Sustainability in the supply chain

With a clear vision for the future and a firm commitment to environmental protection and sustainability, Krones has developed a comprehensive strategy and puts its focus on the two key issues of human rights and greenhouse gas emissions. There is one area in particular where the former can be preserved and the latter reduced: the supply chain. If this is to be made more sustainable, active cooperation with our suppliers is essential. This is already subject to certain rules, an overview of which we would like to give here.

As regards greenhouse gas emissions, under our net zero target is to cut 90 percent of these by 2040, with the remaining 10 percent being neutralised. 

Emissions are divided into three scopes: Scope 1 comprises the emissions that are produced with the company’s own plant. Scope 2 covers emissions from purchased energy, such as power and heating gas. Scope 3 concerns both the upstream and the downstream supply chain, i.e. our suppliers and, ultimately, the use of our products by customers. 

Human rights and climate in focus

The latter is particularly interesting, because a CO₂ reduction target has now also been set for the upstream scope 3 supply chain: minus 30 percent by 2030. In addition, 100 percent of suppliers are to be audited with regard to diligence in human rights matters. To achieve these targets, then, the supply chain must be optimised and adapted so that it meets human rights and climate criteria. 

This is done on the basis of the Supplier Code of Conduct, which our suppliers must sign. Among other things, it sets out what expectations Krones has, i.e. the form in which our business partners must assume ethical, social and ecological responsibility. As well as compliance with international ESG standards, it requires observance of the German Act on Corporate Due Diligence Obligations in Supply Chains. 

In addition, Purchasing conducts annual and case-by-case risk analyses of our supplier base in relation to various sustainability criteria. Emissions hotspots of our suppliers and goods are also identified, based on the question: Which material groups and which products cause the most emissions?

Gaining more transparency 

After this initial evaluation, Purchasing then begins to approach selected suppliers.

This is followed by a sustainability assessment carried out by EcoVadis, a provider of universal sustainability ratings, which is intended primarily to give a transparent insight into the performance and management of suppliers when it comes to sustainability.

Selected suppliers are also to be required to set certain climate goals: These were defined for corporate groups by the Science Based Targets initiative (SBTi) and also serve as a basis for Krones' Mission Net Zero. They specify by how much and how quickly a company is to reduce its emissions in order to be in line with the 2015 Paris Agreement on climate protection.

If we are to increase transparency about our supply chain emissions, improve comparability and derive actual reduction potential, it is essential that we obtain primary data from our suppliers. They are asked to calculate the carbon footprints of their products in accordance with recognised standards. 

Raising awareness at the Supplier Day

The overriding goal of this strategy, though, is to inform and raise awareness of this issue among suppliers. Ideally, in the future there will be a consistent basis on which all stakeholders have agreed and by which they abide. To accelerate that process, this year Purchasing organised a Supplier Day where Krones buyers were able to get together virtually with some suppliers for a whole day and explain exactly what the sustainability assessment entails. 

As can be seen, Krones continues to underline its commitment to a sustainable future worth living with targeted measures and initiatives, placing a clear focus on the continuous improvement of environmental performance along the entire value chain.