soybean supply chains.
- Human Rights – Goodyear will work to ensure its soybean oil supply chain supports and protects the rights of all involved and fosters a positive working environment at all levels of the supply chain.
- Responsible Land Acquisition and Use – Goodyear will work to promote an environmentally and socially responsible soybean supply chain, free from deforestation and land grabbing.
- Soybean Oil Processing – Goodyear expects its soybean oil suppliers to manufacture their products in a responsible and environmentally friendly manner.
- Soybean Growing and Harvesting – Goodyear encourages its suppliers and any sub-suppliers to implement the best-known cultivation and agricultural practices, including, as applicable, those outlined by The Round Table for Responsible Soy.
- Supplier Alignment – Goodyear encourages its soybean oil suppliers and sub-suppliers to demonstrate commitment to responsible practices.
- Policy Implementation and Compliance – Goodyear is committed to the corruption-free and transparent implementation of the policy.
A greener future
Another innovation by Goodyear is the concept for a tyre that will automatically generate its own tread, continuously replacing the rubber that erodes from daily use. The concept called ‘’ aims to deal with the problem of tyres being scrapped. It shows a possible way to increase the longevity of tyres and allowing them to adapt to different conditions.
The reCharge tyre uses a biodegradable tread compound that can be replenished with special capsules. So instead of replacing the whole tire, you just replace the tread. “The tire is one of the few components that doesn’t stay on for the life of the vehicle,” says CTO l. “It’s replaced quite often. So the first problem to solve was to make the tire more of a permanent structure, as part of the vehicle itself.”
The tyre maker Michelin, has built its first plant as part of its efforts within the company to become carbon neutral by 2050 and they expect 80% of the material used in tires to be recyclable by 2050.
The tyre industry is ever evolving along with the rest of the world with the advances in technology and pledges to become greener. Innovations are developing and testing underway, but there is still a long way to go to reach companies' goals.
Germany Adopts Revolutionary Supply Chain Human Rights Laws
While the title states that Germany’s newly adopted that targets human rights abuse across global supply chains is “revolutionary” ─ which it is ─, it certainly shouldn’t be. But nonetheless, today, on June 11th, 2021, the German Parliament has ushered in a long-awaited shift to mandatory company compliance rules. After months of negotiation, the German lawmakers finally pushed it over the finish line within the final days of the current legislative period. The bill will see German multinational corporations held legally responsible for any human rights or environmental abuses found across their global supply chains.
“The German government has taken a critical step to ensure that companies operate responsibly,” said Juliane Kippenberg, associate director, children's rights division, at Human Rights Watch. “Respect for human rights in global supply chains is not something that should be optional.”
This news comes at a time when global corporations are already being pushed towards environmental, social and governance (ESG) compliance, with a massive drive to reduce Scope 1, 2, and 3 carbon emissions from their supply chain operations and a concerted effort to avoid suppliers and manufacturers that do not meet the standards that industry-leading companies are now expected to meet.
Who will the new law affect?
With Germany’s new legislation, organisations that fail to meet the rules and regulations could be forced to pay fines potentially equivalent to 2% of their annual global turnover. However, it isn’t applicable to all.
According to Reuters, under the act, companies above a certain size will be forced to establish set due diligence procedures that prevent the abuses; from 2023, only companies with more than 3,000 employees in Germany will be affected. From 2024, the rules will expand to companies with more than 1,000 employees.
Statistics from within the country suggest that the first stage of this regulation rollout will affect 900 companies, while the second stage will put 4,800 companies under the spotlight. The bill will also enable the government to temporarily exclude from public tenders companies that receive fines in excess of €175,000.
“Incalculable risks arise for companies,” said Joachim Lang, general manager at the Federation of German Industry. A word of warning from a respected leader, at a time when industry lobby groups and wholesale businesses fear that the new law increases bureaucracy and suggest that price rises may be inbound.
The Take of German Giants
After looking at the incoming legislation, Daimler AG, known more commonly as the automotive giant Mercedes-Benz, a company which, should there happen to be any ESG-compliance issues along its multinational supply chain, would pay a hefty fee, is welcoming of the push for change but hesitant about certain aspects of the bill.
“Daimler's position is: The respect for human rights is a central aspect of our sustainable business strategy. We, therefore, welcome the progress made on the Supply Chain Act. Although the regulations are very ambitious, the proposed legislation has a sound approach overall. It is based on internationally recognised human rights and on international agreements. And it gives companies more legal certainty in an area that has so far only been partially regulated.
Supply chains are not "chains" but rather exceedingly complex networks: Daimler alone has over 60,000 direct suppliers - and many more sub-suppliers. For this reason, we also consider the proposed risk-based gradual model to be sensible. The responsibility of the companies lies primarily in their own business area and with their direct suppliers. Companies must then take action in the deeper supply chain if there are concrete indications of human rights violations. Daimler AG already does that today.
Even though we support the proposed legislation in principle, we consider some aspects to be critical, e.g. the planned fines of up to 2% of the average annual turnover. Instead of threats of sanctions, we consider concrete measures, which companies must take in the event of deficits, to be more expedient. In addition, certain wordings are still vague and leave room for interpretation. Terms such as, e.g. "fair standard of living" should be phrased precisely in order to create legal certainty. Furthermore, documentation and reporting requirements should not lead to unnecessary bureaucracy and should be harmonised with existing rules. On the one hand, this does not help the people on the ground, and on the other hand, it puts a burden on the companies – and the implementation can pose substantial challenges for smaller companies in particular.”
This law is arguably one of the most important developments in the supply chain space so far this year. But it must be remembered that changes do not and will not happen at the push of a button and that democratic principles should be applied to the discussion prior to enshrining legislation into tablature. Environmental and human rights advocacy is a hike, not a brisk walk around the park ─ so, for German companies, it’s time to get their boots on the ground and start assessing their global, interconnected supply chain operations. And, hopefully, they’ll set a stellar example for the rest of us.