Industry Comparison
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You are viewing information about the following Industries:
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Auto Parts
Entities in the Auto Parts industry supply motor vehicle parts and accessories to original equipment manufacturers (OEM). Auto parts entities typically specialise in manufacturing and assembling parts or accessories, such as engine exhaust systems, alternative drivetrains, hybrid systems, catalytic converters, aluminium wheels (rims), tyres, rear-view mirrors, and onboard electrical and electronic equipment. Although the larger automotive industry includes several tiers of suppliers that provide parts and raw materials used to assemble motor vehicles, the scope of these Auto Parts industry disclosures includes only Tier 1 suppliers that supply parts directly to OEMs. The scope of the industry excludes captive suppliers, such as engine and stamping facilities, owned and operated by OEMs. It also excludes Tier 2 suppliers, which provide inputs for the Auto Parts industry. -
Meat, Poultry & Dairy
The Meat, Poultry & Dairy industry produces raw and processed animal products, including meats, eggs and dairy products, for human and animal consumption. Important activities include animal raising, slaughtering, processing and packaging. The industry’s largest entities have international operations, and entities are integrated vertically to varying degrees, depending on the type of animal produced. Large industry operators typically rely on contract or independent farmers to supply animals and may have varying degrees of control over their operations. The industry sells products primarily to the Processed Foods industry and to retail distributors that distribute finished products to key end markets including restaurants, livestock and pet feed consumers, and grocery retailers.
Relevant Issues for both Industries (12 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.-
Environment
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GHG Emissions
The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3). - Air Quality
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Energy Management
The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope. -
Water & Wastewater Management
The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution. -
Waste & Hazardous Materials Management
The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories. -
Ecological Impacts
The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.
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Social Capital
- Human Rights & Community Relations
- Customer Privacy
- Data Security
- Access & Affordability
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Product Quality & Safety
The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products. -
Customer Welfare
The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products. - Selling Practices & Product Labeling
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Human Capital
- Labour Practices
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Employee Health & Safety
The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment. - Employee Engagement, Diversity & Inclusion
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Business Model and Innovation
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Product Design & Lifecycle Management
The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories. - Business Model Resilience
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Supply Chain Management
The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labour practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category. -
Materials Sourcing & Efficiency
The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category. - Physical Impacts of Climate Change
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Leadership and Governance
- Business Ethics
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Competitive Behaviour
The category covers social issues associated with existence of monopolies, which may include, but are not limited to, excessive prices, poor quality of service, and inefficiencies. It addresses a company’s management of legal and social expectation around monopolistic and anti-competitive practices, including issues related to bargaining power, collusion, price fixing or manipulation, and protection of patents and intellectual property (IP). - Management of the Legal & Regulatory Environment
- Critical Incident Risk Management
- Systemic Risk Management
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.-
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GHG Emissions
The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).None -
Energy Management
The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.-
Energy Management
Most energy consumed in the automobile manufacturing process occurs in the supply chain. Auto parts manufacturers use electricity and fossil fuels in their production processes, resulting in direct and indirect emissions of greenhouse gases (GHGs). Purchased electricity is a majority of the energy used in the Auto Parts industry. Sustainability initiatives such as incentives for energy efficiency and renewable energy are making alternative sources of energy more cost competitive. Regulators and consumers also are encouraging the industry to reduce GHG emissions. While managing the cost and risks associated with overall energy efficiency, reliance on various types of energy and access to alternative energy sources may become increasingly important.
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Water & Wastewater Management
The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.None -
Waste & Hazardous Materials Management
The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.-
Waste Management
Manufacturing auto parts involves using significant amounts of materials (including steel, iron, aluminium and plastics, among others). Waste generated by the industry includes machine lubricants and coolants, aqueous and solvent cleaning systems, paint, and scrap metals and plastics. Auto parts manufacturers spend a significant proportion of revenue on the cost of materials. Therefore, entities that manage manufacturing inputs properly by reducing and recycling waste may mitigate price volatility and supply disruption risks. Moreover, auto parts manufacturers may achieve cost savings and improve operational efficiency by increasing the proportion of waste recycled. Equally, auto parts manufacturers whose waste management practices create negative environmental impacts may face increased regulatory oversight. Violating environmental regulations may increase legal expenses as well as capital expenditures for pollution-control facilities and occupational health and safety projects.
