Supply chain transparency

Today’s coating industry relies on an interconnected web of suppliers, intermediaries, and other stakeholders. These complex networks can potentially lead to supply chain “gray areas” — where a lack of oversight obscures the origins of specific products or raw materials. So, what can a responsible coatings company do to ensure that harmful practices aren’t hidden within its supply chain?

Supply chain gray areas are a big problem because they conceal practices that may not align with your company’s values, such as deforestation and high carbon emissions. In fact, 77% of emissions in the coatings industry come from Scope 3 (upstream) emissions – and much of this is down to raw material sourcing. At Stahl, we’re committed to eliminating these gray areas and advocating for the highest environmental and ethical standards throughout our value chain.

This ambition is especially relevant as we transition toward more renewable feedstocks, such as biomass. This is because bio-based sources are often subject to potential supply chain risks, including biodiversity loss, land-use challenges, abiotic depletion (the over-use of resources such as fossil fuels, clay, and peat), and human rights issues. These problems have never been more urgent. For instance, an estimate by CDP Global suggests that companies risk losing a combined total of USD 80 billion if they fail to act on deforestation in supply chains. But you can only act effectively if you have accurate information. And that’s where you need supply chain transparency.

Trust: your biggest asset
The pressure to act on supply chain gray areas is mounting, with consumers and investors becoming increasingly aware of this issue. Yet many companies are still trying to get away with concealing their lack of environmental credentials behind greenwash. According to research by the International Consumer Protection and Enforcement Network (ICPEN), 40% of companies globally are making misleading environmental claims. And regulators are responding strongly with a range of far-reaching legislation. For instance, countries like Germany are set to impose huge fines – up to 2% of annual global turnover – on companies that refuse to report transparently on their supply chain or ignore environmental and human rights abuses. And this kind of legislation is set to expand across the EU.

At Stahl, we aim to proactively face supply chain challenges head-on. That’s why we set up a new Supply Chain Transparency department to ensure that we can shine a light on grey areas and reduce, assess, and mitigate supply chain risks. Through agile collaboration, concerted advocacy, and technological innovation, we believe it is possible to create a more transparent coatings value chain. We’re also committed to using our strategic position within the value chain to promote higher sourcing standards throughout our networks, helping to pave the way for a lower-impact coatings industry.