Supporting Supplier Responsibility
A Sustainable Supply Chain
From overseeing environmental impact to ensuring universal respect for human rights, the management of our global supply chain is a complex and critical task.
For the Road Ahead:
- Life cycle analysis reveals that GM’s GHG impact is nine times greater in our supply chain than in our own operations — which makes working with suppliers essential to achieving our zero-emissions vision.
- We have several forums for formal supplier engagement, including a Supplier Business Council, Supplier Business Meeting, Supplier Safety Council and internet portal where suppliers can provide and access best practices.
- Our Supplier Code of Conduct and supplier contracts set forth expectations to uphold human rights and demonstrate ethical social, business and environmental practices; major suppliers must verify compliance and share with their own supply chains.
- As electrification and advanced technologies grow in importance to our vehicle portfolio, so too does our reliance on conflict minerals and raw materials such as cobalt. We are actively working to ensure responsible sourcing of these materials.
- Pursuing compliance with the GM Supplier Code of Conduct across a complex, global and multitiered supply chain.
- Measuring Scope 3 emissions accurately within the supply chain in order to develop reduction strategies.
- Sourcing materials that are critical to the continued development and widespread deployment of advanced vehicle technologies.
- Protecting the rights of workers, communities and the environment in lower, less visible tiers of our supply chain.
GM is committed to forming and nurturing exemplary supplier partnerships built on integrity and shared values. Our global supply chain spans thousands of businesses.
We spend nearly $80 billion annually, representing a wide variety of raw materials, parts, supplies, freight, transportation and other services. These are delivered or provided to manufacturing operations around the world.Purchased goods and services are our second-highest source of emissions and include the life-cycle emissions from parts purchased from our suppliers. Life cycle analysis (LCA) combined with extended input/output analysis allows us to assess suppliers by industry and by tier to identify where the greatest environmental impacts in our supply chain occur and prioritize our resources accordingly. It also helps us monitor and manage sustainability trends within our supply base as automotive technologies change.
Our supply chain is built on strong, transparent and trusted relationships, which are critical to ensuring product quality, availability and affordability for our customers. By seeking to be the partner of choice to suppliers GM is better positioned to:
- Put the customer at the center of everything we do.
- Develop transformative transportation solutions for industry, environmental and societal challenges.
- Accelerate innovation to bring the newest technologies and innovations to customers.
- Improve our business competitiveness.
- Lower or mitigate business risks.
- Eliminate waste from value streams and deliver defect-free vehicles.
- Address human rights issues.
Despite its great breadth, scope and complexity, we’ve found that working with our suppliers to improve our mutual performance leads to rapid and significant improvements in our overall impact. As an example, LCA reveals that greenhouse gas (GHG) impact is eight times greater in our supply chain than in our own operations. By working with suppliers to reduce their own GHG emissions, we are able to reduce our overall impact.
Our Vice President of Global Purchasing and Supply Chain (GPSC) is responsible for working with suppliers to accelerate innovation, eliminate waste and deliver superior financial performance, while ensuring that supply chain standards are defined and understood. GPSC is reshaping how the company and our suppliers work together, partner for mutual success and deliver greater value for our customers.
GM’s supply chain strategy flows from its Priority Wheel, pictured below. The Priority Wheel is a well-established set of priorities aligning supply chain objectives with customer focus at the core.
Furthermore, it’s important to GM to gain supplier input on major process improvements and other issues that may affect them. GPSC has several forums for supplier engagement:
The GM Supplier Business Council consists of 17 global suppliers who meet monthly with our GPSC leadership team. Recently, GPSC established a Sustainability Subcommittee within the Supplier Business Council. Its purpose is to further our vision of collaborating and innovating with suppliers on sustainability initiatives. The first subcommittee meeting was in May 2020 and was attended by GM’s Chief of Sustainability.
