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RIYADH: Saudi Aramco's chairman, Yasir Al-Rumayyan, said in an exclusive interview with Arab News that the Saudi Arabian Oil Co., widely known as Saudi Aramco, has cut material and logistical supply chain emissions by 23% since 2015.
By ensuring that its suppliers are assessed and rewarded for their local environmental, social, and governance contributions, Aramco's iktva programme is helping the oil giant accomplish its long-term sustainability goals.
"The iktva model has always included sustainability. "We are embracing new technologies, using the Circular Carbon Economy framework, and empowering employees to improve our sustainability and decrease our environmental effect," stated Aramco Chairman Khalid Al-Falih.
"It's worth mentioning that since 2015, our material and logistics supply chain Scope 1 and 2 emissions have been decreased by 23%," he said.
Scope 1 emissions are those emitted directly from owned or controlled sources, whereas Scope 2 emissions are those emitted indirectly through a firm's generation of power, steam, heating, and cooling.
Iktva has an influence on sustainability as well as the growth and development of the local economy, according to Al-Rumayyan.
According to the chairman, Aramco now has a domestic supply chain that includes an estimated 1,000 local manufacturers and more than 2,000 service providers.
"The initiative establishes an ecosystem of integrated value chains that enable enterprises operate efficiently in Saudi Arabia. Furthermore, iktva encourages suppliers that create regional offices in Saudi Arabia," he explained.
Concerning efficiency, the chairman stated that it all comes down to investing in a professional network of local suppliers, which immediately leads to supply chain resilience.
To be eligible to operate with the oil and gas behemoth, both domestic and foreign suppliers must satisfy specific standards. Among the requirements are the establishment of local manufacturing facilities, the recruitment of Saudi personnel, and the investment in research and training.
"This consistent development toward supply-chain localization has helped not just our firm, but also the local and national economies. "The impact is projected to continue through increasing exports and job possibilities," the chairman told Arab News.
In terms of milestones, Al-Rumayyan underlined that Aramco received a 63 percent iktva score, suggesting that 63 percent of the company's supplier spending stayed in the Kingdom.
Furthermore, Aramco reported a 40% increase in suppliers' R&D spending in the Kingdom compared to 2021 levels.
Meanwhile, suppliers' spending on small and medium-sized business growth increased 120 percent between 2021 and 2022, accelerating supply chain evolution, he said.
"Since 2015, we have inked 182 agreements totaling $31 billion to develop long-term collaborative partnerships with critical suppliers, generate more investments, and support local content," Aramco chairman emphasised.
According to him, the purpose of those agreements, which masquerade as Corporate Purchase Agreements, is to offer suppliers with long-term visibility of demand, allowing them to foresee and project future growth and drive localization efforts accordingly.
The iktva programme was established with the goal of developing a varied and globally competitive industrial base in Saudi Arabia. In the grand scheme of things, this yearly event is also intended to assist the community develop, cooperate, and network.
In terms of investments, the event has identified approximately 200 investment possibilities with an estimated annual market share of $16 billion across ten different industries.
"We are continually seeking for firms who share our goal of sustainable growth, and to establish win-win strategic collaborations. Together, we hope to spur innovation, diversify industry, and create excellent employment for Saudi Arabia's rising population," Al-Rumayyan said.
