Porsche Demands 1,300 Suppliers Use Renewable Energy

(Credit: Porsche)

Bolstering its efforts to achieve ambitious emissions reduction goals, Porsche is requiring its nearly 1,300 suppliers to use renewable energy to manufacture its vehicle components. Porsche aims to be carbon neutral in its supply chain by 2030.

Companies are increasingly doubling down on their supply chain sustainability efforts. For instance, I recently discussed IKEA shifting its suppliers to 100% renewable energy, and P&G’s new innovation center for supply chain sustainability.

Since 2019, Porsche has used the S-Rating – a sustainability rating for suppliers – as a mandatory order award criterion. Deployed through a partnership with Prewave, the S-Rating uses Artificial Intelligence (AI) to identify sustainability risks such as environmental pollution, human rights abuses and corruption at an early stage – not only among direct business partners but also at the lower levels of their supply chain.

Porsche has also made strides to reduce its internal CO2 emissions. Currently, all major Porsche manufacturing sites are CO2 neutral in terms of operations, including its headquarters in Stuttgart, Germany. But the company’s supply chain accounts for about 20% of its total emissions and is predicted to rise to 40% by 2030 as the EV market grows. The company will also be investing more than a billion euros in decarbonization measures over the next ten years. 

As of July 2021, all new supplier contracts will need to meet Porsche’s clean energy requirements to do any sort of business with the automaker. This new policy applies to any and all contracts awarded to provide production material for new vehicle projects. Any suppliers unwilling to switch to certified green energy will no longer be considered for contracts with Porsche moving forward.

Uwe-Karsten Städter, member of the Executive Board for Procurement at Porsche AG, said, “Our battery cell suppliers have already had to use green energy since 2020. And now we are taking the next important step: we stipulate that our series suppliers also use only renewable energy to produce our components, to help reduce CO2 emissions even further. We recognize that we have a responsibility to ensure that supply chains are transparent and sustainable.”