- GM Supplier Business Meetings are held regularly throughout the year and are globally webcast to our suppliers to gain input and consensus on GM-specific topics. GM Chairman and CEO Mary Barra addresses this group annually during one of its meetings. Suppliers who participate in this webcast represent approximately 80 percent of our annual purchases for parts and services. This group also meets in person once a year.
- The Supplier Safety Council serves as a clearinghouse for supplier safety policies and best practices. This cross-functional Council meets quarterly to share lessons learned and best practices across the supply base. Any GM supplier is welcome to attend these forums to learn safety practices that can be shared within their own operations and supply bases.
- GM Supply Power is an internet portal used for information and best-practice sharing. GM encourages suppliers to facilitate discussions with their employees on important information posted in Supply Power, including policies, guidelines, standards and reports.
- Our Supplier of the Year program recognizes top performers. 133 suppliers were awarded in 2019. Additionally, four suppliers received Innovation awards for outstanding advancements in technology, and four others received Overdrive awards for exemplary culture change leadership.
- Suppliers are provided access to the same communication tools — AwareLine, Speak Up For Safety and others — that our own employees use to raise concerns.
- Across the globe, we hold various webinars and work with third parties to provide external training to improve supplier operations, primarily in the areas of environmental management, workplace conditions, ethics and human rights.
GM is working diligently to further integrate environmental sustainability into all aspects of our supply chain functions. A cross-enterprise project team was formed to execute our new GPSC Environmental Sustainability vision: We envision a collaborative supply chain minimizing environmental impact and enhancing long-term sustainability for our planet and the communities we serve through innovation and performance.
Goals of the project team include:
- Increasing sustainable content in our vehicles: focusing efforts on both sustainable plastics and sustainable metals.
- Increasing sustainable packaging: increasing recycled content and density, sustainable packaging materials, packaging material recyclability and returnable packaging viability.
- Supply chain carbon footprint reduction: concentrating on Scope 3 emissions to include upstream and downstream logistics and supplier emissions.
- Emissions disclosure: increasing visibility and supplier engagement in carbon footprint reduction through tracking of CDP engagement by select Tier I suppliers.
- Sustainable logistics: increasing shipping container packing density, route efficiency monitoring, supplier emissions reduction and alternative fuels.
GPSC is working toward a corporate goal of 50 percent sustainable content within our vehicles by 2030. In order to achieve this goal, we are evaluating applications for recycled content potential along with other sustainable material options. Once an application is identified as a best practice for recycled content, quotes are requested for new programs with the recycled material as the required material, in addition to long-term viability of the recycled material streams.
A recent example of our team’s success in sustainable packaging was securing sustainable packaging requirements for our ventilators, face masks and face shields in response to COVID-19. Packaging ranged from 33 percent to 95 percent recycled material, with the remaining material coming from ethically forested sources certified by the Sustainable Forestry Initiative (SFI).
Additionally, we partner with a preferred supplier for all consumer-facing packaging. The packaging is, on average, comprised of 35 to 55 percent recycled content in corrugated boxes, and coated boards are of 100 percent recycled material. Any virgin material used in our packaging is SFI certified. In summary, our automotive consumer-facing packaging and ventilator, face masks and face shields packaging is 100 percent from recycled material or SFI certified material and is 100 percent recyclable.
GM has a vision of zero crashes, zero emissions and zero congestion. In order to drive toward a future of zero emissions, the GPSC environmental sustainability team has focused on increasing visibility to our supply chain footprint. We have aligned our Supply Chain CDP list of suppliers to our strategic supplier list, suppliers in heavy emissions industries such as aluminum and steel mills, key logistics providers and energy providers. We are driving toward increasing CDP participation among these selected supplier partners.
GM uses LCA to better understand the activities of our more than 15,000 suppliers worldwide. Purchased goods and services are our second-highest source of emissions and include the life-cycle emissions from parts purchased from our suppliers.
LCA combined with environmental extended input/output analysis, using the US EPA EEIO 1.0 database, allows us to assess suppliers by industry and by tier to identify where the greatest environmental impacts in our supply chain occur and prioritize our resources. To increase granularity, we performed the analysis at the component level to identify potential opportunities for carbon reduction by the highest intensity of carbon emissions. It also helps us monitor and manage sustainability trends within our supply base as automotive technologies change.
