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The Automotive Partnership
DRIVE SUSTAINABILITY
19th, 21st, 26th, 27th and 29th of November, 2019Deloitte São Paulo - Av. Chucri Zaidan 1240, 12º andar, Golden Tower. São Paulo, SPDeloitte Campinas - Av. John Dalton 301, Techno Plaza Corporate, Prédio 2, bl. A e B. Campinas, SP
SUPPLY CHAIN SUSTAINABILITY
Training for automotive suppliers
TRAINING CONTEXT
Who is who
BMW Group, Daimler AG, Groupe Renault, Honda, Jaguar Land Rover, Scania
CV AB, Toyota Motor Europe, Volkswagen Group, Ford, Volvo Cars and Volvo
Group joined forces to launch ‘Drive Sustainability - The Automotive
Partnership’.
The Original Equipment Manufacturers (OEMs) are defining the Guiding
Principles and the content of the supplier sustainability training.
CSR Europe is a platform for businesses looking to enhance sustainable
growth and positively contribute to society with 44 corporate and 41 national
CSR members.
CSR Europe is coordinating and facilitating the Drive Sustainability initiative,
the content and the logistics of the supplier sustainability trainings.
Deloitte is a network of firms employing 245,000 people in 150 countries
providing audit, tax, legal, financial advisory, risk advisory, and consulting
services.
Deloitte teamed up with CSR Europe to facilitate the supplier sustainability
trainings in several countries.
ANTI-TRUSTRegarding your company’s and/or your competitors’ product and services, it is forbidden:
• To discuss current or future prices or supply conditions.• To discuss any increase or decrease in price or change of supply conditions.• To discuss pricing procedures.• To discuss standardizing or stabilizing prices or supply conditions. • To discuss current or future demand. • To ask competitors why a previous bid was so low, or to describe the basis for a previous bid.• To discuss profit levels.• To discuss controlling sales or allocating markets for any product.• To discuss future design or marketing strategies.• To discuss credit terms.• To discuss banning or otherwise restricting legitimate advertising by competitors.• To discuss allocating customers.• To discuss volumes.• To discuss any other subject likely to restrict competition.
Regarding your company’s and/or your competitors’ selection of their supplier companies, it is in particular forbidden:
• To disclose or discuss the identity of suppliers if this identity is a competitively sensitive information.• To discuss any boycotting of a company because of its pricing or distribution practices.• To discuss strategies or plans to award business or remove business from a specific company.• To discuss prices, margins, payment terms, volumes, markets, customers or marketing strategies of
suppliers with competitors.
Regarding your company’s and/or competitors’ trade secrets, it is forbidden:
• To discuss trade secrets or confidential information of your company or any other member
CHATHAM HOUSE RULES
• Participants attending the training may discuss the details of the discussion in the outside world, but may not discuss who attended or identify what a specific individual said
• Provides anonymity to speakers and encourages sharing of information;
• Used throughout the world;
• Allows people to speak as individuals, and to express views that may not be those of their organizations;
• Encourages free discussion
Please also keep in mind
AGENDA
Working & leaning together
09:00 – 10:00 General Introduction
• What is Sustainability?
• Drive Sustainability
• The local context vs global context
10:00 – 10:15 Coffee break
Participants form 2 groups Group A: Business Ethics & Social Sustainability
Group B: Environment and
Health & Safety
10:15 – 10:45 Introduction Break-out session
10:45 – 12:15 Improvement plan exercise: Identifying key local challenges
12:15 – 12:45 Improvement plan exercise: Root causes and actions
12:45 – 14:00 Lunch
14:00 – 15:45 Improvement plan exercise: Root causes and actions (cont.)
15:45 – 16:00 Coffee break
16:00 – 17:00 Improvement plan exercise: Budget, responsibilities and timeline
Participants regroup
17:00 – 17:30 Closing
TODAY: WHAT IS IT ABOUT?
Is about
• Drive Sustainability & the automotive
industry
• Individual OEMs
• Common group expectations / position • Individual OEM/ buyer expectations
• Common tools & activities
• SAQ,
• Trainings,
• Local networks
• Individual OEM actions
• Potential future common actions
Finding solutions
• Getting new ideas for improvements
• Learn from your peers
• Working for your company
improvement plan
Ticking a box
• Passing an audit
• Getting a diploma
Is NOT about
WHAT IS SUSTAINABILITY?
