Module 6, supplier, assesses companies’ efforts to decarbonise the supply chain by reviewing information relating to the type and coverage of their supplier engagement, along with any demonstrated collaboration with suppliers on R&D and emissions reductions. This module comprises one indicator and accounts for 1.2 out of the overall performance assessment score of 20.
Auto manufacturers rely on technologically complex and integrated supply chains for their vehicle parts. Not only do supply chain emissions fall under the indirect upstream emissions companies should be accounting for in their greenhouse gas reporting, innovation across the supply chain can be key to achieving ambitious decarbonisation goals in both the manufacturing and use phases of the vehicles. As such, engaging with suppliers to drive progress on the low-carbon transition is a vital element of climate leadership.
As discussed in 2020 key finding 3, there is a high level of inaction around climate-related supplier engagement in this sector, with over a quarter of the companies (8 out of 30) assessed having no climate-focused engagement with suppliers. Comparing average performance across the 25 companies included in both the current assessment and the 2019 Benchmark highlights the lack of progress in this area, with the average score remaining at 33 percent across both assessments.
For a large portion of the companies assessed (13 out of 30), supplier engagement barely extends beyond fundamental compliance:
Subaru, Mahindra & Mahindra and Fiat Chrysler expect suppliers to be certified by an environmental standard, such as ISO14001, or have their own environmental management systems.
Nissan collects emissions data through information requests but does not show evidence of actively driving down supply chain emissions or using supplier emissions data in a meaningful way.
Moderate performers in this module ranking typically have their own internal supplier engagement program, education platform or rating (e.g., CDP Supply Chain program or other internal rating):
For some of these moderate performers, year-on-year supplier emissions reductions are included in the supplier selection process. For example, Volkswagen uses CDP data to select suppliers who are actively reducing emissions to contribute towards the company’s life cycle emissions reductions goals. However, it was not clearly demonstrated that these companies are actively supporting suppliers to set their own emissions reduction targets or collaborating with key suppliers on R&D.
At the top of this module ranking, Groupe PSA and Renault tie in second place. Both have strong supplier engagement processes. Groupe PSA’s suppliers are required to monitor current and future emissions and to implement a reduction plan. Renault has a strong emphasis on encouraging its logistics partners to reduce emissions. However, BMW is the top performer. It is the only company to demonstrate significant emissions reductions as a result of its supplier engagement and collaboration – resulting in emissions reductions of 32 million tonnes of CO2 in 2019. This has been achieved through strong partnerships such as the joint technology consortium with Swedish battery manufacturer Northvolt and Umicore, a Belgian developer of battery materials, to develop battery cell technology.