Apply 3-phase program for global supplier decarbonization
Table of contents

Apply 3-phase program for global supplier decarbonization

Applied by
Schneider ElectricSchneider Electric

Summary

The Zero Carbon Project’s 3-phase program uses digital solutions, active engagement, and agile governance to reduce GHG emission intensity by 38% across 1,000 suppliers, aiming for 50% by 2025

Context

Context 

The prevailing economic model, heavily reliant on fossil fuels, has resulted in 90% increase in greenhouse gas emissions since 1970. June 2024 marked the twelfth month in a row that the world was 1.5C warmer than pre-industrial times, breaching the important threshold identified by Paris Agreement. 

According to Accenture, supply chains are responsible for 60%-70% of the global GHG emissions. Therefore, engaging suppliers to reduce their GHG emissions is critical to have any tangible impact and prevent further increase in global temperatures. 

Schneider Electric has adopted an ambitious Net Zero target by 2050. However, the company’s upstream emissions are 33 times more than the combined emissions of its emissions from the 160+ factories, 80+ Distribution Centers and 1,000 commercial sites operated by the company. Its top 1000 suppliers contribute more than 65% of the GHG emissions from purchased goods and services. 

Challenge 

In 2021, the company launched The Zero Carbon Project to halve the operational GHG emissions (scope 1 and 2) of these top 1,000 suppliers by 2025. The top three challenges faced at the onset of the project were: 

  1. Geographical distribution: The 1,000 suppliers are located in 50+ countries, supplying 65+ categories of products representing a wide variety of manufacturing technology and processes 

  2. Low awareness: ~70% of the 1000 suppliers were yet to start their decarbonization journey, had not quantified carbon footprint, and two thirds (23) were small and medium scale enterprises (SMEs) having low economic buffer to initiate decarbonization or onboard specialized teams. 

  3. Complex procurement structure: The 1,000 suppliers were managed by more than 500 Procurement buyers coming from 11 teams; regular outreach and timely engagement of >1500 stakeholders, spread globally was a massive challenge.  

Strategy 

The company acknowledges that achieving Net Zero requires bridging a substantial capacity gap and addressing the diverse needs of suppliers across various sectors and sizes. To tackle this challenge, the company has adopted a phased approach, where short-term objectives steadily build towards the long-term goal. As progress is made, the ambition of each subsequent phase will incrementally increase in difficulty, ensuring a scalable and achievable path to Net Zero.  The Zero Carbon Project (TZCP, 2021-25) is the first phase of this journey and aims to create a common understanding and initiate top 1000 suppliers to reduce GHG emissions. The objective of the initiative is to achieve 50% reduction in the operational GHG footprint (scope 1, 2) of the top 1000 suppliers. The emissions reduction is referenced as a measure of economic intensity. 

Solution

Schneider Electric invited its top 1000 suppliers (globally, across sectors, representing majority of supplier emissions) to join The Zero Carbon Project. This initiative required screening and mapping of stakeholders, onboarding suppliers, deploying effective governance for continued engagement, quantifying carbon emissions, adopting significant reduction targets and implementing actions to achieve it.  

The program involved three simple phases, outlined below: 

  • Supplier selection & procurement onboarding 

  • Supplier onboarding 

Phase 1: Analysis - quantify & report operational emissions 

  • Governance 

  • Data collection 

Phase 2: Ambition – adopt ambitious reduction target 

  • Unique challenge 

  • Acceleration day 

Phase 3: Action – implement a roadmap to achieve the reductions  

  • Implementation support by sustainable procurement 

  • Activities in multiple regions (globally) 

 

Objectives and results included: 

Objective 1: 50% operational GHG reduction by top 1000 suppliers in 5 years (2021-25) Result 1: 38% operational GHG emissions reduction (Nov 2024 result)   

Objective 2: 100%+ of suppliers compute and report emission reductions Result 2: 100% suppliers computed GHG emissions; 93% of suppliers declared emission reductions (Nov 2024 result)  

To empower suppliers throughout their decarbonization journey across the three phases, a comprehensive support framework was established, offering: 

  • Technical guidance on decarbonization 

  • Access to digital tools, calculators, and diagnostic kits 

  • Expert consultations with sectoral specialists on various decarbonization technologies and connections with solution providers for execution 

  • Onsite implementation support by dedicated sustainable procurement experts from Schneider, including customized decarbonization roadmap and various innovative programs like sustainable supply chain finance and renewable initiative. 

This extensive support framework was provided on complementary basis to suppliers, ensuring a seamless and supported transition towards a net-zero future.   

More details on steps can be found in the “Implementation” section and in the Appendix.  

Impact

Sustainability impact

Climate

  • Scope 1 and 2 emissions reductions of Schneider Electric's suppliers (Scope 3 of Schneider Electric) 

  • The GHG emission reduction reported in Schneider Sustainability Impact (SSI) #3, is measured as the average operational carbon intensity reduction of reporting suppliers, multiplied by the percentage of reporting companies out of the 1,000 participating suppliers. This normalization is done to give a more accurate picture of the overall progress. The efforts have resulted in about 38% reduction of the GHG for 1,000 suppliers as of November 2024, and Schneider Electric remains committed to work together with its partners to achieve 50% operational emission reduction by Dec 2025.  

Business impact

Benefits

Any improvement in GHG performance is directly linked to the overall efficiency and effectiveness of the organization. The quantified range of benefits will depend on the existing status of maturity if the company and depend upon the sector of operation. Hence it would not be appropriate to provide quantified range of improvements. However, key benefits include: 

1) Tangible improvements in energy saving and operational efficiency by optimizing the operational parameters e.g.: 

  • Arresting leakages; maintaining a narrow range of pressure for air compressor) 

  • Traditional lighting system replaced with enhanced day light usage and energy efficient lighting system (e.g. LED) 

  • Automation of energy change-over system between different sources 

2) Minimize the energy loss and wastage 

  • Power factor improvement 

  • Waste heat recovery and further utilization 

3) Hedge against energy price fluctuation and future energy securitization 

  • Onsite solar  

  • Long term power purchase agreement 

  • Investment in captive hybrid energy projects (solar-wind offsite) 

4) Other innovative measures: 

  • Redesigning the fixtures to increase the capacity and improve specific energy consumption. 

5) Innovative financial instruments, to facilitate the execution: 

  • Arranged OPEX model to implement energy efficiency improvements (which are conventionally CAPEX, thus removing the need to initial investment and faster adoption) 

  • Initiated sustainable supply chain finance to provide immediate payment for goods/services for achieving specific threshold of decarbonization performance (pilot in select geographies).  

Costs

Personnel costs: 

  • 2 global FTEs  

  • 5 regional FTEs 

Dedicated for onsite implementation support in China, India + East Asia Cluster, Europe and the Americas. 

Impact beyond sustainability and business

Co-benefits

The real effectiveness of Schneider Electric’s efforts to onboard supply chain will be reflected if the suppliers adopt the decarbonization actions and take ownership of the entire spectrum of activities, driven by their own commitment and no longer due to customer requirement. This would showcase that the supplier has truly understood the importance and benefits of decarbonization actions and has become a change agent, driving decarbonization (in due course with its own suppliers) without any external stimulus.  

Below are some of the suppliers who have adopted decarbonization and proudly disclose performance on their company website: 

Implementation

Typical business profile

  • The program can be implemented by any company that has a manufacturing supply base.  

  • There are no geographical limitations or size limitation of the company.  

  • It works equally well for small and medium scale enterprises as it does for large corporations.

Approach

The full approach can be found in the appendix. To summarize the steps here: 

Preparation

Supplier selection & procurement onboarding 

  • Hot-spot analysis 

  • Mapping & validation 

  • Role allocation 

 Supplier onboarding 

  • Carbon maturity survey 

  • Channeled communications 

  • Single portal for all procurement communication 

Initiating Phase 1- Analysis 

  • Trainings series 

  • Special module for first-time suppliers 

  • Templates 

  • Live sessions 

  • Digital emission calculation tool 

Governance 

The Zero Carbon Project ecosystem involves 1500+ stakeholders. To ensure timely and agile connection with right stakeholder, a cross-functional network was setup for swift, informed decision-making and collective ownership. The key elements of this network are: 

  1. Sustainable Procurement Team: Subject matter experts with program management responsibility. Full time responsibility. 

  2. SPOC: Single point of contact responsible for identifying and communicating to the right stakeholder/buyers. There are 11 SPOCs representing 11 procurement teams. Additional responsibility. 

  3. SSL: Strategic Supplier Leader, procurement business relationship owner with respective suppliers. There are 500+ SSLs involved in the program. Additional responsibility. 

  4. Suppliers: The suppliers participating in the program. There are 1000+ suppliers involved in the program.

Initiating Phase 2- Ambition  

  • Standardized training methodology 

  • Acceleration workshops 

  • Tech toolkit 

Initiating Phase 3- Action 

  • Regional implementation experts 

  • Consultation on renewable energy tech 

  • Business model optimization 

Stakeholders involved

  • Project Leads: The project is led by Sustainable Procurement team, within the Global Procurement Function. This team houses decarbonization experts who design the overall strategy and solutions implemented by suppliers, lead the deployment and are technical advisors.  

