Insight: “How Does Sustainable Procurement Work, Mr. Reidelbach?”

Heinrich Reidelbach, responsible for global procurement at Daimler, talks about the implementation of sustainable procurement processes and the new Daimler sustainability guidelines for suppliers.

 

360 DEGREES: Mr. Reidelbach, could you explain your concept of sustainable procurement?

Heinrich Reidelbach: The same principles apply to procurement as to all other business units: our activities are based on the Group-wide principles and standards of sustainability. These in turn are derived from our core values of passion, respect, integrity, and discipline. The great challenge for us in procurement is to ensure that these principles and standards are also put into practice along the supplier chain. We have therefore made it our business to take on this challenge in cooperation with our suppliers.

What form does your daily cooperation take?

It takes place within a partnership, because approximately 50 percent of added value is generated by our suppliers. Only if we work together can our sustainable business practices lead to success. For this reason, we have developed sustainability guidelines for our suppliers which formulate the standards for sustainable business operations. We derived these guidelines from our own internal principles, which apply to all of our employees, and from internationally recognized principles and conventions such as the International Labour Standards (ILO) and the United Nations Global Compact.

What are the most important components of these guidelines, and what do you aim to achieve through them?

We want to clarify for our suppliers exactly what we expect from them in terms of sustainable business operations. The principal aspects here are working conditions, environmental protection, and business ethics. Through our guidelines we want to draw attention to these issues, create a permanent awareness of them, and stimulate discussion. In order to emphasize how important these issues are for us in procurement, I sent out copies of these guidelines to all of our suppliers in July 2008 in cooperation with my colleagues Stefan E. Buchner from Procurement Commercial Vehicles and Frank Deiß from Procurement Mercedes-Benz Cars and Vans.

What do you expect from your suppliers?

 We expect them to comply with the standards defined in these guidelines. We are convinced that these principles are already the basis of daily business operations for many of our business partners. For us it’s particularly important to support our suppliers with regard to communication and to apply these principles throughout the entire supplier chain. That’s why we are explicitly requiring that our direct suppliers not only apply the guidelines within their own companies but also communicate them to their business partners in the supplier chain and demand “clean” business operations there as well. Here too we are supporting our suppliers, for example by making the text of the guidelines available in ten different languages in Daimler’s portal for suppliers.

How would you describe the suppliers’ response to the guidelines?

We’ve received a lot of positive feedback, and of course I’m very happy about that. Many of our business partners explicitly support our initiative and are providing us with detailed information about their own efforts to achieve sustainability. Some of them are asking us for additional copies of our guidelines so that they can make them available to their own suppliers; others are asking for a system for sharing information and comparing our respective sustainability strategies. We’ll be very happy to set up such a system. For us it’s important to work together to make sure that the standards are complied with and to support their implementation. Our task is to promote compliance with appropriate standards and modes of behavior within the supplier chain and to insist on it repeatedly — because, after all, we can’t monitor the entire supplier chain, and we don’t want to do so anyhow. In this area we need the support of our direct business partners, and they in turn have to remind their direct suppliers of their obligations.

Are there already any examples of projects that promote sustainability?

Yes. The sustainability guidelines are indeed new, but we can look back on a long tradition of social responsibility at the company — especially in cooperation with our suppliers. In Germany we have a policy of placing orders with workshops for disabled people, and we are also working with our suppliers to develop new plant technologies and materials that will reduce emissions in the vehicle production process. One example at the international level is the successful cooperation of Brazilian suppliers with our plant in São Bernardo do Campo in a joint environmental protection program that involves recycling pallets and processing oil.

We’ve also run a small but very effective project together with the Gesellschaft für Technische Zusammenarbeit (GTZ — Society for Technical Cooperation) and the Global Reporting Initiative (GRI). The aim of the project was to develop a sustainability report for two supplier companies in India. The suppliers, who were supported by independent consultants, received a detailed analysis of their corporate processes and data, and they regard the results as a good foundation for their future development.