Collaboration & Co-Creation Collaboration & Co-Creation

World's Largest Automakers Reach Landmark Agreement on Responsible Supplier Standards

On Wednesday, the Automotive Industry Action Group (AIAG) and CSR Europe, facilitators of the European Automotive Working Group on Supply Chain Sustainability, announced an unprecedented agreement among 14 global automakers on a set of standards outlining expectations for suppliers on key responsibility issues including human rights, environment, working conditions and business ethics.

By Sustainable Brands | Published 10 years ago | About a 3 minute read

Participating members aligned with “The Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain” are BMW Group, Chrysler Group LLC, Daimler, Fiat S.p.A., Ford, GM, Honda, Jaguar/Land Rover, PSA Peugeot Citroen, Scania, Toyota, Volkswagen, Volvo Cars and Volvo Group.

“With a singularity of purpose and a common voice, the key players in our industry are collaboratively reinforcing the individual commitments each has made to doing business in a socially and environmental responsible way,” said J. Scot Sharland, executive director at AIAG. “Automakers and suppliers of all sizes face heightened compliance & extended responsibility expectations, from materials sourcing, handling, reporting and disposal requirements to improving factory working conditions, so it’s imperative that we work together to develop, socialize and deploy industry best practices on a range of issues for our global supply chains.”

As the companies collectively state in the Guiding Principles, “People and the environment are the automotive industry’s most important resources. For this reason, we are working together to attain the highest standard in business integrity and in the social and environmental performance of our supply chain. … The following guidelines clearly describe our expectations towards business ethics, working conditions, human rights, and environmental performance, for our suppliers as well as their subcontractors and suppliers. We expect that suppliers will uphold these standards and cascade them down their supply chain.”

The guidelines, which are based on fundamental principles of social and environmental responsibility that are compliant with local law and consistent with international expectations, were first developed by AIAG in 2009, in collaboration with Ford, GM, Chrysler, Honda and Toyota. In 2009, the companies created in 2009 a specific European working group to enhance collaboration in the area of sustainability in the supply chains. Since 2012 the group has been facilitated by CSR Europe. Together with AIAG, the initial guidelines were further elaborated.

To establish these Guiding Principles, AIAG and CSR Europe worked with the 14 automakers to find the common points of agreement among the companies. Individual automotive companies may have their own standards, codes and policies that supersede the common Guiding Principles.

“We built on the guidelines that AIAG and its member companies had established, expanding the principles and messages so they would apply to the broadest possible range of suppliers. This allows us to drive the sustainability agenda in the automotive sector even further,” said Stefan Crets, executive director at CSR Europe.

The Guiding Principles announced by AIAG are the latest in a series of ongoing work by the group and its members to drive supply chain sustainability. AIAG’s Conflict Minerals Working Group, which features more than two dozen manufacturers, suppliers and service providers throughout the auto industry, have collectively examined the impact of the conflict minerals issue on their global supply chains since the Dodd-Frank Act became law in 2010.

Speaking of high supplier standards, in January CDP launched its Supplier Climate Performance Leadership Index (SCPLI), a new evaluation and benchmarking tool for CDP supply chain members and suppliers. European Automotive Working Group members BMW, Daimler, Fiat and Volkswagen were among the eight corporates to score an ‘A’ for demonstrating strong and transparent climate strategies and emissions reduction programs.