Greenhouse Gas Advisory Committee

Greenhouse Gas Advisory Committee

Project Scope

Business case introduction - You may want to include background information and specific data that will set the stage for documenting your business case.

The automotive industry is a large producer of greenhouse gas (GHG) emissions from both its

manufacturing and logistics operations. These emissions are now being regulated by a growing

number of regions and countries throughout the world. In addition, there are an increasing number of non-government organizations (NGO’s) and investors that are interested in this data and how a company is managing its emissions. The impact that GHG emissions may have on a company’s operation and public perception are now being assessed by many financial firms and SEC reporting is required for publicly held U.S. based companies.

Our understanding of the impact that GHG emissions may have on climate change and the environment is evolving, however it is clear that the need for GHG emission estimates must now become a part of business operations and public disclosure.

The automotive industry must be prepared to estimate GHG emissions from not only from its operations, but it’s supply base as well. AIAG member companies are developing industry common emission estimation processes and the training to support the supply chain to meet this need.

Describe the industry business problem – Provide additional details on the issues that drive the business problem. Explain how the current situation will affect industry stakeholders over the next three to five years. (increased cost, inefficient processes, etc.)

There are several potential problems that drive the need for this :

1. Regulatory. If applicable, companies will have to comply with GHG regulatory requirements in a growing number of country or regional jusisdictional areas in which it operates. Generally regulatory reporting is required of the largest of sites (i.e., greater than 25,000 tons of GHG per year). Therefore, if regulatory reporting criteria were utilized, then the majority of the industry’s GHG emissions would not be counted and recorded emissions would be inconsistent from country to country

2. OEM and Tier 1 Request. There are two OEMs and at least one Tier 1 currently requesting GHG data and others are expected to request GHG data as part their sustainability efforts. If companies had reporting on to individual company methodologies, then not only would the overall process would be extremely inefficient and inconsistent, but the measured outcomes across the industry would be highly variable (as they would depend on the methodology. If each company implements their own measurement and reporting process, then there is a significant development cost that must be borne.

3. Scope 3. Scope 3 data collection and reporting is extremely broad and needs to be evaluated for what is applicable and appropriate for the automotive industry

The AIAG membership needs to take a leadership role to develop a single, common global process for collecting, calculating, and reporting GHG emissons.

Describe the proposed solution – What type of solution is being sought? (business process guideline, standard, regulation, technical process, EDI solution, training, etc.) Include project goals and/or objectives. Is this solution global? Is it applicable to other industries? Describe how the solution will be verified and validated. Determine if this project includes helping the industry with implementation of the solution.

This project will continue to address the need for a common, voluntary GHG emissions calculating and reporting process across the auto industry and its supply chain. The process will allow OEMs and Tier 1s to calculate and report emissions from the supply base in a globally consistant manner.

The project has completed the following actions:

• Gather information on what process and methodology will meet the needs of the AIAG members and their suppliers;

• Determine the appropriate and common methods for GHG estimation

• Develop an AIAG Guidance document for data collection and emission estimation and reporting;

The project will address the following actions:

• Review the use of the current AIAG materials by OEMs and process and reporting materials;

• Evaluate alternatives to current AIAG guidance document (e.g. CDP, EICC,)

• Recommend progression of the GHG Advisory Committee to include environmental sustainability issues, such as energy, water, waste water, waste generation & other air emissions) with coordination through an environmental- sustainability advisory committee

• Prepare for the GHG Advisory Committee to contribute content to the HS&E Call-to-Action event

• No matter what the methodology, additional training will be required over the next five years for on-going education and information sharing. Given the continued difficulty in conducting traditional training, evaluate the appropriate method(s) for delivering baseline and update training. Options include, but are not limited to:

o Webinars to provide updated GHG emission estimation and reporting matters related to OEMs and suppliers.

 Additional topics for webinars: GHG reduction methods and renewable energy discussions and fuel switching

 Highlight web-based/data base GHG calculation systems

 GHG Benchmarking (use available resources – CDP, EPA Energy Star)

 Best Practices for reduction methods

 Scope 3 data collection and reporting

o Co-Sponsor Symposiums. Whether with other organizations or combining with the GHG Symposium with other AIAG Events, there needs to be more cost effective information delivery methods to provide the essential information for managing the data collected, understanding the process, and reporting results,

 Evaluate combinations with other like associations (e.g. Engineering Society of Detroit)

 Increase integration with the CR Summit

Define critical success factors for implementation of the proposed solution – What is necessary in order for this solution to be implemented by the industry, e.g. ease of implementation, OEM buy-in, etc.

• Review progress in the AIAG Purchasing VP Meeting to gain support on activities

• Continued support from the VP’s in regards to the development of common metrics and reporting is critical for success and the need for technical as well as purchasing resources to participate in GHG workgroup.

• A consensus by the participating members of the GHG advisory committee on operational / organizational boundaries, method of calculation,

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