Veera Johnson, the co-founder of Circulor, whose mission is traceability and due diligence of raw materials, from source to manufacturer, shares how collaboration with Volvo and Polestar offers tangible actionable solutions for transparency and traceability in the automotive industry’s race to Net-Zero.
Talk a bit about the bigger trends that are happening now, specifically with the auto industry, and how these trends tie in with the work that Circulor is doing with Volvo and Polestar.
I would say there are two really big trends at the moment, particularly in the automotive space which are driving change towards NetZero. The first of which is about the genuine transparency and traceability of raw materials that they’re using in car manufacturing, particularly the EV battery space. The second is the traceability of those materials that are driving the CO2 emissions through the production processes. Those two combined, really meet the global challenge of achieving NetZero faster, and in a more responsible way. And that’s where the tie-in comes to Circulor. Our mission is to make the most global complex supply chains, transparent, accessible, and responsible.
There is a genuine partnership with Polestar and Volvo. Their stated ambition is to be the spearhead, to drive the movement for the acceleration of a climate neutral car. To make that happen, transparency and sustainable traceability is core to their heart and mission. And that really resonates with us. So, there is a genuine partnership.
As an example, their ambition over the next five years working with us is to onboard all of their suppliers. I think there are about thirty who supply all of the materials including cobalt, graphite, manganese, lithium into the production of the battery that goes into their EV. By doing that over the next 12 months, we will have a global supply chain that is transparent, which allows them to make those decisions that will help them drive better consumer behavior. Even going as far as giving consumers visibility into the supply chain. Polestar and Volvo are demonstrating they really do care about the ethics of the environment and how they are leading the way with what they are able to achieve.
How does that visibility into the supply chain happen?
We track the actual raw material itself, in the supply chain. All the way from a mine in Africa, for example, cobalt, mica, or lithium as it goes into a chemical refiner, we create a digital twin for that physical raw material. We’re tracing the physical raw material itself, with a digital twin, and creating the chain of custody as it goes through the individual participants in the manufacturing supply chain. All the way through to the end battery. This means you and I as consumers, when we buy a Polestar car, can actually look at the identity of the battery, the barcode, the tagging. We can see the journey that the battery has gone on. We can feel confident that no child labor is being used and that genuine principles of carbon reduction are being applied. We can see the carbon emissions of that battery and that vehicle. So, we can make more informed decisions as consumers.
How is consumer and corporate behavior changing with a transparent supply chain and how does that relate to the matrix of pressure coming from all the players in the race to Net-Zero?
I would say what makes up that matrix of pressure, that matrix of challenging change and call to action, is that stakeholders, consumers, are wanting to ensure that the organizations we are buying our products from are behaving responsibly and are demonstrating responsible sourcing and also responsible recycling and reuse of materials, as they’re going to their second life, into their third life. So that is one set of pressures.
Investors. The investor community is now demanding more of their investee companies. As part of making their investment decisions, one of the investment criteria that we’re seeing more and more of, particularly over the last 12 months, is the need for companies to demonstrate their Net-Zero ambitions and how they have set out a journey to achieving these changes within their organization, within their partner relationships, and within their supply relationships.
Consumers. We demand more of the things that we buy–we want them to be demonstrated as responsibly sourced and as responsibly recycled so we can make those informed decisions. As consumers, we feel more aligned with the brands that make that change and demonstrate they are doing this properly.
Employers, employees, and that relationship about why should employees work for a brand, or an OEM, or for a recycler? Employers need to demonstrate their responsibility to employees, and the way in which that responsibility is cascaded down to individual roles and objectives that employees have, in order to achieve their own ambitions. Attaining those ESG’s (Environmental, Social and Governance) and sustainability goals are becoming more and more important. We demand more of our employers.
Of course, regulations. We’ve seen a huge amount of change over the last two, three years with a number of regulations requiring manufacturers to demonstrate how they are managing, using, resourcing and sourcing “conflict materials” in their supply chains.–such as cobalt, manganese, tantalum and so on. There’s also the future, the battery passport. How are we reusing some of the critical scarce materials in their second life? Because as we go into the energy transition, the role of the battery to store power from solar or wind becomes even more important, particularly in our households.
Lastly, of course, is the Board itself, the non-executive directors, and the directors demanding that organizations within their businesses, really lay out a set of objectives that are achievable, and show the route to achieving Net-Zero–whether they are a small business, a medium-sized, or a major international conglomerate.
What I’ve seen over the last two or three years, is that a lot of the ESG and SGD benefits that have been achieved have been incidental. What we need to move towards is designing those benefits to be intentional. Such that the confidence between procurement, IT organizations, and sustainability are really aligned so there are a common set of objectives and common draws on internal budgets to make that happen and to make sustainability systemic.
You speak often about intentional vs incidental change in the drive towards Net-Zero. What are actionable ways businesses can implement intentional change in their drive to Net-Zero?
Procurement and Sustainability need to be C-suite level roles to give the functions of procurement, sustainable sourcing, and recycling a voice and a set of aligned corporate objectives. This is one of the simplest moves to make.
In the last 20-30 years, most organizations involved in manufacturing have outsourced their supply chains to make the manufacturing process more agile. Over the years, the visibility of the participants in supply chains has become more and more remote. Therefore, control has become more remote. By creating transparency, and understanding what’s really happening in the supply chain, gives the voice back to the combined function of procurement and sustainability, which gives them much more leverage to make change happen.
The second practical thing that could happen – and this is quite an easy thing to do, but quite a hard thing to achieve – is that from the C-Suite level down, the Chief Executive, the Board needs to drive the change, to make it systemic and continuous. It’s not nice to have anymore, it has to become embedded into: this is the core of who the organization is and this is why it matters both internally, externally, and to its stakeholders. And allow the stakeholders to hold the organization to be accountable for it.
Julie Campbell is a content contributor for CNZ and the founder of www.centerstageconnections.com
