Climate change is one of the major challenges of our time and is already impacting on the opportunities for societies to grow and business to prosper. Without drastic action, the future will be more difficult and costlier, as it will require major adaptations. In this respect, business has a key role to play both individually and collectively on the road to Europe’s carbon neutrality.
Making corporate climate adaptation the new norm
Individually, each business can address climate change and climate change-related risks by setting ambitious targets and supporting the Agenda 2030 Goals and the Paris Agreement. Within the last year, several businesses announced their commitment to reach carbon neutrality in their operations. While this was indeed an important first public step, the journey had just started.
To fulfil such a commitment, companies still need to outline and break down climate-related tasks for different operational areas. Finally, it is crucial for companies to verify the route they choose and adapt it when necessary, while continuing monitoring and reporting to internal and external stakeholders.
In the automotive sector, CSR Europe facilitates Drive Sustainability, a collaborative platform. This partnership of ten automakers has the ambition to lead the transformation towards a circular and sustainable value chain
On the journey to carbon neutrality, climate adaptation is the big challenge. According to the latest report co-created by CSR Europe and the other members of the Project Task Force on Climate-Related Reporting (PTF-CRR), facilitated by the European Financial Reporting Advisory Group (EFRAG), companies are still struggling to identify “if” and “how” their business model and strategy are resilient to climate risks, and how they will adapt to a low-carbon world or to increased physical risks.
A double materiality approach and the use of scenario analysis to assess the resilience of business strategies under a range of plausible future climate states, are strongly recommended by the Task Force on Climate-Related Financial Disclosure (TCFD) and the European Commission to business across all industries interested in making progress. The scenario analysis exercise should not, however, focus exclusively on one scenario, the best-case scenario, otherwise the company will fail to develop relevant mitigating actions.
A duty to cooperate
Like the current coronavirus (COVID-19) outbreak, climate change poses a cross-border and cross-sector threat, imposing a ‘duty to cooperate’ on the shoulders of companies, policymakers and civil society organisations at local, national and international level. This requires leading companies to engage and encourage their sectors and/or value chain peers to work together with other stakeholders to transform the entire ecosystems in which they all work.
The Drive Sustainability lead partners and the partners have recently launched their new common strategy addressing four key sustainability challenges: sustainable raw materials, workforce wellbeing, carbon neutrality and circular value chain
In recent years, many different industrial sectors have included climate change risks and the need to build sustainable and resilient supply chains on their agenda. From the chemical and pharmaceutical industry to the steel, textile, and mining sectors—including different raw materials industries such as mica, cobalt, and rubber—the purpose of most initiatives is oriented to the definition of common principles and to provide a system of due diligence. Ultimately, they all aim to promote production and trading models that deliver better social and environmental outcomes with respect to the United Nations Guiding Principles on Business and Human Rights (UNGP) and to general sustainability frameworks including environmental and climate impacts. They incentivise positive change amongst actors on the ground and help build their capacity to adopt new practices.
Drive Sustainability: scaling up impact for system change
In the automotive sector, CSR Europe facilitates Drive Sustainability, a collaborative platform. This partnership of ten automakers has the ambition to lead the transformation towards a circular and sustainable value chain. The lead partners—BMW Group, Daimler, Scania, Volkswagen Group, Volvo Cars, Volvo Group—and the partners—Ford, Honda, Jaguar Land Rover and Toyota Motor Europe—have recently launched their new common strategy addressing four key sustainability challenges: sustainable raw materials, workforce wellbeing, carbon neutrality and circular value chain.
Building upon more than seven years of collaboration, the common strategy has the ambition to widen the scope of activities of Drive Sustainability. In the common guiding principles, the Drive Sustainability partners set out a shared direction to shape a sustainable automotive supply chain and communicate their expectations to their suppliers. For this reason, they implemented a series of compliance measures, such as a self-assessment questionnaire (SAQ) and supplier training to achieve impact locally.
Our ambition is to see all the European industry federations—including those operating in the automotive sector—roll out a mature Sustainability Industry Strategy by 2024
At the time of writing, Drive Sustainability has conducted over 35,000 supplier assessments in over 100 countries and organised over 820 training sessions in 17 different countries, from Romania to India, South Africa and Brazil. Recognising the potential impact of local networks, the platform set up a representation in China and collaborates with key stakeholders, such as the China Association of Automobile Manufacturers (CAAM), to leverage the reach of the group activities.
In 2017, Drive Sustainability developed the Raw Materials Observatory Process to identify risks and opportunities for collective action in the field of raw materials sourcing. As a result, under this framework, the consortium published the ‘Material Change’ report, in partnership with the Responsible Minerals Initiative (RMI).
Following CSR Europe’s Leadership Model (see Figure 1), Drive Sustainability partners are working together and scaling up their collective impact by engaging with suppliers, stakeholders, and related sectors. As a result, they are transforming the entire automotive eco-system.
Figure 1: CSR Europe’s Leadership Model (2030 Strategy), adapted from Grayson, Coulter & Lee (2018)
How to develop sector and cross-sector collaboration for system change
As the coronavirus (COVID-19) pandemic is altering every facet of business and society as we know it, now more than ever, there is an urgency for togetherness: for enterprises, industry federations, policymakers and civil society organisations to collaborate on practical solutions.
For this reason, in 2020 CSR Europe will work to support companies in the incubation of many more collaborative platforms under the umbrella of the European Pact for Sustainable Industry, which will be inaugurated in the autumn of 2020.
The objective of this Pact is threefold:
- Support companies and their industry federation in taking collective action to create a better Europe: one that has one which has sustainability, climate action, and inclusiveness at its core;
- Embed sustainability into the strategy and business models of EU enterprises and their industry federations;
- Dialogue and engage with European policymakers in support of the EU’s Green Deal and the UN’s Sustainable Development Goals.
Our ambition is to see all the European industry federations—including those operating in the automotive sector—roll out a mature Sustainability Industry Strategy by 2024.
About the author: Dr Heike Schulze is Coordinator Drive Sustainability at CSR Europe
