Suppliers are screened to verify a wide array of environmental aspects. During the inspections, the auditors verify the presence and certification of an environmental management system.
In addition, we encourage suppliers to develop in-company standards or guidelines providing direction on all topics in this area. In addition to the aspects mentioned above, our environmental due diligence process also determines whether suppliers are adequately managing water consumption and discharge, waste (recycling and waste disposal), and the use of recycled materials. Lastly, we stay informed on supplier engagement in protecting biodiversity, since one of the Group’s environmental missions is to preserve the variety of plant and animal species in all areas of operation.
In working toward full compliance with REACH, our direct suppliers are required to use chemicals whose contents meet our current standards for the management of hazardous substances as closely as possible. We also examine the supplier's use of the LCA (Life Cycle Assessment) method.
If we discover through the self-assessment that the supply chain is causing a negative impact on the environment or has the potential to do so, the Group conducts thorough on-site audits to examine the supplier’s environmental management methods - or lack thereof. These audits include a rigorous inspection of: proper environmental management system documents and their mode of distribution in the work environment; the person responsible for ensuring compliance with the environmental management system; how information or training programs are provided to employees; engagement with environmental protection organizations; goals set to improve environmental performance; and any environmental certifications in possession. In order to prevent, mitigate or redress a negative impact encountered during inspection, a joint action plan is defined with the supplier.
Based on results of self-assessment questionnaires, 78 suppliers were identified in 2013 as creating - or at risk of creating- a significant potential negative environmental impact specifically in the areas of greenhouse gas emissions management, environmental training, recycled and/or sustainable materials use, biodiversity and measures to verify responsible environmental practices of their suppliers. In addition, we implemented action plans for about 17% of audited suppliers(1) (i.e., 8 action plans about the definition of a formal Environmental Management System for 8 suppliers), as follow-up to the 2012 self-assessment process. No contracts were canceled.
We recognize the importance of supplier collaboration for improving the environmental sustainability of their products and processes, so we provide comprehensive support through a variety of initiatives.
For example, in an effort to raise the awareness of suppliers on climate change issues, with a particular focus on the reduction of their greenhouse gas emissions, 68 suppliers were invited to participate in the Carbon Disclosure Project (CDP) Supply Chain program in 2013. Forty-five suppliers disclosed (66% response rate), attaining an average disclosure score of 68 and an average performance band of C. As evidence of their commitment to drive down carbon emissions, the Group suppliers that responded to the CDP Supply Chain survey eliminated approximately 39 million tons of CO2 equivalent in 2012. The CDP Supply Chain program is an annual process that yields consistent information from suppliers on climate and water-related strategy and action.
After a pilot with CDP Supply Chain, we are planning to work more closely with our suppliers in the coming years to increase our collective emissions reduction and climate change mitigation efforts.
The Group believes that water scarcity could impact business continuity and that water conservation is becoming increasingly important, involving both peers and business partners alike. For this reason, we are consulting with selected Tier 1 suppliers on ways to develop a mutual water stewardship strategy in water-stressed areas. In addition, in 2013 we added questions to the supplier self-assessment questionnaire specifically aimed at preventing and detecting risks related to water usage in the supply chain. The questionnaire gathers information on:
- water policy, strategy or management plan
- specific water-related targets or goals
- water policy, strategy or management plan focused on discharge water quality improvement
- quantitative data on water withdrawal, recycling/reuse and discharge
- bodies of water, wetlands or natural habitats affected by operations due to water discharge or withdrawal and
- operations located in water-stressed areas.
This collaborative approach will foster innovative thinking and will help to identify specific risk factors, forming the basis for a second-level risk map, which is a goal for 2014.
To help manage environmental aspects related to vehicles and components, the Group uses the International Material Data System (IMDS). Suppliers are required to submit detailed information on the materials and substances used in their components through this on-line platform so that hazardous substances can be traced back to the specific component. We thus are able to work with suppliers to reduce, control, or eliminate the hazard. A total of 88,000 data sheets were completed in 2013 for Group vehicles.
The system also covers information on recycled material content. This feature facilitates the analysis of raw and recycled material consumption trends, as well as the evaluation of the environmental implications of replacing certain materials or substances, thereby enabling recyclability and recoverability calculations.
Suppliers are therefore involved in product development; the Group has a general quality specification under all supply contracts indicating every material’s adherence to environmental, health and safety requirements, including ingredients, formulas' ingredients and handling procedures where relevant.
Fiat and Chrysler Suppliers - CDP Supply Chain summary results
|Average supplier response rate: 66%|
|39 million tCO2eq of emissions reduced|
|€325 million was saved as a result of emissions reduction initiatives|
|91% of suppliers who responded integrate climate change into their business strategy|
|76% of suppliers who responded have emissions reduction targets|
|87% of suppliers who responded report emissions reduction initiatives|
|38% of suppliers who responded propose collaboration projects|
(1) The percentage is calculated based on the number of 47 suppliers audited. The analysis of the action plans for the remaining 25 suppliers audited will be completed in 2014. No significant issues have arisen during these audits.