Partnership will improve livelihoods of rubber tree farmers in Indonesia
Tracking of the supply chain from the rubber cultivators to production will prevent deforestation
Continental is consistently increasing sustainability activities in purchasing
Hanover, February 21, 2018. Technology company Continental and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH are joining forces in a development partnership to improve the sustainability of the natural rubber supply chain in Indonesia. The country is the world’s second largest producer of natural rubber. The aims are to develop a criteria catalog for sustainable production of natural rubber, to train farmers in sustainable production in accordance with these criteria and to track the rubber from smallholders to production at Continental. Improved rubber quality, higher yields and supply chain optimization will generate higher incomes for rubber tree cultivators. The partnership between Continental and GIZ is part of the develoPPP.de program initiated by the German Federal Ministry for Economic Cooperation and Development (BMZ). To ensure that supply chain partners are on board, memorandums of understanding have been signed with two suppliers.
To safeguard and monitor sustainable rubber production, Continental and GIZ will implement a traceability system and increase the traceable production of rubber in West Kalimantan over the next three years. © Continental AG
Rubber trees grow in the same area where the rainforest grows. Therefore, it is important to ensure that rubber tree cultivation does not lead to deforestation. To safeguard and monitor sustainable rubber production, Continental and GIZ will implement a traceability system and increase the traceable production of rubber in West Kalimantan over the next three years. In total, 400 farmers will be trained to grow high-quality rubber in accordance with clearly defined sustainability criteria. An electronic system will be developed to ensure full traceability of the raw material along the entire supply chain.
“Our objective is to establish a traceable and sustainable supply chain and set a best practice example for the production of natural rubber,” said Nikolai Setzer, who is in charge of Corporate Purchasing and the Tire division in the Executive Board of Continental AG. “The partnership with GIZ gives us access to local players whom we need to achieve traceability and sustainability.”
Numerous sustainability activities at Continental
Continental is consistently increasing the importance of sustainability in purchasing in other ways besides this development partnership. Despite already having a clear policy and enforcing mechanisms to avoid non-compliance behavior in the supply chain by its supplier, the Sustainability Management team in Corporate Purchasing at Continental is preparing a specific natural rubber sustainability policy for Continental to be released in 2018. This policy is designed to further reinforce the unquestionable commitment of the corporation to securing a healthy and compliant supply chain and the zero tolerance attitude toward deforestation, land grabbing and other practices that harm local populations and the entire eco-system. At the same time, Continental representatives on the World Business Council for Sustainable Development (WBCSD) are actively working to establish an industry standard for the sustainability of natural rubber. The eleven leading tire manufacturers in the world are involved in the WBCSD’s Tire Industry Project.
Continental and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH are joining forces in a development partnership to improve the sustainability of the natural rubber supply chain in Indonesia. © Continental AG
Furthermore, in 2017 Continental worked with a service provider to establish a sustainability evaluation for existing and potential suppliers on the basis of standardized questionnaires. The scope of this evaluation is enormous as the company has to cover a couple of hundred companies currently supplying raw materials to its locations. At present, more than 80% of its Rubber Group raw material suppliers have already been evaluated and further development activities have already been started.
Nikolai Setzer is in charge of Corporate Purchasing and the Tire division in the Executive Board of Continental AG. © Continental AG