Germany’s Volkswagen has issued an ultimatum to its 40,000 suppliers: work with us to cut carbon emissions, or risk losing your business with us. According to an article in the Financial Times, the vehicle giant is targeting a reduction in pollution across the lifecycle of its vehicles, spanning the raw materials used in production through the driving-phase to the recycling of components.
To ensure that its green cars really are clean, VW is planning to give its suppliers “S-ratings”, for sustainability. Like its German rivals BMW and Daimler, VW has already pledged that its zero-emissions vehicles will be built in a carbon neutral fashion by assembling them in factories that rely on renewable energy. VW executives have decided their big push on electric cars, where it plans to spend €30bn in the next five years, will only be credible if its suppliers also rely on sustainable energy wherever possible.
“This is a revolution,” said Marco Philippi, corporate director for VW Group procurement. “If there are violations, our partners will not be our partners.”
Getting the car giant’s supply chain on board could be a challenge. For example, battery makers currently operate with such slim margins that few have the extra money to invest in green initiatives. VW acknowledged that it would be a “step-by-step” process that will take years. In areas where CO2-neutral manufacturing does not exist, it plans to offset the emissions, for instance by planting trees in rainforests.
CyNation CEO Steve Berry (left) commented: “this article from the FT appears with good timing for the investors in this fundraising round. This is the way the Supply Chain is going, and with climate change concerns only going to become more important, the market for sustainability risk management will grow astronomically. CyNation is in a good position to capitalise on this with our next module release.”
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