Shifting Gears: How Automotive Suppliers Can Effectively Communicate About Sustainability
Automakers are increasingly embracing ambitious social and environmental targets, responding to regulatory mandates, consumer preferences, and investor expectations. To achieve these targets, they are leveraging their supply chains for support. Key areas of focus include reducing greenhouse gas emissions, conserving water, ensuring responsible sourcing, and promoting pay equity.
According to a report by the Center for Automotive Research (CAR), suppliers face significant challenges in meeting automakers’ demands. Among the key issues they face are the absence of actionable internal data on hand and a lack of standardized reporting requirements being imposed by various automakers.
Reporting on sustainability achievements by suppliers is a powerful tool for fostering transparent communication and genuine commitment to sustainable business practices within the industry. Yet, its effectiveness hinges on accurate measurement and collaborative efforts between automakers and suppliers. Suppliers, now more than ever, find themselves navigating a complex landscape of expectations, especially concerning Scope 3 emissions - the indirect emissions across the entire value chain. Addressing these emissions presents unique challenges for those tasked with reporting sustainability efforts, as manufacturers and suppliers alike must disclose their environmental impacts.
To address these challenges and drive positive change throughout the supply chain, it is important to enhance communication and collaboration between automakers and suppliers. Here are some key strategies to help do this:
Clear Communication Channels:
Establishing clear and consistent communication channels between automakers and suppliers is essential will help each side better understand the needs and challenges. Whether through regular meetings, dedicated chat channels, or other methods, transparent communication improves understanding and helps to achieve a shared vision for sustainability.
Tailored Implementation Plans:
Recognizing that one size does not fit all when it comes to sustainability strategies, data, and reporting, automakers should work closely with suppliers to develop tailored implementation plans that address the unique challenges and opportunities of their operations. These plans should outline specific actions, timelines, and resources required to meet sustainability targets, helping suppliers make meaningful progress rather than simply placing the burden on them with no support.
Extending Engagement Across Tiers:
Making progress on your sustainability goals requires engagement across all tiers of the supply chain. One major gap seen in automakers' supply chain sustainability efforts is that they tend to focus predominantly on Tier 1 suppliers. To be most successful, however, automakers must extend their efforts beyond Tier 1 suppliers to include their Tier 2, 3, and 4 suppliers wherever possible. By collaborating and sharing best practices throughout the entire supply chain, automakers can more completely understand their impact and drive sustainability improvements that are holistic and not piecemeal.
Providing Suppliers with Resources:
Suppliers are usually smaller companies than the large automakers they sell to, so it is no surprise that they frequently seek additional guidance and support from automakers to help them make long-term investments in achieving more sustainable operations. Automakers can address this by providing access to resources, training programs, and technical support, giving suppliers the help they need to implement more sustainable practices.
Standardizing Metrics and Reporting:
Standardization is one effective way to help suppliers better measure and report out their progress on achieving their sustainability targets. Automakers can seek ways to collaborate with their suppliers to help develop more standardized metrics, decide which Scope 3 categories are relevant for the company, and choose reporting frameworks that align with industry best practices. Working together to develop standardized metrics and reporting frameworks will lead to more consistency in measurement, enhancing transparency, accountability, and comparability across suppliers - something that will ultimately benefit the automakers just as much as the most responsible suppliers.
As automotive suppliers work to better understand and disclose their impacts on the environment and human rights so they can meet the requirements of manufacturers, they are also able to enhance their own corporate reputation if they use the same data provided to manufacturers to release an annual public sustainability report. Doing so will provide additional internal and external benefits, including enhanced reputation and trust, engaged employees, and reduced overall risk.
Conclusion:
The success of the automotive industry's pursuit of social and environmental targets hinges on collaborative efforts between automakers and suppliers. Despite challenges in data accessibility and reporting standards, transparent communication remains essential above all. By fostering partnerships, standardizing metrics, and leaning into sustainability reporting, the industry can realize its goals while enhancing reputation and trust, paving the way for a more sustainable future.
Are you an automotive supplier ready to learn more about completing an emissions inventory or setting emissions reduction targets? Do you want to learn more about how that work ties into developing your own ESG reports?
No matter your environmental or social impact stage, we’re here to help. Reach out to The Uplift Agency at hello@theupliftagency.com.
The Uplift Agency
Uplift builds strategies, programs, and communication campaigns that advance ESG in workplaces, supply chains and communities.
We know how to navigate the road ahead because we’ve already been down it – 90 percent of our team has led environmental or social programs in corporations or nonprofits. Because ESG is all we do, our services are more comprehensive and integrated than most firms.
