What’s in a supply chain?

Published 8 October 2019
Stora Enso buys materials and services from over 20 000 suppliers worldwide. For years, we have worked with our suppliers to promote more sustainable operations globally, but recently we’ve raised our ambition level. What if we looked a little deeper? What could we learn?

“Sustainability risks and opportunities in our supply chains depend on what and where we buy,” says Johanna Pirinen, Head of Sustainable Sourcing and Logistics at Stora Enso. “They’re never about just one issue: we have to look at the big picture to find the best way to address the topic at hand. For example, buying agricultural-based chemicals can involve questions related to migrant workers and environmental issues such as biodiversity loss, but also provide opportunities to replace fossil-based materials with renewable alternatives.”

About half of Stora Enso’s total variable costs are used to purchase fiber and wood, while the other half goes towards chemicals, tools, and services to make the best out of our renewable raw materials. All suppliers that have a direct relationship with us are screened using our risk management tool. Our experts also talk with suppliers and follow public debate to pinpoint potential risks.

Up for the challenge

All our suppliers must commit to Stora Enso’s Supplier Code of Conduct and they are expected to make sure that their own suppliers do the same. But driving change with our suppliers’ suppliers remains a challenge. To tackle this, our sourcing personnel has used “deep dives” to have a closer look at supply chains where we have identified risk or that we simply want to learn more about. A deep dive combines desktop reviews – reviewing reports from suppliers and deciding on focus areas, for example – with on-site visits. During the visits, team members meet with workers and other representatives of various organisations in the selected supply chain.

“Deep dives focus on open dialogue and observe the full chain of a product or service – all tiers and layers included,” says Pirinen. “So far, we have looked into a few supply chains around the world: tapioca starch in Thailand, bio-based plastic in Brazil, sugar cane harvesting in the United States, and coal in China.”

“In Thailand, we wanted to learn more about safety, labour rights, and environmental conditions in our tapioca starch supply chain,” says Lily Li, Sourcing Sustainability Manager at Stora Enso. “The results were encouraging. The farmers are happy with the transparent market prices and freedom to sell to the factory of their choice. We’ve asked farmers and other workers to wear safety shoes for added safety, and land degradation is a slight concern, but we didn’t find anything alarming. We were impressed with the level of support that the local government and factories provide for workers.”

Our findings in Brazil were also reassuring as no major concerns were identified. In China, the deep dive helped us find a safety risk that came from trucks carrying our cargo through small villages. This leg of the journey is now covered by train transport. In the United States, persistent dialogue over many years has led to increased transparency and understanding of the recruitment and working conditions of migrant workers – and helped our supplier respond to concerns coming from other customers as well.

A learning curve

So why not do a deep dive with all supply chains everywhere?

“The risks and non-compliances related to lower-tier suppliers are usually systematic industry challenges with geographical twists, and it takes persistence and legwork to change them,” Pirinen says. “A deep dive can take anything from a few days to several years, so it’s a question of available resources of course.

“And deep dives are also not needed everywhere. We have suppliers that are forerunners in sustainability themselves, and supply chains that are simple, short, and clear. But for those supply chains that are spread across the globe and that may pose risks we’re not familiar with, a deep dive is a great tool.”

Ensuring that Stora Enso’s own supply chains are as sustainable as possible is of course vital to us, but that’s not enough. Pirinen concludes: “Ultimately, we want to work together with our suppliers to make our entire value chain more sustainable.”

Tapioca starch measuring in Thailand

The starch content of the harvested tapioca in our supply chain in Thailand is measured with a traditional but widely accepted method at processing plants. Farmers are free to choose which plant to sell their tapioca to.