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Ecological Impacts
The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.None -
Product Quality & Safety
The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.-
Product Safety
Driving is a risky activity, since distracted driving, speeding, drunk driving, dangerous weather conditions and other factors may result in accidents that expose drivers, passengers and bystanders to injuries and deaths. Accidents can also be caused by defective vehicle parts, and an entity’s failure to detect defects before vehicles are sold may have significant financial repercussions for both automobile and auto parts manufacturers. Entities improving vehicle safety and responding quickly when defects are identified may mitigate potentially costly regulatory action or customer lawsuits. These efforts may preserve relationships with original equipment manufacturers (OEMs), who often select Tier 1 suppliers based on their safety performance and reliability. As cars integrate more sophisticated electronics and technologies, risks related to recalls may increase. Through effective management of product safety, entities may enhance their brand value and improve sales over the long term.
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Customer Welfare
The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.None -
Employee Health & Safety
The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.None -
Product Design & Lifecycle Management
The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.-
Design for Fuel Efficiency
Automobile manufacturers increasingly are demanding motor parts and components that reduce vehicle fuel consumption. Fuel-efficient components and parts are critical in reducing automobile tailpipe emissions through energy efficiency gains and weight reductions, among other factors. Auto parts entities that design and manufacture such parts may increase sales to auto manufacturers that increasingly are facing stricter environmental regulations and customer preferences for more environmentally friendly cars.
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Supply Chain Management
The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labour practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.None -
Materials Sourcing & Efficiency
The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.-
Materials Sourcing
Entities in the Auto Parts industry commonly rely on rare earth metals and other critical materials as important inputs for finished products. Many of these inputs have few substitutes and often are sourced from a few countries, many of which may be subject to geopolitical uncertainty. Other sustainability-related impacts such as 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 because of growing global demand from other sectors may 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 strive to reduce greenhouse gas emissions and consumers demand more fuel-efficient vehicles, the share of hybrids and zero-emission vehicles (ZEVs) produced by the Automobiles industry may continue to increase in the future. Entities that limit the use of critical materials, secure sourcing and develop alternatives may mitigate supply disruptions and volatile input prices, which could adversely affect their margins, risk profile and cost of capital. -
Materials Efficiency
Millions of vehicles worldwide reach the end of their useful lives every year. At the same time, the rate of vehicle ownership is expanding globally, resulting in more end-of-life vehicles. To reduce vehicle lifecycle impact, auto parts manufacturers may design parts to be more easily recyclable and reusable, and apply modularity principles to product design. They also may sponsor take-back programmes to ensure safe product disposal and reuse. Given input price volatility and resource constraints, entities that manage materials efficiency may improve their long-term operational efficiency and risk profile. In addition, entities may reduce manufacturing costs by using fewer materials or by recycling materials, which may improve their margins.
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Competitive Behaviour
The category covers social issues associated with existence of monopolies, which may include, but are not limited to, excessive prices, poor quality of service, and inefficiencies. It addresses a company’s management of legal and social expectation around monopolistic and anti-competitive practices, including issues related to bargaining power, collusion, price fixing or manipulation, and protection of patents and intellectual property (IP).-
Competitive Behaviour
Competitive business practices are an important governance issue for entities in the Auto Parts industry. Although industry concentration is low, a wide range of auto parts are available, and competition for business within each category of parts may be limited. Therefore, leading producers of any specific auto part may wield substantial market power in specific market segments, creating antitrust concerns. Collusion and price fixing by auto parts manufacturers may ultimately affect consumers through higher vehicle prices. If such activities are discovered, jurisdictions may impose legal or regulatory penalties, and the resulting reputational damage may adversely affect an entity’s valuation.
