The European railway industry is about to go greener with the creation of Railsponsible, a new programme founded by six of the biggest rail operators and manufacturers on the continent. Launched on 4 March in Utrecht, the Netherlands, Railsponsible is aimed at encouraging sustainable procurement and setting a common ground for climate-friendly business procedures.

The six founding members dominate both ends of the commercial spectrum: manufacturers Alstom Transport, Bombardier Transportation and Knorr Bremse joined powers with railway operators Deutche Bahn, Nederlandse Spoorwegen (NS) and SNCF.

Under the stewardship of global non-profit organisation BSR, the companies signed a charter of responsibility, pledging to sustain good ethical, social, environmental and business practices in all their operations.

This comes at a good time for the industry. Just two weeks after the launch of Railsponsible, audiences at the Railway Forum in Berlin were told how the European railway industry should revamp their operations and completely rethink their approach to procurement. Speaking at the conference, senior vice president at rail specialist Voestalpine Dr Martin Platzer highlighted the fact that, more often than not, railway companies cower under intense short-term financial pressures and choose to purchase the least expensive equipment.

To help solve this, new EU Public Procurement Regulations, which came into effect in February, include the Most Economically Advantageous Tender (MEAT) directive, a push to consider the “life-cycle costs” of the equipment when making a business decision, not just the cheapest option. This is especially relevant in a railway context, where the average lifespan of rolling stock for EU infrastructure is approximately 20 years.

Railsponsible, however, is designed to go beyond the purely financial aspect. The industry-wide collaboration opens up a forum for exchange, discussion and engagement on the greenest, most ecologically and socially friendly practices that giant corporations can implement to help local communities and the environment, while still making perfect business sense at the same time.

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By GlobalData

To be sustainable: a shared vision

Railsponsible falls within the corporate social responsibility (CSR) narrative. A few years ago, businesses worldwide wised up to the fact that productivity spurs not only from cost-effective acquisitions, but also from an eco-friendly, sustainable and morally sound corporate profile. Globally, companies from every industry have fine-tuned their approach to CSR. One of the main aspects of CSR is evaluating and choosing your business partners, suppliers, manufacturers and other service providers based on their positive impact on the world.

Bombardier’s co-designed Train Zero testing facility has the potential to revolutionise the design process .

Talking to BSR about the global sustainable procurement movement, head of internationalization at Deutsche Bahn Michael Boback said: “Sustainability is a priority not only for industries affected by poor working conditions in faraway countries. Every company needs to realize that sustainability starts at its doorstep. By taking responsibility for monitoring and engaging suppliers in a collaborative way, companies can improve efficiencies by assessing risks in their supply chains. Simply put, investing in sustainable procurement is key for every company.”

Sustainable procurement is a three-tier process which promotes a heightened awareness of the ecological, social and economic consequences of the business. Railsponsible’s potential for change is immense when considering the sprawling operations of its founding members.

All together, the three railway operators – Deutche Bahn, NS and SNCF – jointly manage an ever-expanding network of over 67,400km throughout Germany, the Netherlands and France, with a total spending volume of over €15bn every year between them.

According to a European Commission report, in 2012, the EU railway procurement market invested an estimated €34bn in both conventional and high-speed lines. Over the next five years, a further €26bn is earmarked for transport infrastructure in Europe.

“Because railway companies rely on vast supply chains, there is a high potential for environmental and social impacts,” said sustainable sourcing director at Alstom Transport Sylvie Margueret in an interview with BSR.

“To mitigate risk and ensure responsible practices along the supply chain, we saw the need for an industry-wide approach to assess our suppliers’ sustainability performance.”

Although Railsponsible is a specific industry-focused initiative, the operational framework it is based on is not new. The UN Global Compact charter has been in operation since 2000 to promote a universal consensus for responsibility throughout all industries. The charter lists ten basic principles, which most companies currently abide by, covering key areas such as human rights, labour, environment and anti-corruption activities.

