Auto Manufacturers, Supply Chain Sustainability and Conflict Minerals

November 21, 2011 EcoVadis

“If you want to go quickly, go alone. If you want to go far, go together.”
– African proverb.

A critical issue for the automobile manufacturing industry, especially for those with SEC financial reporting requirements in the United States, is compliance with the Dodd-Frank legislation, or in other words, the soon to be finalized Conflict Mineral regulation. A round table of experts was held in mid October to support in finalizing the rules, but to-date it is anyones bet when they will be final which adds to the industry anxiety over how to move forward.

This has certainly been a key topic of conversation for many sectors. The electronics industry, specifically the EICC-GeSI Extractives Work Group, has been the leader and has already started running pilot projects to ensure companies in the sector can meet the regulation which requires proof of due diligance on conflict mineral issues. At the Business for Social Responsibility 2011 Conference in San Francisco earlier this month, a panel of experts including Monique Oxender, Global Manager for Supply Chain Sustainability at Ford Motor Company, spoke on a panel about Conflict Minerals and discussed how to deal with this issue. She stated:
“It’s difficult to get support internally for extensive or costly actions, while expectations are still being defined with regard to conflict minerals. But regardless of what happens with the SEC legislation, the problem of conflict minerals is not going to go away. Business cannot provide solutions to all of the problems in the DRC, but there are certainly some concrete steps the private sector can take to improve the situation.”
Collaboration will be central to how businesses take on Conflict Minerals, just as it is central for how companies engage in sustainable procurement. The Automotive Industry Action Group (AIAG) has established a working group, for which Monique Oxender is the Chair, and their proposed solutions are similar to what EICC and GeSI have proposed for the electronics industry.

In a broader sense, automobile manufacturers are maturing and taking actions to take into account Corporate Social Responsibility (CSR) criteria in their supply chains. Renault, for example, wants to ensure their suppliers (French, English) are reliable not only on quality and cost issues, but also in respect to CSR criteria, such as environment, human rights and ethics.

Renault has already established a supplier CSR charter which was developed in line with Nissan and have taken the next steps to ensure suppliers are held accountable by leveraging the EcoVadis Supplier Performance (SP) tool.

This tool not only allows them to benchmark suppliers on their CSR performance, but it also allows them collaborate with their suppliers towards performance improvement. Additionally, EcoVadis is taking steps to support companies and to ensure the Supplier Performance (SP) solution provides support for the due diligence necessary for compliance on the Dodd-Frank Conflict Minerals regulation.

Times are changing quickly, but this cross-pollination and cross-collaboration is allowing everyone to keep up, if not ahead of the changing market and regulatory environment.

Photo provided by p4nc0np4n on Creative Commons license.

This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

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