On July 27th, 2022, AIAG announced the publication of the latest revision of Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain. The Guiding Principles are based on fundamental principles of social, environmental, and governance responsibility consistent with applicable laws and international standards and they outline the expectations of automotive companies towards suppliers on issues related to sustainability. The latest revision aims to address some of today’s most important sustainability concerns by adding sections on circularity, carbon neutrality, animal welfare, biodiversity, land use, and deforestation.
The revised guidance was a collaborative effort between AIAG and Drive Sustainability and automakers BMW Group, Daimler Truck, Ford Motor Company, General Motors, Honda, Jaguar Land Rover, Mercedes Benz, Nissan, Scania, Stellantis, Toyota Motor Europe, Volkswagen Group, Volvo Cars, and Volvo Group, members who have all participated in previous revisions and accepted the content as the most up-to-date industry guidance.
“The automotive industry supply chain has a high degree of complexity; therefore, we believe in the benefits of a common approach and message where possible…We expect suppliers to uphold these standards and cascade them throughout their supply chain.”
The Guiding Principles document includes simple guidance on the following topics intended to comply with the most relevant industry standards and regulations displayed in an easy-to-understand fashion for ease in implementation into management systems throughout the supply chain and they’ve provided a second document, Automotive Sustainability Practical Guidance, to give recommendations of the practical application of the following principles.
1. Business Ethics
- Anti-Corruption and Anti-Money Laundering
- Data Protection and Data Security
- Financial Responsibility/Accurate RecordsDisclosure of Information
- Conflicts of Interest
- Counterfeit Parts
- Intellectual Property
- Grievance Mechanism
- Carbon Neutrality
- Water Quality, Consumption & Management
- Air Quality
- Responsible Chemical Management
- Animal Welfare
- Biodiversity, Land Use and Deforestation
- Soil Quality
- Noise Emissions
3. Human Rights and Working Conditions
- Child Labor and Young Workers
- Wages and Benefits
- Working Hours
- Modern Slavery
- Ethical Recruiting
- Freedom of Association and Collective Bargaining
- Non-Discrimination and Harassment
- Women’s Rights
- Diversity, Equity, and Inclusion
- Rights of Minorities and Indigenous Peoples
- Land Rights and Forced Eviction
- Private or Public Security Forces
4. Health and Safety
- Personal Protective Equipment
- Emergency Preparedness
- Incident and Accident Management
5. Responsible Supply Chain Management
- Due Diligence
- Responsible Sourcing of Raw Materials and Minerals
As mentioned, the Practical Guidance further expands on the content of the Principles document to provide guidance on the practical application of the principles embedded into management systems throughout the supply chain.
To fulfil the Guiding Principles, automotive suppliers should implement a management system/s — defined as a combination of policies, processes, functions, tools and internal controls — that help an organization to control its operations, reach objectives, and ensure continuous improvement. The recommendations concerning the practical application of the Guiding Principles are outlined in the Practical Guidance.
Examples of relevant ISO MSS include:
- ISO 14001 – Environmental Management Systems
- ISO 50001 – Energy Management Systems
- ISO 45001 – Occupational Health & Safety Management Systems
- ISO 37301 – Compliance Management Systems
The guidance document highlights that these standards may set different expectations for different management systems, but that generally an effective management system, regardless of its scope, embeds common elements found in all sustainability-related standards; the Practical Guidance emphasizes the following core elements of an effective management system for sustainability.
- Risks and Impacts Assessment
- Management Programs
- Competency and Capacity Building
- Emergency Preparedness Response
- Stakeholder Engagement
- Grievance Management
- Reporting on the Progress
- Monitoring and Review
It is evident that AIAG and the collaborative automakers who have weighed in on these guidelines are serious about sustainability and understand the need for these core elements to be communicated in a common way and embedded into management systems throughout the automotive supply chain. This article is only an overview of the content published in the two newly revised guidance documents, but the documents were made free by AIAG and can be downloaded below. Take the time to understand the content and assess your own management systems to see how well you’ve implemented the principles necessary for sustainability in today’s world.