Sustainability at core of auto makers, suppliers future

When the stakes are high enough, when the circumstances demand, you shoot for the moon.

The way Dane Parker sees it, this is one of those times to set big goals and aim as high as possible. To protect the planet, to do what's best for the work force at all levels of the supply chain and to ensure that businesses are poised to thrive for decades to come, companies may need to establish a sustainability moonshot.

"In reading books about (NASA's moonshot) and watching things about it, the excitement and the energy and the passion that that 15-year effort unleashed was amazing," Parker, GM's chief sustainability officer, said during a presentation that was part of the Center for Automotive Research's Management Briefing Seminars. "If we can do that with bold (sustainability) goals, then we can look back at this time period with that same amount of pride that others look back at that time period."

For GM, those goals in the areas of safety and environment boil down to a whole bunch of zeroes: Zero emissions, zero crashes, zero congestion.

"That is a bit of a moonshot, and things like autonomous, electric vehicles are going to be a part of that as we go forward," Parker said. "Right now, electric vehicles are a big part of that, and we can build road maps within that moonshot to get us there step by step by step."

Sustainability is a tricky term. It evokes images of environmental responsibility and reducing carbon footprints in manufacturing, and those certainly are parts of any company's overall sustainability vision, Gulay Serhatkulu, senior vice president of performance materials in North America for BASF Corp., said in the MBS session. But sustainability also touches on areas such as profit, procurement and maintaining a talented, skilled work force.

"Studies show that when companies have future and sustainable programs, the returns will be higher," Serhatkulu said. "So, they are also in this for the money, let's be honest here. We want sustainability that has three parts, and profit is one of them. Without profit we can't be established as a sustainable program."

Serhatkulu said the world's largest investors are making strategic decisions based on factors relating to sustainability. She pointed to a recent letter published by BlackRock CEO Laurence Fink, in which he pushed companies to not only set sustainability targets but remain open and transparent about how and when they are achieving those goals.

Without a doubt, Parker said, those are the areas that investors are asking about.

"When I first got involved in these topics 20 years ago, there were more specialty or niche investors that were interested in asking questions" about sustainability, Parker said, noting that he now speaks with some of the largest investors around the country and the world. "That momentum has been really, really impressive to see. More and more mainstream investors view (sustainability) as mainstream."

When addressing sustainability, companies need to think beyond their own business and look to the entire supply chain. Every partner and every supplier needs to be transparent about their operations, working toward a shared vision of corporate responsibility similar to your company, Serhatkulu said.

"We have financial and non-financial targets. One of the non-financial targets is related to procurement," Serhatkulu said. "So, working with our partners, we expect them to also be responsible. So, what we do is we work with our suppliers in open and transparent ways to realize the mutual long-term benefits.

"If you look at the things we are dealing (with) in the world: the human rights, labor, environmental concerns, anti-corruption, child labor—I mean, these are bigger than one company alone can handle," she said. "I think the groups and the people that are working in the value chain need to collaborate together to be sure we actually work with the right partners."

And just as the sourcing matters for sustainable products throughout your supply chain matters, so does the lifecycle of the products you manufacture.

GM recognizes that 95 percent of an automobile's lifecycle emissions are in "tailpipe emissions" and the content makeup of the vehicle. That means that the auto maker needs to have aggressive product-related goals. To this end, it aims to have 50 percent sustainable content within the decade.

"We set this target of having a 50 percent sustainable content by 2030 because we realize that is how we are going to move the needle together in this," Parker said. "(We need to) look at the actual content of the product and how can we innovate around that?"

Perhaps the most efficient innovations, he went on to say, will be those that connect the supply chain to a product's end life.

Parker pointed to the fact that as much as 85 percent of a vehicle's content can be recycled, and it's a process that the auto industry has embraced for years. The key, he said, is finding the ways to make the most of that process.

"One part of that circularity is enabled. We need to enable the front end of that so if we can turn more of that back into the supply chain and bend that back around to use and create more sustainable content as we start. We have the chance to take a major, major step toward circularity."

There are a number of reasons companies would be taking small steps, giant leaps and even a moonshot or two when it comes sustainability. Companies need to take these steps because it is expected—not just from investors, but from consumers and from the next generation of professionals.

"What is driving much of the commitment you are seeing from companies is a combination of a shift in the perceptions and the desires of their key constituents," Parker said.

"The generation that is joining the work force now, in the last few years and in the coming few years, is more attuned to sustainability," Parker said. "Whether it's the issues you talked about in racial injustice or it's the environment, this is something that is meaningful to them."