Auto suppliers urge carmakers to standardize their sustainability efforts

Automakers are making more requests of their suppliers to reach looming sustainability targets. To cope with the growing demand, parts makers are urging the industry to come up with standardized reporting metrics.

A survey released in March by parts maker organization MEMA found that more than 80 percent of automakers and Tier 1 suppliers have asked their subsuppliers to help them reach sustainability goals. Spurred in part by government mandates, companies are looking to ensure their supply chains become more eco-friendly, with many businesses striving to have net-zero carbon emissions across their chains in the coming years.

But as they're asked for more data and information, suppliers with numerous customers often find they have different standards, definitions and metrics to measure their carbon footprint, which creates inefficiencies, said John Chalifoux, chief sustainability officer at MEMA, which represents more than 1,000 companies in the automotive supply chain.

Chalifoux is urging the industry to come up with common standards and metrics across the board to make decarbonization efforts more efficient. "We know the industry can develop standards," he said. "We've done it before on quality. Now let's do it in sustainability."

That may be easier said than done.

Companies across the industry have individual targets, regardless of their competition, and automakers and suppliers are often reluctant to share data or develop standards together.

Chalifoux pointed to the quality standards that the industry developed as a possible way forward on emissions. In the early weeks of the pandemic in 2020, auto companies worked together to create health and safety protocols as they prepared to return to work.

"It takes time," he said. "Different companies have different requirements, or are used to doing business a certain way. It comes down to working toward the common good."

For years, suppliers of all sizes have singled out a lack of standardization as a significant issue when it comes to achieving industry climate goals. But smaller suppliers with smaller staffs face a harder time sorting through different customer requirements.

MEMA found that 53 percent of suppliers said they do not have a dedicated sustainability manager. The group estimates that sustainability reporting and compliance "demands the equivalent of 4.5 full-time staff."

The survey also found that while suppliers are largely confident in their ability to report on their Scope 1 and 2 emissions — meaning those directly emitted by the company and from power sources — tracking Scope 3 emissions could prove a tougher challenge. Scope 3 emissions are those generated indirectly by a company through its supply chain. Gathering insights from smaller companies further down the supply chain can be difficult.

But suppliers are making progress on decarbonization, Chalifoux said. He sees the "glass half full" side of the issue, as 47 percent of suppliers do have sustainability managers on the job. "It's a strong number," he said.

Chalifoux urges suppliers to have direct contact with their customers to learn more about their long-term sustainability targets — but also to be diligent about looking through publicly traded companies' sustainability reports and other publicly available documents to gain more information.

"One of the things we've learned and work with members on is that if you want to see what customers may require," he said, "go to their public documents and see what they're saying is important to them."