Decarbonizing the supply chain

 The next step on our journey to net zero emissions by 2050

Hamburg / 18 December 2020

Over the course of 2020 Siemens Gamesa has recorded several crucial decarbonization successes - becoming carbon neutral or switching to 100% electricity from renewable sources to name just a few. But we are committed to going further: reducing indirect emissions in our supply chain is a vital step on our journey to net-zero emissions by 2050. The production of towers is a major source of carbon emissions worldwide and therefore a great place to start. Siemens Gamesa deployed a decarbonization project for the tower supply chain with promising first results: a reduction of 20,000 tons of CO2 emissions annually, approximately 20% of the emissions generated by its main tower suppliers. Compared with emissions derived from all our activities, this reduction accounts for more than 70% of the company's annual emissions.

Global Head of CSR
The transition from fossil fuels to a low-carbon economy is key to mitigating climate change. A critical piece of the puzzle is a corporate commitment to achieve net-zero emissions across their operations but also in their supply chains, usually a key bottleneck for accelerating the transition. Siemens Gamesa committed to an ambitious roadmap early on to achieve net-zero emissions by 2050, which was verified by the Science Based Target initiative (SBTi) this summer. Another important milestone in our decarbonization strategy was switching to electricity from 100% renewable sources worldwide – achieved in the fall this year.  

But our ambition goes further. To reach our overarching goal of becoming net-zero, reducing our indirect emissions generated in the supply chain is inevitable, as over 80% of the carbon footprint of our wind turbines is linked to the materials used in their manufacturing. To mitigate the supply chain impact, we are working with our suppliers and supporting them on their own decarbonization journey.
Siemens Gamesa developed the ‘Supply Chain Decarbonization Program’
Working with tower suppliers to significantly reduce the carbon footprint  
Initiated by a group of employees, the company has put in place a decarbonization project for the tower supply chain. Steel, which is the main material used for towers, is a major source of carbon emissions worldwide. It is also the dominant source of emissions when assessing the climate impacts of a wind turbine. In fact, during the process of manufacturing CO2 emissions account for roughly two times a tower’s weight.  
After an initial assessment of the CO2 emission figures, Cresten Flor, Head of the Onshore Tower Operations team in the Northern Europe and the Middle East region, concluded that it was time to act. Together with the Procurement team, they developed the ‘Supply Chain Decarbonization Program’ that aims to reduce the environmental impact of the company’s tower suppliers leading the way to a more sustainable supply chain.

“We are reducing the carbon footprint of our own production facilities and offices, but we know that the main challenge going forward will be to reduce emissions in our entire supply chain. The joint program from Tower Operations and Procurement aims at consciously reducing CO2 emissions emitted during the manufacturing process of our products and the required raw materials to have the most sustainable value chain,” Cresten states. “We now have full transparency of where the CO2 emissions occur and how they can be reduced. This allows our suppliers and us to push for the needed change”. 

This program, launched in early 2019, stands on three pillars: (i) implementing a transparent annual process to evaluate the sustainability performance of each supplier; (ii) incentivizing suppliers to join the effort in reducing the shared environmental impact by rewarding good performance with a bonus system; (iii) and establishing a collaborative relationship with suppliers by providing education and guidance on sustainable practice.
The program shows promising first results. Three of our main tower suppliers have already agreed to switch to renewable energy sources. This will reduce the relative global average carbon intensity of tower manufacturing by 25%, entailing an absolute reduction of about 20,000 tons of CO2 emissions annually. If we compare this figure with the emissions derived from our direct operations, it accounts for a 72% reduction of those emissions. “But this is more than a figure,” clarified Cresten. “We are happy to see real action and changes, like the installation of solar panels in one of our supplier’s factories to feed its operations with clean energy”.  
Cresten Flor, Head of the Onshore Tower Operations team
And this is just the beginning: other suppliers are planning to follow the example, introducing further significant CO2 reductions. The idea is to expand the initiative to around 40 suppliers, targeting a reduction of 100,000 t of CO2 in 2021.
Collaboration matters  
Cresten highlights the personal aspects of this project. "For me this project is an example of a corporate culture that allows ideas to grow and prosper. It shows that we can make a huge difference with what others would consider small changes by simply collaborating internally and pushing our external partners to operate more sustainably. It makes me proud to see that Siemens Gamesa saw the value in our initiative and that it is now being rolled out to the entire tower supply chain globally."  

Partnering with the Procurement department proved to be the driver to bring the tangible results. The decarbonization of manufacturing processes of Siemens Gamesa’s suppliers is becoming a supplier selection criteria. A ‘Sustainability/Greenhouse Gas Emissions’ category is incorporated into the Towers yearly supplier evaluation process and gives the company’s suppliers an opportunity to present their CO2 reduction efforts.
The initiative makes a reduction of about 20,000 tons of CO2 emissions annually
“We are working to implement a sustainable procurement approach, which means that we not only focus on a cost-benefit analysis, but also see the bigger picture of how to maximize the benefits for both the company and society. When we select a tower supplier to work with, the decision is based on criteria that supports the decarbonization of the supply chain alongside the conventional procurement criteria of price, quality and delivery reliability,” stated David Anderson, Head of Towers Procurement in Siemens Gamesa.
He adds: “With the transparency achieved in this initiative, we support our suppliers in tackling the most relevant and impactful items. This implies, of course, encouraging suppliers to innovate, change and push ideas forward to achieve our carbon emission reduction targets.” 

The promising first results of the program have driven a global development of the initiative. Siemens Gamesa has a clear ambition to include the supply chain in its decarbonization efforts and set targets accordingly. “This first pilot program offers lessons learned that can be applied to other areas of the organization, for sure. We are currently expanding this for tower procurement globally, meaning increasing the number of suppliers from 10 to about 40, and will then gradually expand the scope from there across multiple high impact commodities,” says David Anderson and adds, “Clearly, it shows how the commitment of a dedicated team can lead to great results and accelerate our decarbonization efforts to limit global warming to maximum 1.5° Celsius.” 

Siemens Gamesa still has a long way to go to reach its ambitious decarbonization goals but is taking firm steps on the road to a low-carbon value chain.

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