Material Change – A Study of risks and opportunities in material supply chains of automotive and electronics industry
The report titled "Material Change," developed by Drive Sustainability (DS) and the Responsible Minerals Initiative (RMI), focuses on the environmental, social, and governance (ESG) issues related to corporate supply chains and the sourcing of materials in the automotive and electronics industries. It compiles and analyzes publicly available information on materials commonly used in these industries to facilitate industry-wide discussions on responsible sourcing. The report is not an assessment of the net societal contribution of these materials, but rather aims to raise awareness about potential risks and opportunities for collective action to improve supply chain practices.
The study's scope is broad, deliberately avoiding a detailed analysis of a few materials to present a general industry-level assessment of many materials. This approach is meant to challenge readers to expand their understanding of the complex and interconnected nature of manufacturing supply chains. Environmental and social information, along with economic and governance indicators, are presented for countries identified as top producers of these materials.
The report acknowledges the growing demand from regulators, investors, consumers, and advocacy groups for companies to disclose results of supplier due diligence and commit to addressing negative impacts associated with their activities. However, navigating this path is complex due to the intricate nature of modern supply chains, which involve multiple tiers and thousands of suppliers from diverse environmental, social, and political contexts. Companies need tailored information on the ESG risks in their supply chains to monitor performance, conduct due diligence, and identify collaborative opportunities for positive change. A significant challenge in this area is the limited public availability of reliable, current data on the environmental and social dimensions of material production and processing.
"Material Change" presents findings from studies by DS and RMI on responsible sourcing in the automotive and electronics industries. However, it is not comprehensive in its coverage of the studies' research areas, and its results are not conclusive. This report is an early step in the ongoing programs of DS and RMI to improve the availability of reliable information and incorporate it into future reports.
The report emphasizes that supply chain risks and opportunities for change vary significantly across materials and companies. Corporate policies and management practices at individual sites and facilities often determine how potential impacts and reputation risks associated with business activities are managed. While acknowledging the responsibility of companies to conduct due diligence in line with international standards, the report clarifies that it is not a substitute for company due diligence, nor should its information be seen as representing specific risks to any one company or as being universally present in a particular material supply chain.
DS and RMI recognize the power of collaborative action among businesses, industries, governments, and civil society in addressing serious social and environmental problems in countries where these materials originate. "Material Change" is intended to initiate discussions on collective actions by industry groups or trade associations to maximize positive social, environmental, and governance impacts. The use of this report and its information is subject to a Creative Commons-Attribution-NonCommercial-NoDerivative Works License, with credit given to the Responsible Minerals Initiative, Drive Sustainability, and The Dragonfly Initiative for their research and analysis efforts.