Working in collaboration to achieve environmental goals
The Importance of Sustainability Agreements in the Automotive Industry
After years of international pressure, the automotive industry is starting to make greater steps in setting and achieving environmental goals--particularly around lowering carbon emissions across the supply chain.
Though many suppliers have established their own sustainability plans over the years, the industry now recognizes that collaboration is essential in order to make meaningful progress and change.
Together, Original Equipment Manufacturers (OEMs) and suppliers are joining forces and committing to sustainability agreements which not only will help lower our carbon footprint, but create better environments for people and communities. Henkel is no exception and has recently signed a sustainability agreement with a major North American OEM.
These sustainability agreements will see the industry push further than ever before in addressing the issue of climate change and being better leaders in business and our communities.
Here are some of the commitments that the automotive industry can make to protect the planet as well as safer and healthier work environments for people.
Environmental Sustainability: Committing to Carbon Emissions Reduction
In my recent blog on sustainability, I talked about the automotive industry’s impact on the environment and the importance of collaboration in achieving environmental sustainability goals. All topics mentioned are still important, but there is a lot that businesses can do around Scope 1, 2, and 3 emissions, in particular.
Reducing Scope 1 and 2 Emissions
One of the easiest ways to reduce your carbon footprint is to commit to emissions reduction across Scopes 1 and 2. As businesses are in direct control of these emissions, it’s a great place to start.
The carbon footprint of production sites is heavily contributed to the use of fuels and energy purchased. By lowering dependency on fossil fuels and increasing the usage of renewable energy, companies can make big strides in reducing their carbon footprint.
At Henkel, we’ve committed to reducing Scope 1 and 2 greenhouse gas emissions by 67% per metric ton of product by 2030 compared to 2017—this is one important milestone on our way to eliminating our reliance on fossil fuels.
Reducing Scope 3 Emission and Becoming Climate Positive
A serious commitment to the reduction of a company’s carbon footprint requires serious action. To prevent warming to 1.5 degrees Celsius, as stated as essential in the Paris Agreement, businesses must act with aggressive targets and timelines.
One way to do this is not only by becoming carbon neutral, but taking it a step further to become climate positive. Scope 3 emissions (all other indirect emissions that occur in a company’s value chain) is where the majority of carbon emissions are generated.
The only way we can achieve this is by collaborating with other companies across the value chain to decrease emissions. Only then can we can make significant strides towards being more environmentally sustainable.
With strong efforts to reduce Scope 1, 2 and 3 emissions, companies can then look to become climate positive. By 2025, we are committing to reducing emissions along the value chain by 100 million tons. We will also move to 100% renewable energy and have committed to reducing the carbon footprint of our production 75% by 2030 from what it was in 2010. In the decade after that, we plan to convert all remaining fossil fuels used in production to climate-neutral alternatives and supply any surplus carbon-neutral energy to third parties.
Social Responsibility: Investing in People and Communities
Sustainability efforts shouldn’t just revolve around carbon emission reduction and how to maintain a profit, but also around people. It's about creating a balance between people, planet and profit.
Introducing Employee Sustainability Programs
Investing in people can be another way of investing in the environment. Equipping employees with knowledge, skills and mindsets around sustainability can empower them to become more actively involved in sustainability in their professional and personal lives. By 2030, we plan to engage and empower over 50,000 employees to take action on sustainability.
Giving people the opportunity to learn about sustainability issues, participate in training and initiatives, and volunteer for environmental causes outside the organization is a way to embed sustainability at the heart of a business.
Strengthening Commitment to Human Rights and Labor Standards
Responsible business commit to running in an ethical and legal manner—including respecting internationally acknowledged human rights. Having a clear definition of the ethical and social values that you want to uphold is important for all stakeholders including employees, customers, suppliers, investors and the communities you operate in.
Adhering to acknowledged human rights and international, and local, labor standards is just the first step. Through agreements and collaboration, OEMs can strengthen commitments by ensuring the same stringent standards are applied across the full supplier base. By applying the same codes and standards throughout (such as on working hours, occupational health and safety, data protection, non-discrimination, fair renumeration, freedom of association and collective bargaining, and zero tolerance of child and forced labor, etc.) we as an industry can push further to create a safe and secure place where people and communities can thrive.
Improving Our Communities
Commitment to people should extend to the wider community and society, not just employees. Businesses can’t function without the support of communities in which they operate, therefore, it is essential that we invest resources to secure the future viability of those communities and our society.
There isn’t one specific way to go about this as every community and its needs are different. At Henkel, we’ve found success in supporting voluntary activities of employees on over 16,800 projects and in more than 100 countries—with many of those volunteers joining forces to implement larger social projects. Companies can also engage in local social partnerships to support initiatives and public institutions in areas such as digitalization, sustainability and innovation, for example.
Though all of these aspects can be applied to any industry, with huge international attention on the automotive sector, it’s important that the businesses within it set high standards and be leaders for other industries.
Responsible Sourcing: Improving Procurement Processes to Reflect 21st Century Values
Companies within the automotive industry are highly interconnected and dependent on one another for products and services. To further help in collaborative environmental efforts, companies can implement a responsible sourcing approach which focuses on sustainability aspects along the supply chain.
Establishing a framework for sustainable procurement in the supply chain is beneficial to people and the planet. Having a responsible sourcing strategy that puts more emphasis on the circular economy is essential in achieving environmental goals. Through collaborations with independent sustainability specialists EcoVadis, Henkel has developed a self-assessment for new suppliers which to help determine their sustainability performance prior to working with them. This helps with relationship transparency and allows us to make informed and ethical choices when it comes to working with suppliers.
This assessment early in the procurement process demonstrates the importance of the environment, people and communities to our organization and allows us to achieve our commitment of 100% responsible sourcing together with our partners. By working transparently, we will build a network of trusted partners with the same commitments to sustainability efforts.
The automotive industry’s potential impact on international sustainability goals is huge. By joining forces and agreeing on ambitious targets, we can create the change we need to protect the planet and its people.
Henkel’s approach to sustainability is outlined further in the 2021 Sustainability Report.
Juliane Hefel is Corporate Vice President, Automotive OEMs Americas, responsible for Henkel Corporation’s automotive operations throughout the Americas. Hefel’s direct responsibilities include overseeing sales, operations, and management teams to achieve financial growth targets of the business unit. Hefel has served the company in several international business, marketing and purchasing roles - including positions in Europe, Asia and the US - since joining the company in 2006.
If you’re interested in collaborating across the value chain, please contact me via LinkedIn.
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