Supplier engagement programs: Featuring Unilever, Nexio Projects & Ecochain

## Chapter 1: Introduction

Welcome, everyone, to another episode in our series, this time with Frans-Willem from Ecochain.

Today, we’re going to talk about supplier engagement programmes and life cycle assessments.

Frans-Willem, could you introduce yourself?

I’m Frans-Willem de Kloet, the CEO of Ecochain. Ecochain provides software to calculate the environmental footprint of products through Life Cycle Assessments, or LCAs.

We’ve been doing this since 2011. We’re based in Amsterdam, but we serve customers all over the world.

We’ve been working together for several years now. Looking back over the past 12 years, what do you see as the biggest challenge in the LCA space?

## Chapter 2: Challenges in LCAs

The biggest challenge is that the landscape is changing a lot.

A lot of this work started in the Netherlands, particularly in the construction materials sector. That was where many of these developments began, and they are now spreading across a wide range of industries.

One of the main challenges is agreeing on common standards. Collecting the data is complex, as are the modelling and other technical aspects.

The LCA itself is complex, but additional complexity comes from the language we use. How do you compare like with like? This has created a lot of difficulties.

What I hear from many of our clients is that they are trying to understand what an LCA really involves. There is confusion around data collection, obtaining the right data points, and establishing the right methodology.

There is still a lot of confusion in the market.

It is a new market, and when a market is new, everyone tries to develop their own language.

There are many initiatives discussing what the outcome should be. The good news is that industries and companies have agreed that the LCA is the standard methodology for calculating environmental impacts.

Based on that methodology, there can still be different outcomes, terminology, and interpretations. That is where the complexity comes in.

At the end of the day, as a supplier or a company with products, you can rely on a Life Cycle Assessment to calculate their impact.

The complexity comes from how you translate the results, how you communicate with one another, and how you interpret the different data points.

## Chapter 3: PACT Collaboration for Supplier Data

During our collaboration, we have come across a range of different frameworks in the LCA space.

We know that LCA is the methodology, but there are also many initiatives around it. One of these is PACT, the Partnership for Carbon Transparency.

What has your experience been with PACT, and how have you worked with it?

PACT is an initiative, and it is an important one because many companies and industries are involved in it. A large number of industries worldwide have adopted the framework.

One of the challenges of obtaining product data is that you need to collect data from your suppliers.

A product often consists of materials or supplies that you purchase from suppliers. You therefore need to establish a common language for how suppliers should provide that data.

Having standards and a common agreement about what the data should look like is very important. Suppliers are not only supplying to you, they are also supplying to many other customers.

If they have to provide the data in a slightly different format or language for every customer, it quickly becomes difficult to manage.

All initiatives that address this challenge are valuable. When an initiative such as PACT has many industries behind it, that value becomes even greater.

One of the common denominators has been our project with Unilever, which has been a great success and has been running for the past three years.

## Chapter 4: Unilever Success Story

Perhaps this is a good moment to ask Stella about her experience with PACT and why Unilever started its supplier engagement programme.

Stella is a Senior Manager in Sustainability and Business Operations at Unilever, and she will give us some insight into the programme.

Hi Mark, thanks for having me. It is good to see you both, and thank you for the opportunity to speak.

I’ll come to your questions in a moment, but first, for your viewers, here is some context about who I am.

I’m Stella, and I work at Unilever. My role focuses entirely on our supplier climate programme. I sit within the Procurement organisation, which is an important point when engaging suppliers on this topic.

I’ll address your second question first, which was why we started engaging with suppliers on climate.

The short answer is that we have two science-based targets for 2030 as a company, with very significant emissions reductions required.

When we looked at the data to understand where most of our emissions arise, it became clear that most of them come from the raw materials and packaging materials we purchase.

It therefore became clear very early in the programme, around four or five years ago, that we had to engage meaningfully with suppliers on this topic. That was when the programme was designed.

We have learned a lot along the way, and I would like to share a few highlights about what has helped us.

