Scania’s road to decarbonizing its supply chain
We Mean Business Coalition
Swedish heavy vehicle manufacturer Scania has already laid the foundation for a large-scale roll-out of electrified transport solutions that will help accelerate the global shift from fossil fuels to clean solutions. Knowing that its carbon footprint will now increasingly shift from when vehicles are in use to when they are produced, Scania is taking steps to tackle upstream supply chain emissions.
Owned by Volkswagen Group’s subsidiary Traton, Scania is one of the biggest heavy vehicle manufacturers in the world today, having delivered nearly 100,000 vehicles in 2023. Commercial vehicles such as buses, coaches and trucks produce more than a quarter of road transport greenhouse gas (GHG) emissions in the EU, Scania’s largest market for truck deliveries. They also account for over 6% of total EU GHG emissions.
Determined to drive the shift towards a sustainable transport system, Scania is combining immediate climate action with investments in clean solutions. While electrification is the company’s ultimate answer to decarbonization, fuel efficiency measures and increased use of sustainably produced renewable fuels also play a decisive role.
Switching gears with science-based targets
In 2020, Scania became the first company in its industry to adopt science-based emission reduction targets. The targets were set at the corporate level, to steer the company’s investment decisions across its business areas. They are set short-term as an internal challenge and to push industry peers. By 2025, Scania aims to lower emissions from its operations by 50 percent, and by 20 percent from the use of its sold vehicles.
Scania’s way of working is in line with We Mean Business Coalition’s The 4 A’s of Climate Leadership – ambition, action, advocacy and accountability – including the important step of embedding climate action into business strategy. In this way, diverse areas of the business are helping reduce emissions, from logistics and production to product development and sales priorities.
Scania also advocates for policies that will bolster investment in the global energy transition and help companies achieve their science-based targets and clean energy goals faster, such as the international agreement made at COP28 to accelerate the transition away from fossil fuels.
Scania was one of 200+ companies that signed the Fossil to Clean advocacy letter to governments attending COP28. This and similar advocacy efforts from countries, cities, scientists, health professionals, youth, activists, NGOs and others helped to secure a historic international agreement at COP28 that signals the beginning of the end of the fossil fuel era.]
Life cycle assessment highlighted supply chain emissions
In 2023, Scania laid the foundation for its electrification ramp-up. The production line at the headquarters in Södertälje was redesigned to enable production of electric trucks, and a new battery assembly was inaugurated with the capacity to handle one battery cell every second.
As the transition to electrified and sustainable transport accelerates, Scania’s climate emissions will shift as well. Today, 96 percent of its emissions occur when sold vehicles are in use, and as those emissions decrease, the footprint moves to the supplies.
Knowing this, Scania in 2021 made a life cycle assessment that identified four emissions hotspots – batteries, steel, aluminium and cast iron – accounting for some 80 percent of the CO2 emissions arising from production materials. To minimise these emissions, the company the following year launched a far-reaching decarbonization strategy for its European operations, stating that all deliveries of these four materials – by 2030 – will have to come with a minimised carbon footprint, by removing the main sources of emissions which result from the burning of fossil fuels in the energy-intensive parts of the process.
As a next step, the strategy is being turned into mandatory purchasing requirements. In steel making, for instance, the blast furnace must be replaced with hydrogen technology, which is estimated to take away at least 80 percent of the CO2 emissions. As for batteries, Scania targets a 60 percent reduction in emissions, in particular by requiring clean energy in the production process.
Supplier engagement key for success
Both the decarbonization strategy and the mandatory purchasing requirements have been implemented in close collaboration with suppliers, as supplier engagement is key for success. While the new requirements of course bring challenges for many, Scania says it has generally had positive engagement and understanding for the set direction, and a large share of the suppliers have ambitions in line with the target.
Important progress is made in its partnerships. In 2023, Scania placed its first order for low-carbon steel from H2 Green Steel. Through the partnership, Scania is helping to fund a new steel plant in northern Sweden, which is powered by green hydrogen. The same year, a letter of intent was signed together with SSAB, Scania’s main steel supplier, to decarbonize all steel deliveries for the manufacturing of heavy-duty vehicles in 2030. Through the partnership, SSAB will steadily increase deliveries of decarbonized steel to Scania starting in 2026. Together they aim “to use their purchasing power to create early markets for innovative clean technologies.”
Meanwhile, as Scania produces more electric vehicles, batteries will become an increasing focus. In 2023, the company unveiled a new battery cell for heavy electric vehicles in conjunction with battery developer Northvolt, which could have a sizable impact on embodied emissions. This lithium-ion cell, in validation tests, has proven its capacity to power trucks over their entire lifetime. Furthermore, the cell’s carbon footprint is approximately one-third of that of a comparative industry equivalent.
From Europe to the world
Having started with Europe, Scania is also planning for its decarbonization strategy to be implemented globally. The company’s work sets an example to others of what can happen when management minds are focused on forging partnerships to decarbonize key parts of the supply chain. Meanwhile, signalling demand for clean energy, decarbonized materials and other clean solutions with targets and mandatory purchasing requirements gives Scania’s partners the confidence to invest in new technologies and build value at the same time.