DRIVE SUSTAINABILITY PROGRESS REPORT

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#DriveSustainabilityDRIVE SUSTAINABILITYPROGRESS REPORTDRIVING CHANGE SINCE 2013

ABOUT DRIVE SUSTAINABILITY2COMPLIANCEOUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION67ABOUT DRIVE SUSTAINABILITYI. ABOUT DRIVE SUSTAINABILITYDrive Sustainability is an automotive partnership with the following LeadPartners - BMW Group, Daimler AG, Scania CV AB, Volkswagen Group,Volvo Cars, Volvo Group - and the following Partners - Ford, Honda,Jaguar Land Rover, Toyota Motor Europe. The Partnership, facilitatedby CSR Europe, aims to drive sustainability throughout the automotivesupply chain by promoting a common approach within the industry andby integrating sustainability in the overall procurement process.“The Drive Sustainability partnership allowsautomotive companies to have one commonvoice towards their supply chains and engagewith the relevant stakeholders on topics relatedto sustainability. Together, we look for higherefficiency and – ultimately – impact.” – Stefan Crets,Executive Director, CSR Europe, facilitator of Drive Sustainability.II. LOOKING BACK – DRIVING CHANGE SINCE 2013IV. LOOKING FORWARD – 2030 STRATEGYHaving started informal discussions in 2007, the partners of DriveSustainability formalised into a group in 2011. Always operatingunder strict anti-trust rules and in compliance with competition law,the group focused first on alignment of tools and on building trustamongst members. This was a crucial basis for cooperation, whichresulted in an increasingly ambitious common set of activities followingthe 2013 establishment of the European Automotive Working Groupon Supply Chain Sustainability. Amongst the first milestones of thegroup was the launch of the Global Automotive Sustainability GuidingPrinciples (Guiding Principles) in collaboration with the AutomotiveIndustry Action Group (AIAG), which have become the basis of allsubsequent activities.2019 is the year of consolidation and common positioning. But moreimportantly, it’s the year of finding a long-term direction and ambition inthe 2030 Strategy.Building on these growing years, the Drive Sustainability Partnership waspublicly launched in 2017. The transition reflects Drive Sustainability’sestablishment as a global leadership initiative on sustainability, leveragingits common voice to promote standardization, cross-sectorial collaborationand impact focused solutions on supply chain sustainability.III. 2018 - A YEAR OF STANDARDISATIONDuring 2018, the partnerships’ activities focused on solidifyingworking processes within the group and on meeting the stakeholderexpectations set out during the first stakeholder dialogue in autumnof 2017.Beyond existing activities on compliance and capacity building,stakeholders expressed the need for a clear strategic direction,further harmonization across sectors and initiatives, impact-orientedactivities in the field of raw materials and greater transparency.In 2018, Drive Sustainability has doubled the scope of its suppliertrainings, extended its suppliers assessment tool beyond Tier 1,launched a continuous raw materials risk assessment study under itsRaw Materials Observatory and joined multiple initiatives. Structurally,Drive Sustainability transitioned to a layered partnership witha weighted voting model to accelerate decision making processesand enhance impact. The publication of this Progress Reporttogether with the commitment to biennial stakeholder consultationsare a first step towards a more standardised stakeholder engagementand transparency. To further increase our impact, a more strategicapproach and structuring of our activities remains pertinent.2Drive Sustainability Progress ReportFor this, two elements are essential: alignment with the internal ambitionsof the partners and integration of stakeholder feedback. Therefore, the2030 Strategy is being developed in a four-phase process.During 2018, consultations with selected stakeholders and automotivecompanies took place. As a result, it became evident that ambitions andthe working scope of Drive Sustainability needed to be increased to meetstakeholders’ expectations. Subsequently, in February 2019, purchasingand sustainability leaders of the automotive companies convened todiscuss stakeholder feedback, present opportunities for alignmentwith internal ambitions, and agree on common objectives. The partnersdecided to extend the working scope to a value chain approach, whilealso addressing sustainability challenges related to climate and circularuse of resources through the Drive Sustainability partnership. The 2030Strategy and its roadmap will be submitted to stakeholder feedbackduring Drive Sustainability’s second stakeholder event on 14 May 2019,before being finalised and published in 2020.V. ABOUT THIS REPORTThis Progress Report presents our development and milestonesfrom 2011 to date in a qualitative form, but it doesn’t report onnor introduce a consistent set of targets and key performanceindicators. The reason is that until 2017, the partnership worked onsetting, testing, and fine-tuning the principles and tools for furthercollaboration. With the formalisation into Drive Sustainability, thenecessity to set clear strategic directions and targets has becomecentral and will be translated in the 2030 Strategy. Meanwhile, webelieve that it is essential to take the time to align with all partiesinvolved and to take our external stakeholders’ feedback into account.Nevertheless, we hope you enjoy reading our report while we keepworking on further deepening of our reporting. You can visit ourwebsite for upcoming announcements.Please note that the Progress Report does not reflect the individualdevelopments and actions of the automotive companies. These areincluded in their individual Annual and/or Sustainability Reports. Thenext Drive Sustainability Progress Report will be issued in 2021.

