Sustainability in the supply chain

Building on the 2015 Paris Agreement and the 1.5-degree target enshrined therein, the automotive industry is facing a profound transformation of its business models. This shift is complemented by a multitude of national and European sustainability and due diligence obligations, including the German Supply Chain Due Diligence Act (LkSG), the EU Regulation on Deforestation-Free Supply Chains (EUDR) and the European Carbon Border Adjustment Mechanism (CBAM). These regulatory frameworks are increasingly focusing on the upstream and downstream stages of the value chain, as a significant proportion of the environmental, social and governance-related impacts of many companies arise in the so-called Scope 3 area of the supply chain.

The requirements for transparency, traceability and evidence-based reporting are thus increasing significantly. Violations of legal requirements can result in severe sanctions, whilst Scope 3 emissions are increasingly becoming an integral part of carbon footprints, sustainability ratings and investment decisions. Sustainable business success therefore depends ever more on sustainable products – and these, in turn, on efficient, resilient and sustainability-compliant supply chains.

As a globally active company with a complex, globally ramified supplier structure, ElringKlinger faces rising demands in procurement. External factors such as geopolitical tensions, trade restrictions, transport disruptions or economic sanctions further increase the pressure to ensure long-term security of supply. Against this backdrop, the regionalisation of procurement activities is gaining in importance, as it both strengthens the resilience of supply chains and shortens transport routes.

A key challenge lies in the systematic collection, validation and evaluation of sustainability-related data along the supply chain. In particular, traceability back to raw material extraction involves significant effort – especially in supply relationships outside the EU. At the same time, legal requirements demand that risks of a human rights, social or environmental nature be identified, assessed and minimised through appropriate measures. ElringKlinger has implemented new processes and IT-supported systems for this purpose to enable a differentiated risk assessment of suppliers and products.

Another key focus is the growing importance of CO₂ metrics at product level. In addition to direct emissions, the so-called Product Carbon Footprint (PCF) is coming to the fore, which maps all greenhouse gas emissions across a product’s entire life cycle. Car manufacturers are increasingly incorporating this information into their procurement decisions. For ElringKlinger, this means systematically recording CO₂ data at component level, making it available for PCF calculations and using it specifically to identify potential for reduction.

To ensure the structured implementation of sustainability requirements, a Code of Conduct for suppliers has been introduced, amongst other measures; this forms a binding part of supplier contracts and defines minimum environmental and social standards. In addition, a software-supported sustainability risk management system is used, which consolidates supplier assessments, audit results and CO₂ information. These criteria – alongside price, quality and delivery reliability – are factored into procurement and awarding decisions.

Although increasing regulatory and customer requirements entail considerable additional effort, they open up new opportunities in the long term: greater data transparency, a better understanding of one’s own supply chains, and the targeted avoidance of risks. Sustainability in the supply chain thus becomes a key success factor – as a joint task for companies and their partners along the entire value chain.