Transparency and disclosure of supply chains and their emissions
For automakers to successfully eliminate emissions, environmental harms and human rights abuses from their supply chains to the point of extracton, they must first “know and show” what is happening across their supply chains.
As automakers ditch the tailpipe for EVs, the emissions profile of their vehicles car shifts. Although absolute lifecycle emissions drop dramatically, embodied emissions from supply chains can grow to represent up to 90% of the total lifetime emissions from electric vehicles, making it the single most important area for emissions reductions for EVs. Discerning and disclosing these emissions is an essential prerequisite for automakers to effectively reduce and, ultimately, eliminate them.
Transparency and disclosure of where and under what conditions the metals and minerals used in their vehicles are extracted, refined and used in their manufacturing processes is also essential for automakers to be able to ensure that environmental harms and human rights abuses do not occur in their supply chains.
With the focus of regulators increasingly turning to scope 3 emissions disclosures, such as the EU’s Corporate Sustainability Reporting Directive and proposed rules by the SEC on climate-related disclosures, automakers should act now to stay ahead of the curve.
Traceability and transparency of supply chains is also essential for risk management, enabling automakers to identify problems before they impact parts deliveries. Robert Bosch, the world’s largest auto supplier, now views transparency as the “No. 1 priority” in its relationships with suppliers and automakers.
What can automakers do?
- Map their supply chains to the point of extraction
- Disclose their scope 3 GHG emissions which result from purchased goods and services
- Disaggregate their scope 3 emissions by supply chain, including steel, aluminum and batteries.
- Disclose supply chain emissions beyond GHG to include other significant emissions that pollute the environment, as well as water usage.