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6OUR APPROACHI. OUR APPROACHThe Drive Sustainability approach consists of 3 core workstreams, with the workstream on “Direction” being the foundation of all other activities.The Drive Sustainability approach is aligned with the OECD Due Diligence Guidance for Responsible Business Conduct.DRIVE SUSTAINABILITY APPROACH11. DirectionCommon GuidanceVision 2030Guiding PrinciplesLong-term strategy2030 Goals and Road MapPractical GuidanceSupplier Code of ConductIDENTIFY & ASSESS ADVERSE IMPACTS IN THE SUPPLY CHAINInitial Risk MappingCommon ScreeningCommon RiskAssessment*Self-AssessmentQuestionnaire forsuppliers (SAQ)3. Impact36OEM Individual Integration34MANAGE RISKSTRACK RESULTSResult IntegrationCommon RequirementsFurther Assessment business impact involvement of buyers visibility at tope.g. Common auditstandard*COMMUNICATE HOW IMPACTS ARE ADDRESSED2. Compliance2Common Strategy5EMBED RESPONSIBLE BUSINESS CONDUCT INTO POLICIES & MANAGEMENT SYSTEMSmanagement levelMANAGE RISKS AND PROVIDE FOR OR COOPERATE IN REMEDIATION WHEN APPROPRIATECommon Capacity BuildingCommon LeverageSupplier trainings (at various tiers*) (eLearning*, one-day training, knowledge assessment*)Stakeholder and cross-sectorial exchangeSupplier Dialogue EventsPolicy exchange and institutional influence*Local networksKnowledge creation (e.g. studies)Company supplier developmentCompany institutional engagement and influence Alignment with OECD Due Diligence Guidance for Responsible Business Conduct Step 1 to 6 OEM Individual Activities * Future common activities / under development2017TIMELINE - MILESTONES Partnership:2013-T he European Automotive Working Groupbecomes Drive Sustainability- First Leadership Assembly & Stakeholder Event2015 Public launch of the EuropeanAutomotive Working Group onSupply Chain Sustainability Compliance: Alignment of tools forevaluating supplier sustainability Capacity Building: First suppliertraining in Romania Direction: GermanAutomotive Association(VDA) adopts theGuiding Principles Direction: First revision of the Guiding Principlestogether with the Automotive Industry ActionGroup (AIAG) Capacity building:Supplier trainings inIndia and South Africa C apacity building: Official launch of the DriveSustainability China local network; Suppliertrainings in India and Italy R aw materials: First raw materials initiative –The Raw Materials Observatory201420162018 Direction: Launch of the Global Automotive SustainabilityGuiding Principles (Guiding Principles) aligned with theAutomotive Industry Action Group (AIAG) Compliance: First revisionof the SAQ Compliance: Update to SAQ 3.0. andincrease of SAQ user community C apacity building: Twosupplier dialogue events(China and Logisticssector); Supplier trainingsin China and the CzechRepublic Capacity building: Two stakeholderexchange meetings hosted by DriveSustainability China; Supplier trainings inHungary, Mexico, Spain, and Thailand Compliance: Public launch of the Self-AssessmentQuestionnaire (SAQ) Capacity building: First supplier dialogue event in Turkey;Supplier training in Poland Raw materials: Launch of the ongoingMaterial Change StudyDrive SustainabilityDS Progress Report3

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6GOVERNANCE AND STAKEHOLDERSI. GOVERNANCE STRUCTUREDrive Sustainability is governed by two central bodies, the Leadership Assembly and the Steering Committee. The partnership is facilitatedby CSR Europe. CSR Europe is the leading European business network for Corporate Social Responsibility.LEADERSHIP ASSEMBLY (LA) Sets strategy, priorities, and reviews progress Consists of Chief Procurement Officers, Procurement Vice-Presidents or similar strategicfunctionsMeets once everytwo yearsSTEERING COMMITTEE (SC) Oversees and supports the implementation of the strategy and activities set by the LA Consists of Senior Procurement Officers or equivalent representativesMeets four times peryear and via bi-monthlyweb-meetingsWORKING GROUPS (WG) Working groups on specific projects or topics (trainings, SAQ, raw materials) They develop new activities and facilitate a more closed-looped feedback process Each working group consists of three to five representatives from relevant company functionsThey meet on aneeds basisII. PARTNERSDrive Sustainability has a layered partnership model consisting of leadpartners, partners, and participants. Drive Sustainability companiesmake a collective commitment to shape a sustainable automotivesupply chain for the automotive industry. Their Partnership is basedon a similar approach on supply chain sustainability, on correctimplementation and on integration in business processes.The Lead Partners, as the main drivers of the initiative, commit to pushthe industry towards excellence and to lead sustainability progress inthe automotive value chain. Lead Partners fully support and implementthe Drive Sustainability approach in their own business processes.LEAD PARTNERS:PARTNERS:4Drive Sustainability Progress ReportThe contribution of each partner is vital for the success of thePartnership. Only by joining forces and by collaborating can DriveSustainability have a long-term impact. Currently, Drive Sustainabilityhas six lead partners and four partners. Companies can also engageas Participants, which allows them to use the tools and servicesdeveloped by the Lead Partners and Partners of Drive Sustainability,without making any specific commitment.

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6GOVERNANCE AND STAKEHOLDERSIII. BUDGETThe partnership fees for Drive Sustainability are 40.000 for LeadPartners, 22.500 for Partners, and 10.000 for Participants. Thepartnership fees cover the costs related to the continuous operationand development of Drive Sustainability. Additional to this yearlyoperations budget, there is a services budget covering the costs relatedto the various activities run by Drive Sustainability (trainings, events,activities on the ground etc.). Each year the automotive companiesdecide in which activities to take part and allocate the funds accordingly.The total budget for 2019, including both operational and servicesbudgets, is around 630.000 as allocated below.2019 DRIVE SUSTAINABILITY BUDGET (IN %)Budget for 2019 630.000Communication4%Stakeholder engagement6%Capacity building56%Compliance8%Raw material9%Admin, strategy, monitoring17%IV. TRANSPARENCY AND STAKEHOLDER ENGAGEMENTSustainability can only be achieved through close collaboration ofautomotive companies, suppliers, and other stakeholders. We seekto regularly communicate about our progress and to engage withstakeholders.As its first significant move towards transparency and engagement,Drive Sustainability hosted its first official Stakeholder ConsultationEvent in 2017 to be held every two years. Additionally, informationon Drive Sustainability is shared through the automotive companies’sustainability reports and websites.ENGAGEMENTTRANSPARENCY Drive Sustainability commentfunction provides a direct channel ofcommunication for stakeholders Drive Sustainability website and news pageprovide regular updates Drive Sustainability two-yearly newsletterreports on key activities of the past sixmonths and announces upcoming eventsand opportunities to engage with DriveSustainability Informal meetings and calls are setat the request of stakeholders Targeted consultations areconducted with stakeholders onspecific topics such as the DriveSustainability 2030 Strategy Stakeholder consultation eventstake base on a bi-annual basis andfocus on getting stakeholder inputon Drive Sustainability’s strategicdirection, existing and future activitiesCivil sationsCommunitiesAutomotiveSuppliers Drive Sustainability progress report reportson KPIs and targets as defined in the contextof the 2030 Strategy on a bi-annual basis from2020 onward Drive Sustainability events participationallows the automotive partners and DriveSustainability staff to share our progress andengage with stakeholdersDrive Sustainability Progress Report5

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6DIRECTIONOur common Direction is set by our Strategy and by the Global Automotive Sustainability Guiding Principles. These serve as the basis and framework forall activities implemented by Drive Sustainability.PROGRESS AGAINST MILESTONESA. GLOBAL AUTOMOTIVE SUSTAINABILITY GUIDING PRINCIPLES AND PRACTICAL GUIDANCEThe Global Automotive Sustainability Guiding Principles (Guiding Principles) outline our expectations for suppliers on key responsibilityissues, including human rights, environment, working conditions, and business ethics. The Guiding Principles, the foundation for all ouractivities, are: Based on fundamental principles of social and environmental responsibility; Global in nature and compliant with local laws and international expectations; Complemented by individual sets of codes and policies of the Original Equipment Manufacturers (OEMs); Periodically revised.The Guiding Principles are complemented by the Practical Guidance, which provides practical explanations and examples on how tocomply with the expectations set out in the Principles.MILESTONES TO DATEFUTURE OBJECTIVESGlobal guidelines for the automotive sectorThe Guiding Principles were first published in 2014 in collaborationwith Automotive Industry Action Group (AIAG). In 2015, the GermanAutomotive Association (VDA) has adopted the Guiding Principles asthe official industry standard. The Principles also found recognitionin the Chinese Supply Chain since the launch of Drive SustainabilityChina in 2017. The Principles are periodically reviewed to makesure they align with the latest expectations and stay globally relevant.Solidify the Guiding Principles as the global automotive industryguidelines by achieving alignment with leading global and localautomotive industry associations in Asia, Latin America, and Africa.6Drive Sustainability Progress Report