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GHG Emissions
The category addresses direct (Scope 1) greenhouse gas (GHG) emissions that a company generates through its operations. This includes GHG emissions from stationary (e.g., factories, power plants) and mobile sources (e.g., trucks, delivery vehicles, planes), whether a result of combustion of fuel or non-combusted direct releases during activities such as natural resource extraction, power generation, land use, or biogenic processes. The category further includes management of regulatory risks, environmental compliance, and reputational risks and opportunities, as they related to direct GHG emissions. The seven GHGs covered under the Kyoto Protocol are included within the category—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).-
Greenhouse Gas Emissions
The Meat, Poultry & Dairy industry generates significant Scope 1 greenhouse gas (GHG) emissions from both livestock and energy-intensive industrial processes. GHG emissions contribute to climate change and create additional regulatory compliance costs and risks for meat, poultry and dairy entities because of climate change mitigation policies. The majority of the industry’s emissions stem directly from the animals themselves through the release of methane during enteric fermentation, and from manure storage and processing. The direct emissions from raising and producing livestock represent a significant portion of total GHG emissions released among all sources. Currently, these emissions sources are not regulated widely, which presents uncertainties regarding the future of GHG regulations for the industry. Entities in this industry also use large quantities of fossil fuels to meet energy needs, generating additional direct GHG emissions and increasing exposure to regulatory risks. Future emission regulations could result in additional operating or compliance costs. By implementing new technologies to capture animal emissions and focusing on energy efficiency, entities may mitigate regulatory risk and volatile energy costs while also limiting GHG emissions.
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Energy Management
The category addresses environmental impacts associated with energy consumption. It addresses the company’s management of energy in manufacturing and/or for provision of products and services derived from utility providers (grid energy) not owned or controlled by the company. More specifically, it includes management of energy efficiency and intensity, energy mix, as well as grid reliance. Upstream (e.g., suppliers) and downstream (e.g., product use) energy use is not included in the scope.-
Energy Management
The Meat, Poultry & Dairy industry relies heavily on purchased electricity and fuel as critical inputs for value creation. Entities’ use of electricity and fossil fuels in their operations results in indirect and direct greenhouse gas (GHG) emissions, which contribute to environmental impacts, including climate change and pollution. Purchased electricity is a significant operating cost for meat, poultry and dairy entities. Efficient energy usage is essential to maintain a competitive advantage in this industry, as purchased fuels and electricity account for a significant portion of total production costs. Decisions regarding alternative fuels use, renewable energy and on-site electricity generation versus purchasing from the grid can influence both the costs and the reliability of the energy supply.
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Water & Wastewater Management
The category addresses a company’s water use, water consumption, wastewater generation, and other impacts of operations on water resources, which may be influenced by regional differences in the availability and quality of and competition for water resources. More specifically, it addresses management strategies including, but not limited to, water efficiency, intensity, and recycling. Lastly, the category also addresses management of wastewater treatment and discharge, including groundwater and aquifer pollution.-
Water Management
The Meat, Poultry & Dairy industry is water-intensive both in raising livestock and industrial processing. Additionally, entities in the industry typically generate wastewater or effluent, from both animal production and processing activities. As water scarcity becomes an issue of growing importance because of population growth, increasing consumption per capita, poor water management and climate change, entities in the industry may face higher operational costs or lost revenues because of water shortages or regulations resulting in production reduction. Entities can manage water-related risks and opportunities through capital investments and assessment of facility locations relative to water scarcity risks, improvements to operational efficiency, and partnerships with regulators and communities on issues related to water access and effluent.
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Waste & Hazardous Materials Management
The category addresses environmental issues associated with hazardous and non-hazardous waste generated by companies. It addresses a company’s management of solid wastes in manufacturing, agriculture, and other industrial processes. It covers treatment, handling, storage, disposal, and regulatory compliance. The category does not cover emissions to air or wastewater nor does it cover waste from end-of-life of products, which are addressed in separate categories.None -
Ecological Impacts
The category addresses management of the company’s impacts on ecosystems and biodiversity through activities including, but not limited to, land use for exploration, natural resource extraction, and cultivation, as well as project development, construction, and siting. The impacts include, but are not limited to, biodiversity loss, habitat destruction, and deforestation at all stages – planning, land acquisition, permitting, development, operations, and site remediation. The category does not cover impacts of climate change on ecosystems and biodiversity.-
Land Use & Ecological Impacts
Meat, Poultry & Dairy industry operations have diverse ecological impacts, primarily because of significant land-use requirements to raise livestock and the contamination of the air, land and groundwater by animal waste. While the impacts are varied, both traditional and confined animal feeding operations may result in significant ecological impacts. The primary concern from confined animal feeding operations and animal-product processing facilities is the generation of large and concentrated amounts of waste and pollutants. Treating effluent and waste from facilities involves significant costs. Non-confined animal feeding operations require large tracts of pastureland and may result in the physical degradation of land resources. Land use and ecological impacts pose legal and regulatory risks in the form of fines, litigation and difficulties obtaining permits for facility expansions or waste discharges.
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Product Quality & Safety
The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.-
Food Safety
Meat, poultry and dairy products are either sold directly to consumers (for example, milk or eggs) or are processed into a wide variety of foods. Maintaining product quality and safety is crucial because contamination by pathogens, chemicals or spoilage presents serious health risks to humans and animals. Food safety practices and procedures in the industry are often subject to intense scrutiny and oversight, and outbreaks of diseases among livestock may result in increased regulation. Product recalls can harm brand reputation, reduce revenues and lead to costly fines. Recalls can also increase regulatory scrutiny, which may lead to trade restrictions. Obtaining food safety certifications and ensuring suppliers follow food safety guidelines may help entities safeguard against product safety risks and improve consumers’ perceived quality of their products.
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Customer Welfare
The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.-
Antibiotic Use in Animal Production
In livestock production, prevalent use of antibiotics that are also administered to humans may promote the development of antibiotic-resistant strains of bacteria. Although the use of antibiotics in animal feed or water supplies can improve the output of animal production and enhance animal welfare in industrial farm settings, entities in the industry must balance these benefits against the potential public health risks. The use of antibiotics in animal production presents reputational and regulatory risks, both of which can affect long-term profitability through effects on demand and market share for meat, poultry and dairy producers. Depending on the animal species, entities in the industry may have varying degrees of control over, and management approaches to, this issue. Entities may have direct control over the feed and medicine administered by contract suppliers in some instances but may set requirements for suppliers more broadly in others.
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Employee Health & Safety
The category addresses a company’s ability to create and maintain a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both chronic and acute). It is traditionally accomplished through implementing safety management plans, developing training requirements for employees and contractors, and conducting regular audits of their own practices as well as those of their subcontractors. The category further captures how companies ensure physical and mental health of workforce through technology, training, corporate culture, regulatory compliance, monitoring and testing, and personal protective equipment.-
Workforce Health & Safety
The Meat, Poultry & Dairy industry has relatively high injury rates compared with other industries given the prevalence of industrial machinery, chemicals, and a fast-paced, loud working environment. Common acute and chronic industrial hazards include musculoskeletal disorders, exposure to chemicals and pathogens, and traumatic injuries from machines and tools. Worker injuries or deaths may result in low worker morale and productivity, and prohibitive legal, financial and reputational risks to the entity. Regulators may levy fines against entities for worker health and safety standard non-compliance or mandate employee training to reduce preventable accidents. By developing a strong safety culture and reducing employees’ exposure to potentially harmful situations, an entity can safeguard against accidents and proactively improve workforce health and safety.
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Product Design & Lifecycle Management
The category addresses incorporation of environmental, social, and governance (ESG) considerations in characteristics of products and services provided or sold by the company. It includes, but is not limited to, managing the lifecycle impacts of products and services, such as those related to packaging, distribution, use-phase resource intensity, and other environmental and social externalities that may occur during their use-phase or at the end of life. The category captures a company’s ability to address customer and societal demand for more sustainable products and services as well as to meet evolving environmental and social regulation. It does not address direct environmental or social impacts of the company’s operations nor does it address health and safety risks to consumers from product use, which are covered in other categories.-
Animal Care & Welfare
Entities in the Meat, Poultry & Dairy industry are especially sensitive to changes in the public perception of animal welfare. Entities perceived to be causing unnecessary cruelty to animals may face increased risk of fines, damage to brand reputation and regulatory restrictions, such as mandated factory closures. Pressure from consumers and advocacy groups can drive shifts in industry practices such as reducing the use of small enclosures. Entities that anticipate or adapt to these trends effectively may increase market share by capturing new markets as they emerge, or by being the first to comply with new regulations.
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Supply Chain Management
The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labour practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.-
Environmental & Social Impacts of Animal Supply Chain
Entities in the Meat, Poultry & Dairy industry rely on a variety of contract farmers and suppliers. Environmental and social impacts within the industry’s supply chain include those related to deforestation, land use and waste management, water withdrawals, animal welfare, antibiotic usage and food safety. An entity’s management of environmental and social risks relating to its animal supply chain is critical to secure a steady source of animals at desired price points and prevent reputational damage, all of which may decrease revenue and market share.