Environmental Impact by Vehicle Component
CDP (formerly the Carbon Disclosure Project) helps companies better understand and manage climate change, deforestation and water-related risks. This effort goes beyond our own operational footprint to include those of our suppliers. For the past seven years, we have engaged our supply chain by inviting a group of suppliers, around 300 in 2019, to participate in the CDP Supply Chain climate change and water programs.
We have recently developed a goal to have 100 percent of strategic suppliers participate in CDP reporting by 2022. This goal seeks to improve the 68 percent response rate in 2019. Increasing the number of supplier responses should enhance our ability to capture Scope 3 emissions details.
To launch this effort, we held two webinars with suppliers in April 2020 that featured Chief Sustainability Officer Dane Parker and Purchasing Director Amanda Willis. Topics included GM’s recently announced sustainability goals as well as explanations of how GM will use the data and why supplier support is essential. A CDP representative explained the surveys, system access and submission tips.
Later in 2020, we plan to have one-on-one strategic discussions with targeted suppliers about their emissions results and initiatives to decrease emissions, energy and water usage. These will enhance collaboration between GM and its supply base for further reductions.
Climate Change Responses
company) metric tonnes
GHG emissions avoided
from supply chain GHG
We place high expectations of excellence and ethical conduct on our suppliers, who are expected to act in a way that is consistent with our principles and values. Likewise, GM employees must hold suppliers they work with accountable for acting in a manner that is consistent with our employee Code of Conduct, Winning with Integrity.
Our Supplier Code of Conduct and purchase contract Terms and Conditions set forth expectations for ethical social, business and environmental practices. By choosing to do business with GM, our suppliers accept our purchase contract Terms and Conditions. Compliance is mandatory. Our Terms and Conditions clearly state our prohibition against any use of child labor or any other form of forced or involuntary labor, abusive treatment of employees or corrupt business practices in the supplying of goods and services to us. Furthermore, our contracts lay out expectations for lawful compliance with data protection and privacy, wages, hours and conditions of employment, subcontractor selection, anti-discrimination, occupational health and safety and motor vehicle safety.
Our largest suppliers must attest to compliance with our Terms and Conditions, Supplier Code of Conduct, and all applicable laws and regulations. This attestation occurs annually via a supplier compliance survey. In 2019, the number of suppliers included in the survey was just under 600, and we had a response rate of 93 percent. In 2020, we are moving to increase the number of suppliers participating in the supplier compliance survey to more than 3,000.
In addition, suppliers are asked to confirm via the survey that they:
- Have company business practices consistent with GM’s Supplier Code of Conduct or a similar code of conduct published by their company.
- Have adopted their own code of conduct or similar document expressing a commitment to conducting business ethically, honestly and in compliance with all applicable laws.
- Have shared GM’s Supplier Code of Conduct or a similar code of conduct published by their company with their suppliers.
- Have 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, we require our direct or 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 our Built in Quality System (BIQS), consisting of IATF 16949 certification and BIQS Metrics requirements. This foundation allows us to cascade quality standards through tiers of our supply base. We aim for all of GM Tier I suppliers to achieve BIQS Level V, the highest level possible. BIQS compliance also compels 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 our Sourceability Report, which is a compilation of metrics used to inform sourcing decisions and supplier engagement.
An ongoing challenge for us is striving for a sustainable and socially responsible supply chain without adding complexity and burdens to our supplier relationships. Collaboration among auto manufacturers to develop sustainability and social responsibility requirements for our suppliers is a logical approach, particularly given the level of common suppliers among the major automakers. This approach also helps ensure that automotive suppliers are pursuing aligned goals and are not overburdened by duplicative OEM efforts.
