Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

Exclusive Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals
Saudi Aramco chairman Yasir Al-Rumayyan (Supplied)
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Updated 02 February 2023

Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

Saudi Aramco slashes supply chain emissions by 23% since 2015, chairman reveals

RIYADH: The Saudi Arabian Oil Co., also known as Saudi Aramco, has reduced material and logistics supply chain emissions by 23 percent since 2015, the chairman Yasir Al-Rumayyan revealed in an exclusive interview with Arab News.

Aramco’s iktva program is playing a key role in helping the oil giant achieve its long-term sustainability goals by making sure that its suppliers are evaluated and rewarded for their local environmental, social and governance contribution.

“Sustainability has always been part of the iktva model. We are embracing new technologies, harnessing the Circular Carbon Economy framework and empowering people to enhance our sustainability and reduce our environmental impact,” said the Aramco chairman.

“It’s worth noting that our material and logistics supply chain Scope 1 and 2 emissions have been reduced by 23 percent since 2015,” he added.

Scope 1 emissions refer to the direct emissions from owned or controlled sources, whereas Scope 2 emissions relate to the indirect emissions that come from the generation of electricity, steam, heating, and cooling used by a firm.

As well as having an impact on sustainability, iktva also plays a role in backing the growth and development of the local economy, Al-Rumayyan noted.

As of today, Aramco has a local supply chain comprising an estimated 1,000 local manufacturers and more than 2,000 service providers, the chairman disclosed.

“The program creates an ecosystem of integrated value chains that help businesses operate efficiently in Saudi Arabia. In addition, iktva rewards suppliers for establishing regional headquarters in Saudi Arabia,” he said.

With regards to efficiency, the chairman noted that it all goes back to investment in a skilled network of local suppliers which automatically leads to resilience when it comes to supply chain matters.

Both local and international suppliers are required to meet certain criteria in order to be able to work with the oil and gas giant. The criteria includes establishing local manufacturing facilities, recruiting Saudi employees, investing in research and training, among others.

“This steady progress towards supply-chain localization has not only benefited our company, but also the local and national economy. The impact is expected to continue through growth in exports and increased employment opportunities,” the chairman told Arab News.

Speaking of milestones, Al-Rumayyan emphasized that Aramco achieved a 63 percent iktva score, implying that 63 percent of the firm’s expenditures on suppliers has remained within the Kingdom.

Moreover, Aramco also recorded a 40 percent surge in suppliers’ spend on Research and Development in the Kingdom compared to 2021 levels.

Meanwhile, suppliers’ expenditure on small and medium enterprise development rose 120 percent between 2021 and 2022, thereby propelling supply chain evolution, he exposed.

“Since 2015, we have signed 182 agreements with a total value of $31 billion to build long term collaborative relationships with strategic suppliers, drive further investments, and promote local content,” Aramco chairman stressed.

The goal of those agreements, which pose as Corporate Purchase Agreements, is to provide suppliers with long-term visibility of demand; therefore, enabling them to forecast and project future growth and drive localization efforts accordingly, he explained.

The iktva program was launched with the vision of building a diverse and internationally competitive industrial base in Saudi Arabia. Looking at the bigger picture, this annual gathering is also designed to help the community further innovate, collaborate, and network.

In terms of investments, the event has managed to identify over 200 investment opportunities with an annual market share estimated to stand at $16 billion across 10 different sectors.

“We are continuously looking for companies who share our vision of sustainable growth, and to build win-win strategic partnerships. Together, we aim to stimulate innovation, diversify industry, and produce quality jobs for a growing Saudi population,” Al-Rumayyan concluded.