Decarbonization – a change in the purchasing world

How we decarbonize the supply chain together with our suppliers.

Now is the time to act

The effects of climate change are obvious. The frequency of extreme weather events is increasing and long-lasting climate extremes with devastating consequential damage are a reality. Climate change affects us all and only together can we create a turning point. The legally binding basis is the Paris Agreement – an international treaty signed by 196 parties in 2015. The goal: to limit global warming to 1.5 degrees Celsius if possible, and in any case to well below two degrees Celsius compared to the pre-industrial era.

To achieve this, all countries around the world are called upon to curb this climate change and transform the global economy in a climate-friendly way. As an energy company, we also have a huge responsibility – not only in the production of energy products and solutions, but also in the orientation towards a decarbonized supply chain. At Siemens Energy, we take these efforts very seriously and support the goals of the Paris Agreement. The most important internal goal is to make our own operations climate-neutral by 2030 (see Siemens Energy Sustainability Report).

But honestly, we can’t do it alone.

We need to collaborate with our suppliers and convince them to also reduce their CO2 emissions towards Net Zero. This path is characterized by a forced transition to lower-emission energy sources and simultaneous development of more sustainable and ultimately emission-free energy products and technologies. 

Supply chain decarbonization transformation process

The decisive factor in the supply chain is, there are multiple links that all interlock. Decarbonizing the supply chain also means that every single link must be interested in and work to reduce emissions. This applies to our suppliers, to us as an energy company and to our customers. 

How decarbonization can take place

With increasing electrification, the use of hydrogen and the intensified use of renewables, we already have climate-friendly alternatives. The generation of green electricity and its direct use are key. Electrification of manufacturing processes, heating and cooling systems, and mobility can increase direct consumption of green power. In areas that cannot be electrified, green hydrogen contributes to decarbonization as an indirect or direct energy source, through the production of synthetic e-fuels for mobility of all kinds, or to produce CO2-free steel. 

The use of energy management systems and energy-efficient control systems (smart systems) additionally increase energy efficiency and thus also the reduction of CO2 emission. You can find examples and solutions from Siemens Energy here: The power of Hydrogen | Find a storage solution that fits your needs

Decarbonization Due Diligence Assessment (DDA)

A deeper knowledge of our suppliers' footprint and greater transparency on all CO2 emissions in our supply chain are the foundation for the future. The introduction of this DDA, a web-based assessment, is a logical result. DDA helps us to learn about the supplier’s implemented and planned actions for CO2 reductions. By conducting the DDA annually, we can track progress in decarbonizing our supply chain. And this is where you as a supplier come in.

We would like to invite you to complete the DDA annually in order to be as transparent as possible in measuring your carbon footprint and thus our progress in decarbonizing our supply chain. To do this, you should provide us with information about your energy efficiency, use of renewable energy and recycled materials, and carbon management. After the evaluation of the DDA by our external partner, the result will be discussed with you.

Based on the result, you can see where you stand and where there is still room for improvement. You should then develop and implement further decarbonization measures on your own responsibility, which will be monitored in our annual DDA process. In addition, you should not only focus on reducing CO2 emissions from your own production, but also work closely with your suppliers to source CO2-neutral products.

Why is this so important?

Since 75% of the CO2 emissions in the Siemens Energy supply chain are caused by the subcontractors of our suppliers, it is critical that our suppliers also agree on CO2 reduction measures with their suppliers.

In addition to price, quality, availability and technology, your decarbonization strategy has an influence on our annual supplier evaluation and will be a criterion in our purchasing decisions in the future.

Decarbonization use cases

Based on the feedback from the suppliers on their CO2 reduction measures they have already implemented or are planning, we can see that some suppliers are already very successful in reducing CO2 emission. One of the main measures of our suppliers is the own generation or the purchase of renewable energy as well as the modernization of old inefficient systems with new technologies such as the installation of heat recovery systems or the switch to CO2-free heating systems (heat pumps/biomass heating) and the use of LED lamps. In the area of steel, aluminum and copper production, suppliers are pushing the use of recycling materials or hydrogen technology.