  • Company functions: The company’s 11 procurement departments are the key collaborators. There are approx. 500 procurement staff that are engaged from these 11 teams.  

  • Main providers: In addition to its own experts, the Sustainable Procurement team has identified external regional decarbonization experts and solution providers to facilitate supplier transformation. The team also leveraged internal experts, such as Sustainability Business division to develop digital emission calculator (DEC), knowledge portal- Zeigo Hub and end-to-end decarbonization tool Zeigo Activate, especially for SMEs.

Implementation and operation tips

Main challenges faced during implementation:  

  • Low carbon maturity & lack of technical understanding among suppliers 

  • Cost barrier 

  • Lack of specialized teams 

  • Low priority for supplier leadership 

  • Lack of stretch ambition among suppliers 

  • Lack of access to solutions and solution providers 

  • Technical implementation challenges 

  • Business uncertainty with supply base 

 How to overcome challenges, ensure success and drive wide scale adoption:

  • Demystify decarbonization concept by simplifying the communication/language/vocabulary and make it relatable to daily supplier operations. 

  • Provide mentoring/guidance/solutions for enhancing supplier knowledge of the subject. 

  • Provide access to tools/digital toolkits 

  • Provide viable, tangible and actionable implementation plan. 

  • Relate with the business impact and benefits  

  • Ensure regular/dynamic monitoring of the performance. 

  • Provide regular updates of performance to internal teams. 

  • Be available to answer any supplier question and resolve any challenge they face 

  • Alignment with the procurement team on supplier business continuity 

Going further

External links

Appendix

Appendix

Full process description: 

Supplier selection & procurement onboarding 

During 2020, the Sustainable Procurement department conducted a hot-spot analysis of the supply base to review GHG emission profile based on secondary data. This helped shortlist the top 1000 suppliers, contributing to 65% emissions in the purchased goods and services category. The shortlisted suppliers were then mapped to the appropriate procurement stakeholders and validated for business continuity for mid-future term.  

During the Jan-Feb 2021 series of internal workshops were conducted to sensitize procurement staff around the world about the context, approach and intended outcome of the supplier decarbonization initiative. The key message addressed the call for action from suppliers and support provided by Schneider Electric. This equipped procurement staff to address any potential query from suppliers resulting in uniform messaging and instilling a sense of priority.  

There was a clear definition of roles and responsibilities between category/region procurement, who were responsible for active supplier engagement and sustainable procurement, who were subject matter experts responsible to provide solutions to guide the decarbonization efforts.  

 

Supplier onboarding 

In April’21, the executive leadership of Schneider Electric launched the program, via digital event with leadership of 1000 suppliers as a collaborative engagement. The event was hosted by the then Chief Procurement Officer, attended by Chief Supply Chain Officer, the then Chief Strategy & Sustainability Officer and had special video message from the then CEO & Chairman of Schneider Electric. The overarching message was ambition to drive decarbonization as a joint responsibility and reaffirming the implementation support from Schneider Electric.  

 

This top level connect was complemented with the series of 1-1 operational engagement led by Schneider Electric Procurement teams, informing the suppliers of the ambition, expectations and available support. 

A carbon maturity survey was conducted to situate the suppliers in their carbon journey. The survey revealed more than 70% suppliers had not quantified the GHG emissions and were new to decarbonization topic. This highlighted the need to demystify the topic, simplify the vocabulary and make it relatable to day-to-day supplier operations. 

All communications, including the survey were channeled via the Procurement department’s supplier portal (SSP-SRM). This portal is single window for all procurement communication and helped reaffirm the ‘ask’ from procurement department. 

 

Initiating Phase 1- Analysis 

To ensure a common understanding of all suppliers, series of training, capacity building and experience sharing sessions were conducted for the suppliers between June-July 2021. Customized modules were developed for advance and beginner levels. These explained end to end decarbonization, main levers for emission reduction and shared experiences from Schneider Electric sites via 17 experts coming from different departments within the company in different sessions. A total of 8 live sessions spanning over 30 hours were conducted. 

Additionally, in November 2021, a special module was developed for first time suppliers. This module elaborated on practical recommendations and approaches for setting up governance for first time companies, boundary definition, data/sources, links to various public emission factors (ADEME, DEFRA, US EPA), calculation steps and demonstrated sample computation. This was complemented with easy to use templates for collecting and computing the emissions. More than 50 live sessions of 1 hour each, were conducted for this training and 150 additional 1-1, doubt clarification, speed-dating sessions were organized for clarifications, review the data and provide feedback on the challenges faced by suppliers. In addition to this any supplier query was taken on ad-hoc basis for quick resolution. These sessions were led by the Sustainable Procurement Team. 

