Procurement at Deutsche Bahn: A Holistic Conception of Supply Chain Sustainability

April 2, 2021 Sean Donnelly

Christoph Schwärzler is Senior Officer for Sustainable Procurement at Deutsche Bahn and a passionate sustainability expert. As a graduate mechanical engineer and business economist, he focused early on topics such as CO2 reduction, energy and resource management and has since expanded his sustainability expertise beyond environmental issues to include the human rights and social aspects of procurement. In an interview with journalist, Thomas Heine, first published in German in the April 2021 edition of “Kleine Kniffe” magazine, he spoke about transformation, sustainable procurement and future-oriented supplier management.

Mr. Schwärzler, you have been with Deutsche Bahn since 2017 in your role as Senior Officer Sustainable Procurement. What does your area of responsibility look like?

It is a very diverse and exciting task. Sustainable Procurement at Deutsche Bahn's Corporate Procurement department is located directly in the Finance board department. We are a staff unit in the Policy Department that develops framework conditions and processes, but also provides operational support to the purchasing departments. This includes information and training, as well as specific advice on the content of procurement projects. 

Within the internal procurement network, we maintain a close exchange with demand drivers and other specialist departments: e.g. with the Sustainability/Environment, Compliance and Human Resources departments. Externally, we are networked throughout the industry via the international industry initiative "Railsponsible", but also at national level with the BME and econsense. There are also dialogs with the UIC, the International Union of Railways, and with other initiatives such as ResponsibleSteel. 

Deutsche Bahn plays a special role in society due to the size of the Group, its purchasing volume and its position in public procurement. It is, therefore, important for us to be involved in strategy dialogs. For example, we are currently involved in the technical consultations on the Due Diligence Act for human rights in supply chains in Germany.

What role does sustainability play for Deutsche Bahn?

Sustainability is integrated throughout the Group. The Group's 'Strong Rail' expansion strategy has four sustainable objectives: for the climate, for people, for the economy, and for Europe. We are part of the mobility turnaround in Germany, but of course also beyond Germany. With DB Cargo, DB Arriva and DB Schenker, we can make a big difference worldwide, but we also leave an environmental footprint. That's why climate neutrality is laid down in the strategic program, which is geared toward phasing out coal in 2038. 

Today, we already run 100% of our long-distance transport on green electricity and have been recognized as a climate-friendly transport company. But there are other challenges we are working on hand in hand within the Group: social sustainability, responsible procurement, innovations and new technologies.

"We can only manage environmental issues in a meaningful way if we simultaneously observe socioeconomic and human rights aspects in supply chains."

Human rights due diligence in supply chains is currently the subject of much discussion. How do you see this in the context of a comprehensive sustainability approach?

The key to a successful sustainability strategy lies in balancing the three dimensions of economy, ecology and social issues. In particular, respect for human rights in the supply chains and compliance with the relevant standards plays a key role in sustainable procurement. We can only manage environmental issues in a meaningful way if we simultaneously observe socioeconomic and human rights aspects in supply chains.

As one of the most climate-friendly transport companies, Deutsche Bahn AG is an environmental pioneer and intends to remain so. But at the same time, we pay particular attention to human rights due diligence in supply chains. Alongside environmental issues, this is an essential pillar in sustainable procurement. Due to the complexity of supply chains, we need to work in partnership and engage in intensive dialog with our suppliers and industry associations.

What challenges do you see in public procurement with regard to sustainability?

At first glance, public procurement is highly regulated and involves a great deal of effort to ensure legal compliance. But that is only at first glance. A closer look reveals quite clearly that public procurement law is a great basis for procuring sustainably. This means that we can use aspects such as the protection of human rights in supply chains or the use of renewable energies in production processes for a procurement decision with legal certainty. From a regulatory point of view, there are many possibilities, whether as an evaluation criterion, a suitability condition, a performance specification or even a contract performance condition.

The challenge here is that we must learn to implement sustainability in a legally secure manner in order to gain the trust of our buyers and consumers. Since sustainability aspects are not yet widely established in procurement procedures and there is not as much experience available, we as sustainability experts supply support with questions, intercept concerns and provide practical guidance on implementation.

"The EcoVadis score complements other quality indicators such as delivery reliability or product quality. We started in 2013 with a few dozen supplier ratings. In the meantime, we have over 700 ratings. That corresponds to several billion euros in purchasing volume."

How does collaboration succeed in improving sustainability performance in supply chains?

