Fourteen global automakers have agreed to a set of broad sustainability standards that make clear what they expect from suppliers on issues such as human rights, the environment, working conditions and business ethics.
The companies are all members of the Automotive Industry Action Group (AIAG), a global industry-led body that works to improve corporate responsibility in the auto sector. Businesses that have signed up so far are BMW, Chrysler, Daimler, Fiat, Ford, GM, Honda, Jaguar Land Rover, Peugeot Citroen, Scania, Toyota, Volkswagen, Volvo Cars and Volvo Group. Signatories say they expect their suppliers not only to conform to the standards themselves but to ‘cascade them down their supply chain’.
Among other things, the standards require suppliers to reduce energy, water consumption and greenhouse gas emissions, and to increase the use of renewable energy. They also state that workers should be able to communicate openly with management about working conditions ‘without fear of reprisal, intimidation or harassment’ and that they should have the right to join trade unions and workers’ councils.
In addition, suppliers are expected to operate ‘honestly and equitably’ and to fight against corruption and anti-competitive business practices. The standards – known as the ‘automotive industry guiding principles to enhance sustainability performance in the supply chain’ – were devised in conjunction with CSR Europe, a group of 70 multinational companies that fosters sectoral co-operation between businesses on corporate responsibility issues. The companies set up a working group in 2009 to develop and agree the standards, and CSR Europe has been guiding the process since 2012.
J. Scot Sharland, executive director at AIAG, said the standards were partly a response to pressure from stakeholders, including investors, as the industry has faced ‘heightened and extended responsibility expectations’ over the past few years. Although the companies have all agreed to work to the standards, CSR Europe said individual automotive companies may have their own principles, codes and policies that are more developed on some topics, and will therefore supersede the standards in those areas.
The PRI are currently leading engagements on anti corruption, employee relations and the integration of environmental, social and governance (ESG) factors into executive pay. A full list of current PRI led engagements is available here.