Environment

  • GHG Emissions
  • Air Quality
  • Energy Management
  • Water & Wastewater Management
  • Waste & Hazardous Materials Management
  • Ecological Impacts

Business Model & Innovation

Leadership & Governance

  • Business Ethics
  • Competitive Behavior
  • Management of the Legal & Regulatory Environment
  • Critical Incident Risk Management
  • Systemic Risk Management
General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Automobiles

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Product Quality & Safety

Product Safety

Driving is a risky activity, as factors such as distracted driving, speeding, drunk driving, and dangerous weather conditions can lead to accidents that expose drivers, passengers, and bystanders to possible injuries and deaths. Accidents can also be caused by defective vehicles, and failure to detect defects before vehicles are sold can have significant financial repercussions for auto manufacturers. Defective vehicles sold in many countries that do not meet safety requirements must be recalled and repaired or replaced at the manufacturer’s cost. Recalls can result in reputational damage, which can reduce revenues and growth potential while increasing a company’s risk profile and thus its cost of capital. Ensuring vehicle safety and responding in a timely manner when defects are identified can protect companies from regulatory action or customer lawsuits, which may result in significant costs that can erode industry margins. Through effective management of the issue, companies can enhance their brand value and drive higher sales over the long term.

Labor Practices

Labor Practices

Many workers in the Automobiles industry are covered under collective bargaining agreements that cover fair wages, safe working conditions, and freedom of association, which are among basic worker rights. Meanwhile, due to the global nature of the industry, auto companies may also operate in countries where worker rights are not adequately protected. Effective management of, and communication regarding, issues such as worker pay and working conditions can prevent conflicts with workers that could lead to extended periods of strikes, which can slow or shut down manufacturing, reduce revenues, and raise operational risk. Auto manufacturers that manage workers in a way that protects worker rights may face higher labor costs in the short term, but may be better positioned to ensure the long-term financial sustainability of their operations by enhancing worker productivity.

Product Design & Lifecycle Management

Fuel Economy & Use-phase Emissions

The combustion of petroleum-based fuels by motor vehicles accounts for a significant share of greenhouse gas (GHG) emissions that contribute to global climate change. It also generates local air pollutants such as nitrogen oxides (NOx), volatile organic compounds (VOCs), and particulate matter (PM), which can threaten human health and the environment. In this context, vehicle emissions are increasingly of concern to consumers and regulators around the world. While use-phase emissions are downstream from auto manufacturers, regulations often focus on auto manufacturers to help reduce these emissions, such as through fuel economy standards. More stringent emissions standards and changing consumer demands are driving the expansion of markets for electric vehicles and hybrids, as well as for conventional vehicles with high fuel efficiency. Moreover, manufacturers are innovating by designing vehicles made with lighter-weight materials to improve fuel efficiency. Companies that can meet current fuel-efficiency and emissions standards and continue to innovate to meet or exceed future regulatory standards in different markets are likely to strengthen their competitive position and expand their market share, while mitigating the risk of reduced demand for conventional vehicles.

Materials Sourcing & Efficiency

Materials Sourcing

Companies in the Automobiles industry commonly rely on rare earth metals and other critical materials as key inputs. Many of these inputs have few or no available substitutes and are often sourced from deposits concentrated in a few countries, many of which are subject to geopolitical uncertainty. Other sustainability impacts related to climate change, land use, resource scarcity, and conflict in regions where the industry’s supply chain operates are also increasingly shaping the industry’s ability to source materials. Additionally, increased competition for these materials due to growing global demand from other sectors can result in price increases and supply risks. These materials play a crucial role in clean energy technologies, such as electric and hybrid vehicles. As regulators aim to reduce greenhouse gas emissions and consumer demand grows for more fuel-efficient vehicles, the share of hybrids and zero emission vehicles (ZEVs) produced by the Automobiles industry is likely to continue to increase in the future. Companies that are able to limit the use of critical materials, secure their sourcing, and develop alternatives will protect themselves from supply disruptions and volatile input prices, which may impact their margins, risk profile and cost of capital.

Materials Efficiency & Recycling

Auto manufacturing involves the use of significant amounts of materials (including steel, iron, aluminum, and plastics) and can generate substantial amounts of waste (including scrap metal, paint sludge, and shipping materials). As the rate of vehicle ownership expands globally and millions of vehicles reach the end of their useful lives every year, the lifecycle environmental impacts of automobiles are increasing. Automobile companies can use design innovation as well as process and technological improvements to mitigate these impacts and achieve material financial benefits. Companies that innovate to improve materials efficiency in their production processes, including reducing waste and reusing or recycling waste and scrapped vehicles, can contribute to lowering the lifecycle environmental impacts of vehicles and the strain on natural resources from the production of new materials. Through such innovation, companies can achieve cost savings by lowering input costs and protect themselves from potential regulatory fines or penalties. They can also protect themselves from fluctuations in the prices and availability of key inputs into their production process that may arise from resource scarcity.

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