SUSTAINABILITY REPORT: Sustainable supply chain processes

Why sustainability matters

Welcome to the inaugural Appliance Retailer Sustainability Report.

We recognise that more consumers are looking to brands that are making environmentally friendly decisions to support a sustainable future.

More than seven in 10 Australians (71%) are either ‘extremely concerned’ or ‘somewhat concerned’ about their personal carbon footprint, according to a recent Finder Consumer Sentiment Tracker, which represents responses from a 1,015 person nationally representative sample.

Generation Z (those born after 1996) are the most concerned, followed by Gen Y (born between 1981 and 1996) and then Gen X (born between 1965 and 1980). We have taken the opportunity to address the importance of this persistent trend and the steps being taken by members of the appliance and consumer electronics industry to contribute to a better tomorrow.

Defining sustainability

The Cambridge Dictionary defines sustainability as ‘the idea that goods and services should be produced in ways that do not use resources that cannot be replaced and that do not damage the environment’.

When Appliance Retailer approached brands in the appliance and consumer electronics industry, there were varying definitions of the term sustainability, but one theme was unanimous – it not only relates to creating more energy efficient products, but nurturing employees, customers, communities and other stakeholders with the view of creating a better world for future generations.

The Finder Tracker also found that more than four in 10 (42%) believe a company’s social and environmental efforts are either ‘extremely important’ or ‘very important’ when considering whether to buy from them, with 34% saying it is ‘moderately important’.

By generational split, it was considered ‘extremely important’ by 21% of Gen Z, ahead of Gen Y (18%), Gen X (15%) and Baby Boomers (9%). Those that responded ‘very important’ were made up of 34% of Gen Z, 33% of Gen Y, 26% of Gen X and 16% of Baby Boomers.

“Younger audiences are more interested in this topic and are more passionate and concerned about reducing their environmental footprint,” Finder head of corporate social responsibility and public affairs, Ben King told Appliance Retailer.

“No business can ignore climate change anymore, particularly among the Millennial audience who are entering their 30s and are some of the biggest buyers of any product. We’ve seen increases in Google searches for green products and services, which didn’t happen even five years ago. It’s becoming more front of mind now.”

Sustainability is a topic often reserved for boardrooms, so the aim of this Report is to bring sustainability to the forefront of conversation and provide a resource for the industry to better understand the steps being taken by brands.

Sustainable supply chain processes

The supply chain is the process of getting a product from the place where it is made to the person who buys it.

Brands acknowledge that the supply chain is the largest contributor to carbon footprint, from the warehouse, use of materials during production and engagement with supply partners, to transportation and logistics.

Warehouse compliance and stewardship

The construction of the Electrolux Ravenhall facility in Victoria continues the company’s commitment to find better, sustainable solutions in everything from design and operations to the workplace, suppliers and products. Boasting a 6-star energy rating, Ravenhall sets a new, globally recognised level of best practice sustainability.

The 6-star energy rating is the highest standard rated by the Green Building Council of Australia and to achieve this, an organisation must demonstrate high compliance and stewardship in all facets of design, build, use and waste management.

Electrolux Australia and New Zealand head of logistics, David Mair and JLL Australia head of supply chain and logistics, Allan Frydman at the start of construction of the Ravenhall facility.

Ravenhall, a facility housing service and distribution for Electrolux Victoria, has been designed with an emphasis on utilising natural resources and reducing emissions. Solar energy will power the entire forklift fleet of 12 forklift trucks and provide more than 80% of the electrical requirements for the facility. Rain harvesting capacity will be utilised for landscape irrigation and toilet facilities.

The safety of employees and visitors at Ravenhall is critical to maintaining a sustainable work environment. Some safety measures introduced include integrated truck coupling to ensure loading docks are secure before a truck can move, personal proximity sensors to indicate presence of people to forklift drivers, fall protection integrated into loading docks, and adjustable work platforms for service to prevent the need for product lifting.

Alternative energy solutions

Many brands are using renewable energy solutions, such as solar panels, to reduce carbon emissions.

Miele is evaluating the feasibility of on-site solar systems across all local facilities and its new Melbourne head office was developed with a strong sustainability approach with finishes based on minimal use of additional materials.

Solar panels were installed on Smeg’s Guastalla factory in Italy at the end of 2021 and will soon be 100% powered by solar. For machines that cannot run on electricity alone, Smeg has sourced certified zero emission methane gas to help reduce production waste and carbon output.