ABOUT DRIVE SUSTAINABILITY2COMPLIANCEOUR APPROACH3IMPACT107GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6COMPLIANCEThe Drive Sustainability Compliance Process assesses organisational adherence of automotive suppliers to international regulations andstandards in the area of sustainability, such as the UN Guiding Principles on Business and Human Rights or the OECD Guidelines for MultinationalEnterprises, and to the expectations of the OEMs shaped by the Drive Sustainability Guiding Principles. The Compliance Process was developed to: Create transparency in global and complex supply chains; Assess supplier sustainability performance as a basis for further improvement; Establish standardised and efficient mechanisms to reduce individual OEM requests towards their suppliers.PROGRESS AGAINST MILESTONESA. INITIAL RISK MAPPING AND FURTHER ASSESSMENTFUTURE OBJECTIVESIn order to correctly embed sustainability into the procurement process,Drive Sustainability has to strengthen its activities on standardisationand process integration. Thus, in 2019, Drive Sustainability plans todevelop a common view on risk assessment and auditing, furtherdeveloping and strengthening our standardised Compliance Process.B. COMMON SCREENING: THE SELF-ASSESSMENT QUESTIONNAIRE (SAQ)To assess the Corporate Social Responsibility (CSR) and the sustainability performance of automotive suppliers, Drive Sustainability developed acommon Self-Assessment Questionnaire (SAQ) focusing on social and environmental accountability, business ethics and compliance, and suppliermanagement. The SAQ is globally applicable for all suppliers including sourcing, manufacturing, assembly, retail, and service providers.MILESTONES TO DATEFUTURE OBJECTIVESIncreased SAQ usageThe SAQ was publicly launched in 2014. Every two years, theautomotive partners and suppliers are consulted to revise the contentand structure of the questionnaire. This is a great opportunity to adjustthe mechanisms to the evolving trends and standards to clarify theambiguities, and to add new focus elements and trending topics.In 2018, Drive Sustainability developed a structural approach toengage with suppliers and supplier associations in order to receivetheir feedback on the SAQ. We will continue to work closelytogether with them to finalise the SAQ 4.0 with the aim of makingthe assessment tool more useful and comprehensive for automotivecompanies and its suppliers.The current SAQ version, SAQ 3.0, was launched in 2018. The SAQ 3.0is available in 9 languages: English, Mandarin Chinese, French, German,Italian, Japanese, Spanish, Russian, and Turkish. Czech and Portuguesewill follow soon. Among others, it includes the usage of 3TGs, the CarbonDisclosure Project (CDP) scope, and stronger focus on internal KPI’s andinternal communication of policies. More details can be found here.To date, over 25,000 suppliers have been assessed in more than 100countries1. Almost 88% of the suppliers who completed an SAQ more thanone time have improved their score.1Based on the data from 8 OEMsDrive Sustainability Progress Report7

ABOUT DRIVE SUSTAINABILITY2COMPLIANCEOUR APPROACH3IMPACT107GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6COMPLIANCEIn 2018, more than 8.000 suppliers (roughly 30% of the total) completed the questionnaire. See below the scores, the sector distribution, and thegeographical spread.25,00088%SUPPLIERS HAVECOMPLETEDAN SAQSHARE OF SUPPLIERSHAVING IMPROVEDTHEIR SAQ SCORE**Refers to suppliers fillingSAQ more than onceDIVISION OF COMPLETEDSAQS BY SUPPLIER BUSINESSCATEGORIESDISTRIBUTION OF OVERALLSAQ SCORES IN 20189%11%23%serviceproviders77%44%manufacturing& RAPHICAL DISTRIBUTION OF SUPPLIERS HAVING COMPLETED AN SAQ8.8%North America2.9%Latin America71.2%15.3% 0.2%EuropeAsiaAustralia1.5%AfricaMILESTONES TO DATEFUTURE OBJECTIVESSAQ standardisationAll Drive Sustainability partners use the SAQ as one of their main tools to assess suppliersustainability performance. For the assessment, the automotive partners collaborate with twoplatform providers: NQC: BMW Group, Daimler, Ford, Honda, Scania, Toyota Motor Europe, Volkswagen Group,Volvo Cars, Volvo Group Achilles: Jaguar Land RoverAs of 2019, the SAQ user modelwill be officially rolled out on dataplatforms. By doing so, we strategicallyincrease supplier assessments beyondTier 1 and enhance supply chaintransparency. Until today, 13 Tier1 suppliers and 2 other automotivecompanies joined the SAQ model toassess their own supply chains. We aimto increase the user community of theSAQ as well as increase the number ofcompleted questionnaires. Opening upthe user model of the SAQ strengthensit’s positioning as the leading globalsustainability questionnaire used in theautomotive industry.On the different technical platforms, suppliers are asked to respond to the SAQ only once and canshare it with all buyers using the same platform.From 2017 to 2018, Drive Sustainability conducted a pilot project with Tier 1 suppliers who arenot only respondents to the SAQ but can also use the questionnaire to assess their own supplychain. In the meantime, Drive Sustainability received requests from automotive companies that arenot partners of the initiative, but have expressed interest in using the SAQ. To increase the usageof the SAQ and allow the onboarding of suppliers and automotive companies, Drive Sustainabilitydeveloped an SAQ user model for buyers.The SAQ user model sets out specific conditions to use the questionnaire and the relatedtechnical platforms and presents a systematic approach to create transparency and assess suppliersustainability in the automotive supply chain.8Drive Sustainability Progress Report