“The well-being of workers, communities and the planet is inextricably tied to the health of the business. The smart choice is to proactively manage a company’s operations and value chain – looking at risks and opportunities through a wide lens,” the charter reads.

“Because railway companies rely on vast supply chains, there is a high potential for environmental and social impacts.”

A similar project launched in 2011 by the EU focused specifically on Responsible Supply Chain Management (RSCM) and it sought to outline the biggest challenges in pursuing corporate responsibility.

One of the major areas that the report found problematic was transparency throughout the supply chain: “[…] many companies have thousands of suppliers across the globe. It seems to be impossible to provide transparency with regard to the operational practices of all suppliers,” the report reads. “There is an increasing demand for information about the origin and conditions under which products are made in the downwards supply chain, as well as information regarding disposal and waste in the upward value chain.”

Supplier Assessment Technique: putting sustainability to the test

By entering the programme, each member will be subjected to a supplier assessment campaign undertaken by partner company EcoVadis, who provide a sustainability rating platform for global supply chains.

Under the assessment process, all suppliers undergo a common questionnaire and a full review of the company’s credentials by EcoVadis CSR experts. The result is a confidential ‘scorecard’ detailing the business’s strengths and weaknesses in their overall ethical and sustainability performance.

The results are initially disclosed only to the companies who filed the request for an assessment. Companies can then choose who they want to disclose their results to. Otherwise, without the member’s approval, all the details concerning their business operations are fully confidential.

Although it is up to the companies to decide who they share their information with, the scheme does provide a clear and common minimum standard of operation, based on the same requirements.

Pierre Francois Thaler, co-CEO of EcoVadis, explained the reasoning behind this model in a press release: “On one hand, procurement teams face challenges such as finding reliable sustainability indicators in a myriad of standards and regulations and scales across global supply chains. On the supplier side, they are faced with multiple duplicative surveys and little guidance on improvements.”

The global transport sector is on the verge of drastic transformations in sustainability, connectivity and emerging transport pathways.

“This industry collaboration, combined with the EcoVadis platform, solves these challenges with a universal CSR scorecard rating and sharing system,” Thaler said.

From a member’s point of view, Boback explained why Deutche Bahn warmed up to this approach: “Initially, we were very interested in how other companies manage sustainability in their supply chains because we were just starting to integrate sustainability into our own supplier-management approach. And when we started to talk to our peers, it became apparent that sustainability is very relevant for all industry players — from operators to system integrators to suppliers,” he told BSR.

“We had two goals in adopting this shared approach: First, we wanted to avoid having different requirements for supplier assessments, which would have burdened suppliers with higher costs. Second, we wanted to increase transparency, which will help us understand suppliers’ processes to assess risk, as well as their sustainability performance. This, in turn, will help our suppliers understand how we will use the information they provide.”

Benefits and an outlook to the future

There are important benefits to be reaped by all involved parties. Apart from demonstrating commitment to a green company culture and saving costs from repeated assessment requests, companies can benefit from a common benchmark of innovation and enterprise upheld by fellow businesses.

And some of them are certainly not short on resourcefulness. For example, NS is currently preparing to switch from electric to wind-powered trains on its network by 2018, under a contract signed last year with energy firm Eneco. Currently, 50% of its trains operate on wind energy.

“The focus points of the NS CSR policy are energy and waste reduction,” says sector head of procurement at NS Group Bas van Kempen.

“We can and will share best practices in sustainable procurement. This year will focus on getting the programme started. The members of Railsponsible committed themselves to do CSR assessments for a minimum of 100 suppliers each. The CSR performance of our suppliers will in the near future be part of our sourcing strategies.”

For the rest of the year, Railsponsible will be pressing forward with promoting engagement amongst current members and encouraging participation, as well as promoting the scheme to other companies.

“As Railsponsible develops, we welcome other companies within the railway industry to apply to join us,” said Margueret. “By covering a greater pool of suppliers, we aim to keep raising expectations and awareness on sustainability issues.”