In order to leveraging collective learning, experience sharing sessions were organized, where some of the leading companies shared their decarbonization experiences, challenges and resolution with the peers.

To ensure all of this is available to the supplier participants and their extended teams 24x7, a dedicated portal, Zeigo Hub, was developed and recorded sessions of the trainings, knowledge material, thought leadership were hosted on it. All participating suppliers were given the complementary access to the portal. 

In August 2022, a digital emission calculation tool was developed by Schneider Electric and launched for suppliers to automate the computation process. This simplified the calculation process and helped in maintaining consistency and quality of data.  

Governance 

The Zero Carbon Project ecosystem involves 1500+ stakeholders. To ensure timely and agile connection with right stakeholder, a cross-functional network was setup for swift, informed decision-making and collective ownership. The key elements of this network are: 

  •  Sustainable Procurement Team: Subject matter experts with program management responsibility. Full time responsibility. 

  • SPOC: Single point of contact responsible for identifying and communicating to the right stakeholder/buyers. There are 11 SPOCs representing 11 procurement teams. Additional responsibility. 

  • SSL: Strategic Supplier Leader, procurement business relationship owner with respective suppliers. There are 500+ SSLs involved in the program. Additional responsibility. 

  • Suppliers: The suppliers participating in the program. There are 1000+ suppliers involved in the program. 

The Sustainable Procurement team reviews the carbon footprint survey response coming from 1000 suppliers on a weekly basis. The observations are categorized as per the scope of the procurement teams and weekly cadence are organized with each of the 11 SPOCs to share the performance feedback, highlights, areas of improvements, with clear identification of supplier, SSL and call to action. The SPOCs in turn communicate the message within their departments and ensure right message is communicated for timely action.  

The action taken and results are reviewed in the subsequent weeks for accountability.  

Weekly cadence established since Q2 2022 is a crucial pillar of strength to identify gaps, suggest remedial actions and drive performance. 

Data collection  

In September 2021, a Carbon Footprint Declaration Survey was launched, via the supplier portal, for suppliers to share the computed carbon footprint. The scope 1 and 2 emissions were mandatory and scope 3 was optional.  

By the end of Dec 2021, the total responses to the survey was ~120 reporting 1% operational emission reduction. However, owing to the extensive capacity building, handholding, tools and templates and governance mechanism the number of suppliers quantifying the operational emission and reporting increased to 950, with ~10% reduction achieved by end of Dec 2022.  

Initiating Phase 2- Ambition 

By Q3 of 2022, over 900 suppliers quantified and reported the operational GHG footprint and the center of gravity of the initiative shifted to the second phase, where suppliers needed to adopt emission reduction targets for their companies.  

The analysis revealed the initial set of reduction targets adopted by suppliers were not ambitious. This stemmed from the low awareness on the emission reduction avenues.  

Unique challenge 

Unlike the capacity gap observed in the Phase 1, where standardized training methodology was cascaded for mass deployment, yielding expected results, the challenge in phase 2 arose from the fact that reduction pathways depend on the sector, maturity, size of operations and even geography/location of the company. It was not practically feasible to get a synthesis of 1000 suppliers in 50 countries across 65+ categories in a timely manner and recommend a roadmap for each one of them. Moreover, for the ownership of deployment, it is essential the emission reduction pathways are developed by supplier teams in a site-specific manner.  

The Sustainable Procurement team adopted a regional approach and conceptualized an innovative concept of acceleration workshops.  

The Zero Carbon Project Acceleration Day (formerly iAccelerate Zero Carbon Day Workshop) 

The concept evolved from the question, what prevented suppliers from adopting ambitious emission reduction targets.  

The answer came from variety of reasons, including lack of knowledge, technical competency, lack of support mechanism for implementation to simple lack of prioritization.  

The address these challenges, a roadmap was conceptualized to bring all relevant stakeholders, including technical experts and solution providers at one place and answer all open questions.  

A generic supplier road map comprising of all possible decarbonization solutions was created with priority from plugging wastage and sub-optimal usage of energy to range of renewable energy instruments.  

To prepare suppliers and provide required tools, a decarbonization toolkit was created, which consisted of self-assessment diagnostic tool (MS Excel) to identify energy efficiency measures, a decarbonization playbook, region/sector specific tools like solar calculator for India, US and plastic sector diagnostic. Pre-workshop trainings was conducted for SSLs and suppliers on the call for actions and suppliers were recommended to review the toolkit and identify key action areas.  

