Companies that want to be green must look beyond what they do and monitor the entire supply chain, delegates heard at the ESG Real Estate Roundtable that was organised by PwC in Paris this week.
“It’s very important to look beyond the real estate bubble to get ideas and inspiration from other sectors,” said Christiane Conrads, global real estate ESG leader, PwC. “Sharing best practice accelerates progress towards ESG compliance.”
The automotive sector might not seem like the obvious place to look for best practice in sustainability, but there are some notable examples of companies leading the way. One is BMW, the first German carmaker to join the ‘Business Ambition for ESG’ that is committed to achieving carbon neutrality through the value chain by 2050 and a 50% reduction in CO2 emissions from product utilisation by 2030.
“We know we need to embrace ESG in order to be future-proof,” said Kerstin Meerwaldt, corporate strategy sustainability, head of CoC customers, brands and communication, BMW Group. ”We also need to bring our suppliers on board. We focus a lot on the supply chain and on the logistics side because we know we can make a real difference there.”
The group conducts regular audits of its 6,000 suppliers and 30,000 indirect suppliers and has put in place a monitoring system “with an early warning system to alert us if things go wrong and if there´s any sign of misconduct”, she said. “We have a responsibility to check”.
Using green energy is the main lever in all sections of the supply chain. Since 2020 BMW has purchased electricity only from a variety of 100% CO2-free energy sources: wind turbines and hydrogen in Leipzig, geothermal energy in Shenyang, solar panels in Debrecen.
By 2025, BMW will have sold two million fully electric vehicles but that is only part of the picture, said Meerwaldt: “What makes a real difference is using green energy to power the car.”
A car with a combustion engine will produce 40 tonnes of CO2 over its lifetime. An electric car will produce 14 tonnes if it uses a mix, or ‘grey’ energy. If the car is charged exclusively with renewable energy, it will produce a mere 1 tonne of CO2.
“We negotiate the use of green energy with all our suppliers,” said Meerwaldt. “We’re also embracing the circular economy idea, replacing primary materials with recycled materials whenever possible.”
BMW is a global company, so it has to deal with variations in legislation, regulations and customer expectations in different countries. European consumers and, above all, companies are the most demanding when it comes to sustainability.
“Europe leads the way and European corporates are really pushing this,” she said. “They ask questions and they demand detailed and validated sustainability data on every product.”
In order to meet this demand, the group has introduced the BMW Vehicle Footprint, with four KPIs: climate impact; efficiency; circular economy; and supply chain.
“The EU´s efficiency rating labels are not very clear or informative and they do not reflect the supply chain,” said Meerwaldt. “So we have made this totally voluntary move to increase transparency and credibility. Giving accurate information will enable customers to take responsible and informed decisions.”