Sustainable supplier management
Components and raw materials currently make up more than 80 percent of the carbon footprint of the product manufacturing process of a wind turbine. As part of our sustainability strategy, Sustainability in Everything We Do, we are committed to reduce carbon emissions from our supply chain by 45 percent per MWh generated by 2030, and to produce zero-waste turbines by 2040. To achieve these goals, we depend on our business partners’ collaboration. Therefore, we began working with 27 strategic suppliers, covering 30 percent of our material spend, to achieve substantial improvements in the areas of carbon footprint and circularity.
The collaboration with these 27 suppliers is only the start and we will gradually increase the number of suppliers in scope. The selected strategic suppliers are asked to commit to 100 percent renewable electricity, to set targets for reducing scope 1 and 2 carbon emissions, and to measure production waste for products delivered to Vestas. In 2022, the suppliers will be expected to set targets for reducing scope 3 emissions.
Responsible supply chain management
As part of our commitment to sustainability, everyone at Vestas is devoted to responsible supply chain management. Through a strong qualification and onboarding process, sustainability evaluations and global partnerships, we aim to improve our shared sustainability performance. Complying with the Vestas Supplier Code of Conduct is an integral part of our Purchase Agreements, and we expect all suppliers to uphold these principles and standards.
We mitigate supplier risk by conducting third party due diligence screenings covering business ethics and sanctions. In 2020, we screened 2989 suppliers, allowing us to make informed decisions about who we work with, develop mitigation actions if necessary, and thus lower our risk exposure.
Supplier compliance is being assessed before letting suppliers into the Vestas supply chain. This is done through our rigorous due diligence processes. Our assessments range from questionnaires to full onsite assessments. In 2020, we carried out 39 onsite assessments for new suppliers globally, measuring performance against specific quality and sustainability parameters. Of these, 35 were approved, none were rejected, and 4 are under approval.
Due diligence activities after supplier onboarding are conducted based on a risk evaluation. Such activities include, but are not limited to, supplier scorecards, performance review meetings, and third-party sustainability audits. The purpose of sustainability audits is to ensure that our suppliers are operating in compliance with local regulations, our Code of Conduct and quality requirements. When so-called ‘red flags’ are identified, indicating that suppliers are falling short of our standards, we initiate actions to address the issues raised.
Vestas has also invested in an external data management solution, to trace conflict minerals within our supply chain, with the aim of ensuring that suppliers’ products do not contain conflict minerals sourced from mines that support or fund conflict in conflict-affected areas. We are currently working with the first results from this process.