Episode 233 - The Supplier's Role in Achieving Sustainability

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When people think of sustainability in the automotive world, they typically focus on the automaker. But the reality is that sustainability goals cannot be met without suppliers.

GKN Automotive is a Tier 1 supplier of driveline components, all-wheel drive systems, and plug-in hybrid solutions. Listen in as Roberto Baldwin, Sustainability Editor, SAE Sustainable Mobility Solutions, sits down with Tom Salisbury, Director of Sustainability, GKN Automotive, to discuss the company’s sustainability goals, working toward a net zero supply chain, and responsible sourcing practices.

For more information on the evolution of sustainability, head on over to sustainablecareers.sae.org. There you can learn about the adoption of SAE standard J3400 (also known as NACS or the Tesla port) and what it means for the future of charging EVs.

Meet Our Host

ROBERTO BALDWIN
Sustainability Editor
SAE Sustainable Mobility Solutions

Roberto Baldwin has been covering technology and automobiles with a focus on sustainability for nearly two decades. He’s currently the sustainability editor for SAE. Spends his free time performing music with his bands and walking his dogs.

Transcript:

Roberto Baldwin:

Hello, I'm Roberto Baldwin, and this is Tomorrow Today's Sustainable Mobility Brief.

The transportation world is evolving at a rate not seen in decades. The transition from fossil fuels to sustainable energy has brought with it some truly exciting opportunities, but also some confusion. I'll sift through the noise and share quick updates on the latest news, trends, and advancements that will impact our world for years to come.

This week on the Tomorrow Today Briefs podcast, we have GKN Automotive's Director of Sustainability, Tom Salisbury. 

Tom, thank you so much for meeting with us today, for talking to us. And GKN has some big news, but before, before we get into that, I think the real thing that I think most people think about when they think about sustainability in the automotive world, they only think about the actual automaker.

Like what is the Ford? What is the BMW? What is the Mercedes Benz's of the world? What are they doing? But the reality is these vehicles and the sustainability goals, they don't happen without the suppliers working together with them. And so just to start off, what does GKN supply to automakers?

Tom Salisbury:

Great. Thanks, Roberto. It’s really great to be talking today. GKN Automotive is a tier one supplier. So we supply directly to about 90 percent of global car manufacturers, and we are in the driveline business. So we make side shafts and prop shafts, and then also a powertrain and also a drive, so electric motors as well. So basically, the parts of the car which make it take the power from the engine to the wheels. That's what driveline isn't in simple terms, and yeah, like you said, I think, every car is a construct of numerous different parts, which have been made by a number of different suppliers, which, and they all come together by the OEMs when they put it together like a jigsaw. 

Roberto Baldwin:

Yeah, I think a majority of people just think that everything that let's say an F 150 has might be, is probably made by Ford is, they, if they look underneath some of this as Ford, it's stamped Ford. But the reality is that vehicles are actually a construct of so many different things from so many different companies that all have to come together.

And I think Covid probably helped inform more and more people about that. But I still think for the most part, most people are thinking Ford just makes everything. And the reality is, no. 

Tom Salisbury:

But it also means you have real subject matter expertise. We have teams of engineers and experts focused on drive shafts. Yeah. I think or e powertrain or your, how can you really improve the torque of any power? I think, and that makes sense. You have this unique expertise of these different suppliers. And when a company like Ford comes along, they can know they can tap into the expertise and the supplier who's really focused on doing that, that one part in a really great way.


Roberto Baldwin:

Yeah, I think I've had to replace a few transac axles in my time yeah. We talked a little bit about how the automakers have sustainability goals and of course there's also global goals. Yeah. There, there's US based goals, but there's also the Paris Accord, there's global goals.
How does GKN how do you fit into the, that whole puzzle? 

Tom Salisbury:

In a very similar way to a lot of the global car manufacturers, we are also a global company. Global company with 25, 000 employees with, we have site, but 50 sites around the world. And the impacts that we have on the environment and also, the impact we can have from a social impact side of things as well is significant.

So if we can look at how we can improve our business, both in terms of minimizing our environmental footprint, helping our customers reduce theirs, but also being a great employer. Yeah. That's significant. And I suppose you we're actually in a very similar position to our customers and that they obviously have their supply chains.

And so do we. And it's about, how we can really collaborate because these are like you say, the Paris agreement or the sustainable development goals. They are significant challenges for. For us as society and no one business, whether they're the top of the supply chain or down in the, down, no one business can solve those.

So that's why I think collaboration is critical and then how we can really achieve some of these through supply chains and working together. 

Roberto Baldwin:

And GK with internal, you have your own goals as well. Like you have your own internal goals that you're working to on. And I saw something recently you made a huge achievement just from in 2023 versus 2022. Can you talk a little bit about that? 

Tom Salisbury: 

Yeah. So we do have our own target. So we set our sustainability strategy in 2021. So a couple of years ago and to your point earlier around how our customers impact that, that was a significant part of when we're looking at what our targets are, what are the areas to focus on, what really makes sense from a customer perspective.

So we have targets across four pillars. So one are people, which is which covers things like diversity, inclusion, health and safety, climate action, which I'll come back to in a moment. Responsible sourcing. So what we're doing in our supply chain and looking at labor standards and things like that and sourcing of everything from our suppliers and then our impact.

