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May 08, 2024

GM faces investor vote on supply-chain sustainability

Proponent concerned about supplies of low-carbon materials and deforestation

General Motors (GM) shareholders will vote at the company’s AGM next month on a proposal seeking an annual report providing ‘additional disclosure on sustainability risks within its supply chain and risk-mitigation efforts.’

Green Century Capital Management, which filed the resolution, encourages GM’s board and management to assess in the report:

  • ‘The pros and cons of joining global value chain emissions-reduction efforts, such as the Aluminum Stewardship Initiative and ResponsibleSteel, and demand-aggregation initiatives such as SteelZero and the Sustainable Steel Buyers Platform
  • ‘Progress toward attaining low-carbon steel and aluminum 2030 procurement targets
  • ‘Enhancing disclosure of deforestation risk associated with GM’s tire, leather and mineral supply chains, including the potential for adopting targets for eliminating supply-chain deforestation.’

The AGM will take place on June 4.

In materials accompanying the proposal, Green Century writes that GM has issued low-carbon procurement targets for primary steel and aluminum of 10 percent by 2030 but that with demand for those materials rising, the company may face competitive and reputational risks if it does not join broader initiatives to secure additional supply.

The proponent says rival companies have acted to support sustainable steel supply by taking part in initiatives such as ResponsibleSteel, a standard-setting organization, and SteelZero, which seeks to incentivize production of low-carbon steel.

‘Although GM is a founding member of the Global Platform for Sustainable Natural Rubber, it has not disclosed comprehensive information on deforestation risk posed by rubber cultivation, nor on risk mitigation,’ Green Century writes.

‘The company fails to provide similar disclosures for its leather and mineral supply chains. While GM reported some deforestation risk in 2021 to… CDP, it submitted virtually no information in 2022 and 2023. Without greater disclosure, investors may be under-informed about climate and deforestation risks embedded in GM’s supply chain or risk-mitigation measures.’

Company argument
GM’s board is calling for shareholders to vote against the proposal. It argues in the company’s proxy statement that GM is ‘committed to incorporating responsibly sourced materials into its supply chain and is working to increase the sustainable materials used to make its vehicles.’

The board states: ‘As we transform our business to support production of [electric vehicles], we are not only considering end-of-life reusability and recyclability, but also working to ensure the use of sustainable materials in our vehicles from inception. We aim to procure increasingly sustainable materials... We will drive collaboration with our suppliers and apply data-driven strategies that can be customized to the specific attributes of each commodity. In addition, GM has a number of policies that document our commitment to responsibly sourced materials.’

GM collaborates with and is an active member of organizations to develop sustainable and socially responsible supply-chain programs, the board writes. It adds that the requested report is ‘unnecessary because GM already follows robust and transparent reporting practices’.

The company’s approach to supply-chain sourcing and sustainability is addressed in its annual sustainability report and GM makes disclosures aligned with GRI and SASB standards, it says: ‘GM will continue to provide robust public disclosure on its actions and engagement on supply-chain sustainability matters, including our expanding engagement with providers of raw materials throughout our supply chain.’

A request for comment from GM was not returned immediately.

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...