The first is knowing who to partner with. By this, I mean identifying which suppliers are most important from a climate or greenhouse gas emissions perspective.

Secondly, we recognised early on that we could not do this alone. We simply did not have the capacity in-house to support all the suppliers that needed help.

Some suppliers already knew what they were doing and simply needed to continue with their own work. However, there were definitely two groups of suppliers that needed additional support.

We selected Nexio Projects and Ecochain to work with one of those groups. In particular, we worked with them to help suppliers develop the LCA and Product Carbon Footprint capabilities we needed.

The second point is to select your partners carefully. There are many potential partners, but we carried out a robust market review before making our selection.

It is important to select partners that can deliver what you need and what your suppliers need. This is what we found with Ecochain and Nexio Projects.

The third point is that supporting suppliers has been a major enabler. Our partnership with these two organisations provided support to suppliers and helped them meet our requirements, which they found challenging.

Another question was about our experience with PACT.

If I go back five years, most suppliers would probably have looked at me blankly if I had mentioned PACT. Many of them would not have known what it was.

The journey that PACT and the wider industry have taken over the past few years has been phenomenal. It is now a well-known brand and methodology.

For Unilever, PACT is an important enabler on our decarbonisation journey.

We can ask suppliers to share PACT-compliant Product Carbon Footprint data with us, and they can provide that data in a standardised format.

We received nearly 700 of these data sets last year. We then act on the data together with our Procurement team.

That means engaging with suppliers and asking where most of their emissions arise and what plans they have to address those emissions.

These are the conversations that the data enables. Being able to do this in a standardised way across different portfolios and suppliers allows us to work at scale.

PACT has therefore been a major enabler for us in working at scale on this topic.

To summarise, if I look back four or five years, the most important thing was simply to get started.

Once we began, we learned a great deal from the mistakes we made, the feedback we received from suppliers, and the advice and experience of the partners we selected.

If I could give one piece of advice to anyone who has not started this journey, it would be to begin. You will learn a great deal along the way.

Thank you, and back to you.

Thank you, Stella, for those great insights.

Frans-Willem, how do these key challenges resonate with you, particularly given Stella’s experience at Unilever and the way the programme began three years ago?

## Chapter 5: Data Challenges for Scope 3

How have these challenges looked from a digital perspective?

Scope 3 upstream emissions, in other words, obtaining data from suppliers, are a very important topic for companies such as Unilever.

It is a recognised challenge. In the beginning, companies may have estimated the potential impact of their suppliers.

Sometimes they asked for a supplier’s overall company footprint or the impact of the supplier’s operations. Ultimately, however, you do not purchase a supplier, you purchase products from that supplier.

You therefore need product-level data. This is a major challenge because many suppliers do not yet have that data.

The goal is to create a scalable supplier engagement programme to obtain the data from suppliers.

One thing Unilever does very well is recognise that the data belongs to the suppliers. It remains the supplier’s data, so the supplier can also use it for other customers.

This creates ecosystem collaboration, which is critical to making the system work.

One of the key lessons from our work with Stella and her team was that our supplier engagement programme was initially designed differently.

We now see that newer generations in companies are much more accustomed to using learning management systems and learning independently, rather than being taught directly or having the work done for them.

## Chapter 6: What’s Next for Suppliers?

Looking beyond LCAs, what do you think the next step is for suppliers?

They may currently be supplying one piece of data to Unilever. Do you foresee LCAs covering a broader range of products in the future?

To be honest, this is part of my general view.

As a product manufacturer, you need to realise that sooner or later you will need environmental data for every product you provide.

This may take time. It may be because companies such as Unilever are asking you for the data, because consumers are asking for it, or because regulations require it.

The Digital Product Passport is an important example of this development.

Sooner or later, you will need your entire product portfolio to be supported by environmental data.

You should therefore start now. You do not have to begin with 10,000, 20,000, or 30,000 products. Start somewhere.

In that sense, what Unilever is doing is a very good initiative. Many other companies are now starting similar programmes.

This is becoming a normal part of doing business, and your commercial teams will increasingly receive these types of questions.