So how we're having a positive impact. So both in terms of charitable partnerships, our sites around the world, but also how our products are helping the decarbonization of the sector. But yeah, so we just launched our sustainability report. So for looking at 2023 progress, and yeah, we reduced our carbon emissions by 10 and a half percent, which is really great.

And actually, last year, we also had our Carbon reduction and net zero targets accredited by the science-based targets initiative as well. So we've now got really clear framework and targets, which we know are in line with the Paris agreement, which you mentioned and really helped give us our North Star to, so 10 and a half percent is great, but actually we want to get to net zero and get to net zero by 2045.

Roberto Baldwin:

I think people, they think of that number like that's, that's pretty far away, but you're talking about, we're talking about mechanical parts and electric parts. And it's not something that can be solved overnight. This is long term because you still have to be a profitable company.

Tom Salisbury:

And it's also, when we talk about net zero, it's not just our own operations, but also. In a net zero supply chain and critically also looking that the carbon emissions associated with the use of our products as well. So looking at the type of vehicle that our products are going into.

So obviously, he's having a much, much lower carbon footprint than a nice vehicle. But I think your point also around it's got to make business sense. That is absolutely critical. And I think that is, I think regulation, consumer expectations and then again, how they get filtered to the expectations our customers have on us.

Should we be using renewable electricity? What are, how are we designing our products for to be more recyclable, or how can they be repaired more easily? And I think a lot of that. Society is increasingly moving in the way that this just makes sense. There's not a tradeoff between this is just being a cost actually in many cases is a cost saving but it's also meet, we've got to make sure we don't meet the expectations of society, our customers, then we don't have a sustainable business model.

Roberto Baldwin:

Let's talk a little a bit about sourcing. I know it's incredibly difficult to find, for some companies, especially if you're dealing with many materials from China. Sometimes it's really difficult to find the actual real source of a material, that's what we're hearing.

But like really how difficult is it to find that? Because it seems like you have to be a detective at some point as a company in order to make sure that the materials and the items that you're getting from your suppliers are sourced responsibly. Like that seems you have to hire an entire new staff.

Do you have to? Are you hired? Are you hired as detectives from? 

Tom Salisbury:

Yeah, that's gotta be quite, yeah. Like you said, supply chains are really complex. And particularly when you get into different levels, and you start thinking about going down to the mind level as well. I think two things. So firstly, another perfect example of why that needs to be greater collaboration.

Yeah. To tackle some of these whether it be things like conflict minerals is not going to be something that GK and automotive. It's going to be able to do single handedly. So that's the first thing and that's not just businesses collaborating, but civil society, governments to tackle some of the root challenges of this.

And that's not, I'm not saying that's easy, but that's what's needed. And then I think from our perspective. It's really about having a strong due diligence program in place. So we, so from it for conflict mineral perspective we ask our suppliers who'd be in scope for there's a kind of conflict, mineral reporting template, which is like a standardized approach, which you use to ask your suppliers about what smelters they're using.

And then they can look at the risk of those particular smelters. So again, getting further down into the supply chain and yeah. So we have that, that in place and then obviously then you, if you have a supplier who is not complying or not wanting to participate, then that's another question.

And you have to start thinking about, okay this is actually a red line to, to be a supplier. But I think tackling the root cause of it is something that does need to be tackled. Broadly, because it is, yeah, it is a challenge. 

Roberto Baldwin:

Yeah. Cause I think for, on both fronts the, both for the sustainability and ethically sourcing, it has to be essentially an international effort.

Tom Salisbury:

Yeah. These are global supply chains. Yeah.

Roberto Baldwin:

Because yeah, it's a global supply chain. It can't be just, a few companies have to be, everyone has to be on board, but also you have to talk, make sure that these governments are also on board and they're also, at least trying. And in some cases to take care of some of the issues, especially around human rights that, have popped up over the few years.

And I, I see a lot of like companies, battery companies, and, and an automaker and they're working towards making sure that they get the sources that they need the, they get the minerals that they need in a way that's ethically sourced, but you still have to have where these things are coming from. You still need to have pressure on those countries, essentially. 

Tom Salisbury:

Yeah. And I think obviously batteries is, though we, it's not our line of work as it were. But yeah, I think that's a particular area. And that's where you start to have ideas of battery passports, which allow better tracing of batteries as well, which I think, I'm sure we will see and technology is enabling greater transparency. Food, food supply chains as well. So I think technology will play quite a role in that as well. 

Roberto Baldwin:

Thank you so much, Tom. I really appreciate you coming on today and yeah, congratulations. 10%. That's a huge deal from one year to the next. 

Tom Salisbury:

Yeah, we'll keep going. We'll keep I think we've one area that we're really looking to do more of is purchase more renewable electricity around the world.

And then that will really help us start to reduce our carbon emission, our direct carbon emissions as well. Yeah, so it's great. It's good to get 10 percent in the bank and then, we carry on, move forward towards net zero. 

Roberto Baldwin:

Yeah. That, yeah. Purchasing electricity. That's another thing that's, it's outside of your control. Unless it's there, it has to be there. Again, international effort. Thank you so much. 

For more information about the evolution of sustainability, head on over to sustainablecareers.sae. org. And if you're not quite ready to add an EV to your household, you can check out our other videos, plug-in hybrid explainer video to help bring you up to speed on the hybrid technology and the vehicles. 

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