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The auto supply chain at a glance

Climate & Environment

We can’t build sustainable vehicles with dirty metals and materials

Retiring combustion vehicles is just one part of the essential journey to decarbonization. Although the lifetime emissions of an EV are far lower than an ICE vehicle, producing an EV is more carbon intensive. That means its supply chain Scope 3 emissions – a growing target for regulators and investors – are higher. Steel, aluminum and batteries are clear priorities, as they constitute an estimated 70% of BEVs’ supply chain emissions. Without forceful action on supply chains, the automotive industry will be unable to meet its climate goals and stay on a 1.5-degree pathway. As the industry accelerates towards EVs, automakers therefore need to take charge of all their embodied emissions and other destructive environmental practices that remain in their supply chains. 

Aluminum

Aluminum produces about 2% of all the world’s greenhouse gas emissions, although it has a higher intensity than steel. Refining and smelting aluminum releases over 90% of all direct CO2 emissions from this fossil-heavy production process, and extracting bauxite to make aluminum can harm the land.

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Steel

Steel is responsible for 7-9% of global greenhouse gas emissions and makes up about 65% of the current average vehicle. No other industrial material has a higher climate impact.

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Batteries

EVs are powered by large battery packs. Manufacturing battery minerals, such as nickel, cobalt and lithium, can be emissions intensive and environmentally harmful, negatively impacting the rights of local communities – and demand for these minerals is skyrocketing.

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Human Rights & Responsible Sourcing

We Can’t Continue To Replicate Injustices

  • Indigenous Rights
  • Mineral Extraction
  • Workers’ Rights

Indigenous Rights

Indigenous Peoples have long been stewards of the land and our world’s natural resources. More than half of the resources needed to power the energy transition are located on or near land where Indigenous People live. Indigenous Peoples have the right to self-determination and to provide or withhold their Free, Prior and Informed Consent on projects and activities to be carried out on their lands and territories. 

Far too often, projects linked to auto supply chains are conducted on Indigenous Peoples’ territories without their consent, sometimes even displacing them from their ancestral lands. Extractive projects also pollute their resources, which affects these communities’ right to food, water, livelihoods, and culture. An equitable supply chain must respect Indigenous Peoples’ right to self-determination and Free, Prior and Informed Consent. 

Mineral Extraction

Producing aluminum and steel requires large amounts of bauxite and iron. The EV transition demands more of these materials, plus minerals that are essential for the transition including cobalt, nickel, lithium, manganese, zinc, and copper. Some of these minerals are sourced in areas with—and can often fuel—armed conflict, violence, forced labour or other human rights and environmental abuses. 

An equitable supply chain requires ongoing, proactive, and reactive due diligence processes. Automakers can leverage their position as major mineral buyers to drive up mining standards that safeguard the environment and the rights of Indigenous Peoples, workers and local communities.

Responsible mineral sourcing also entails ensuring greater transparency and disclosure on the minerals used in automakers’ supply chains, their risks and their impacts, from mining to smelting and refining all the way through to manufacturing.

Finally, automakers need to reduce the demand for primary materials, which can be achieved through interventions such as  increased recycling, material efficiency strategies, decreasing the size of EV batteries,  and research and development into less mineral-intensive battery chemistries. 

Workers’ Rights

People fuel every part of the auto supply chain, from miners to aluminum plant employees and vehicle assembly workers. Unfortunately, the auto supply chain is rife with corporations that tolerate discrimination, forced labor, low wages, and unsafe working conditions, in nearly every corner of the world. Respecting workers’ rights throughout the supply chain is essential for a just and sustainable EV transition. 

According to the ILO Declaration on Fundamental Principles and Rights at Work, an equitable workplace demands: freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labor; the effective abolition of child labor; the elimination of discrimination in respect of employment and occupation, and a safe and healthy working environment. Automakers must ensure that these fundamental principles and rights are upheld across their own business operations and throughout their supply chains.

Leaderboard

How Do Global Automakers Measure Up?

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    logo Mercedes

    Human Rights & Responsible Sourcing

    46%

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    logo Ford

    Human Rights & Responsible Sourcing

    51%

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    logo Volvo

    Human Rights & Responsible Sourcing

    24%

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    logo Volkswagen

    Human Rights & Responsible Sourcing

    28%

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    logo Stellantis

    Human Rights & Responsible Sourcing

    34%

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    logo BMW

    Human Rights & Responsible Sourcing

    26%

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    logo Renault

    Human Rights & Responsible Sourcing

    21%

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    logo General Motors

    Human Rights & Responsible Sourcing

    25%

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    logo Tesla

    Human Rights & Responsible Sourcing

    21%

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    logo Hyundai

    Human Rights & Responsible Sourcing

    13%

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    logo Nissan

    Human Rights & Responsible Sourcing

    14%

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    logo Toyota

    Human Rights & Responsible Sourcing

    8%

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    logo Geely

    Human Rights & Responsible Sourcing

    0%

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    logo Kia

    Human Rights & Responsible Sourcing

    7%

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    logo Mitsubishi

    Human Rights & Responsible Sourcing

    6%

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    logo GAC

    Human Rights & Responsible Sourcing

    0%

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    logo BYD

    Human Rights & Responsible Sourcing

    0%

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    logo Chery

    Human Rights & Responsible Sourcing

    0%

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Our Vision

The future is an automotive industry where all vehicles are made:

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01

Equitably

Respecting and advancing the rights of Indigenous Peoples, workers, and local communities throughout the supply chain.

02

Sustainably

Preserving and restoring environmental health and biodiversity across supply chains, while reducing primary resource demand through efficient resource use and increased recycled content.

03

Fossil-free

100% electric and made with a fossil fuel-free supply chain.

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Supply Chain News & Progress

The Race Is On

Supply chain transformation is a risk management imperative and opportunity for a competitive edge. Leading brands are already securing a first-mover advantage and leveraging their power to transform legacy supply chains into a force for good. The revolution is underway.

07.06.2023

Mercedes and H2 Green Steel announce agreements in both Europe and North America

Steel
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07.06.2023

Mercedes and H2 Green Steel announce agreements in both Europe and North America

Mercedes-Benz and H2 Green Steel have signed a binding agreement for the delivery of about 50.000 tonnes of green steel to the car maker’s European production annually. In a pioneer move Mercedes-Benz has also signed a memorandum of understanding with H2 Green Steel for the potential supply of green steel produced in North America.

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06.06.2023

ArcelorMittal to supply recycled and renewably produced steel to General Motors

Steel
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06.06.2023

ArcelorMittal to supply recycled and renewably produced steel to General Motors

ArcelorMittal North America said on Tuesday the steelmaker will supply General Motors (GM.N) with recycled and renewably produced steel, which substantially lowers CO2 emissions.

Material will be supplied from ArcelorMittal Dofasco in Hamilton, Ontario and shipments are expected to begin in the second quarter of 2023, the company said. The terms of the deal were not disclosed.

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29.05.2023

Progress on battery chemistries holds potential to reduce demand for high-intensity minerals

Batteries
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29.05.2023

Progress on battery chemistries holds potential to reduce demand for high-intensity minerals

During the first few months of 2023, several automakers have made announcements of investments and / or progress made on new battery chemistries that promise to reduce their demand of high-intensity minerals such as cobalt, nickel and lithium. In March, the JAC Group’s joint venture with Volkswagen in China made history by introducing the world’s first electric vehicle (EV) powered by a sodium-ion battery – a battery technology that, according to the IEA, “has the potential to completely avoid the use of critical metals.” BYD has also said that it plans to use sodium-ion batteries in its vehicles later in the year. In May, Stellantis announced an investment in lithium-sulphur battery developer Lyten, working on a novel three-dimensional graphene material platform that is free from nickel, cobalt, and manganese.

30.03.2023

Mercedes announces new supply chain goals, including steel, aluminum, battery recycling, and human rights risk assessment

Aluminum
Batteries
Fossil Free & Environment
Human Rights & Responsible Sourcing
Steel
Transition Minerals
Workers' Rights
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30.03.2023

Mercedes announces new supply chain goals, including steel, aluminum, battery recycling, and human rights risk assessment

At Mercedes annual ESG Conference 2023, Mercedes announced further supply chain priorities, plans, and investments across several areas.

Mercedes set “the goal of a green steel supply chain from 2039 at the latest,” including “low-CO2” steel from scrap already part of their vehicles, further details on their partnerships with H2 Green Steel and SSAB, including prototyping parts that contain “almost fossil-free direct-reduced iron,” and their intention to launch models from 2025 that use “almost CO2-free” steel. Like BMW, Mercedes also stated they see themselves as “promoting the transformation of the steel industry.”

Regarding aluminum, Mercedes stated they are working on decarbonization, however did not provide specific targets or milestones. They did state that “a third of the aluminium used in Europe” for EVs will be made with renewable energy, and that they are testing aluminum from Hydro with a minimum 25% scrap content, with the aim of it being incorporated into production this year. Each results in 50% and 70% lower CO2 emissions, respectively. Also with Hydro, Mercedes plans to pilot “very low CO2” aluminum by 2030.

Mercedes’ new battery recycling factory will increase their operations and achieve a recycling rate of more than 96%, with the potential to recycle “2,500 tonnes of battery modules per year.” They are also working with partners in China on recyclable materials. Additionally, Mercedes are aiming to reduce the CO2 footprint of battery cells by 40% with further emissions reductions’ possible with renewable energy to produce and refine raw materials.

Mercedes also shared further details on their timeline and milestones to assess 24 raw materials with elevated human rights risks: 70% by 2025 and completed by 2028. They also stated that this year, they plan to “establish risk mitigation measures for all raw materials affected by the future EU battery regulation.”

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