Case study: How Nissan promotes sustainability across its supply chain

What are the material issues the company has identified?

In its 2021 Sustainability Report Nissan identified a range of material issues, such as climate change, occupational health and safety, air quality, resource dependency, learning and development. Among these, promoting sustainability across its supply chain stands out as a key material issue for Nissan.

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:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

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 Nissan engages with:   

To identify and prioritise material topics Nissan engaged with its stakeholders through the following channels:

What actions were taken by Nissan to promote sustainability across its supply chain?

In its 2021 Sustainability Report Nissan reports that it took the following actions for promoting sustainability across its supply chain:

• Implementing CSR Guidelines for Suppliers
• To effectively implement sustainability practices worldwide, Renault and Nissan revised the Renault-Nissan CSR Guidelines for Suppliers in December 2015. Renault and Nissan distributed the revised guidelines to all their suppliers and also asked suppliers to share the revised guidelines with their own business partners to ensure they permeate throughout the supply chain. Renault and Nissan drew up the first edition of the guidelines for distribution in 2010 with reference to the CSR guidelines of the Japan Automobile Manufacturers Association, Inc. Key revisions and clarifications in the 2015 edition included, as a response to new laws and ordinances: (1) updating the procurement policy to include responsible mineral procurement and the elimination of antisocial forces based on new Japanese governmental guidelines and regulations; (2) requiring a shared commitment to sustainability activities with suppliers at the time the guidelines are distributed and (3) beginning third-party assessment of supplier sustainability activities as an Alliance initiative from fiscal 2016. As part of efforts to promote sustainability practices among business partners in emerging countries, the revised guidelines were published in Chinese as well as English and Japanese. To help suppliers review their corporate activities from a sustainability perspective and take sustainability actions, the guidelines explain expected initiatives in 26 categories across the following five areas:
  • Compliance: Complying with laws, preventing corruption, etc.
  • Safety and Quality: Ensuring the safety and quality of products and services, etc.
  • Human Rights and Labour: Prohibition of child labour and forced labour, complying with working hours and remuneration laws, etc.
  • Environment: Environmental management, reducing greenhouse gas emission and industrial waste volumes, and managing chemical substances, etc.
  • Information Disclosure: Open and impartial communication with stakeholders, etc.

• In addition, suppliers are requested to undergo assessments by third parties. The guidelines mandate that suppliers comply with laws and regulations. If suppliers are found to be in a state of non-compliance, the guidelines prescribe required responses, such as filing a report immediately, conducting an investigation and formulating corrective measures. In the case of a non- compliance incident, Nissan will take firm action based on its regulations and do everything necessary to prevent a recurrence. In fiscal 2020 no human rights violations, such as discrimination, occurred, and no supplier was found to be at serious risk of forced labour or child labour.

• Promoting environmental sustainability
• Nissan has shared its environmental philosophy and environmental action plan with suppliers since the mid-1990s. To improve environmental performance throughout the supply chain jointly with suppliers, Nissan first published the Nissan Green Purchasing Guidelines in 2001 and has actively promoted environmental activities at suppliers in line with these guidelines since then. After Nissan and Renault integrated their technical standards for management of chemical substances in fiscal 2016, a revised version of the guidelines was published in January 2017. Furthermore,
in August 2018, based on the midterm environmental action plan, Nissan Green Program 2022 (NGP2022), Nissan revised the content of the guidelines, adding requests that suppliers undertake their own environmental activities. Additionally, in May 2019, in order to strengthen management of environment-impacting substances, Nissan added requirements dealing with supplier self-diagnosis of environment-impacting substance management and related topics, which all suppliers are asked to follow. The Nissan Green Purchasing Guidelines are part of the detailed explanation in the environment-related section of the Renault-Nissan CSR Guidelines for Suppliers. Environmental activities undertaken with suppliers involve the core components of compliance with environmental regulations and Nissan’s basic environmental principles, along with activities to reduce the burden on the environment. As for the former, in response to global trends in such regulations as the European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) Regulation and the European Reusability/Recyclability/ Recoverability (RRR) Directive, Nissan has added new items to the list of banned substances and globally expanded component data management. When selecting suppliers for new models, Nissan checks their management of and activities regarding environmentally hazardous substances, informing them of specific actions needed to comply with the REACH Regulation and requesting their compliance.  Based on the NGP2022, Nissan holds annual environmental briefing sessions and has since fiscal 2012 conducted surveys to ascertain CO2 emissions, water usage, waste production and other data related to its burden on
the environment. To further enhance its activities in this area, in fiscal 2014 Nissan adopted the supply chain programme run by CDP, an international environmental NPO that manages a global system for disclosing corporations’ environmental impact and strategies. In fiscal 2020, based on these surveys, Nissan continued encouraging some suppliers to improve their environmental activities.

• Evaluating, monitoring, and auditing suppliers’ sustainability practices
• Nissan has been confirming suppliers’ acceptance of the Renault-Nissan CSR Guidelines for Suppliers and check their environmental management systems and their willingness to advance environmental activities with it at the time of supplier selection. Among newly selected suppliers in fiscal 2020, 100% of them met both Nissan’s social standards and basic environmental principles. In 2016 the Renault-Nissan alliance began third-party assessment of suppliers’ sustainability activities to raise standards through mutual confirmation. When results do not meet Alliance standards, suppliers are asked to draw up plans for improvement. Nissan then monitors their implementation. In fiscal 2020, Nissan held a seminar for suppliers, where
a rating organisation spoke to them directly on how to answer assessment questions and formulate improvement plans. By now, more than 90% of Nissan’s purchase demands are covered by a third-party assessment. Nissan also conducts sustainability training in its purchasing department to ensure that employees conduct checks of suppliers’ sustainability activities in their daily work. If there are issues with the supply of parts and materials, they may lead to problems not only for Nissan’s production but also supply chain as a whole. Nissan therefore positioned the following measures as part of sustainability activities: (1) confirming supply risks
under normal circumstances; (2) following up annually on quality, cost, delivery, development, management, sustainability, and risk (QCDDMSR) performance and (3) working with suppliers to craft response plans for natural disasters to ensure production continuity or early restoration of capacity. Nissan monitors compliance from the perspective of supplier management, constantly assessing the situation at each supplier based on a range of factors. When high risk is identified, Nissan works with the supplier to rapidly draft and implement countermeasures. In fiscal 2020 there were no suppliers whose compliance was problematic, and no supplier contract was terminated for such a reason.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken

3) Disclosure 414-1 New suppliers that were screened using social criteria

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

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 Nissan, 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.nissan-global.com/EN/DOCUMENT/PDF/SR/2021/SR21_E_All.pdf

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