ABOUT DRIVE SUSTAINABILITY2COMPLIANCEOUR APPROACH3IMPACT107GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6COMPLIANCESAQ USAGE MODEL FOR BUYERS:RolesTier 1 suppliersAutomotive companies(not members of DS)Rights Usage of SAQ & technical platform Option to provide feedback and changerequests to Drive Sustainability Usage of SAQ & technical platform Option to provide feedback and changerequests to Drive Sustainability Permission granted via license fee** SAQ copyright owner Usage of SAQ and technical platform Option to make changes to the SAQand the platform Decision on direction Sharing of experience and suggestionsfor improvement Sharing of experience and suggestionsfor improvement Payment of annual license fee to useSAQ and technical platform Development and revision of SAQ Development and improvement oftechnical platform Development of a suitable model forall usersResponsibilityDrive Sustainability*Supplier SAQ and cost sharing throughout the different user groups* In this case Drive Sustainability stands for a separate sub group within Drive Sustainability using the technical platform** An annual license fee that grants Automotive companies (which are not part of Drive Sustainability*) permission to use the SAQ and technical platformDrive Sustainability Progress Report9

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6IMPACTImprovement and impact can only be achieved by working with local stakeholders and suppliers to build capability and by finding shared solutionswith other sectors and initiatives. Hence, the impact work stream summarizes two activity areas, focused on capacity building and leveragingof a common voice respectively.I. CAPACITY BUILDINGPROGRESS AGAINST MILESTONESA. TRAININGMILESTONES TO DATE2.200 suppliers trained in 12 countries since 2013Drive Sustainability first launched its one-day supplier trainings in2013. Initially covering one country a year, the roll-out has becomemore strategic in 2018 with the commitment to cover a minimum of5 countries and 800 suppliers annually. Training attendance is fundedby the participating automotive companies and free of charge for thesuppliers.Our objective is to help suppliers understand the Automotive GuidingPrinciples, explore, and discuss key local sustainability challenges andhow to best address these. Localisation, a workshop style trainingformat, and the focus on best practice analysis allow for a practicallearning experience.If you are interested in learning more about our training model, localsustainability challenges, and solutions identified in each trainingcountry, please consult the 2018 Training Report published incollaboration with our training implementation partner Deloitte.Nevertheless, our training model faces limitations in reach and scope.Our trainings have only covered a fraction of the Tier 1 supplier base.Another challenge is group heterogeneity with both experiencedand newcomer trainees. Furthermore, the lack of impact assessmentneeds to be addressed. The current model will be revised in 2019.TO DATE,59 TRAINING SESSIONSWERE CONDUCTED IN12 COUNTRIES:10Drive Sustainability Progress ReportFUTURE OBJECTIVESDrive Sustainability aims to increase the reach and impact of its capacitybuilding by implementing an integrated training offer including a modulare-Learning meeting various learning needs, face-to-face trainings, andknowledge assessment by 2020. An impact assessment and trainingextension beyond Tier 1 are also under development.2018 TRAINING PARTICIPANT SURVEY1008060Strongly agree40Agree20NeutralDisagree0The training allowed meto get new ideas andsolutions for some of mycompany’s sustainabilitychallenges (in %)Overall the training wasuseful (%) Romania Poland South Africa Spain India China Czech Republic Mexico Turkey Italy Hungary Thailand

