Harbour with colourful containers

Focus topic: SUSTAINABLE SUPPLY CHAINSTowards more sustainable production worldwide

For a growing number of consumers, the social and environmental sustainability of products is of central importance. This challenges companies to enforce even stricter oversight of their own, often globally interconnected, supply chains while also facilitating compliance with international standards by their suppliers in developing countries and emerging economies. At the same time, this offers a major opportunity – both for the companies themselves and for the people in these countries.

Through its develoPPP funding programme, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) supports business initiatives that: make a measurable contribution to better working and living conditions for local employees in industry, agriculture and the service sector; foster the ecological transformation of production processes or cropping methods; or generally raise supply chain transparency and traceability.

390
Projects
around the world
Projects in more than
70
countries
EUR
330000000
project volume – some 45 per cent of which is publicly funded
Basis: develoPPP projects with supply chain relevance between January 2016 and July 2021

Modern-day supply chains are often global and highly complex. The challenges that companies face in order to make them sustainable are equally diverse.

  • Environmentally friendly production
    Insufficient knowledge about sustainable cropping methods, the use of obsolete technologies in production processes or a lack of awareness about the eco-friendly management of natural resources constitute considerable obstacles to environmental sustainability among local supplier companies. The approaches used by develoPPP-backed projects to address these problems include training farmers in the sustainable use of cropping areas, encouraging production companies to employ low-emission technologies and bringing businesses into line with international environmental standards.
  • Social standards and working conditions
    Fair wages, a safe working environment, reliable provisions against health and social risks, equal rights for women and minorities: these are all essential elements of socially sustainable business. Projects that are eligible for develoPPP funding address these aspects by sensitising management personnel, setting up management systems or providing further training for employees. Certification to international standards can also help raise employees’ income by making local companies more internationally competitive.
  • Transparency and certification
    The more product components that are sourced externally and the more actors involved in the local value chain, the more difficult it is to seamlessly trace a product’s manufacturing process. At the same time, companies now find themselves under increasing pressure to demonstrate their compliance with environmental and social standards at every step along the supply chain. Preparing certification or rolling out innovative solutions to increase traceability are two of the approaches that develoPPP projects use.

INDIA: First textile supply chain certified to Fairtrade textile standard

With their joint pilot project, the German clothing manufacturer Brands Fashion GmbH and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH have achieved a first by certifying an entire textile supply chain to the Fairtrade textile standard – from fibre production to dyeing and weaving through to garment manufacturing. In addition to environmental aspects, certification also extends to workplace safety, employee co-determination and the introduction of a living wage. The first products labelled supply chain-wide with the Fairtrade textile standard started selling in October 2021.

INDONESIA: Rubber supply chain to be made digitally traceable

In the past, one of the factors that made it difficult to trace the rubber supply chain in its entirety in Indonesia was the large number of intermediaries. As part of a joint project, the mobility supplier Continental AG and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH thus set up a digital traceability system that tracks the flow of goods along the entire supply chain. Furthermore, getting local processing companies on board and engaging in direct marketing with smallholders has created structures that ensure additional transparency. At the same time, smallholders benefit from increased productivity and higher income levels.

INDIA: Environmental and social standards established for electronics goods suppliers

India’s electronics market is experiencing a boom and global demand for Indian electronic goods is increasing. At the same time, the sector does not have enough skilled workers. To make its Indian suppliers more competitive and efficient and its supply chain sustainable, one of the steps taken by the electronics manufacturer Salcomp Manufacturing India Pvt Ltd. – working in collaboration with DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH – involved advising ten of its local suppliers on their quality, environment, health and safety (QEHS) policy. By improving these standards, Salcomp is pioneering a way forward for the entire electronics sector.

MADAGASCAR: Sustainable vanilla and better income opportunities

The German manufacturer of flavours and fragrances Symrise AG and the consumer goods manufacturer Unilever PLC have been collaborating with the NGO Save the Children (STC) on several projects with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH since 2014 in a bid to improve cropping and working conditions along the vanilla supply chain. Smallholder farmers are trained in sustainable growing methods, for example, in order to raise the yield and quality of vanilla and diversify their sources of income. Moreover, some 5,000 families are benefiting from a project-backed health insurance scheme. Further support includes awareness-raising campaigns on health, hygiene, nutrition and child welfare.

BANGLADESH: Improving women’s rights along the textile supply chain

The Swedish textile company Lindex AB joined forces with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to mainstream gender aspects in its corporate strategy and the HR management of its textile suppliers in Bangladesh. This not only meant working closely with the suppliers themselves but also with industry and employer associations, the local labour and commerce ministries, trade unions and the Alliance for Sustainable Textiles. The guidelines thus produced form part of a toolbox that can be used worldwide. Moreover, a community-led women’s café was set up that gives employees advice on labour law and access to further training.

If you want to make your supply chain more sustainable and are planning a concrete project in a developing country or emerging economy, find out more about the funding options under develoPPP Classic.

develoPPP Classic is aimed at established medium-sized and large companies.

develoPPP Ventures is aimed at innovative start-ups with a development-relevant business model that are ready to take the next step.

develoPPP can be applied worldwide in many sectors and subject areas. Learn more about how others are using the programme.

Carolin Welzel
Carolin Welzel Senior Consultant Agency for Business & Economic Development
Hans-Joachim Hebgen
Hans-Joachim Hebgen Senior Consultant Agency for Business & Economic Development
Daniel Thomann
Daniel Thomann Head of Programme DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH
Kathinka Kurz
Kathinka Kurz Head of Programme Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH