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.
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.
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.
Human Rights & Responsible Sourcing
We Can’t Continue To Replicate Injustices
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?
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.
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.
Mercedes and H2 Green Steel announce agreements in both Europe and North America
ArcelorMittal to supply recycled and renewably produced steel to General Motors
Progress on battery chemistries holds potential to reduce demand for high-intensity minerals
Mercedes announces new supply chain goals, including steel, aluminum, battery recycling, and human rights risk assessment