And why does it matter?
19th, 21st, 26th, 27th and 29th of November, 2019Deloitte São Paulo - Av. Chucri Zaidan 1240, 12º andar, Golden Tower. São Paulo, SP
Deloitte Campinas - Av. John Dalton 301, Techno Plaza Corporate, Prédio 2, bl. A e B. Campinas, SP
POLLING EXERCISE
Why does sustainability matter?
THE BUSINESS CHALLENGE
…meeting the expectations of sustainable sourcing
PROFITABILITY & COMPETITIVE ADVANTAGE
Timely delivery
Cost
Quality
EnvironmentEnvironment
Traditional
sourcing
Society Sustainable
sourcing
INCREASED EXPECTATIONS AND MONITORING
Commit to full due diligence of supply chain
Enhance transparency of entire supply chain
Environmental impact & circular models
Respect for human rights
Ensure decent working conditions
Implement safeguards for privacy and other rights
THE RISKS
The consequences of ignoring expectations
Legal action
Buyer
expectations
Government
expectations
Failure to meet …
Public
expectations
Quality
standards
Ignorance of CSR
risks
Loss of Business
Reputational damage
… may cause
THE OPPORTUNITIES
Supply chain sustainability is about opportunity!
Flextronics Case Study: Zhuhai plant, China
Automate overtime tracking system to prevent excessive
working hours
Upgrade working and health facilities/policies + set up
closed-loop process for preventing health & safety risk
Training programs to internalize principles of
empowerment, dignity and respect
Form a management council to regularly monitor and
evaluate CSR performance
Partner with community resources to provide employee
assistance programs and other support services
THE OPPORTUNITIES
Supply chain sustainability is about opportunity!
Flextronics Case Study: Zhuhai plant, China
Lower attrition ratehigh % of employees returning
after Chinese New Year
Zero accident rateDecreased below industry average of 2.0
Increased employee satisfaction
Flextronics awarded by BT
• Passing the audit
• Checking the boxes
Compliance
Risk
• Understanding root causes
• Seeking impact
Beyond compliance
• Partnership
• Competitive advantage
Innovation
Opportunity
TURNING RISK INTO OPPORTUNITIES
Mentality shift
THE BUSINESS CASE
Risk Efficiency
Innovation Relationships
• Prevent supply chain interruption
• Increase traceability and quality
• Enhance long-term reputation
• Reduce costs and resources
• Reduce environmental footprint
• Raise employee health, productivity
• Supplier-OEM cooperation
• Solutions to new customer demands
• Access new markets
• Culture of responsibility
• Lasting supply chain relationships
ABOUT DRIVE SUSTAINABILITY
Enhancing sustainability in the automotive industry
WHO WE ARE
THE AUTOMOTIVE PARTNERSHIP
Share experiences and information
Send a common
message to the
supply chains
Develop and apply common
tools and common projects
Partnership owned by
the automotive
companies, facilitated
by CSR Europe
Share a common
approach
Strict compliance with competition laws19th, 21st, 26th, 27th and 29th of November, 2019Deloitte São Paulo - Av. Chucri Zaidan 1240, 12º andar, Golden Tower. São Paulo, SPDeloitte Campinas - Av. John Dalton 301, Techno Plaza Corporate, Prédio 2, bl. A e B. Campinas, SP
The Automotive Partnership
OUR APPROACHDRIVE SUSTAINABILITY APPROACH
Common Screening
Self-Assessment
Questionnaire for suppliers
(SAQ)
3. Im
pa
ct
2. C
om
pli
an
ce
Common Risk
Assessment*
Common Strategy
Vision 2030
2030 Goals and Road Map
OEM Individual Integration
Long-term strategy
Supplier Code of Conduct
Common Requirements
• business impact
• involvement of buyers
• visibility at top
management level
Result Integration
e.g. Common audit
standard*
Further AssessmentInitial Risk Mapping
Common Guidance
Guiding Principles
Practical Guidance
Common Capacity BuildingSupplier trainings (at various tiers*)
(eLearning*, one-day training, knowledge assessment*)
Supplier Dialogue Events
Local networks
Common Leverage
Stakeholder and cross-sectorial exchange
Policy exchange and institutional influence*
Knowledge creation (e.g. studies)
1. D
ire
cti
on
Company supplier development Company institutional engagement and influence
EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES & MANAGEMENT SYSTEMS