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Materials Sourcing & Efficiency
The category addresses issues related to the resilience of materials supply chains to impacts of climate change and other external environmental and social factors. It captures the impacts of such external factors on operational activity of suppliers, which can further affect availability and pricing of key resources. It addresses a company’s ability to manage these risks through product design, manufacturing, and end-of-life management, such as by using of recycled and renewable materials, reducing the use of key materials (dematerialization), maximizing resource efficiency in manufacturing, and making R&D investments in substitute materials. Additionally, companies can manage these issues by screening, selection, monitoring, and engagement with suppliers to ensure their resilience to external risks. It does not address issues associated with environmental and social externalities created by operational activity of individual suppliers, which is covered in a separate category.-
Animal & Feed Sourcing
Meat, poultry and dairy entities source animal and animal feed from a range of suppliers depending on animal species. The industry’s ability to reliably source animals and animal feed at desired price points may be affected by climate change, water scarcity, land management and other resource scarcity considerations. Entities that select and work with suppliers who are less resource-intensive and who actively manage adaptation to climate change and other resource scarcity risks, may reduce price volatility and supply disruptions. Additionally, such entities may improve their brand reputation and develop new market opportunities. Failure to effectively manage sourcing risks may result in higher costs of capital, reduced margins and constrained revenue growth.
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Competitive Behaviour
The category covers social issues associated with existence of monopolies, which may include, but are not limited to, excessive prices, poor quality of service, and inefficiencies. It addresses a company’s management of legal and social expectation around monopolistic and anti-competitive practices, including issues related to bargaining power, collusion, price fixing or manipulation, and protection of patents and intellectual property (IP).None
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General Issue Category
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Auto Parts
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Meat, Poultry & Dairy
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GHG Emissions
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Greenhouse Gas Emissions
The Meat, Poultry & Dairy industry generates significant Scope 1 greenhouse gas (GHG) emissions from both livestock and energy-intensive industrial processes. GHG emissions contribute to climate change and create additional regulatory compliance costs and risks for meat, poultry and dairy entities because of climate change mitigation policies. The majority of the industry’s emissions stem directly from the animals themselves through the release of methane during enteric fermentation, and from manure storage and processing. The direct emissions from raising and producing livestock represent a significant portion of total GHG emissions released among all sources. Currently, these emissions sources are not regulated widely, which presents uncertainties regarding the future of GHG regulations for the industry. Entities in this industry also use large quantities of fossil fuels to meet energy needs, generating additional direct GHG emissions and increasing exposure to regulatory risks. Future emission regulations could result in additional operating or compliance costs. By implementing new technologies to capture animal emissions and focusing on energy efficiency, entities may mitigate regulatory risk and volatile energy costs while also limiting GHG emissions.
Energy Management
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Energy Management
Most energy consumed in the automobile manufacturing process occurs in the supply chain. Auto parts manufacturers use electricity and fossil fuels in their production processes, resulting in direct and indirect emissions of greenhouse gases (GHGs). Purchased electricity is a majority of the energy used in the Auto Parts industry. Sustainability initiatives such as incentives for energy efficiency and renewable energy are making alternative sources of energy more cost competitive. Regulators and consumers also are encouraging the industry to reduce GHG emissions. While managing the cost and risks associated with overall energy efficiency, reliance on various types of energy and access to alternative energy sources may become increasingly important.
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Energy Management
The Meat, Poultry & Dairy industry relies heavily on purchased electricity and fuel as critical inputs for value creation. Entities’ use of electricity and fossil fuels in their operations results in indirect and direct greenhouse gas (GHG) emissions, which contribute to environmental impacts, including climate change and pollution. Purchased electricity is a significant operating cost for meat, poultry and dairy entities. Efficient energy usage is essential to maintain a competitive advantage in this industry, as purchased fuels and electricity account for a significant portion of total production costs. Decisions regarding alternative fuels use, renewable energy and on-site electricity generation versus purchasing from the grid can influence both the costs and the reliability of the energy supply.
Water & Wastewater Management
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Water Management
The Meat, Poultry & Dairy industry is water-intensive both in raising livestock and industrial processing. Additionally, entities in the industry typically generate wastewater or effluent, from both animal production and processing activities. As water scarcity becomes an issue of growing importance because of population growth, increasing consumption per capita, poor water management and climate change, entities in the industry may face higher operational costs or lost revenues because of water shortages or regulations resulting in production reduction. Entities can manage water-related risks and opportunities through capital investments and assessment of facility locations relative to water scarcity risks, improvements to operational efficiency, and partnerships with regulators and communities on issues related to water access and effluent.