GM works closely with many industry and supply chain-focused organizations, including the Automotive Industry Action Group (AIAG), where GM co-chairs the Responsible Materials Work Group; the Responsible Minerals Initiative (RMI), where GM is an active member in both the cobalt and mica subgroups; the International Automotive Task Force (IATF); and the Global Platform for Sustainable Natural Rubber (GPSNR).
Industry collaboration groups are a primary forum for developing and sharing responsible supply chain practices across other automotive OEMs, Tier I and subtier suppliers. For example, in the U.S., GM employees maintain leadership positions in AIAG. GM provides direct financial support to the organization and leverages its sponsored membership program to enable free membership for small subtier suppliers. This allows key information and tools, such as responsible supply chain training materials, self-assessments and best practices and standards currently available to Tier I suppliers, to cascade to the subtier supply base. We also require all of our supplier quality employees who visit supplier facilities to take AIAG training regarding responsible working conditions, including child/slave labor.
In addition, specific requirements regarding responsible supply chain practices are part of IATF 16949 Quality Standards. These requirements include an employee code of conduct, antibribery policy and an ethics escalation policy (“whistle-blowing policy”). Compliance to the IATF 16949 is a requirement for GM suppliers.
Our corporate goal is for 100 percent of our direct suppliers to be compliant; currently, 90 percent have passed this certification. Furthermore, GM is a founding member of GPSNR. Their Code of Conduct is in alignment with ours in protecting human rights. GPSNR has finalized standards that will help protect human rights, uphold fair business practices, protect biodiversity and water resources and improve yields, and increase supply chain transparency and traceability. Tire suppliers, rubber refiners, NGOs and further upstream actors also held a collaborative role in the group’s creation.
GM’s approach is to drive tiered supplier visibility as the key to moving from a traditional reactive crisis management approach to one of proactive crisis avoidance. Over the past few years, we have developed a robust in-house, customized supply chain visibility tool, which integrates GM plants, Tier I suppliers, known Tier II suppliers and logistics nodes. This tool gives us the capability to map geographic locations and relationships across the GM supply chain. The tool also incorporates 24/7 monitoring and Global Incident Mapping (GIM) of potential disruptive events that could impact our supply chain partners worldwide.
Our Global Crisis Management approach has significantly improved our response to disruptive events in the supply chain through the use of innovative tools and real-time data analysis. We monitor for both catastrophic events (e.g., earthquakes, hurricanes) and isolated disruptions (e.g., factory fires, labor strikes), reporting all potential impacts to our Command Center’s Global Crisis teams for supplier follow-up. In addition, contracted third-party services provide information regarding financial risk, location risk (i.e., countries, industries and commodities with higher ESG risk), and interdependency risk between our suppliers and extended supply chain tiers. Risk scores are provided to the Purchasing team, and are factored into the sourcing process and support mitigation plan development for high-risk areas.
Utilizing this due diligence process, GM identified a supplier involved with an environmental incident. After notification from our supply chain visibility tool, GM’s Supply Chain Risk Management team reacted swiftly to notify the appropriate GM Global Supply Chain crisis response teams. These crisis teams then had the ability to work cross-functionally with Tier I suppliers, Purchasing, Logistics and Engineering to mitigate the impacts of this potential disruption to the supply of material to GM plants and the environment. This was done by resourcing or rescheduling until the supplier was compliant with governmental regulations.
Our Global Crisis Management approach supports zero production losses, keeping material pipelines full, reduced premium transportation, alternative supply allocation planning and overall protection of supply for foreseen risks.
Supply chain risks are managed through our broader GPSC risk management functions and processes. All identified key risks are assessed, updated and reviewed by senior leaders at least twice a year. Additionally, GPSC leadership participates in corporate governance forums, including the Board Risk and Cybersecurity Committee, the Senior Leadership communication, oversight, management and mitigation implementation. Strategic initiatives include quarterly risk dashboard updates, annual CEO reviews and annual CEO business unit reviews, annual global risk assessment and Senior Leadership Team interviews.
