Top Automotive Suppliers’ ESG Reports Focus Mostly on Environment and Little on Governance

Most top auto suppliers’ ESG reports focus mostly on the E (environmental) and neglect the G (governance), according to our recent study – “Automotive Suppliers and ESG,” which we recently conducted in May/June of 2021 by looking at the ESG reports for the top 25 North American auto OEM suppliers, based on the most recent Automotive News ranking.

We conducted the study to provide insights to help automotive supplier communicators assist their CFOs and investor relations executives in enhancing their ESG reports. The goal was three-fold: to create a snapshot in time of auto supplier ESG reporting; to identify commonalities for the auto supplier sector in ESG reporting; and to identify the greatest opportunities and areas for improvement.

In this current era of distrust, the more focus suppliers can put on transparency about their environmental, social and governance topics, the greater the benefit will be. Yet, of the 200 specific topics covered in the supplier ESG reports we recently reviewed, approximately 1/3 related to the environment while only 3% related to corporate governance and compliance.

In this age of impact investing, your key publics – investors, customers, employees, recruits, partners, and others – want to know what your company is doing relative to its progress in sustainability and governance, as well as the environment. But because there isn’t one common standard or format, it’s hard for investors to compare companies.

The study uncovered some key insights:

  • There’s a big gap in coverage of the diversity, equality and inclusion efforts, with almost two-thirds of auto supplier ESG reports neglecting this topic. This is a key ESG reporting area that can help a supplier with social cause-motivated investors, automaker customers, employees and recruits;
  • The top North American auto supplier sector has not standardized on a single reporting standard, and many suppliers use multiple reporting standards, which makes it difficult for investors to compare companies; and
  • The top auto suppliers’ reports don’t share a common format or approach – running the gamut from sustainability reports to integrated reports with financial details and from corporate social responsibility (CSR) reports to combined reports.

If you’d like to learn more about automotive supplier ESG reporting or obtain insights on how your company’s next ESG communications can be enhanced, let us know.

And if you have a specific question, you can ask us here:

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