Waste & Hazardous Materials Management
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Waste Management
Manufacturing auto parts involves using significant amounts of materials (including steel, iron, aluminium and plastics, among others). Waste generated by the industry includes machine lubricants and coolants, aqueous and solvent cleaning systems, paint, and scrap metals and plastics. Auto parts manufacturers spend a significant proportion of revenue on the cost of materials. Therefore, entities that manage manufacturing inputs properly by reducing and recycling waste may mitigate price volatility and supply disruption risks. Moreover, auto parts manufacturers may achieve cost savings and improve operational efficiency by increasing the proportion of waste recycled. Equally, auto parts manufacturers whose waste management practices create negative environmental impacts may face increased regulatory oversight. Violating environmental regulations may increase legal expenses as well as capital expenditures for pollution-control facilities and occupational health and safety projects.
Ecological Impacts
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Land Use & Ecological Impacts
Meat, Poultry & Dairy industry operations have diverse ecological impacts, primarily because of significant land-use requirements to raise livestock and the contamination of the air, land and groundwater by animal waste. While the impacts are varied, both traditional and confined animal feeding operations may result in significant ecological impacts. The primary concern from confined animal feeding operations and animal-product processing facilities is the generation of large and concentrated amounts of waste and pollutants. Treating effluent and waste from facilities involves significant costs. Non-confined animal feeding operations require large tracts of pastureland and may result in the physical degradation of land resources. Land use and ecological impacts pose legal and regulatory risks in the form of fines, litigation and difficulties obtaining permits for facility expansions or waste discharges.
Product Quality & Safety
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Product Safety
Driving is a risky activity, since distracted driving, speeding, drunk driving, dangerous weather conditions and other factors may result in accidents that expose drivers, passengers and bystanders to injuries and deaths. Accidents can also be caused by defective vehicle parts, and an entity’s failure to detect defects before vehicles are sold may have significant financial repercussions for both automobile and auto parts manufacturers. Entities improving vehicle safety and responding quickly when defects are identified may mitigate potentially costly regulatory action or customer lawsuits. These efforts may preserve relationships with original equipment manufacturers (OEMs), who often select Tier 1 suppliers based on their safety performance and reliability. As cars integrate more sophisticated electronics and technologies, risks related to recalls may increase. Through effective management of product safety, entities may enhance their brand value and improve sales over the long term.
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Food Safety
Meat, poultry and dairy products are either sold directly to consumers (for example, milk or eggs) or are processed into a wide variety of foods. Maintaining product quality and safety is crucial because contamination by pathogens, chemicals or spoilage presents serious health risks to humans and animals. Food safety practices and procedures in the industry are often subject to intense scrutiny and oversight, and outbreaks of diseases among livestock may result in increased regulation. Product recalls can harm brand reputation, reduce revenues and lead to costly fines. Recalls can also increase regulatory scrutiny, which may lead to trade restrictions. Obtaining food safety certifications and ensuring suppliers follow food safety guidelines may help entities safeguard against product safety risks and improve consumers’ perceived quality of their products.
Customer Welfare
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Antibiotic Use in Animal Production
In livestock production, prevalent use of antibiotics that are also administered to humans may promote the development of antibiotic-resistant strains of bacteria. Although the use of antibiotics in animal feed or water supplies can improve the output of animal production and enhance animal welfare in industrial farm settings, entities in the industry must balance these benefits against the potential public health risks. The use of antibiotics in animal production presents reputational and regulatory risks, both of which can affect long-term profitability through effects on demand and market share for meat, poultry and dairy producers. Depending on the animal species, entities in the industry may have varying degrees of control over, and management approaches to, this issue. Entities may have direct control over the feed and medicine administered by contract suppliers in some instances but may set requirements for suppliers more broadly in others.
