audi faurecia tesla_agc_final

Sustainability in Supply Chain ManagementIdentification of similarities and differences within the sustainability structures of Audi AG and Faurecia S.A.

Anette Odersky & Jan Groschopp Sashank Nepal & Mahesh Devarala December 2015

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1. Outline

2. Sustainability aspects published by companies

3. Identification of similarities and differences within the sustainability structures

of Audi AG and Faurecia S.A.3.1 Sources of both companies for the comparison of sustainability aspects

3.2 Comparison of the Code of Conduct (Audi AG) and Code of Ethics (Faurecia S.A.)

3.3 Comparison of the Supplier Code of Conduct (Audi AG/ VW) and Code of Sourcing (Faurecia S.A.)

4. Conclusion of the Comparison4.1 Code of Conduct (Audi AG) and Code of Ethics (Faurecia S.A.)

4.2 Supplier Code of Conduct (Audi AG/ VW) and Code of Sourcing (Faurecia S.A.)

5. Prospect

6. Sustainability aspects of Tesla Motors6.1 Economic Sustainability aspects of Tesla

6.2 Environmental Sustainability aspects of Tesla

6.3 Social Sustainability aspects of Tesla

6.4 Code of Conduct – Tesla Motors

7. Sustainability aspects of AGC Automotive7.1 Economic Sustainability aspects of AGC Auto

7.2 Environmental Sustainability aspects of AGC Auto

7.3 Social Sustainability aspects of AGC Auto

8. Sources

1. Outline

Anette Odersky & Jan Groschopp

Sashank Nepal & Mahesh Devarala

December 2015

Fußzeile auf Masterfolie eingeben3

2. Sustainability aspects published by companies

The three dimensions of the Triple Bottom Line form the basis

for sustainable actingCode of Conduct / Ethics

The Code of Conduct/ Ethics is a definition of rules and guidelines set by a group or organization for internal and external business relations.

Economic

Social

Environmental

Supplier Code of Conduct/ Code of SourcingIn a near future the sustainability performance of OEM suppliers will become more important. The Supplier Code of Conduct/ Code of Sourcing is a definition of rules and guidelines set by a group or organization for their suppliers.

Anette Odersky December 2015


3. Identification of similarities and differences within the sustainability structures of Audi AG and Faurecia S.A.

Audi AG Faurecia S.A.

Supplier Code of Conduct

Supplier Code of Sourcing

Code of EthicsCode of ConductInternal policies

External requirements

for suppliers

3.1 Sources of both companies for the comparison of sustainability aspects



3.2 Comparison of the Code of Conduct (Audi AG) and Code Of Ethics (Faurecia S.A)

Social aspects Audi AG Faurecia S.A. Acting in accordance with the applicable requirements of the ILO ✓ ✓

Child labor is prohibited ✓ ✓Equal treatment for ethnicity, skin color, gender, disability, ideology, faith, nationality, sexual orientation, social background, or political conviction

✓ ✓

No discrimination ✓ ✓Right to form unions/associations and labor representations ✓ ✓Providing occupational safety and health protection ✓ ✓

Elimination of forced labour ✓ ✓

Global Compact ✓ ✓




Social aspects Audi AG Faurecia S.A.

Insertion and development of training ✗ ✓

Respect for the law / regulations ✗ ✓Professional development and employability ✗ ✓Freedom of expression and social dialogue ✗ ✓Remuneration and benefits paid must at least be the minimum national legal standard

✓ ✗





Environmental aspects Audi AG Faurecia S.A. Reduce waste and polluting products, conserve natural resources and recycle material

✗ ✓

Limit energy consumption, reduce greenhouse gases ✗ ✓Implement technology capable of reducing polluting emissions ✗ ✓





Social aspects expected to be fulfilled by suppliers Audi AG Faurecia S.A.

