# Get inspired: ZF Friedrichshafen Featured case studies ### Action plan and target setting ZF has a goal to be fully climate-neutral over all scopes by 2040. This goal is broken down to 2030 emission targets for all business areas. Due to the high importance of its global supplier network with over 30,000 suppliers, ZF puts a high emphasis on supply chain decarbonization and has established a dedicated decarbonization roadmap for the upstream supply chain. ### Supplier assessment Based on a supplier assessment, ZF identifies the top ten suppliers causing the largest amount of GHG emissions for each product category, i.e., the emissions hotspots. ZF then assesses each individual supplier’s maturity level based on (1) climate management, (2) use of recycled materials, and (3) energy efficiency. Suppliers with maturity levels below average enter agreements for measures to reduce carbon emissions. For more information on how ZF identifies parameters to assess maturity, please reference here. ### Engage suppliers and kick-start the net-zero journey General expectations for CO2 reduction and sustainability-related issues are communicated yearly to suppliers at ZF’s Global Supplier Summit. In 2023, the “ZF sustainability score” for suppliers was reviewed. It I now a mandatory part of the sourcing process and quantifies supplier performance regarding (a) mandatory green power from 2025, (b) acceptance of sustainability business partner principles and (c) the NQC supplier score. Furthermore, there’s commodity-specific expectations concerning other sustainability aspects like share of recycled material. For more information, please reference here. ### Target outreach to prioritized suppliers ZF’s communication of emissions reduction expectations was followed with Decarbonization Dialogues. ZF’s Decarbonization Dialogues aim to share information and knowledge on applying strategies. The Dialogues serve as a starting point for campaigns and more concrete projects. ZF also has a dedicated “supplier academy” offering trainings including web-based training, webinars, and/or question-and-answer sessions to aid suppliers. These services are free of charge for suppliers. For more information, please reference here. ### Engage and support suppliers through incentives Public RecognitionZF honors eight out of approximately 30,000 global suppliers for excellent performance at their annual ZF Global Supplier Summit. The 2023 Summit’s focus topic was sustainability. The winner of the 2023 ZF Supplier Award in the category Sustainability category was the company Val Giovanni, an Italy-based strategic supplier for geards and shafts. Val Giovanni has not only met demanding sustainability criteria including transparency on CO2 emissions and running on 100% green power already, but they have also demonstrated a continued commitment to responsible sourcing, upholding human rights along the value chain. For more information on this public recognition, please reference the press release here.Long-term Purchase AgreementTo support ZF’s transition to sustainable materials, ZF closed a 7-year binding supply agreement with Swedish startup H2 Green Steel. Through the agreement, valued at 1.5 billion euros, H2 Green Steel will supply 250,000 tons of green steel per year (10% of ZF's annual steel requirements) from 2026 until 2033. The agreement is expected to reduce CO2 emissions by close to 2.3 million tonnes compared to traditional steelmaking processes. As part of the agreement, H2 Green Steel will also work closely with ZF’s sub-suppliers to support transformation in the rest of the steel supply chain. For more information on this long-term purchase agreement, please reference here.Financial IncentivesOne of ZF’s main levers to achieve their goal of climate neutrality by 2040 is to switch ZF’s electricity supply to green power. Recently, ZF has pulled its goal to reach 100% green electricity in all its global locations forward, from 2030 to 2025. To be considered "green", electricity, gas and hydrogen must come from renewable sources. In addition, ZF has invested in expanding renewable energies with their power purchase agreement (PPA) with Statkraft, where Statkraft promised to deliver wind power from their wind farms to ZF sites. For more information on ZF’s financial incentives for mitigation, please reference their Green Finance Framework here. For more information on the Statkraft PPA, please reference here. ### Unlock the process: Embed sustainability Embed sustainability-related questions in the RFP evaluation criteriaZF implemented a CO2 target operating model for their sourcing process of production materials. A key element of this operating model is that the Product Carbon Footprint (PCF) will be requested from suppliers as part of the RFP/RFQ process. The PCF will be introduced incrementally as a mandatory element for sourcing decisions on the Souring Decision Board.