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GM requires suppliers to sign environmental pledges and ESG scoring

On Monday, General Motors publicly requested its suppliers to pledge themselves to adhere to carbon neutrality. However, this pledge is actually quite advanced, incorporating many aspects of environmental, social and governance (ESG) scoring that have been promoted by the world’s most powerful companies, financial institutions and world leaders. ..

In fact, the official name of the oath is “Environmental, Social and Governance Partnership Pledge”, which is already associated with the indicators defined by EcoVadis. EcoVadis is a third-party evaluator focused on how individual companies integrate sustainability priorities. Corporate responsibility, social cohesion to business and management systems.

“There are economic and social demands for reducing emissions and addressing climate change while promoting a just transition,” said Jeff Morrison, GM Vice President of Global Purchasing and Supply Chain. I am. “Our commitment to take everyone as we accelerate towards our vision for the future of all-electricity requires cooperation to promote a sustainable, safe and better world globally. Includes suppliers. “

I’ve been tracking the progress of ESG scoring for some time (It came out yesterday) And I became more and more skeptical that the kind of capital needed to make the outlined changes would help to benefit large multinational organizations. While many companies are jumping into the cultural ecology bandwagon associated with greening, it has been argued that this scheme does not necessarily support the concept of sustainability. Critics believe that ESG has effectively become a tool for large organizations to give a squeaky, clean, green image that can attract potential investors. However, it does not lead to the profitability of the company. It can be argued that it represents the true sustainability of the organization.

In the “social” aspect of ESG scoring, additional criticism is leveled because such indicators rely primarily on qualitative data. This is exacerbated by the fact that most schemes utilize different (often shifting) targets.This phenomenon was investigated in 2019 Paper from MIT Sloan School of Business Investigate differences in ESG ratings issued to six separate companies. The resulting data is not measured in the same way by all companies, and even if some companies supplement it elsewhere, they are truly abominable behaviors with high ESG scores. Suggested a system assigned to take.

These component points are to spend more money to buy carbon credits or to make women executives while the company is simultaneously using forced labor or engaging in non-technical medical tests. It can result from something like vowing to hire a person. The problem is that while human rights are considered an integral part of an ESG scheme, it gives a simple and often rosy picture of the business that can engage in offensive behavior. This can explain why so many large companies are interested. Due to the deep pocket nature, the opportunity to raise ESG scores and earn excellent investment ratings during periods when Wall Street appears to be growing on all emerging green stocks, regardless of the business model of the affiliated company. Will increase.

Considering the inventory of General Motors, it has been on a downward trend since January 2022. Currently facing worsening supply chain problemsRunning on an ESG score can be a good way to increase your inventory.After years of seeing Tesla’s extraordinary market performance and high IPOs Many technology companies that effectively sold the concept of environmental protection With no tangible products, it’s unimaginable to assume that legacy automakers want part of that action.

What GM wants its suppliers to do is part of their commitment to environmental, social and governance partnerships.

Achieve carbon neutrality for Scope 1 and Scope 2 emissions on dates based on their respective industries. These are before 2025 for professional services, before 2035 for manufacturing, and before 2038 for raw materials and logistics.

By 2025, achieve a minimum score of 50 on EcoVadis’ pillars of labor, human rights and ethics. It represents a mature sustainability management system that covers employee health and safety, social dialogue, diversity / indiscrimination, children and forced labor, and avoids corruption. Anti-competitive practices.

By 2025, achieve a minimum score of 50 on the pillars of EcoVadis Sustainable Procurement. It covers how GM suppliers understand and manage their suppliers’ social and environmental practices and leverage their purchasing influence to drive sustainability.

Ironically, ESG scoring itself can be argued to be anti-competitive. This is because these indicators are ultimately related to fluctuations in where investors invest their funds based on their EcoVadis scores, not their actual financial performance. I’ve seen problems already occur. In 2021, the DSW Group (owned by Deutsche Bank) had problems after its former Sustainability Officer. The company claimed in its 2020 annual report that it significantly misrepresented ESG functionality. — We call it propaganda. Her actions triggered an investigation by the US Securities and Exchange Commission and German regulator BaFin.

Without more data, it would be difficult to determine if GM’s initiative is just greenwashing. But the company said suppliers, which accounted for 53% of last year’s $ 76 billion in direct material purchases annually, have already signed the pledge. It also “identifies opportunities to significantly reduce greenhouse gas emissions and energy usage, provides educational webinars and resources, and develops tools to help remove barriers to the transition to renewable energy.” We pledged to continue to support our environmental efforts.

“GM’s ESG Supplier Pledge is an example of best practices for working with suppliers to put their“ Everybody In ”vision into action,” said Pierre-Francois Thaler, Co-CEO of EcoVadis. “These concrete and viable goals are exactly the kind of efforts needed to accelerate the value chain towards positive impacts and empower businesses to create a more sustainable world.”

None of the above really helped the global supply chain improve the worst-case conditions that currently exist, but instead primarily focus on changing the culture and message of cooperation in ways that enhance a company’s market reputation. Notice that it is focused.

[Images: Linda Parton/Shutterstock]

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https://www.thetruthaboutcars.com/2022/04/gm-asks-suppliers-to-sign-environmental-pledge-esg-scoring/ GM requires suppliers to sign environmental pledges and ESG scoring

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