Car Performance Under Pressure

Car companies have come under intense scrutiny over their environmental performance in recent years, particularly in Europe. Climate change and pollution are the biggest pressure points. But increasingly, the sustainability of the supply chain is an area under the ethical microscope too. Since 2003, PSA Peugeot Citro�n, one of Europe's largest car-makers, has been incorporating social and environmental standards into its manufacturing strategy. In March, the French car manufacturer took another step along this road, asking 14 of its largest suppliers, representing a quarter of its 2006 procurement, to endorse ethical commitments. These are designed to bring about compliance with the UN Global Compact's ten principles and the International Labour Organisation's recommendations for good practice. Working with suppliers as big as Bosch, Alcan, Faurecia, IBM, Michelin, Valeo, Vinci, Siemens and Saint Gobain meant global purchasing agreements were necessary, Peugeot says. In future, compliance with the car-maker's sustainability code will be a prerequisite for new suppliers, whose performance against it will be as important as product quality. The integration of environmental and social standards into purchasing processes has become a major element of manufacturers' strategy to improve overall efficiency. Poor ethical standards in the supply chain, such as child labour (as with accusations against Firestone in Liberia in recent years) have reputational risks that can damage manufacturers' brands as well as their sales and margins.