By Richard Edwards

Vattenfall is excavating deep into its global supply chain as part of a pioneering project aimed at ensuring environmental and social standards at its coal suppliers.  
 
Despite huge investment in innovative projects involving wind, solar, carbon capture and hydro technology, Vattenfall acknowledges that coal is still the driving force behind global energy.
 
After signing up to the UN Global Compact in 2008 – which covers its entire supply base – it’s intent on driving improvements across its coal supply chain and, since 2007, has audited two of its hard coal suppliers each year based on the ten principles outlined in the compact.
 
“We buy coal from mines in Colombia, South Africa, Poland, Russia and Kazakhstan – that’s one of the advantages of coal, you can get it worldwide and you’re not dependent on one area, such as the Middle East,”  Jorgen Nielsen, head of strategy Vattenfall BU Heat Nordic, told Sustainable Sourcing.
 
“Of course, we’re delivering a lot of other innovative approaches so we’re becoming less and less dependant on it. But in a flat country like Denmark, despite the harnessing of hydro-electricity, there’s still a reliance on coal.”
 
Nielsen, who has recently returned from an audit in South America, believes that many suppliers have already taken positive steps from a sustainability standpoint, although he admits that, at times, the company’s approach has encountered pitfalls across its entire supply base.
 
“It was difficult to get suppliers to accept the new regulations when we first began,” Nielsen says. “However, the majority of the mines we’re working with have very high standards on issues such as labour rights. The main issues we’re dealing with involve areas such as occupational health and safety and the treatment of sub-suppliers.” 
 
At present, Vattenfall purchases almost 10 million tonnes of hard coal every year in order to maintain production at the company’s fossil-based plants across Northern Europe. And with many of the mines owned by major US and Australian concerns – BHP Biliton and Anglo American among them – suppliers are, it seems, taking action to clean up coal’s reputation.
 
“I’ve seen world class underground mining in South Africa and also world class re-establishing of open pits in Colombia,” says Nielsen. “Across the world mines are now meeting very strict standards.”

With strategies ranging from solar-generated power to environmentally sound vehicles, Belgian supermarket chain Colruyt has become something of a model of sustainable business management.

None other than Crown Prince Philip of Belgium climbed onto the roof of its distribution centre at Halle, near Brussels to inspect a wind turbine and the largest area of solar panels in the country. Solar installations at every new Colruyt store can produce up to 95% of the energy used by that store.

Perfect case study

But royal intervention and green energy aside, Colruyt’s activities in the world of sustainable business were described as “the perfect case study” at a recent event at KHLeuven business school, which concluded with a tour of the retailer.

During the tour, Colruyt’s regulatory affairs manager, Koen Demaesschalck, who is also responsible for procurement and supplier relations, explained the mechanics of sourcing and shifting goods in a fast-moving supply chain. He focused on how Colruyt applies the sustainable management ethos to commercial decision-making as well as internal processes and systems.

The company grew during the 1960s cash-and-carry movement but now sells itself on a combination of value, efficiency and sustainability. Its stores are still plain, functional spaces and its ‘lowest-price’ promise survived the transition. But its
product range has undergone a marked change with all stores offering organic or bio products. Colruyt is also opening Bio-Planet stores selling only organic products in the Netherlands and Belgium.

For cost reasons, fresh products are sourced in their raw state and in bulk whenever possible.

“We work with seven farms on exclusive contracts to supply meat,” said Demaesschalck.

A central butchery prepares the meat for store distribution and produces 50% of Colruyt’s cooked meats. There is an added benefit of easy traceability of meat to the cattle breeder.

What about wine bottling, cheese packaging, frozen goods, transport and logistics? “We do it ourselves,” Demaesschalck said.

Packers complete 14 million trays (nearly 24,000 tonnes) of fruit and vegetables a year. Sustainable sourcing of rice has led to Colruyt working with the people of Benin in West Africa to grow production volumes. An agreement to buy 10% of the total will give the country a guaranteed income.

An education programme focuses on developing countries and regions where Colruyt buys goods, including teak furniture from Indonesia. Some 5% of profits go back to these regions through non-governmental organisations in Belgium and around €150,000 a year funds schooling programmes.

According to Peter Tom Jones, ecology economics specialist at KHLeuven, European sustainable production and consumption goals call for new technology and innovation at all levels.

Colruyt is trialling radio frequency identification technology with Danone and Gillette to improve efficiencies.

Co-sourcing alliance

The company engages in joint sourcing with other members of Coopernic, a strategic retail alliance of five independent companies, and works on product innovations, new markets and new technology with them as well.

Veronica Velo, research director at Coventry University Enterprises, believes the business world can gain by working closely with universities.

“Numerous opportunities exist for actors from academia to collaborate with the retail industry at international level to advance the mission of operating at lower cost and in a responsible manner,” she said.