GM’s Human Rights Policy is guided by the UN Global Compact, to which GM is a signatory, and is informed by the United Nations Guiding Principles on Business and Human Rights and the principles expressed in the International Bill of Human Rights and the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. GM’s policy covers employees, suppliers, partners and communities, among others. It includes ethical recruitment practices, diversity, antiharassment, unlawful discrimination, support of women’s rights and equal pay, individual privacy, reporting and antiretaliation policies. Suppliers and business partners are expected to comply with laws on safety, individual security, prohibitions on human trafficking and use of underage children, along with laws that ensure freedom of association and rights to collective bargaining.
GM has a zero-tolerance policy against the use of child labor as stated in our Supplier Code of Conduct and Conflict Minerals Policy. GM prohibits abusive treatment to employees and corrupt business practices in our supply base. We aim to support indigenous people and the communities in which we work and source material. As stated in this policy, we “seek to avoid inadvertent adverse economic impact attributable to conflict mineral due diligence activities.”
Historically we have relied on extensive trainings as a tool to prevent human rights-related issues from arising, and robust reporting and internal auditing mechanisms to rapidly identify and respond to issues if and when they may arise. We recognize, however, that there is an opportunity for us to become more proactive in identifying potential human rights issues within both our own operations and across our supplier base. Over the course of the year ahead, we intend to conduct an initial human rights saliency assessment in order to more precisely determine how our operations and activities may adversely impact people and communities. Based on the results of this assessment, we aim to work across the business to start establishing new — or integrate into existing — processes for identifying particular sites, geographies and/or demographics that may be at higher risk so that we may be more proactive in preventing issues from arising in the first place.
As automotive battery capacity expands globally by up to 10 times over the next 10 years, it may be a challenge to maintain access to critical battery materials. We are securing supplies of raw materials so that we can manufacture our new, cutting-edge battery chemistry, which requires cobalt and battery-grade nickel and lithium. We are looking around the globe and throughout the value chain — from mines to refiners to battery precursors — to secure supplies, understand where investment and partnerships can yield benefits and explore areas of untapped value that lowers costs.
When seeking out new partnerships to gain a competitive advantage or meet future demands in product sourcing, we never compromise on our core values. General Motors is committed to upholding human rights across our network of suppliers that support our global operations. In an effort to formalize these values, several policies were created as part of this commitment: the Supplier Code of Conduct, Human Rights Policy and Conflict Minerals Policy. GM understands that long-term success starts with a company’s value system and a principled approach to doing business.
Tracing Raw Materials to the Source
Many of the advanced technologies in our portfolio require the use of minerals (i.e., tin, tantalum, tungsten and gold) that could be mined in conflict-affected and high-risk areas. We utilize a common industry approach to identify the smelters and refiners (SORs) in our supply chain and the origin of their minerals. The Conflict Minerals Reporting Template (CMRT) is the form we send to our Tier I suppliers to identify these SORs which are the pinch point in the supply chain. 3,598 supplier locations were considered in-scope for the CMRT in 2019 and we received responses from 90 percent of these suppliers. Compared to the previous year, we had 3,400 supplier locations in-scope, and had an 88 percent response rate.
After the SORs are identified, we validate whether they have passed an OECD (Organisation for Economic Co-operation and Development) aligned assessment. The OECD has the nationally recognized due diligence framework for the responsible sourcing of minerals. The Responsible Minerals Initiative (RMI) assessment that is aligned with the OECD framework is known as the Responsible Minerals Assurance Process (RMAP). This assessment employs a risk-based approach to validate that smelters and refiners have processes in place for responsible mineral procurement. Those SORs that have passed this assessment are considered conformant to the RMAP.
Annual SEC disclosure of conflict mineral sourcing is fully integrated into our business processes. A dedicated team analyzes information in CMRT reports of more than 3,500 direct suppliers. Some duties of the team include, but are not limited to, conducting due diligence on the source and chain of custody of minerals in our supply chain, and SOR outreach to encourage participation in the RMAP.
