- Norican recently committed to the Science-Based Targets initiative (SBTi). Is this something MAT Group is considering?
All our facilities comply with ISO 14001 for environmental management and our OE plants are all ISO 50001 certified for energy management. We haven’t signed up to SBT, we’re waiting so we can align our standards with our customers. But we’ve been measuring scope 1 and 2 emissions across the group for the last two years and already offer our customers a product carbon footprint based on that. We started measuring scope 3 emissions in own supply chain this year.
- What is the priority for Scope 3 emissions data and are you using it for your own procurement?
Our raw material suppliers (scrap and ferro-alloys) are the first focus for us and our customers are pushing us in that direction too. They know that this is where the majority of emissions are coming from: the ferrosilicons and the carbon products that are produced at 2000 to 4000°C.
Once we have a better handle on scope 3, we will definitely use it ourselves. For example, where should we buy ferrosilicon magnesium from? From suppliers in our region of Europe that use 100% green energy or from suppliers outside Europe that potentially use non-renewable energy?
- What else do your customers want to know about?
They want to maximise secondary material content and are starting to ask how much secondary material is in each product. We already use a lot of iron scrap and we’re going through all our raw materials to classify each one as primary or secondary. For example, carbon could be defined as secondary because it’s a waste product from petroleum coke.
- Do you see any specific sectors taking a lead on sustainability and is emissions measurement becoming obligatory for foundries?
Automotive is the obvious one. We deal with both tier one suppliers and the OEMs themselves, and they all want to be carbon-neutral by a certain date – 2030 or 2040 is common. Most are starting to factor emissions into their tendering processes and we’re now being asked to quote for zero-carbon products.
So yes, measuring scope 1, 2 and 3 emissions is becoming essential to winning business, though how much it is genuinely being taken into account remains to be seen. But by 2025, if you can’t quantify your carbon emissions and discuss them in detail, I don’t think you will even be invited to tender.
- So if a foundry has high emissions then it won’t get the business?
We’re just getting to the quoting stage now so, frankly, we don’t know yet. Some companies seem to be very serious about carbon neutrality but it really comes down to whether the market is willing to pay more for a greener product. For example, our UK facility uses 100% renewable energy but that comes at a cost. And removing certain carbon emissions in our process is very difficult so we have to buy carbon credits or plant trees.
If we quote for a carbon-neutral product to be fitted to a vehicle in Europe and that contract then goes to a Asian foundry, well, then it is unlikely that product could be zero carbon and still have a competitive price. They are most likely using non-renewable energy and shipping it halfway across the world. Unfortunately, we have seen this happen in the recent past, where it just comes down to the cheapest part, even though that company’s website might be all about how green they are.
- What’s the best way to take account of sustainability in the procurement process?
Applying a correction factor to tender prices, based on a supplier’s quality and delivery performance, is a common approach and adding supplier emissions to this calculation would be a transparent way to make them part of tendering. A high score is bad and increases the price of the part. Reduce your emissions and you will be competitive.