The long and winding road to decarbonization
Last week, I had a call with the head of planning and logistics for a global food and beverage company. One of the biggest changes she has noticed in a nearly 30-year career is the broadening of the supply chain focus from efficiency and sufficiency to one of efficiency, sufficiency and sustainability. What she meant was that it was no longer enough to deliver things on time and at the lowest cost. Instead, supply chain managers were now tasked with balancing cost and delivery times with sustainable operations. “We want to be recognized as a good company,” she said.
It’s a timely discussion. With the recent passage of Inflation Reduction Act sustainability is once again in focus.
It was a great introduction to another conversation I had recently, this one with Jana GerberPresident of Microgrid North America at Schneider-Electric. Schneider may not be a household name, like P&G, Unilever or Apple – companies we interact with all the time as consumers – but it is a leader in energy management and automation.
Jana Gerber, President North America Microgrid at Schneider Electric is working to decarbonize supply chains.
Schneider is also one of the world’s leading supply chains, consistently ranking at the top of Gartner’s list of the Top 25 Supply Chains. Schneider jumped two places to land at No. 2 on this year’s list, which I will publish in the September issue of SCMR. And, like Unilever, Cisco and MilliporeSigma, it is a company that has made sustainability central to its business strategy. In 2021, Schneider was ranked the most sustainable company in the world by Corporate Knights Global 100 Index.
In fact, Schneider’s commitment to sustainability was among the accomplishments cited by Gartner, both in its own supply chain, but also in those of its suppliers and customers. “Its STRIVE program (2021-2023) aims to have 70 net-zero carbon factories and distribution centers by 2025, and the company continues to seek further efficiencies in its remaining manufacturing and warehousing facilities. “wrote the Gartner team. “The company’s demonstrated track record of meeting ESG commitments indicates a strong likelihood of achieving these ambitious goals.”
“The market is at an inflection point,” is how Gerber describes what appears to be a new and sustained focus in supply chain and corporate management on sustainability.
Schneider tackles both aspects of the sustainable development strategy. In addition to the program to have 70 zero-carbon facilities announced by Gartner, Gerber noted that Schneider’s internal program addresses emissions from Scope 1 to Scope 3.* This year, for example, “We launched the Zero Carbon Project to help our top 1,000 suppliers who account for 70% of our emissions to find ways to reduce their carbon footprint,” she said. The goal is for suppliers to reduce their emissions by 50% by 2025.
The other part of the strategy is to provide products and services that enable Schneider customers to decarbonize their supply chains and drive their sustainability programs. “We have an internal group of 2,000 people around the world who are focused on helping our customers find ways to implement their sustainability programs,” Gerber said. The company provides consulting services to create an action plan “from ambition to action” that enables companies to achieve their climate and sustainability objectives through a unique partnership of strategic planning and implementation. implemented. The company also advises clients on more than $35 billion in energy expenditures annually. They combine this with the firm’s expertise as the largest adviser on negotiated corporate power purchase agreements in the world. Power Purchase Agreements, or PPAs, are an agreement developed for large-scale renewable energy projects. In this model, an industry or organization with a large supply chain can consolidate the purchase of the energy needs of many of its assets. One example is a program that Schneider set up for 10 US and European pharmaceutical companies and their joint suppliers to aggregate their demand for renewable energy.
Another example is Walmart’s Project Gigaton. This initiative aims to remove one billion metric tons of carbon dioxide – one gigatonne – from Walmart’s global value chain by 2030. As part of this initiative, Schneider has worked with Walmart to develop the Gigaton PPA that enables to Walmart suppliers who do not contract renewable energy or may not have the scale on their own to take advantage of a PPA, to access a utility-scale PPA. The Walmart initiative focuses on Scope 3 emissions – that’s a broader supply chain.
Schneider is also a leading supplier of microgrids. They work with partners to develop and install large-scale microgrids, which include distributed energy resources such as solar panels to generate renewable energy, batteries for storage, and controls and intelligence to manage the network for Schneider customers and help them disconnect from a traditional network. electrical network.
The second aspect of this approach is called Energy-as-a-Service, which works much like Software-as-a-Service or Robotics-as-a-Service. “In this model, there is a financial vehicle that allows customers to purchase a microgrid without a large capital outlay,” Gerber said. “The customer pays per kilowatt-hour for a partner to operate and maintain the network with an availability commitment.” Schneider has formed two joint ventures with other partners, AlphaStruxure and GreenStruxure.
Through the GreenStruxure joint venture, Schneider works with Bimbo Group to develop and build Energy-as-a-Service microgrids for six California bakeries – targeting their scope 2 emissions. Grupo Bimbo estimates that the microgrids “will provide approximately 25% carbon reduction and 25% site electricity.
One of my questions to Gerber is the question I ask everyone, which is, is the current focus on sustainability sustainable? Is the energy real and will it last? “It’s sustainable,” Gerber said, pointing to BlackRock CEO Larry Fink, who said companies without a sustainability strategy pose investment risk. “Without getting into the embrace of the trees, the question is what do we do to ensure that we have businesses that can work for the long term?” Gerber asked.
Fink also once posed an existential question of the corporate world: “As your industry is transformed by the energy transition, will you follow the path of the dodo or be a phoenix?”
Schneider clearly chose to be a phoenix.
*If you do not know them, Scope 1 represents the direct emissions under the operational control of an organization. Scope 2 represents indirect emissions generated by the purchase of electricity, heat, steam or cooling. And, Scope 3 represents all other indirect emissions, including business travel, waste management and the value chain. Supplier activities, for example, represent scope 3 emissions.
About the Author
Bob Trebilcock Bob Trebilcock, Managing Editor, has covered material handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.