IDENTIFY & ASSESS ADVERSE IMPACTS IN THE SUPPLY CHAIN MANAGE RISKS TRACK RESULTS
MANAGE RISKS and PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATE
= Alignment with OECD Due Diligence Guidance For Responsible Business Conduct Step 1 to 6
1
2 3 4
63
CO
MM
UN
ICA
TE HO
W IM
PA
CTS A
RE A
DD
RESSED
5
= currently OEM Individual Activities * = Future common activities / under development
THE GUIDING PRINCIPLES
A set of common baseline guidelines related to:
Human rights and working conditions
Environmental standards
Business Ethics
• Describe OEMs common expectations towards suppliers/sub-suppliers
• Complemented by OEMs individual set of codes and policies
THE GUIDING PRINCIPLES
• Child Labour
• Wages and Benefits
• Working Hours
• Forced Labour
• Freedom of
Association
• Health & Safety
• Harassment
• Non-Discrimination
Human rights
and working
conditions
• Air/Water Quality
• Emissions
• Natural Resources
Management
• Waste Reduction
• Responsible
Chemical
Management
Environment
• Responsible
sourcing
• Anti-Corruption
• Privacy
• Financial
responsibility/transpa
rency
• Fair Competition
Intellectual Property
• Economic Sanctions
Ethics
What do the Guiding Principles cover?
THE GUIDING PRINCIPLES
“ We endeavor to achieve excellence,
innovation and performance in a sustainable
manner. (…)
For this reason, we are working together to
attain the highest standard in
(1) business integrity and in the
(2) social and
(3) environmental performance of our
supply chain”.
Success depends on the commitment
of our entire global supply chain.
THE PRACTICAL GUIDANCE
• Complements Guiding Principles
• Practical explanations and examples
• How to comply
BUT does not represent the only way
THE PRACTICAL GUIDANCE
Compliance with laws
Obligation to comply
with highest standards
Guiding Principles
demand a preventive
approach
2014 2015 2016 20172018/2019
GLOBAL Reach
• Alignment of
Guiding
Principles
with
Automotive
Industry
Action
Group
(AIAG)
• German
automotive
association
adopts
GPs
• Set up
local
network in
Turkey
• Start
setting-up
a local
group in
China
• Launch of
DS local
group in
China
• Common
revision of
GPs with
AIAG
• Trainings in 9 countries:Spain, Hungary, Thailand China, Mexico, Poland, Brazil, Malaysia and South Africa
19th, 21st, 26th, 27th and 29th of November, 2019Deloitte São Paulo - Av. Chucri Zaidan 1240, 12º andar, Golden Tower. São Paulo, SPDeloitte Campinas - Av. John Dalton 301, Techno Plaza Corporate, Prédio 2, bl. A e B. Campinas, SP
GLOBAL VS LOCAL
Sustainability in Brazil
THE GLOBAL CONTEXTSustainability trends in the global automotive industry
GHG emissions
& energy use
Product lifecycle
Sustainable
sourcing
Market
conditions
Data security
Vehicle changes
CO2 mitigation
technologies
Re-use and refurbishment
of parts
Low energy and emission
technologies
Sustainable materials
Increasing pressure on
compliance
City oriented vehicles
Technologies for recycling
Secure resources
CSR in the supply chain
Attention to sociopolitical
situations (instabilities)
Security and privacy of
systems and processes
Increased air quality
Reduction of solid waste
Lower emissions of GHG
Reduced risks in the
supply chain
Changes in consumption
habits
Circular economy
Better control of suppliers
“Green economy”
Better relationship with
local stakeholders
Better reputation
Electric, autonomous cars
DRIVERS TRENDS IMPACTS
THE GLOBAL CONTEXTGlobal maturity level in Sustainability
Country Rank Index
France 4 81.5
Germany 6 81.1
Czech Republic 7 80.7
United Kingdom 13 79.4
Japan 15 78.9
South Korea 18 78.3
Canada 20 77.9
Spain 21 77.8
Hungary 25 76.9
Slovakia 27 76.2
Poland 29 75.9
Italy 30 75.8
USA 35 74.5
China 39 73.2
Thailand 40 73
Romania 42 72.7
Russia 55 70.9
Brazil 57 70.6
Iran 58 70.5
Malaysia 68 69.6
Morocco 72 69.1
Mexico 78 68.5
Turkey 79 68.5
Indonesia 102 64.2
India 115 61.1
Top 25 passenger car producing countries in 2018 x SDG Sustainability Index
Sources:
- International Organization of Motor Vehicle Manufacturers, available at http://www.oica.net/category/production-statistics/2018-
statistics/, Accessed on August 28th 2019.
- Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. (2019): Sustainable Development Report 2019. New York:
Bertelsmann Stiftung and Sustainable Development Solutions Network (SDSN).
Scores of the 25 top passenger car
producing countries per region/block
East and South Asia
Eastern Europe, Middle East,
North Africa and Brazil
OECD members
THE LOCAL CONTEXT
Expectations from authorities
• Reduction in governmental attention to sustainability issues
• Concerns on economy development
• Changes to the normative regulations on occupational health and safety
• Anticorruption and bribery
• Incentives to improve vehicles
• GHG emissions reduction
Law nº 8.723 de 28/10/1993
• Economic, safer cars
Law nº 12.715 de 17/09/2012
• Most concerns coming from civil society
Focus on the product (vehicles) over the value-chain
THE LOCAL CONTEXT
Expectations from civil society and media:
• NGOs acting in different areas, such as
• Children rights
• Forest protection
• Sustainable businessStudy sector: http://www.siteuniethos.org.br/wp-content/uploads/2013/11/1_UNIETHOS_auto_bx.pdf
• Media focuses mainly on technological advances of vehicles
• Advances in value chain and production processes not well reported
THE LOCAL CONTEXT
Local sustainability focus topics
Environment
• Energy and emissions
• Wastemanagement
Health & Safety
• Occupationalsafety
• Changes in relatedregulatorynorms
Business ethics
• Anticorruptionand bribery
• Data disclosure
Human Rights & WorkingConditions
• Diversity and inclusion
• Harrassmentand discrimination
THE LOCAL CONTEXTAutomotive industry maturity level to meet these expectations
Low High
▪ Automotive industry very reactive to requirements of regulatory agencies
▪ Moderate management of its supply chain
▪ Focus on the vehicles
▪ Little concern on value chain and production process
▪ Sustainability issues approaching manly environmental issues
▪ Ethics and human rights issues still in need of closer attention
Room to improve
A CLOSER LOOK
Understanding the topic & biggest challenges
AGENDA
Moving on to the next part
Participants form 2
groups
Group A: Business
Ethics & Social
Sustainability
Group B: Environment
and Health & Safety
10:15 – 10:45 Introduction Break-out session
10:45 – 12:15 Improvement plan exercise: Identifying key local challenges
12:15 – 12:45 Improvement plan exercise: Root causes and actions
12:45 – 14:00 Lunch
14:00 – 15:45 Improvement plan exercise: Root causes and actions (cont.)
15:45 – 16:00 Coffee break
16:00 – 17:00 Improvement plan exercise: Budget, responsibilities and timeline
Participants regroup
17:00 – 17:30 Closing
BREAK-OUT SESSIONS
CLOSING
Summary and next steps
19th, 21st, 26th, 27th and 29th of November, 2019Deloitte São Paulo - Av. Chucri Zaidan 1240, 12º andar, Golden Tower. São Paulo, SP
Deloitte Campinas - Av. John Dalton 301, Techno Plaza Corporate, Prédio 2, bl. A e B. Campinas, SP
SUMMARY OF THE DAY
• Which key challenges and actions did you identify?
• How do you plan to implement lessons learned in your company?
Any other comments, feedback or reflections from today?
Findings from group discussion
WHAT’S NEXT?
• Share improvement plan and new ideas with colleagues
• Improve your company’s performance based on today’s learnings
For You…
• Follow up email with all materials
• Improve future actions based on your feedback
…For Drive Sustainability
ADDITIONAL RESOURCES
• Drive Sustainability website
• AIAG Supply Chain Sustainability eLearning
• Econsense Training Video and Handbook: Human Rights in the Supply Chain
• UN Global Compact website
• Global Reporting Initiative: About Sustainability Reporting
• GAN Business Anti-Corruption Portal
• CSR Europe Webinars and business tools and practices
EVALUATION FORMPlease complete & hand it to staff to receive your certificate
THANK YOU