Fiat-Chrysler's 'Blue Album' Charts Path to Sustainability

It may be taken as an encouraging sign of the times the number of multinational corporations now taking sustainability seriously. We're not talking about companies simply paying lip-service or “greenwashing,” but rather instilling an ethic and values of social and environmental sustainability from the core of their businesses outward to include suppliers, distribution and sales partners, customers and those outside of, but affected by, their investments and activities.

Resource-, energy- and capital-intensive, auto manufacturing has been an engine of economic growth and a core aspect of industrial and economic development worldwide over the course of the fossil fuel-era. Times change, and businesses, as well as ways of doing business, change with them, however. Today, multinational auto manufacturers such as Fiat-Chrysler are digging deeper and making comprehensive efforts to embed social and environmental, as well as economic, sustainability into their strategic business plans and day-to-day operations.

Some 300,000 people worldwide were involved in Fiat-Chrysler's short- and long-term sustainability strategies and realizing comprehensive sustainability targets, objectives and reporting. In its “2013 Sustainability Report: Economic, Environmental and Social Responsibility,” the multinational automaker lays out its short- and long-term strategy underlying those goals, reviews what's been achieved to date, and outlines how it plans to realize the sustainability goals it has set out to 2020.

No "Johnny Come Lately"

Though they have changed in substance and taken different names and forms over time, Fiat-Chrysler is no “Johnny Come Lately” when it comes to a corporate culture that recognizes, values and promotes enhancing the sustainability of every aspect of its business, Chrysler Group's Mary Gauthier, a veteran in the automaker's sustainability reporting group, pointed out during a 3P interview.

Having lost institutional memory along with veteran employees during the period when the U.S.-based automaker filed for Chapter 11 bankruptcy reorganization (2008-2010), Chrysler managed to rediscover a history of activities, as well as underlying values and attitudes, that today full under the umbrella of sustainability in the wake of its 2009 acquisition by Fiat, the United Auto Workers (UAW) pension fund, and the U.S. and Canadian governments.

“When we first started, we found that, across the company, we were doing the right thing [regarding sustainability]. There were pockets within departments that had been doing these types of things, but we hadn't brought it all forward and together in a cohesive, prominent form,” Gauthier said.

The high value and strategic importance Fiat Group senior management, led by CEO Sergio Marchionne, places on social and environmental sustainability revitalized and provided strategic focus and direction to Chrysler's sustainability initiatives, Gauthier continued. “We've had a lot of encouragement from our CEO, Sergio Marchionne, on down, and we've been seeing results from the grass roots up as well.”

Sustainability and public recognition

The success of Fiat-Chrysler's sustainability initiatives and reporting have not gone unnoticed by organizations looking to promote and foster adoption of pioneering corporate social and environmental sustainability standards and reporting.

For the fifth consecutive year, for instance, Fiat Group in 2013 maintained its place in the Dow Jones Sustainability Indices, which are produced in collaboration with RobecoSAM. It also confirmed its leadership in the CDP's (formerly Carbon Disclosure Project) Italy Carbon Disclosure Leadership Index and Carbon Performance Leadership Index.

Reductions in water use and greenhouse gas emissions across its manufacturing operations worldwide are two prominent examples of the success of Fiat-Chrysler's ongoing efforts to enhance the environmental and social sustainability of its operations.

Sustainability in auto manufacturing: Thinking outside the box

Fiat-Chrysler manufacturing plants worldwide are now reusing 99 percent of the water used in the manufacturing cycle. That was a savings of more than 2.1 billion cubic meters (m3) of water in 2013 -- equivalent to 13 consecutive days of water flow over Niagara Falls. Carbon dioxide (CO2) emissions per vehicle produced have been cut 15 percent over the past four years.

The multinational automaker's energy efficiency initiatives are also paying handsome dividends. Some 730 gigawatt-hours (GWh) of electricity savings have been realized. Those savings flow directly down to the financial bottom line.

These results are illustrative of Fiat-Chrysler's broad-based “green” manufacturing drive. Fiat Group plants in Pomigliano, Italy, Tychy, Poland and Tofas, Turkey, for example, all achieved Chrysler WCM (World Class Manufacturing) Gold level performance ratings. Its Bielsko Biala plant in Poland won the Automotive Lean Production Award 2013.

As Fiat-Chrysler strives to enhance the overall sustainability of its operations, it is also thinking outside the box, stretching beyond convention and thinking “green” when it comes to engine and vehicle design.

Its 3.0-liter EcoDiesel V-6 and Fiat 500e Battery-Electric Drive System was among the winners of Ward's “Best Engines for 2014,” while its 0.9 TwinAir Turbo bi-fuel natural gas-powered engine earned “Best Green Engine of the Year 2013” honors among the 12 categories included in the International Engine of the Year Awards.

