How Honda is managing supply chain emissions with Manufacture 2030

The automotive industry is in the spotlight for its carbon-intensive products and supply chains. For Honda, meeting reduction targets is critical to keep stakeholders on side and retain market share. But engaging hundreds of suppliers to decarbonize is no easy task as a team of three.

Here’s how Honda Environmental Sustainability Project Leader, Alyssa Barbuto, is taking steps to support the company’s suppliers in carbon reduction with Manufacture 2030 (M2030).

Accelerating decarbonization in the supply chain

Honda has set a voluntary goal of achieving zero environmental impact from its products and operations by 2050. Producing vehicles, especially batteries and parts, creates significant emissions. As a result, finding ways to reduce environmental impact is a big challenge.

Many national and state governments are setting stricter rules to meet climate goals. More and more customers also want products that put the planet first. And investors are seeking companies taking environmental action. Reducing emissions is therefore key to meeting demands, staying competitive, and protecting Honda’s reputation.

“The transportation sector is one of the most carbon-intensive in the world. There’s a lot of focus on us. Top of mind for me is the new California bill that requires the reporting of Scope 3 emissions. There’s also increasing regulatory compliance coming from the EU,” said Alyssa.

“Doing nothing is not an option. Honda has made public commitments to reduce carbon, so there are potential financial and reputational costs on the line. This could also potentially impact our brand.”

For the last five years, Honda has been working with M2030 to engage and support suppliers to cut carbon. In 2021, the automotive company published its Triple Action to Zero initiative with three major environmental goals in mind:

• 100% carbon-free energy by 2050
• 100% sustainable materials by 2050
• Reaching carbon neutrality by 2050

These goals have been set in alignment with the Suppliers Partnership for the Environment (SP), a leadership forum for automotive buyers and suppliers. SP is running working groups on both carbon neutrality and sustainable materials which Honda is involved with.

Achieving these goals requires action from suppliers. But engaging them to reduce emissions is not easy, especially as a small sustainability team with many other priorities. Investing in a strong carbon technology stack is essential to make progress.

Honda’s suppliers form a big part of achieving our 2050 targets and meeting reporting requirements. We're a small team. We need a third-party solution to tackle supplier engagement and hit decarbonization targets.”

“That’s where M2030 fits in. It is our critical piece of first engagement with suppliers to help them measure, manage, and reduce emissions. It helps inform our sustainability program.”

Engaging suppliers to decarbonize through collective action facilities

Across the world, suppliers are facing increasing requests for environmental data and reduction updates from their customers. Misaligned requirements and processes between brands make meeting these asks difficult and time-consuming.

“We partner with the Supplier’s Partnership for the Environment which makes it easier for automotive companies and suppliers to work together. It was through this initiative we developed shared requirements to request from suppliers on M2030.”

“It’s up to Honda and other automotive buyers to set the strategy, make sure it’s achievable, and to help suppliers on their journey. We recognize we’re one company with 700+ suppliers who each have their own suppliers. It’s critical to listen and align on how to make it easier.”

“Working with M2030 has helped us get clear on what the ask is. If we're not making sustainability a priority and letting suppliers know how important it is for us, it will be another email in their inbox that they push away and don’t look at for some time.”

Supporting suppliers to cut carbon

Since partnering with M2030, Honda has welcomed over 420 supplier companies across 23 countries on the platform to measure, manage, and reduce carbon. This gives the automotive company visibility into a large percentage of its supply chain emissions and how suppliers are taking action.

“M2030 isn’t just a disclosure platform. It’s not just about data being reflected to us. Rather, it it’s a platform for suppliers to take action in. It’s a project management tool.”

“There are lots of reduction actions to support our supply base. These are separated into categories so you can see what’s being worked on and what a supplier may have planned to do but backed away from. This transparency helps us identify where to invest so we can support.”

“M2030 helps us get visibility of our supply chain. With other tools, you may see that a supplier has a goal and plan. But you don’t see how they intend to meet that goal. In M2030, it’s easy to check if a supplier has completed Honda’s requirements. When meeting suppliers, I can quickly pull up their status, see their reduction plans, and so on.”

Another crucial aspect is the ability to scale carbon reduction support across hundreds of suppliers. Without M2030 in place, this would be difficult for the small team to achieve.

“M2030 is available year-round to help our suppliers. We lean on the team and also pull them in to support other work and partnerships. For example, we ran an educational series for our suppliers and the session with the best feedback and participation was led by M2030.”

Motivating suppliers to reduce emissions

Supporting suppliers to decarbonize is one step but giving them a reason to act is another. Leading brands like Honda use sustainability scorecards to push suppliers to cut emissions.

The scorecards track progress in a clear and simple way. Suppliers see where they need to improve and are motivated to act. Meeting these goals helps them to stay in business with Honda. The approach also helps advance toward its carbon neutrality goals and satisfy stakeholder demands.

“We have divided our sustainability scorecard into bronze, silver, and gold. We evaluate our suppliers on how they meet Honda’s requirements each year. A bronze rating can only be reached once Scope 1 and 2 emissions are being reported on M2030. It’s the first step for suppliers to gain access to the rest of our programs and awards.”

Next steps for Honda on supply chain decarbonization

As regulations evolve and reporting milestones approach, the future for Honda’s sustainability team is about getting more granular with environmental data.

“Product Carbon Footprints (PCFs) are increasingly important for us to consider. The good thing about M2030 is that it takes both facility and product-level data into account. It makes sense for our suppliers to be gathering facility data now as they will be better prepared when it comes to completing PCFs on the platform.”

“Water, waste, and biodiversity are going to get more important too, so we will also be focusing our efforts here. We don’t have specific requirements yet, but they are available through M2030. So, we can assess supplier maturity in water, waste, and biodiversity.”

“It's great to have these insights now to help build out a strategy that will give us the most success in engaging our suppliers in those different areas in the near future.”