Case study: How General Motors promotes supply chain compliance
General Motors Company (GM) is a leading global automotive manufacturing company headquartered in Detroit, Michigan, United States. GM places high expectations of excellence and ethical conduct on its suppliers Tweet This!, who are expected to act in a way that is consistent with its principles and values.
This case study is based on the 2020 Sustainability Report by GM, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
GM is committed to forming and nurturing exemplary supplier partnerships built on integrity and shared values, working diligently to integrate sustainability into all aspects of its supply chain. In order to promote supply chain compliance GM took action to:
- implement a Supplier Code of Conduct and purchase contract Terms and Conditions
- conduct supplier surveys
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With this case study you will see:
- Which are the most important impacts (material issues) GM has identified;
- How GM proceeded with stakeholder engagement, and
- What actions were taken by GM to promote supply chain compliance
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What are the material issues the company has identified?
In its 2020 Sustainability Report GM identified a range of material issues, such as financial performance and resiliency, climate change management, workplace safety, diversity, equality and inclusion. Among these, promoting supply chain compliance stands out as a key material issue for GM.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups GM engages with:
| Stakeholder Group | Method of engagement |
| Customers | · Participating in customer satisfaction surveys to understand what vehicle attributes customers value · Partnering to expand EV charging infrastructure · Educating customers on the benefits of EVs |
| Investors and analysts | · Publishing an annual Sustainability Report · Holding focused conversations and briefings to put data in context · Reporting to frameworks including SASB and TCFD |
| Employees | · Recruiting talent at colleges and universities, and with professionals already in the workplace · Adhering to a responsible employer philosophy, which includes paying a living wage and offering competitive benefits · Conducting a global Workplace of Choice survey · Holding regular conversations with labour partners such as the United Auto Workers |
| Suppliers
| · Participating with organisations that help foster responsible supply chains industrywide, such as: · Establishing a Sustainability Subcommittee of the GM Supplier Business Council · Automotive Industry Action Group (AIAG) · Suppliers Partnership for the Environment · International Automotive Task Force · Assessing risks related to mineral sourcing through engagement with the Responsible Minerals Initiative · CDP Supply Chain Survey · Outreach through symposia, webinars and other events on sustainability-related topics |
| Dealers
| · Using Standards for Excellence and Essential Brand Elements programmes to reward dealers · Maintaining the Mark of Excellence programme to recognise high-achieving dealers · Engaging dealers through GM’s national dealer council |
| Communities | · Volunteering for STEM education initiatives worldwide · Sponsoring innovation challenges related to STEM subjects, such as MIT-SOLVE · Working with academic and nonprofit partners to educate community members on the importance of driving safety and seatbelt usage · Improving quality of life in communities where GM operates through volunteerism and donations |
| Governments | · Engaging on fuel economy standards with the U.S. Environmental Protection Agency (EPA), the National Highway Traffic Safety Administration (NHTSA) and California Air Resources Board · Continued commitment to engaging in innovative city and mobility initiatives such as the Smart Cities Challenge and others, to tackle congestion and other transportation challenges |
| NGOs | · Partnering on issues such as resource conservation, climate change, human rights, diversity and vehicle safety · Sharing best practices with other companies that have made renewable energy commitments through RE100 |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics GM engaged with its stakeholders through two online surveys.
What actions were taken by GM to promote supply chain compliance?
In its 2020 Sustainability Report GM reports that it took the following actions for promoting supply chain compliance:
- Implementing a Supplier Code of Conduct and purchase contract Terms and Conditions
- GM’s Supplier Code of Conduct and purchase contract Terms and Conditions set forth expectations for ethical social, business and environmentally responsible practices. By choosing to do business with GM, suppliers accept its purchase contract Terms and Conditions, which clearly state GM’s prohibition against any use of child labour or any other form of forced or involuntary labour, abusive treatment of employees or corrupt business practices in the supplying of goods and services to GM. Furthermore, GM’s contracts lay out expectations for lawful compliance with data protection and privacy, wages, hours and conditions of employment, subcontractor selection, antidiscrimination, and occupational health and safety. GM also expects suppliers to cascade a Code of Conduct in their own value chain. When it becomes aware of violations or alleged violations to its Code of Conduct, GM is committed to responding swiftly and appropriately, up to and including the termination of business relationships. Suppliers must attest to compliance with GM’s Terms and Conditions, Supplier Code of Conduct and all applicable laws and regulations.
- Conducting compliance surveys
- GM conducts annual verification surveys to validate adherence to suppliers’ obligations, and noncompliance is addressed directly with suppliers through its Supplier Champion process. In 2019, just under 600 suppliers were included in the survey. In 2020, participation increased, and survey responses were collected from over 3,000 suppliers, including all suppliers for production, logistics, and customer care and aftersales support. In addition, suppliers are asked to confirm via the survey that they have:
- Engaged in company business practices consistent with GM’s Supplier Code of Conduct or a similar code of conduct published by their company.
- Adopted their own code of conduct or similar document expressing a commitment to conducting business ethically, honestly and in compliance with all applicable laws.
- Shared GM’s Supplier Code of Conduct or a similar code of conduct published by their company with their suppliers.
- Implemented a safety policy that is consistent with the principles set forth in GM’s Supplier Code of Conduct.
- Supplier responses to the survey are reviewed and escalated, if required, to remediate risk. Additionally, GM requires its Tier I suppliers across the globe to mandate that their direct suppliers meet in-country environmental and safety standards, as well as quality standards. The foundation of this process is GM’s Built in Quality System (BIQS), consisting of IATF 16949 certification and BIQS Metrics requirements. This foundation allows GM to cascade quality standards through tiers of its supply base. GM aims for all Tier I suppliers to achieve BIQS Level V, the highest level possible. BIQS compliance also encourages these Tier I suppliers to uphold the same quality standards within their own supply bases, since issues here can ultimately affect their quality performance. To support monitoring, suppliers’ IATF 16949 certification status has recently been added to GM’s Sourceability Report, which is a compilation of metrics used to inform sourcing decisions and supplier engagement.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
2) Disclosure 414-1 New suppliers that were screened using social criteria
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
This case study is based on published information by GM, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:
https://www.gmsustainability.com/_pdf/resources-and-downloads/GM_2020_SR.pdf
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