Greener Supply Chains: IKEA, Schneider Electric and Npower

The logistics and distribution sectors are undergoing a green revolution, integrating sustainable practices at every phase of the supply chain. This approach aims to minimise environmental impact by using resources efficiently, cutting down on waste, and adopting renewable energy sources.

A report by DP World, in collaboration with studioID, highlights that 82% of businesses see enhanced financial performance from adopting sustainability. This demonstrates that eco-friendly practices are not only good for the planet but also beneficial for the bottom line.

Leading this charge are IKEA, Schneider Electric, and Npower, each pushing the boundaries in sustainable supply chain management.

Circularity at the core

Circularity is a crucial element in creating greener supply chains. It involves reusing and regenerating materials to boost efficiency and minimise waste.

Jarrod McAdoo, Director of Sustainable Procurement Solutions at Ivalua, emphasises the importance of circularity: "Organisations can’t afford to let circularity initiatives slip," stressing that maintaining focus on circularity is essential for long-term benefits.

Schneider Electric, recently named the world’s most sustainable company by TIME, exemplifies this commitment.

Jin Piao, SVP Global Supply Chain Safety, Environment, Real Estate & Sustainability, asserts, “To make the biggest environmental impact, supply chain leaders must consider a holistic approach to sustainability.”

Schneider Electric’s efforts include using 32% green materials in their products, with a goal of reaching 50% by 2025. Its MasterPact MTZ circuit breakers, refurbished at the MasterTech plant in France, illustrate their dedication to extending product lifecycles and promoting circularity.

IKEA’s comprehensive sustainability framework

IKEA’s approach to sustainability is reflected in its "IKEA Way," (IWAY)  framework, which guides responsible sourcing and sets stringent standards for environmental, social and ethical practices across its supply chain.

IWAY, based on international standards and principles like the UN Guiding Principles on Business and Human Rights and the UN Sustainable Development Goals, aims to improve supplier practices through a structured approach.

The framework categorises requirements into Must, Basic, Advanced and Excellent levels, encouraging suppliers to exceed minimum standards.

The latest version, IWAY 6, introduced in 2020, incorporates new topics such as biodiversity and resource conservation, and focuses on supporting suppliers rather than merely auditing them.

Jesper Brodin, CEO of Ingka Group, highlights the urgency of action: “The climate crisis is one of the biggest challenges facing humanity... we need to move with impact and speed.”

IKEA’s goal is to limit global temperature rise to 1.5°C, and the company is committed to creating a positive impact across its supply chain, including sub-suppliers and raw material sources.

Leveraging technology for sustainable supply chains

Technology plays a key role in advancing sustainable supply chains. It enables organisations to manage resources more effectively and achieve their environmental goals.

Jarrod McAdoo points out that visibility into immediate and sub-tier suppliers is essential for addressing environmental, social and governance (ESG) compliance issues: “A lack of visibility into immediate suppliers and sub-tier suppliers (where many environmental, social and governmental (ESG) compliance issues exist), can hinder organisations’ efforts to address environmental and ethical issues.”

Adopting technology that provides a 360-degree view of the supply chain is crucial for identifying high-emitting suppliers and collaborating on improvement plans.

IKEA, for instance, uses digital procurement platforms to centralise data related to suppliers, materials, and sustainability metrics. This technology facilitates the management of take-back and recycling schemes and tracks supplier performance.

Npower is also leveraging advanced data analytics to oversee the lifecycle of its equipment, reducing waste and emissions.

Ben Whitelam, Director of Commercial at Npower, underscores the importance of this shift: “For businesses to truly benefit from a secure, responsive, low-carbon energy system that also supports the country’s net zero goals, a radical remodelling has to take place.”

The transition to renewable energy sources requires better management of electricity usage. Market-wide Half-Hourly Settlement (MHHS), set to begin in April 2025, will provide more detailed data on electricity consumption, allowing businesses to manage energy use more effectively.

According to the Business Energy Tracker, nearly a third of businesses have already upgraded their energy meters to gain more detailed data for managing energy risks.

Ben concludes, “With such huge changes afoot, the good news is that the businesses we spoke to for this year’s Business Energy Tracker are already becoming more energy data savvy.”

As companies continue to focus on enhancing sustainability within their supply chains, integrating green energy and technology will be crucial for reducing emissions and optimising resource use.

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