Freedom of association (trade unions and employee representations) ✓ ✓No discrimination (employees are chosen based on their qualifications) ✓ ✓

No forced labor (not bonded and involuntarily) ✓ ✓No child labor (minimum age according to national regulations) ✓ ✓Compensation & Benefits (based on legal requirements ensuring an appropriate standard of living)

✓ ✓

Working hours (according to ILO and national legal standards) ✓ ✓Occupational health and safety (according to national standards for safe and hygienic work conditions)

✓ ✓


3.3 Comparison of the Supplier Code of Conduct (Audi AG&VW) and Code Of Sourcing (Faurecia S.A)

Jan Groschopp December 2015


Economical aspects expected to be fulfilled by suppliers Audi AG Faurecia S.A.

Any kind of corrupt action or behavior causing damage to the company is strictly prohibited ✓ ✓Personal responsibility for ensuring a fair and genuine competition in compliance with competition and trust laws(fair business practices)

✓ ✓





Environmental aspects expected to be fulfilled by suppliers Audi AG Faurecia S.A.

Creation, implementation and application of environmental management systems for all suppliers´ production sites (laws/ regulations)

✓ ✓

Main suppliers should be certified with an environmental management system in accordance with international standards such as ISO 14001 or EMAS

✓* ✓*

Active measurement and dealing with environmental challenges, e.g. the development and market entry of environmental friendly technologies

✓ ✓

Reduction of raw material and energy consumption ✓ ✓Expansion of reusable materials and recycling activities as well as the use of renewable energy ✓ ✓Striving to minimize the environmental impact of the suppliers´ products during the whole life cycle, e.g. avoidance of waste

✓ ✓

New technologies to reduce CO2 emissions ✓ ✓

*For detailed information, please see the conclusion*





Environmental aspects expected to be fulfilled by suppliers Audi AG Faurecia S.A.

Logistic strategies that minimize environmental impacts ✓ ✓Avoiding damage to the environment and the health of employees ✓ ✗Training employees with regards to the environmental protection ✓ ✗Purchased products must not contain any material or substance prohibited by the legislation or regulations applicable in the suppliers’ countries

✗ ✓

Suppliers must address the European REACH procedures or national equivalents such as the US TSCA (Toxic Substances Control Act)

✗ ✓

Disclosure agreements on the use of certain substances and materials for regulations compliance purpose ✗ ✓





4. Conclusion of the comparison

4.1 Code of Conduct (Audi AG) and Code of Ethics (Faurecia S.A.)

Similarities

• A lot of social aspects are similar, for example the regulations for prohibited discrimination, child labor or forced labor• Both companies are guided by the ILO’s prescriptions and also use the Global Compact as their basis

Differences

• Faurecia has some extra ethical aspects in its Code of Ethics: It has implemented a note about insertion and development of training for kljlltheir employees as well as the respect for the law and other regulations. Furthermore the topic about freedom of expression & social dialogue and klillprofessional development and employability is enclosed• Audi has added regulations for the remuneration of their employees. This regulation of remuneration must at least fulfill the country’s standard• One interesting fact is, that Audi only has social aspects in its Code of Conduct

(environmental and economic are not included)



Similarities

• All social and economical requirements to suppliers are similar, especially regulations regarding discrimination, corrupt action as well as child & forced labor• Similar environmental requirements for suppliers have been identified too, for example the implementation of environmental management systems or the reduction of raw material and energy consumption

Differences

• While Audi is expecting its main suppliers to be certified under ISO 14001 and/ or EMAS, Faurecia is looking for an ISO 14001 or equal certification for all suppliers

• The importance of the environmental awareness of the supplier’s employees is emphasized by Audi in its Supplier Code of Conduct. Training sessions in the field of environmental protection sharpen the employees’ senses regarding the reduction of damage to the environment as well as to their own health.

