Industry Comparison

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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.
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  • Airlines Airlines industry entities provide air transportation globally to passengers for both leisure and business purposes. This includes commercial full-service, low-cost and regional airlines. Full-service carriers typically use a hub-and-spoke model to design their routes within countries and internationally. Low-cost carriers usually offer a smaller number of routes as well as no-frills service to their customers. Regional carriers typically operate under contract to full-service carriers, expanding the network of the larger carriers. Many airline entities also have a cargo segment in their operations to generate additional revenue. Entities in the industry commonly form partnerships or join alliances to increase network size. Operating as an alliance allows airlines to offer customers access to international or otherwise underserved itineraries on more than one airline under one ticket. At the same time, airlines share some overhead costs and increase their competitive position in the global market without having to operate outside their home country.
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Relevant Issues for both Industries (9 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.
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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).
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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 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.
    • 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.
    • 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.
    • Labour Practices The category addresses the company’s ability to uphold commonly accepted labour standards in the workplace, including compliance with labour laws and internationally accepted norms and standards. This includes, but is not limited to, ensuring basic human rights related to child labour, forced or bonded labour, exploitative labour, fair wages and overtime pay, and other basic workers’ rights. It also includes minimum wage policies and provision of benefits, which may influence how a workforce is attracted, retained, and motivated. The category further addresses a company’s relationship with organized labour and freedom of association.
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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.
      • 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.
    • 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.
    • 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.
    • Critical Incident Risk Management The category addresses the company’s use of management systems and scenario planning to identify, understand, and prevent or minimize the occurrence of low-probability, high-impact accidents and emergencies with significant potential environmental and social externalities. It relates to the culture of safety at a company, its relevant safety management systems and technological controls, the potential human, environmental, and social implications of such events occurring, and the long-term effects to an organization, its workers, and society should these events occur.
      None
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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 As a result of a heavy reliance on hydrocarbon fuels, the Airlines industry generates significant emissions, more than 99% of which are in the form of carbon dioxide (CO2). Therefore, the industry is subject to compliance costs and risks associated with climate change mitigation policies. The main sources of greenhouse gas (GHG) emissions for airlines entities are aircraft fuel use and emissions, ground equipment and facility electricity. Aircraft fuel consumption is the largest contributor to total emissions from the industry, and fuel management is a critical part of reducing emissions. Management of fuel-related environmental impacts includes increasing fuel efficiency through fleet upgrades, retrofits, and flight speed and route design optimisation, as well as using alternative and sustainable fuels. These initiatives require capital expenditures, but in the long term, they may reduce fuel costs and decrease exposure to GHG emissions programmes and regulatory risk.
    • 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.
      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.
      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.
      None
    • Labour Practices The category addresses the company’s ability to uphold commonly accepted labour standards in the workplace, including compliance with labour laws and internationally accepted norms and standards. This includes, but is not limited to, ensuring basic human rights related to child labour, forced or bonded labour, exploitative labour, fair wages and overtime pay, and other basic workers’ rights. It also includes minimum wage policies and provision of benefits, which may influence how a workforce is attracted, retained, and motivated. The category further addresses a company’s relationship with organized labour and freedom of association.
      • Labour Practices Collective agreements cover many workers in the Airlines industry and guide fair wage discussions, safe working conditions and freedom of association, which are among basic worker rights. The organising of essential personnel and increased wages or benefits may result in higher labour costs. At the same time, labour practices may affect long-term business profitability. Effective management of, and communication associated with, issues such as worker pay and working conditions may prevent conflicts with workers that could result in extended periods of strikes, which may slow or suspend operations and damage an entity’s reputation, potentially reducing revenue and market share.
    • 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.
      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.
      None
    • 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 The Airlines industry is characterised by competitive margins because of high fixed capital and labour costs and competition with government-subsidised carriers in some markets. Airlines often seek cost savings using economies of scale with alliances or consolidation, which may result in market concentration. The industry also has high barriers to entry because of limited landing rights and increasing airport congestion. Together, these characteristics may encourage entities to engage in anti-competitive practices that increase consumer prices. As a result, antitrust authorities have scrutinised some airline industry practices such as airport slot management, predatory pricing, and alliances and mergers. Legal fees, reputational risk, delayed merger or acquisition transaction costs, and limits to growth through acquisition or merger may create material risks for investors.
    • Critical Incident Risk Management The category addresses the company’s use of management systems and scenario planning to identify, understand, and prevent or minimize the occurrence of low-probability, high-impact accidents and emergencies with significant potential environmental and social externalities. It relates to the culture of safety at a company, its relevant safety management systems and technological controls, the potential human, environmental, and social implications of such events occurring, and the long-term effects to an organization, its workers, and society should these events occur.
      • Accident & Safety Management Air travel accidents may result in significant consequences. Passenger safety is paramount in the Airlines industry. Although air travel is one of the safest transport modes, airlines are held to very high safety standards, and consumers expect accident-free operations. Furthermore, since products transported by air tend to be high-value or perishable goods, delivering them safely and in a timely manner is a priority for any carrier. Airline accidents may result in significant environmental and social externalities and require entities to pay for remediation and victim compensation. Safety incidents or violations of safety regulations may affect an entity’s reputation, increasing its risk and cost of capital, resulting in reduced consumer demand and revenues. Even if they occur rarely, larger accidents may result in significant, long-term effects on brand value and revenue growth. Providing adequate employee safety training and ensuring the health and well-being of crew members is critical to ensuring safety. Timely and competent aircraft maintenance may minimise the chances of technical failure and regulatory penalties for non-compliance.

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