Before doing Episode 4 of the podcast, I watched this Ted talk by Jens Burchardt about how the green premium for many products is smaller than we may think. Mr. Burchardt and his team at Boston Consulting Group have been calculating what it would cost to produce products that are CO2-neutral. For an average European mid-size sedan with a cost of 30,000 euro, the green premium would only be 500 euros. The explanation is that the extra cost from the supply chain is low compared to the cost to the final consumer - only about 40% of all expenses come from suppliers. However, a large part of that goes to shipping and production. Ultimately, only 15% of the price of the car comes from the materials in it. That means that even if a company has to pay 50% more for the steel, it is only a fraction of the final sales price to the customer. The low extra cost is also something consumers could be willing to pay, but companies are held back because of price competition.
To evaluate the Ted talk, I reached out to Mr. Burchardt, who helped me contact BCG consultant Miranda Hadfield. We talked about the calculations that she and the team had been making and how companies will likely need pressure from legislators to shift more of their supply chains to come from sustainable sources. In the episode, I also talked with Thomas Hörnfeldt, who works at Hybrit, a company making CO2-neutral steel. For corporations to shift their sourcing, there need to be alternatives that can supply them with sustainable materials.
A Capstone-project by Johannes Frosteman, Minerva University. Check out my blog!
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