Once you recognise that, you need to find partners who can help you address it.

I think one of the biggest misunderstandings about LCAs is that companies immediately need to conduct thousands of LCAs at the same time.

That is not the case. The advantage of your tools is that you can conduct LCAs at scale.

You offer two ways of carrying out an LCA. Could you explain the two options, one from a company or factory-level perspective and the other from a product-centred perspective?

The first approach is top-down, starting at factory level.

The major advantage is that you can look at all the products coming out of a factory. If you need a large number of LCAs, which may be the case in the future, this is a good way to approach it.

If you only need a few product impact calculations, you can also take a bottom-up approach.

This involves looking at a bill of materials, assessing all the components within it, and calculating the impact of those components.

The best approach depends on the use case. Are you doing this mainly for reporting, or are you using the information for eco-design?

Understanding the purpose will determine the best way to use the tool.

That is why we offer two ways to assess product impacts.

This is important because you often hear in the market that an LCA is expensive.

However, with your system, it is possible to conduct LCAs at scale. You do not necessarily have to pay €10,000 or €20,000 for every LCA.

The cost can be much lower when the process is carried out at scale.

## Chapter 7: Benefits of Supplier Engagement Programmes

That is also the approach we used with Unilever, to demonstrate how the process can work at scale.

This is particularly effective when you look at a supplier engagement programme and work with suppliers in groups.

You do not have to work with suppliers one-to-one. Much of the education around what an LCA is and how to complete one can be delivered in groups.

You can explain concepts such as Product Carbon Footprints and Life Cycle Assessments to groups of suppliers. This does not need to be done individually.

Working in this way creates significant efficiencies.

## Chapter 8: Tips for Suppliers

If I were a supplier just starting out and did not know where to begin, what advice would you give me?

I would say: just start.

It is a complex topic, and we all recognise that. However, do not let the complexity stop you from beginning.

You can start even if everything is not perfect or fully accurate yet. The important thing is to begin learning what is involved and to understand the possibilities and opportunities for your business.

Ultimately, it is also a business opportunity.

The market is changing commercially as well. Many companies are requesting LCAs in tender processes.

It is therefore not simply about spending money to obtain insights for your suppliers or clients. It is also about future-proofing your business.

Being future-proof means being prepared to provide LCA data.

Absolutely. There are already many tender processes where, if you cannot provide this data or score lower than another company, you may be excluded from the opportunity.

This is likely to happen much more frequently in the future.

## Chapter 9: Future-Proofing Your Business

If I were Unilever and wanted to start a supplier engagement programme, what advice would you give me?

Once again, suppliers should start small.

For larger organisations setting up a supplier engagement programme, the first step is to understand the impact.

As Stella mentioned, the organisation needs to understand that supplier emissions are an important part of its total environmental impact.

It is also important to establish a target. What do you want to achieve with the programme?

The next step is to start small.

Identify your top 50, 100, or 200 suppliers and work with them first. Once you have established the process, you can expand it.

If you look at all your suppliers at once, you may have 10,000 suppliers or more. This can make the task appear overwhelming.

However, a relatively small number of suppliers usually account for the largest share of the impact.

Understand which suppliers have the greatest impact, start with that group, and work with them.

You should also involve your Procurement and Supply Chain teams to build momentum and establish the programme.

## Chapter 10: Thanks and Key Takeaways

Thank you very much for joining us.

Thank you for inviting me.

And Stella, thank you for joining us live.

On behalf of all of us, thank you for watching.

The key takeaways are:

– Start small.
– Break down the complexity.
– Get started with the right tools.
– Work collaboratively with your suppliers.

Thank you again, and we hope to see you soon for another discussion about supplier engagement programmes.

Thank you.

References:
[1] https://nexioprojects.com/webinars/uniting-the-value-chain-effective-supplier-engagement/
[2] https://ecochain.com/pact-conformant-announcement/
[3] https://nexioprojects.com/carbon-footprints-decoded-a-collaborative-approach-to-climate-action/