Motor City’s Big 3: Leading The Way On Sustainability Reporting

Submitted by Hank Boerner

By Hank Boerner

America’s manufacturing fortunes have long been represented by the “Big Three” auto companies – Ford Motor, General Motors and Chrysler.

When WWII ended, and for the post-war prosperity era well into the late-1960s, American car brands dominated the roads not only in North America, but around the world. American vehicles were an export engine; millions of people (by some estimates up to 10 percent of the working population) depended on the Big Three for their jobs. Communities counted on their presence.

And then the roof caved in.

The Decline of the U.S. Auto Industry

The Motor City’s Big Three suffered decline with gradual steps – think of all the foreign brands sold in the U.S. today – and sometimes by sudden shock (the gasoline shortages of the early 1970s delivered sharp blows). And often the suffering was self-inflicted – products did not meet consumer needs or expectations, or were poorly designed and not as reliable as in the past. 

Toyota of Japan, which first came to the U.S. over 40 years ago, steadily climbed until it was No. 1 in sales – unthinkable back in the day when General Motors accounted for half the sales in the U.S. auto market!

Or earlier, when for a brief time, one of every two cars in use were manufactured by Ford.

And so when the Great Recession began, the Big Three were one of the first to suffer rapid and steep losses – vehicle sales declined by one-third by the end of 2008. Chrysler was for a time combined with Germany’s Daimler-Benz, and then once again, left as a very weakened standalone. GM, a large, lumbering bureaucracy, experienced years of significant financial losses. Ford was ahead of the competition before the recession – it borrowed $25 billion against all of its assets including the prized blue script logo affixed to millions of vehicles and so took no federal bailout monies.

The Rescue of the U.S. Auto Industry

Not long into the new Obama Administration’s reign it was clear: like the nation’s troubled banking industry, the Big Three would have to be “rescued.” And so they were. Somewhere north of $80 billion was eventually allocated through various loan guarantees, loans, TARP monies and other financial aid – the auto industry was “nationalized,” said some. Indeed, the U.S. Treasury owns shares of GM and Chrysler Group. So does the United Auto Workers Union.

And now in 2012, some pleasing surprises – the three companies are once again hiring, re-opening plants, posting profits, repaying government monies, and once again their future is looking bright. Moreover, all three companies have published robust and exemplary sustainability and responsibility reports this year -- for 2011 results and some for the 2012 model year results.

“Good corporate citizenship” on display? Why not!

The U.S. Auto Industry’s Sustainability Reporting

Chrysler Group, partly owned by Fiat Group (Italy), details the company’s sustainability plans, and focuses on such topics as CO2 emissions (vehicles), the company’s carbon footprint, environmental impacts, building a sustainable supply chain, and the “recyclability” of its cars and trucks, in its 2011 Sustainability Report.

A doorstop of a report at 260 pages, Chrysler/Fiat Group’s report is a self-declared “A+” level with external assurance by SGS Italia. Fiat’s deep experience in publishing these reports is evident. For those seeking models of comprehensive ESG reports, look at this one.

General Motors: “Back from the dead," and reorganized, GM recaptured the Np. 1 sales spot for some time in 2012. The new GM also published its first sustainability report -- Sustainability in Motion this year. The report is “buildable” online to enable customization by the user and follows the GRI framework although the company did not select an application Level for this first effort.

Ford Motor Company: Ford has been building its "green" reputation for more than a decade and its latest sustainability report marks its 13^th, a GRI Level A (not third-party assured, so no “+”).  The report covers 2011 results and 2012 model year vehicles and is built around several themes: climate change, financial health, water, vehicle safety, supply chain, and people. The document is also part of a more comprehensive disclosure by the company regarding its ESG/Sustainability strategies and performance.

Ford is also a signatory of the United Nations Global Compact (UNGC) and the report is in compliance with the UNGC's annual reporting requirements.

GRI & the U.S. Auto Industry

GRI’s Focal Point USA team has been working closely with the Automotive Industry Action Group (AIAG), which includes the Big 3 and many other companies -- 60,000 industry participants worldwide representing 900 organizations. The U.S. Big 3 founded AIAG and today, members include Toyota, Honda and Nissan.

Each of these companies follows the GRI framework for their reporting and in March, the AIAG announced that it would become a GRI Organizational Stakeholder and would have a collective voice in the G4 framework discussions.

Now, if GM and Chrysler had not published sustainability reports, would they have been cut some slack? Maybe. But by publishing their reports, along with Ford, America’s Big 3 have demonstrated their intention to be "good citizens," and put stakes in the ground for future ESG disclosure and structured reporting.

The 1970s management at the three carmakers would be astonished today at the sheer breadth and depth of these reports and the subject matter covered. We’ve come a long way from the market dominance of the Big 3 in the post-World War II years -- but these reports point to a bright future for Ford, GM and Chrysler/Fiat.