What do GM’s carbon neutrality plans mean for supply chain?

General Motors signalled its intent on Thursday to become carbon neutral by 2040. Under a new pledge, the car manufacturing giant aims to reduce the environmental impact of its global products and operations, joining a coalition of industry leaders and UN agencies working towards the same goal by signing the Business Ambition Pledge for 1.5⁰C. 

The biggest reduction in its carbon outlay will come with an overhaul of its product offering. GM says that the vast majority (around 75%) of the carbon emissions associated with its goals are caused by the use of its fossil fuel-powered cars, trucks and other vehicles. 

Working with the Environmental Defense Fund, the manufacturer will work to “develop a shared vision of an all-electric future”. Following wider trends in the automotive industry, GM is accelerating its rollout of electric vehicles (EVs), which will account for around 40% of the models it offers in the US by the end of 2025. Thirty new electric models will be launched during that timeframe, and GM has upped its investment in electric and self-driving vehicles from $20bn to $27bn over the next five years. The company aims to eliminate exhaust emissions from light-duty vehicles ahead of the 2040 deadline, by 2035. 

Key supply chain reforms

• GM has formed a ‘sustainability council’ with key suppliers
• The committee will work to develop and enact new standards and best practice 
• Increased transparency reduced emissions throughout the supply chain
• Procurement will priorities and source more sustainable materials 

“Implementing plans today”

Reaching the carbon neutral target by 2040 will require an overhaul of its internal operations, GM admits. Readdressing supply chain will be central to to its mission. The company is “implementing plans today” to lower the carbon impact of its supply chain, beginning with its biggest suppliers, with which it has established a committee. The ‘sustainability council’ will work hand in hand to “share best practices, learn from each other and create new standards for the industry” - the ramifications of which will impact its entire value chain. 

Beyond the committee of core suppliers, GM will also collaborate more broadly down its entire value chain to improve the efficacy of its ESG commitments. Sweeping reforms will aim to increase transparency and push down emissions. In procurement, the car manufacturer says it will prioritise sourcing more sustainable materials. 

"General Motors is joining governments and companies around the globe working to establish a safer, greener and better world," said Mary Barra, GM Chairman and CEO, in a statement. "We encourage others to follow suit and make a significant impact on our industry and on the economy as a whole."

Image: Chevrolet Bolt EUV, General Motors