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Automobiles industry entities manufacture passenger vehicles, light trucks and motorcycles. Industry players design, build and sell vehicles that use a range of traditional and alternative fuels and powertrains. They sell these vehicles to dealers for consumer retail sales as well as sell directly to fleet customers, including car rental and leasing entities, commercial fleets and governments. Because of the industry’s global nature, nearly all entities have manufacturing facilities, assembly plants and service locations in several countries around the world. The Automobiles industry is concentrated, with a few large manufacturers and a diversified supply chain. Given the industry’s reliance on natural resources and sensitivity to the business cycle, revenue is typically cyclical.

Relevant Issues (4 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Automobiles

Product Quality & Safety
  • Product Safety

    Driving is a risky activity, as factors such as distracted driving, speeding, drunk driving, and dangerous weather conditions can lead to accidents that expose drivers, passengers, and bystanders to possible injuries and deaths. Accidents can also be caused by defective vehicles, and failure to detect defects before vehicles are sold can have significant financial repercussions for auto manufacturers. Defective vehicles sold in many countries that do not meet safety requirements must be recalled and repaired or replaced at the manufacturer’s cost. Recalls can result in reputational damage, which can reduce revenues and growth potential while increasing an entity’s risk profile and thus its cost of capital. Ensuring vehicle safety and responding in a timely manner when defects are identified can protect entities from regulatory action or customer lawsuits, which may result in significant costs that can erode industry margins. Through effective management of the issue, entities can enhance their brand value and drive higher sales over the long term.
Labor Practices
  • Labour Practices

    Many workers in the Automobiles industry are covered under collective bargaining agreements that cover fair wages, safe working conditions, and freedom of association, which are among basic worker rights. Meanwhile, due to the global nature of the industry, auto entities may also operate in countries where worker rights are not adequately protected. Effective management of, and communication regarding, issues such as worker pay and working conditions can prevent conflicts with workers that could lead to extended periods of strikes, which can slow or shut down manufacturing, reduce revenues, and raise operational risk. Auto manufacturers that manage workers in a way that protects worker rights may face higher labour costs in the short term, but may be better positioned to ensure the long-term financial sustainability of their operations by enhancing worker productivity.
Product Design & Lifecycle Management
  • Fuel Economy & Use-phase Emissions

    Motor vehicle fossil fuel combustion accounts for a significant share of the greenhouse gas (GHG) emissions contributing to global climate change. Engine exhaust also generates local air pollutants such as nitrogen oxides (NO?), volatile organic compounds (VOCs) and particulate matter (PM), which can threaten human health and the environment. In this context, vehicle emissions increasingly concern consumers and regulators around the world. Although use-phase emissions are downstream from auto manufacturers, regulations often focus on auto manufacturers to reduce these emissions, such as through fuel economy standards. More stringent emissions standards and changing consumer demands are driving electric vehicle and hybrid market expansion, as well as for high fuel-efficiency conventional vehicles. Moreover, manufacturers are designing innovative vehicles made with lighter-weight materials to improve fuel efficiency. Entities that meet current fuel-efficiency and emissions standards and continue to innovate to meet or exceed future regulatory standards in various markets may strengthen their competitive position and expand their market share, while mitigating the risk of reduced demand for conventional vehicles.
Materials Sourcing & Efficiency
  • Materials Sourcing

    Entities in the Automobiles industry commonly rely on rare earth metals and other critical materials as key inputs. Many of these inputs have few or no available substitutes and are often sourced from deposits concentrated in a few countries, many of which are subject to geopolitical uncertainty. Other sustainability impacts related to climate change, land use, resource scarcity, and conflict in regions where the industry’s supply chain operates are also increasingly shaping the industry’s ability to source materials. Additionally, increased competition for these materials due to growing global demand from other sectors can result in price increases and supply risks. These materials play a crucial role in clean energy technologies, such as electric and hybrid vehicles. As regulators aim to reduce greenhouse gas emissions and consumer demand grows for more fuel-efficient vehicles, the share of hybrids and zero emission vehicles (ZEVs) produced by the Automobiles industry is likely to continue to increase in the future. Entities that are able to limit the use of critical materials, secure their sourcing, and develop alternatives will protect themselves from supply disruptions and volatile input prices, which may impact their margins, risk profile and cost of capital.
  • Materials Efficiency & Recycling

    Auto manufacturing involves the use of significant amounts of materials (including steel, iron, aluminium, and plastics) and can generate substantial amounts of waste (including scrap metal, paint sludge, and shipping materials). As the rate of vehicle ownership expands globally and millions of vehicles reach the end of their useful lives every year, the lifecycle environmental impacts of automobiles are increasing. Automobile entities can use design innovation as well as process and technological improvements to mitigate these impacts and achieve material financial benefits. Entities that innovate to improve materials efficiency in their production processes, including reducing waste and reusing or recycling waste and scrapped vehicles, can contribute to lowering the lifecycle environmental impacts of vehicles and the strain on natural resources from the production of new materials. Through such innovation, entities can achieve cost savings by lowering input costs and protect themselves from potential regulatory fines or penalties. They can also protect themselves from fluctuations in the prices and availability of key inputs into their production process that may arise from resource scarcity.

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Current Industry: Automobiles

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