To address and deliberate on the technical aspects, decarbonization technology experts and solution providers (both Schneider Electric and non-Schneider Electric solutions) were identified and invited to participate in the workshop. The solution providers were curated in a marketplace, where they could display their solutions and address supplier queries. This led to creation of region-specific solutions and identified agencies, creating a regional referential of solutions for suppliers. 

The workshop was conducted over 2 days, with day 1 structured in 3 key sections, message from Schneider Electric leadership, technical sessions and marketplace. The day 2 was the dedicated period for suppliers to have 1-1 deep dive with the experts.  

These workshops were piloted in India and East Asia cluster in 2022 and extended to North America and Europe region in 2023. 

The comparison of the average pre-workshop and post-workshop emission reduction targets adopted by participating suppliers showed significant increase, demonstrating increased maturity, confidence and awareness among suppliers to identify and execute decarbonization pathways within their organization.  

In addition to above efforts, Schneider Electric launched Zeigo Activate decarbonization roadmap tool, with complementary access to suppliers, focused on SMEs to feed basic info about location/energy consumption/processes and create an automated decarbonization roadmap.  

Initiating Phase 3- Action 

By mid 2023 the core efforts of The Zero Carbon Project shifted to ensuring the implementation of the adopted decarbonization action plans by the suppliers.  While the governance mechanism helped track the progress, it was realized that more specific efforts were required to address the implementation challenges as suppliers began implementing the action plans. These required a good understanding of local market and technological context and conditions to provide appropriate and actionable advise.  To support this need, the Sustainable Procurement team deployed 5 regional experts in key geographies: India (catering to India and East Asian Cluster), China, Europe and North America.  The suppliers were segmented based on the reported performance and onsite visits were conducted to supplier premises to provide inputs on the action plan implementation, resolution of technological challenges, identify low hanging/high return actions and creating a customized action plan, demonstrating favorable RoI and connecting with the local solution providers. The Sustainable Procurement experts screen the market, potential solution providers and facilitate commercial discussions as requested by suppliers. However, the final decision to select the solution provider rests with the supplier and Schneider Electric does not influence it.  The above efforts resulted in good progress in decarbonization achieved by suppliers. Between Mar 2023- Jun 2024, >130 supplier visits, expert consultations & follow-up actions across various geographies, contributed to increasing average emission reduction, notably in: 

  • India: from 19% to 28% 

  • Mexico: from 18% to 31% 

  • China: from 15% to 23% 

In addition to the onsite visit, several other interventions were curated in each of the regions: 

6. Renewable Energy Adoption:

  • Renewable Energy Week: Digital consultation on adoption of renewable instruments 

  • Renewable Energy Workshop: face-to-face deepdive with experts on renewable energy adoption 

  • Supply Chain Renewable Initiative (SCRI) to create supplier cohorts to access market based renewable instruments, not available individually, due to limited energy load. 

7. Local decarbonization workshops: Country/province-level supplier workshops to find tailored solutions, based on local challenges and opportunities 

8. Thematic webinars: Live webinars with experts on range of decarbonization levers 

9. Arranged OPEX model to implement energy efficiency improvements (which are conventionally CAPEX, thus removing the need to initial investment and faster adoption) 

10. Initiated sustainable supply chain finance to provide immediate payment for goods/services for achieving specific threshold of decarbonization performance (select geographies).  

Details of activities organized: 

2024 activities up to Sept: 

  • CHINA:  

    • Onsite assessments- 36  

    • Workshop- 2; participants- 43 suppliers 

    • Webinars- 4; participants- 552 suppliers 

  • India: 

    • Onsite assessments- 7 

    • Webinars- 3; participants- 92 suppliers 

  • East Asia: 

    • Onsite assessments- 40 

    • Workshop- 1; participants- 6 suppliers 

    • Webinars- 3; participants- 140 suppliers 

  • North America: 

    • Onsite assessments- 5 

    • Workshop- 2; participants- 38 suppliers 

    • Webinars- 8; participants- 87 suppliers 

  • Europe: 

    • Onsite assessments- 11 

    • Workshop- 3; participants- 164 suppliers 

    • Webinars- 5; participants- 60 suppliers 

 

2021-2023 activities:  

  • Webinars/trainings across regions: ~200   

  • Training on renewable energy adoption: 20  

  • Decarbonization training: 10 

  • iAccelerate Zero Carbon Day workshops:  

    • India- 1 

    • East Asia- 1 

    • Europe- 1 

    • North America- 2 

Onsite assessments: ~100 globally