• Faurecia S.A. as a supplier to the OEM’s is mainly focused on the compliance of international material standards - especially ensuring that the procurement processes and the use of certain substances are transparent and in compliance with the law

4. Conclusion of the comparison

4.2 Supplier Code of Conduct (Audi AG/ VW) and Code of Sourcing (Faurecia S.A.)



All Audi plants are certified under EMAS and ISO 50001 (energy management system) and furthermore two plants are certified under ISO 14001

Special training for Audi employees regarding environmental requirements

40 % reduction of CO2 emissions is the goal that Audi has set for its Ingolstadt and Neckarsulm plants by 2020 compared to 2010

Corporate CO2 footprint certification in accordance with ISO 14064 standard

Acquiring more renewable energy from huge photovoltaic systems on the roof of Audi plants (already implemented at the Audi Brussels plant)Cooperation with non-profit organizations such as “Lebenshilfe” which employs handicapped people producing shock absorbers for Audi AG Ingolstadt


5. Prospect

What measures in the area of sustainability and CR have already been taken by Faurecia as there is no information available yet?

If Faurecia is already working on a similar concept – there should be a motivation to continue

Corporate Responsibility Report of Audi AG – an orientation guide for Faurecia S.A.?

• On a voluntarily basis Audi AG is representing its work in the area of Corporate Responsibility to external and internal stakeholders as well as the interested public

• The CR Report contains concrete measures and goals:


6. Tesla Motors & AGC Automotive

• Tesla’s Model S uses over 3,000 purchased parts that are sourced globally from over 350 suppliers.

• Tesla does not produce a standard sustainability report; instead, they outline their sustainability standards for legal compliance on their legal webpage.

Sashank Nepal & Mahesh Devalara

• AGC Automotive group is a Tier 1 supplier of windshields to Tesla Motors.

• The AGC group provides a Corporate Social Responsibility report available here.

Sashank Nepal December, 2015

http://www.teslamotors.com/about/legal

http://www.agc.com/english/csr/feature/index.html


6.1 Economic Sustainability – TESLA MOTORS

Areas of Focus Description Key Points

Innovation Tesla’s primary focus is on R&D as it aims to be the industry leader in the production of Electric Vehicles to position itself securely for the future.

See notes.

Consumer cost Ensure that consumers are continuously able to save on yearly costs.

No dependency on fuel, free solar-powered charging stations, battery producing Gigafactory. See notes.

Competition Tesla’s strategies to remain competitive in the high-end and medium priced industry.

Reduce costs, improve production flows, innovate now to have competitive advantage in the future.

Capital Funding Tesla has raised $5.3 Billion in equity and debt since 2010, and on track to gross $5.5 Billion in revenues in 2015, up 54% from 2014.

Invested capital allows Tesla to innovate new designs and remain competitive.

Strategies for present and future economic viability


http://www.forbes.com/sites/innovatorsdna/2015/08/19/teslas-secret-formula/



http://www.forbes.com/sites/greatspeculations/2015/03/16/teslas-lithium-supply-constraints-might-hamper-its-growth/


6.2 Environmental Sustainability – TESLA MOTORS

Areas of Focus Description Key PointsEmissions Environmental impact Zero emissions vehicles, reduced noise

pollution, reduction of fossil fuel use

Product Life Cycle Recyclable materials are used in manufacturing

Aluminum is used on body frames, non-toxic batteries

Safety Industry leader in safety See notes

Innovative strategies to reduce environmental harm



6.3 Social Sustainability – TESLA MOTORS

Areas of Focus Description Affected PartiesLegal and Regulatory Compliance

Compliance with all national and other applicable laws and regulations.

Tesla Motors and all Tier 1 suppliers

Conflict Minerals Ensure that procurement of materials do not benefit armed groups in the Democratic Republic of the Congo and surrounding countries.

Tesla Motors, Tier 1 suppliers, smelters and refiners

Human Rights Ensure that suppliers do not use slave labor to engage in human trafficking.


Supplier Compliance Supply chain should address risks associated with conflict minerals, human trafficking, and slavery


Focus on Conflict Minerals and Human Rights


https://www.teslamotors.com/about/legal




Due Diligence framework of Tesla Motors

Steps Due Diligence PerformedStep 1 Establish strong company management systems

Step 2 Identify and assess risk in the supply chain

Step 3 Design and implement a strategy to respond to identify risks

Step 4 Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain.

Step 5 Report on supply chain due diligence.