The Glem Gas factory in Modena, Italy installed a large scale photovoltaic solar power system in 2010 which now produces two megawatts of power, or 50% of electricity needs.

In December 2020, Groupe SEB installed 1,558 solar panels at factories in France, the Netherlands, Egypt and Brazil, to produce more than 500MWh of electricity per year, or the equivalent consumption of 100 French households for one year.

All BSH locations around the world operate carbon neutral as of 2020 – a target that was set by the Bosch Group Board in 2019. In 2020, 2,500 solar panels were installed at the BSH headquarters in Clayton, Victoria.

Nespresso’s head office and boutiques in Australia are now powered by clean energy.

Using environmentally friendly materials

Beyond the warehouse facility itself, brands are also focusing on the material being used to produce products and ways to minimise waste.

Smeg champions an ethical supply chain when selecting component materials such as the ability to recycle spare parts including oven elements and rangehood filters. In 2022, Tritan used in Smeg blenders, coffee carafes, water tanks and grinders, is being replaced by a recycled Tritan called Tritan Renew with no impact on product durability or performance.

Glem Gas products are 97% recyclable and use one grade of stainless steel making it easier to recycle and produce. In Italy, Glem Gas works with Remedia TSR for environmental consultancy and eco-sustainable management of corporate waste. In its most recent report, over 112 tonnes of equipment and components were destructed with a 98.02% recovery rate.

Above: In 2020, 2,500 solar panels were installed at the BSH headquarters in Clayton, Victoria.

When Jura is designing a product, it isn’t just about aesthetics but how it can be pulled apart with easy access to components and parts. In most cases, new and improved parts are backwards compatible to ensure the machine can be serviced for a long time.

At Vornado, many raw materials are delivered in corrugated boxes stacked on wood pallets which are delivered to the production lines and then used to stack finished goods. The boxes are returned to the supplier for reuse, and rejected metal and plastic are recycled. Power cords are removed from defective finished goods and the copper inside is recycled.

Olimpia Splendid focuses on using fewer parts so components and materials can be removed more easily; and the process of designing parts, components, or products to make manufacturing easier with the goal of making a better product at a lower cost.

At Belkin, there is a chain of custody process for metals to ensure compliance with the Dodd- Frank Act that no compound minerals are incorporated into products, and where possible, recycled material is used.

ENGAGING WITH ETHICAL SUPPLY PARTNERS

Brands are working closely with their suppliers to help reduce their environmental and social impact.

In 2020, Electrolux secured commitments from its top 200 suppliers to disclose emissions and set targets through the CDP Supply Chain Program. Smeg manufactures 95% of its products in Italy, but suppliers outside of Italy must meet the same standards. Smeg obtains ethical sourcing and modern slavery data from every major appliance supplier to ensure sustainable manufacturing and the recycling of production materials.

Almost 24 tons of CO 2 steel will be used in the production of cooktops and ovens at the Miele Oelde plant in Germany.

Almost all supplier partners of Glem Gas (98%) are based in Europe and all cooking products are manufactured in Italy. European partners are preferred as they share the same values to maximise efficiency and minimise waste, while improving quality and reliability.

Since the launch of the Roomba robotic vacuum cleaner two decades ago, iRobot has evolved its relationships with supply partners. Over the past five years, iRobot has taken control over key relationships previously managed by contract manufacturers.

Panasonic has shifted from a vertically integrated business in which most parts were sourced within the group, to a horizontally specialised business in which parts are sourced from external suppliers. New suppliers are evaluated using self-assessments on human rights, health and safety, the environment, and ethics.

Belkin’s suppliers must meet the company’s ESG (Environmental Social Governance) reporting requirements. Annual reports are conducted with the supplier quality assurance team.

GREENER METHODS OF TRANSPORT

The supply chain goes beyond manufacturing and production, with transportation a major contributor to energy use.

With this in mind, Miele is undertaking a 90% changeover of its Victorian delivery fleet to hybrid vehicles in 2022.

Belkin is working with carriers investing in low carbon and carbon-free vessels to transport product, as well as designing products and packaging to minimise empty space in the carton and optimise the container space.

BSH also undertakes efficient packing to ensure more products can be transported at the same time, to not only reduce packaging material, but save on fuel and cut carbon emissions.

Groupe SEB prioritises non-road transport opting for transport by rail and river. In Europe, Middle East and Africa, which accounts for 41% of alternative journeys.

Olimplia Splendid also looks at the most efficient, economical and energy-saving transportation, such as choosing ships over rail or road transport.