Incorporating ESG into OEM Requirements

The European Union aims to be climate-neutral by 2050, the heart of the European Green Deal. Many countries and institutions have pledged to achieve this Net-Zero Target. The transportation sector is the second largest contributor to greenhouse gas emissions. Companies, including Toyota, have been taking measures to align themselves with sustainable practices in response to environmental challenges.

• The Toyota Environmental Challenge 2050 TEC2050 is twofold: achieving Net Zero Carbon Emissions and positively impacting the environment. To reduce carbon emissions, efforts would be focused on various areas including the life cycle of vehicles, new vehicle production, and ensuring near-to-zero emissions in the manufacturing plant. To make a positive impact on the environment, the focus would be on minimizing and optimizing water usage, establishing efficient recycling systems, and creating a sustainable future that exists in harmony with nature.
• The Toyota Motor North America (TMNA) has four focus areas: Water, Carbon, Materials, and Biodiversity. The initiatives to achieve targets in the focus areas cover TEC2050 and UN SDGs (Sustainable Developmental Goals)
• Various stakeholders, including assembly plants, offices, warehouses, R&D facilities, port operations, and suppliers, are significantly interested in promoting environmental sustainability. However, suppliers play a crucial role in this regard, and the organization expects them to comply with the Green Supplier Requirements (GSR) and Supplier Sustainability Guidelines (SSG).
• The GSR provides environmental guidelines and requirements for compliance regarding carbon, water, materials, chemicals, and biodiversity. Suppliers are required to report on the scope 1 and scope 2 emissions and ensure that they achieve a 3% emission reduction every year apart from adhering to chemical management requirements. The SSG provides suppliers with sustainability guidelines, including business ethics, legal compliance, human rights, and environmental responsibility.
• The organization has categorized the requirements for meeting carbon and chemical management requirements based on Supplier Type and Activity and detailed information about submitting the supplier documents. Product Chemical Compliance Process Management heavily relied on guideline documents from IMDS and Guidelines for the Management of Chemical Substances Contained in Products by Japan Automobile Manufacturers Association (JAMA) and Japan Auto Parts Industries Association (JAPIA Suppliers were required to complete self-assessments, attend online conferences for best practices, and participate in training to meet reporting requirements in 2023. The reporting from the previous year needs to be submitted to Toyota by the specified deadlines.
• Supplier Self-Assessment focused on process and implementation of Int’l Environment Standards, Company Policy, General Enforcement, Data Management, Human Resources/Documentation. The supplier's success in chemical management was measured by their annual self-assessment survey and additional activities based on green supplier requirements (GSR).
• As an organization, they plan to provide proper requirements, offer guidance and support, track performance, and eventually recognize the top suppliers contributing to the TEC2050 and SDG Goals.