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6IMPACTB. LOCAL NETWORKSMILESTONES TO DATEFUTURE OBJECTIVESEstablished one local network in ChinaSustainability challenges are similar across regions. However,countries have specific issues, distinct market outlooks, and socioeconomic contexts. We are aware that a long-lasting impact and thebest solutions can only be developed at a country or regional level itselfwith the key local stakeholders engaged and working together ona regular basis.1. In response to feedback received during the automotive-supplierdialogue event in November 2018, Drive Sustainability China hasset the following priorities for 2019: Enhance knowledge sharing and awareness raising by holdingtwo annual exchange events, translating Drive Sustainabilityknowledge tools and increasing communication activities Develop a common localised risk assessment tool Develop a group mission and targets in conjunction with DriveSustainability’s 2030 StrategyThus, seven of Drive Sustainability’s partners, BMW, Daimler,Jaguar Land Rover, Scania, Volvo Cars, Volvo Group and Volkswagen,have together set up a local network in China in 2017.2. Standardise our approach to local networks and explore how andwhere additional local networks could contribute to our activities.LEARN MORE ABOUT DRIVE SUSTAINABILITY CHINAWhy China? Government focus: China’s pressing sustainability issues are a focus of governmental authorities, increasingly puttingresponsibility with the private sector Impact potential: Leading the development of 11 sectors and providing 4 million direct jobs, the automotive industry playsan influential role in China’s sustainability transitionObjectives Localisation: Translate Drive Sustainability’s global strategy and tools with local stakeholders at the local level Capacity Building: Enhance alignment and capacity for sustainability across the industry Antenna: Share experiences, monitor, and identify local sustainability trends and issuesLocalfacilitation GoldenBee: GoldenBee CSR Consulting locally facilitates the Chinese local network and ensures close cooperation with localstakeholdersMilestonessince 2017 Localisation: Operational Implementation of the partnership in China and localisation of supplier training model Capacity building:- implementation of four supplier training sessions with 140 suppliers- one Industry Exchange Meeting and one OEM – Supplier Exchange Event, engaging over 50 stakeholdersDrive Sustainability Progress Report11

ABOUT DRIVE SUSTAINABILITY2COMPLIANCE7OUR APPROACH3IMPACT10GOVERNANCE & STAKEHOLDERS4FOCUS ON: RAW MATERIALS13DIRECTION6IMPACTC. SUPPLIER DIALOGUE EVENTSMILESTONES TO DATEFUTURE OBJECTIVESAnnual dialogue events in 3 countriesDrive Sustainability regularly holds dialogue events on varioustopics with suppliers and sector associations to develop a commonunderstanding and a view towards shared challenges. Thesedialogues are essential in shaping our approach and in developingnew tools and activities. Drive Sustainability has organised multipledialogue events in locations, such as Turkey, China, and Germany.For instance, in 2016, Drive Sustainability started a dialogue withinbound and outbound logistics suppliers to discuss challenges suchas living wages, health & safety, attractiveness of the sector to youngpeople. Thanks to this first step, the logistics sector, supported bythe automotive companies and facilitated by CSR Europe, is nowbuilding up an initiative to tackle the above-mentioned issues.Moreover, in 2018 two dialogue events in China discussed crosssectoral approaches to local supply chain challenges and possibilitiesfor cascading sustainability beyond Tier 1 respectively.Drive Sustainability plans to intensify the frequency of supplierdialogues and is considering the possibility of moving towardsa more structural engagement and exchange model.II. LEVERAGEDrive Sustainability’s partners recognise the power of leveraging their common voice by seeking collaboration, standardisa

2 Drive Sustainability Progress Report ABOUT DRIVE SUSTAINABILITY I. ABOUT DRIVE SUSTAINABILITY Drive Sustainability is an automotive partnership with the following Lead Partners - BMW Group, Daimler AG, Scania CV AB, Volkswagen Group, Volvo CarsVolvo Group, - and the following Partners - FordHonda, , Jaguar Lan

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