The automaker's sustainability initiatives extend to supply chain partners around the world, as well as Chrysler dealerships in the U.S. Chrysler publicly recognized 30 of them for their eco-friendly operations in 2013.

Fiat-Chrysler: Sustainability and society

Promoting economic and social equity and opportunity are core aspects of triple-bottom-line and sustainability's conceptual framework. For Fiat-Chrysler, that entails creating business and employment opportunities for the socially disadvantaged and minorities, as well as supporting the work of community development groups. As Fiat-Chrysler Group Chairman John Elkann elaborated in the foreword to the group's 2013 sustainability report:

“Social responsibility is another aspect of our activities that is very important to us. We believe firmly in the values of multiculturalism and diversity and, wherever we have a presence, we actively contribute to the advancement of local communities.

Fiat-Chrysler committed some €19.7 million (~US$27.3 million) to local communities last year and spent €3.9 billion (US$5.41 billion) with minority suppliers – nearly 17 percent of Chrysler's North American purchases. Under the Chrysler Group Volunteer Program, Chrysler employees themselves contributed over 9,400 volunteer work-hours in the U.S. in 2013. As Elkann highlighted:

“Of approximately €20 million committed to local communities in 2013, for example, around 40% was for cultural, educational and training initiatives. For every social initiative, we give priority to the involvement of local employees and suppliers in order to create jobs, stimulate the local economy and strengthen social ties within each community.”

Changes in Fiat-Chrysler's sustainability strategy and initiatives have come with the passage of time. Not only is the automaker putting more time, money and other resources into them, it's also refining its strategy and goals, as well as the means by which to achieve them.

Completed and released in 2011, Chrysler's first sustainability report, dubbed “The White Album,” prompted the automaker's parent to draw together all the resources it was devoting to sustainability and centralize the its sustainability reporting function.

“We published in October (2011), reporting at a GRI (Global Reporting Initiative) A-level. We hit that goal and immediately upon publishing we got the word to work together to publish with Fiat. Six months later, in April 2012, we published a joint sustainability report with Fiat,” Gauthier recounted.

Sustainability: From concepts to practice

For the 2013 report – “The Blue Album” – the Fiat-Chrysler sustainability team zoomed in on streamlining and communicating information on “materiality” and other “headline” factors regarding its sustainability strategy and goals. That went hand-in-hand with earning comprehensive GRI G-4 comprehensive-level certification.

The effort for the first time included conducting multi-stakeholder events that spanned the automaker's global operations. Fiat-Chrysler dealers, suppliers and customers, as well as students, and social and environmental NGOs assembled in Brazil, Italy and Michigan along with group staff during these events. As Gauthier told TriplePundit:

“We talked to them about mobility and transportation, and how they saw them evolving out to 2020. We talked about the present, covering sustainability across the value chain.”

Themes common among regions, as well as differences between them, emerged during the course of the three events.

Feedback flowing from the multi-stakeholder event in Turin, Italy, for example, coalesced around promoting “a culture of sustainability, educating stakeholders, and promoting sustainability concepts across the board among various stakeholders,” Gauthier elaborated. At Chrysler's headquarters in Detroit's Auburn Hills, participants' discussion centered on new models of mobility in response to changes in the urban environment.

In Belo Horizonte, Brazil, managing the “end-of-life” of projects and achieving “cradle-to-cradle” product development was central to the discussion. So was Fiat-Chrysler's involvement in public policy and efforts to improve public goods and services.

Fiat-Chrysler's "Materiality Matrix"

In its “Materiality Matrix,” Fiat-Chrysler's sustainability team identifies the topics common among participants across the three multi-stakeholder events.

“The same things rose to the top across regions,” Gauthier explained. “The upper quadrant is all about the consumer and our products impact on them, from vehicle safety and quality to customer satisfaction, research and innovation – the production side of our business in its entirety.”

The sheer size and scope of its sustainability initiatives – from materials and equipment procurement, supply and manufacturing through distribution and sales to reporting – alone makes it clear that Fiat-Chrysler's commitment to sustainability isn't greenwash. It's about putting sustainability at the core of its business.

When asked what its stakeholders and the public can expect going forward, Gauthier said, “We've set goals, we watch the trends, and we're committed to developing new mobility solutions. The synergies between the two companies have already produced some very innovative products and thinking. Stay tuned and we'll see what comes forth. We have a Fiat 500 EV (electric vehicle).”

An interactive version of Fiat-Chrysler's 2013 sustainability report is available on the group's website.

Images credit: Fiat-Chrysler, "2013 Sustainability Report: Economic, Environmental and Social Responsibility"