Top automakers release new supply chain standards

The automakers pledge to better oversee working conditions, human rights and ethics

Supply chain management can have a significant impact on public reputation, and it seems the world’s largest automakers aren’t looking to take any risks.

14 of the world’s largest automakers released the Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain on April 1, pledging to better oversee working conditions, human rights and ethics within the supply chain. The companies have agreed to a set of best practices that each of the automakers will aim to follow.

“The automotive industry supply chain has a high degree of complexity, therefore we believe in the benefits of a common approach and message,” the guidelines say. “The following guidelines clearly describe our minimum expectations towards business ethics, working conditions, human rights, and environmental leadership, for our suppliers as well as their subcontractors and suppliers. We expect that suppliers will uphold these standards and cascade them down their supply chain.”

Among the principles stated are the commitment to effective environmental protection, banning the use of child labor, competitive compensation and benefits, and a “safe and healthy” working environment. The guidelines also address corruption and say the companies should operate “honestly and equitably” in accordance with local law.

The 14 companies that agreed to follow the guidelines are BMW Group, Chrysler Group LLC, Daimler AG, Fiat SpA., Ford Motor Co., General Motors Co., Honda Motor Co., Jaguar/Land Rover, PSA Peugeot Citroen, Scania, Toyota Motor Corp., Volkswagen Group, Volvo Cars and Volvo Group. The guidelines were drafted by corporate responsibility associations AIAG and the European Business Network for Corporate Social Responsibility.

“Automakers and suppliers of all sizes face heightened compliance and extended responsibility expectations, from materials sourcing, handling, reporting and disposal requirements to improving factory working conditions, so it’s imperative that we work together to develop, socialize and deploy industry best practices on a range of issues for our global supply chains,” J. Scot Sharland, executive director at AIAG, said in a release, per The New York Times.

In-house counsel at automakers are feeling enough pressure as it is, such as Toyota’s $1.2 billion sudden acceleration settlement and General Motors’ ignition switch issues. However, instituting strong industry standards for supply chain management is an easy way to ensure more preventable issues do not arise.

 

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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