Sustainability needs joint commitment. We cannot pull the cart alone, but depend on reliable and innovative suppliers. Working together as partners, we struggle to find the best way forward. If we are willing to listen to each other, new solutions emerge, for example with alternative building materials that have a lower carbon footprint than conventional ones. To systematize this approach, Deutsche Bahn co-founded the sustainable supply chain initiative, Railsponsible

Since 2015, member companies in the rail transport industry have been developing standards, tools and creating transparency. Over the past five years, we have made great progress in this area. Over 60 percent of our purchasing volume now has a sustainability rating. This means we also know the hotspots or risk areas and can address them specifically. This was not possible before, simply because the transparency was not there. It is particularly pleasing that not only are we developing in this respect, but also that our suppliers and strategic business partners in particular are moving further in the direction of greater sustainability.

How do you use EcoVadis in your collaboration with suppliers?

In the prequalification of many product groups, we give our suppliers the opportunity to submit their EcoVadis assessment under certain conditions. This shortens the procedure and saves costs. On the other hand, we use EcoVadis in supplier management for the continuous development of the business partnership relationship. 

The EcoVadis score complements other quality indicators such as delivery reliability or product quality. We started in 2013 with a few dozen supplier ratings. In the meantime, we have over 700 ratings. That corresponds to several billion euros in purchasing volume.

What role does Railsponsible play in sustainable procurement?

The Railsponsible supply chain initiative has become indispensable for sustainability in the rail transport industry for various reasons. The global network along the supply chain - i.e. vertically - brings together important companies that develop, for example, an overarching recognition of audits in compliance with antitrust law. 

Another benefit of the network is the dissemination of best practices. Dialogue with stakeholders guarantees that no nonsensical solutions emerge and that no extraneous programs are developed that miss the mark. In this respect, Railsponsible has great practical added value. We encourage other companies to join Railsponsible in order to establish sustainability standards across the board.

"There will be no more 'business as usual' in many areas after Corona. We are, therefore, well advised to prepare now - still in the midst of the crisis - for the future with more sustainable business models."

How can you tell that sustainability generates real business value?

If all management systems and strategic processes are designed in such a way that efficient supply can withstand even a crisis such, as the corona pandemic, then the sustainability approach is working. So far, we have only had interruptions in the supply of spare parts for our fleet and have been able to continue with almost all infrastructure measures without any disruptions. 

This has worked so well because vehicle maintenance, operational planning, construction site planning, range planning for material supply and close contact with suppliers have interlocked perfectly. We have to manage a crisis on the one hand and further develop the sustainability strategy on the other, so that we remain fit for the future and come out of this crisis stronger.

Do you see the crisis as a driver or brake for sustainability?

Faced with the pandemic, the question arose as to whether we still need sustainability at all when it comes to bare economic survival. My conviction is that sustainability is the perspective for the time after Corona and a driving force for acute crisis management. There will be no more "business as usual" in many areas after Corona. We are, therefore, well advised to prepare now - still in the midst of the crisis - for the future with more sustainable business models.

The basic prerequisite for sustainable procurement is raising awareness of the issue among purchasing staff - how do you implement this?

Training is an essential pillar. It is important that training measures are well coordinated with the organization's procurement programs. The content must be compatible with the company's target horizons so that it does not lead to frustration in the end because framework conditions, processes and target systems are not aligned with sustainability. 

The same applies to the supplier side. Through Railsponsible, members individually run supplier trainings, eLearnings and also on-site trainings. Another important format for imparting knowledge on the topic of sustainability is the supplier days. These are typically biannual or annual meetings related to one or more similar commodity groups. These specialist events increasingly revolve around sustainability, new framework conditions and the exchange of best practice examples.

You yourself are heavily involved in the topic of knowledge transfer and have also contributed modules to the JARO Institute's e-learning program for sustainable procurement, for which you are a member of the scientific advisory board.

Yes, the JARO online sustainability buyer course is, in my view, a promising and high-quality continuing education offering. I think we have succeeded in designing a didactically excellent course. The course has a modular structure, so that one can set differentiated focal points that are tailored to the role of the participants.

Deutsche Bahn has been a pioneer in sustainable procurement for many years. What advice would you give to a company that is just starting out with sustainable procurement?

I like to refer to the approaches in guidelines that are based on management system standards. As an entrepreneur, you first have to be clear about the environmental and social impact of your business mission and what opportunities sustainability offers your company. It is about the effects of the products and processes in the entire life cycle, from production to reuse. It will then be relatively easy to derive measures with which initial improvements can be achieved with little effort. 

I would advise against placing too big an elephant in the room. You should not try to do everything perfectly from the start. Sustainability is a step-by-step approach. In this respect, my message is: take a low-threshold approach to the topic, build up a step-by-step plan, transfer sustainability into regular processes and celebrate successes on a regular basis.

Get in touch or find out more about how EcoVadis can help your company to keep ahead of the regulators and proactively build sustainability and resilience throughout your organization and supply chain.

About the Author

Sean Donnelly

Sean Donnelly joined EcoVadis in 2021. He holds a PhD in Modern European History from Teesside University and has worked previously in research and communications capacities at the European Commission and in the Irish Civil Service.

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