In 2014, Tesla Motors was able to successfully identify 112 high-risk suppliers who supply 3TG (Tantalum, Tin, Tungsten, and Gold) in their products and required all of those suppliers to perform and report on their supply chain due diligence through the use of CMRT. They were able to receive 100% supplier responses with over a thousand unique smelters and refiners reported comprehensively. See notes section for more information.


6.3 Social Sustainability – TESLA MOTORS

http://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf






7. Code of Conduct – TESLA MOTORS


Code of Conduct DescriptionHealth and Safety The company strives to provide each employee with a safe

and healthy work environment.

Discrimination and Harassment Tesla is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind.

Competition and Fair Dealing Stealing proprietary information, possessing trade secret information that was obtained without the owner's consent, or inducing such disclosures by past or present employees of other companies is prohibited.

Compliance Procedures Tesla has checks and balances in place to ensure prompt and consistent action against violations of this Code.

Tesla’s Code of Conduct policy can be found here.

http://ir.teslamotors.com/corporate-governance-document.cfm?documentid=7159


Economic Sustainability

Turn around the performance of the glass business

Minimize profitability decline in the display business

Group-wide efforts to enhance efficiency

7.1 Economic Sustainability: AGC AUTOMOTIVE

Generate sustainable results for future business growth

Mahesh Devalara December, 2015


Area of focus Description Reduction of energy Reduction of energy used in-process of production

through environmental related products.Prevention of pollution Prevent opportunities for pollution by making changes in the

production process.CO2 emissions Aim of the company is to do a six-fold reduction by 2020

7.2 Environmental Sustainability: AGC AUTOMOTIVE



7.3 Social Sustainability – AGC AUTOMOTIVE

Social Sustainability Focus Areas

Human resource development

Occupational health and safety

Creation of pleasant work environments

Creating a Safer Work Place

Globally developing the “Serious Accident Eradication Project”

Establish subcommittees for occupational accidents on four themes that are particularly high risk across the group.



• http://www.audi-cr2014.de/uploads/files/500866230528072313-audi-code-of-conduct.pdf

• http://sustainabilityreport2014.volkswagenag.com/sites/default/files/dd_online_link/en/22_SISR_brochure_englisch.pdf

• http://www.faurecia.com/files/media/site_com_corporate/Suppliers/documents/faurecia_code_of_conduct_sourcing_supplychain.pdf.

• http://www.faurecia.com/files/corporate/widgets/documents/2014_code_of_ethics-eng.pdf

• https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

• https://www.nachhaltigkeit.info/artikel/nachhaltigkeitsberichte_1039.htm

• http://www.audi.com/corporate/en/corporate-responsibility/corporate-responsibility-report.html

• Tesla Motors – OECD Due Diligence Guidance For Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas

• Tesla Motors – Forbes Magazine article on Tesla‘s Innovative Strategies

• Tesla Motors – Conflict Minerals and Human Rights Policy

• Tesla Motors – Code of Conduct

• AGC Automotive – CSR Report

8. Sources

Anette Odersky, Jan Groschopp, Sashank Nepal, Mahesh Devalara December 2015

http://www.audi-cr2014.de/uploads/files/500866230528072313-audi-code-of-conduct.pdf

http://www.faurecia.com/files/media/site_com_corporate/Suppliers/documents/faurecia_code_of_conduct_sourcing_supplychain.pdf



http://www.faurecia.com/files/corporate/widgets/documents/2014_code_of_ethics-eng.pdf

https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

https://www.globalreporting.org/information/sustainability-reporting/Pages/default.aspx

https://www.nachhaltigkeit.info/artikel/nachhaltigkeitsberichte_1039.htm

https://www.nachhaltigkeit.info/artikel/nachhaltigkeitsberichte_1039.htm

http://www.audi.com/corporate/en/corporate-responsibility/corporate-responsibility-report.html

http://www.audi.com/corporate/en/corporate-responsibility/corporate-responsibility-report.html




http://ir.teslamotors.com/corporate-governance-document.cfm?documentid=7159

http://www.agc.com/english/csr/book/pdf/agc_report_2014e.pdf

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