Employee Health & Safety
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Workforce Health & Safety
The Meat, Poultry & Dairy industry has relatively high injury rates compared with other industries given the prevalence of industrial machinery, chemicals, and a fast-paced, loud working environment. Common acute and chronic industrial hazards include musculoskeletal disorders, exposure to chemicals and pathogens, and traumatic injuries from machines and tools. Worker injuries or deaths may result in low worker morale and productivity, and prohibitive legal, financial and reputational risks to the entity. Regulators may levy fines against entities for worker health and safety standard non-compliance or mandate employee training to reduce preventable accidents. By developing a strong safety culture and reducing employees’ exposure to potentially harmful situations, an entity can safeguard against accidents and proactively improve workforce health and safety.
Product Design & Lifecycle Management
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Design for Fuel Efficiency
Automobile manufacturers increasingly are demanding motor parts and components that reduce vehicle fuel consumption. Fuel-efficient components and parts are critical in reducing automobile tailpipe emissions through energy efficiency gains and weight reductions, among other factors. Auto parts entities that design and manufacture such parts may increase sales to auto manufacturers that increasingly are facing stricter environmental regulations and customer preferences for more environmentally friendly cars.
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Animal Care & Welfare
Entities in the Meat, Poultry & Dairy industry are especially sensitive to changes in the public perception of animal welfare. Entities perceived to be causing unnecessary cruelty to animals may face increased risk of fines, damage to brand reputation and regulatory restrictions, such as mandated factory closures. Pressure from consumers and advocacy groups can drive shifts in industry practices such as reducing the use of small enclosures. Entities that anticipate or adapt to these trends effectively may increase market share by capturing new markets as they emerge, or by being the first to comply with new regulations.
Supply Chain Management
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Environmental & Social Impacts of Animal Supply Chain
Entities in the Meat, Poultry & Dairy industry rely on a variety of contract farmers and suppliers. Environmental and social impacts within the industry’s supply chain include those related to deforestation, land use and waste management, water withdrawals, animal welfare, antibiotic usage and food safety. An entity’s management of environmental and social risks relating to its animal supply chain is critical to secure a steady source of animals at desired price points and prevent reputational damage, all of which may decrease revenue and market share.
Materials Sourcing & Efficiency
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Materials Sourcing
Entities in the Auto Parts industry commonly rely on rare earth metals and other critical materials as important inputs for finished products. Many of these inputs have few substitutes and often are sourced from a few countries, many of which may be subject to geopolitical uncertainty. Other sustainability-related impacts such as 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 because of growing global demand from other sectors may 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 strive to reduce greenhouse gas emissions and consumers demand more fuel-efficient vehicles, the share of hybrids and zero-emission vehicles (ZEVs) produced by the Automobiles industry may continue to increase in the future. Entities that limit the use of critical materials, secure sourcing and develop alternatives may mitigate supply disruptions and volatile input prices, which could adversely affect their margins, risk profile and cost of capital. -
Materials Efficiency
Millions of vehicles worldwide reach the end of their useful lives every year. At the same time, the rate of vehicle ownership is expanding globally, resulting in more end-of-life vehicles. To reduce vehicle lifecycle impact, auto parts manufacturers may design parts to be more easily recyclable and reusable, and apply modularity principles to product design. They also may sponsor take-back programmes to ensure safe product disposal and reuse. Given input price volatility and resource constraints, entities that manage materials efficiency may improve their long-term operational efficiency and risk profile. In addition, entities may reduce manufacturing costs by using fewer materials or by recycling materials, which may improve their margins.
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Animal & Feed Sourcing
Meat, poultry and dairy entities source animal and animal feed from a range of suppliers depending on animal species. The industry’s ability to reliably source animals and animal feed at desired price points may be affected by climate change, water scarcity, land management and other resource scarcity considerations. Entities that select and work with suppliers who are less resource-intensive and who actively manage adaptation to climate change and other resource scarcity risks, may reduce price volatility and supply disruptions. Additionally, such entities may improve their brand reputation and develop new market opportunities. Failure to effectively manage sourcing risks may result in higher costs of capital, reduced margins and constrained revenue growth.
Competitive Behaviour
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Competitive Behaviour
Competitive business practices are an important governance issue for entities in the Auto Parts industry. Although industry concentration is low, a wide range of auto parts are available, and competition for business within each category of parts may be limited. Therefore, leading producers of any specific auto part may wield substantial market power in specific market segments, creating antitrust concerns. Collusion and price fixing by auto parts manufacturers may ultimately affect consumers through higher vehicle prices. If such activities are discovered, jurisdictions may impose legal or regulatory penalties, and the resulting reputational damage may adversely affect an entity’s valuation.