We have structured an internal management system to support supply chain due diligence. Part of that structure includes a compliance committee of multifunctional GM leaders and an executive steering committee to provide leadership and direction for the program.
Beyond our own reporting activities, we work with our suppliers regularly to increase education and awareness regarding conflict minerals, including conducting periodic webinars and providing a dedicated email address to answer specific questions. We continue to collaborate with others in the industry to educate suppliers. For example, we co-chair the Automotive Industry Action Group (AIAG) Responsible Materials Work Group, which works on common automotive industry solutions with other OEMs and suppliers.
We are also an active participant within the RMI and corresponding RMI sub working groups. The Smelter Engagement Team (SET) is one of these subgroups that enables GM to have a high degree of direct SOR engagement. Through a SET-coordinated email outreach to nonconformant SORs, and RMI sponsored SOR pre-audit visits, we have found this process to be an effective way to encourage nonconformant SORs to move forward with the RMI Assessment.
If SORs have not been validated as conformant to the RMI assessment protocol, then GM sends letters to the SORs to encourage them to participate in this third-party assessment. GM has sent letters to 148 SORs. To further encourage SORs to participate in the audit, GM has made contributions to the not-for-profit RMI Initial Audit Fund in 2017, 2018 and 2019. This fund is used to help offset the costs for the SOR to participate in the RMAP audit.
In addition to our outreach to SORs to proceed with the RMAP assessment, we also conducted two pre-audit visits to nonconformant gold refiners located in India. During these pre-audit visits, we had an opportunity to communicate the importance that SORs in our supply chain source responsibly and validate their responsible mineral procurement through one of the OECD-aligned responsible sourcing programs such as the RMAP. At the end of the visit to India, one of the gold refiners commenced the process of RMAP participation.
As electrification grows in importance to our vehicle portfolio, so too does the focus on cobalt, which is used in lithium-ion batteries. There are concerns around the use of child labor in the mining of cobalt, which would represent a serious violation of our Supplier Code of Conduct and Terms and Conditions in our supplier contracts.
Through our membership in RMI, we are working directly and actively in a cobalt subgroup in the following areas:
- Using the Cobalt Reporting Template (CRT) with key suppliers. The CRT is an important tool in the identification of refiners in the cobalt supply chain.
- Identifying and assisting with the disposition of cobalt companies to determine if these companies meet RMI’s industry specification for a legitimate cobalt refiner.
- Performing outreach to nonconformant cobalt refiners to encourage them to go through the RMAP for cobalt. Refiners have been identified as the choke point in the cobalt supply chain because of their limited number of actors. The RMAP assessment is used to validate that cobalt refiners have systems and processes in place to conduct due diligence in accordance with internationally recognized frameworks.
- Conducting due diligence of key GM Tier I suppliers to receive assurance from these suppliers that responsible sourcing of cobalt is a top priority.
Another area of concern is the risk of child labor in mining mica. We have communicated this risk to our paint suppliers who are either members of the Responsible Mica Initiative are, or have been, involved in third-party audits of the mine sites. In addition, we are working collaboratively within RMI’s subgroup on mica that includes other RMI member companies to proactively address concerns. The RMI subgroup is working with the Responsible Mica Initiative in the following areas:
- Identify mica processors in the supply chain using a Company Identification Questionnaire.
- Create a joint due diligence standard for these processors.
- Disposition mica processors using RMI methods and adding them to the RMI smelter/refiner database.
Localization is another important tenet of our value chain. When we build where we sell, and buy where we build, our vehicles are more competitive because they enjoy pricing benefits and can be built to suit unique local requirements that drive customer enthusiasm and brand loyalty.
Localization also lowers risks by increasing the flexibility of our supply chain to respond to disruptions caused by natural, political or other causes. Furthermore, when we work with local suppliers, we also support the local economies of communities where we operate and realize environmental benefits by helping to minimize shipping, thus reducing fossil fuel use, carbon emissions and material use. GM works cross-functionally through our product development activities, sourcing activities and logistics planning to maximize the benefits of localization.