Drive Sustainability Expands Its Due Diligence Tools to Address EU Batteries and Deforestation Regulations

As the European Union tightens regulations on sustainability, Drive Sustainability (DS), the partnership of 16 leading automotive companies, is ramping up its efforts to ensure compliance across the industry's supply chains. To this end, the collaborative platform has integrated the due diligence requirements of the European Union's Batteries Regulation (EU-Batt-R) and the EU Deforestation Regulation (EUDR) into its Sustainability Assessment Questionnaire (SAQ), a key tool in evaluating supplier sustainability.

EUDR in the Drive Sustainability SAQ

The EUDR SAQ addresses the due diligence requirements found in Chapter 2 "Obligations on Contractors and Traders" from Article 4 through Article 13. This new EUDR SAQ, created in collaboration with the NQC platform, uses a scoring model akin to the general SAQ to identify and collect data from Tier 1 and sub-tier suppliers with high risk for deforestation. Focusing on the EUDR's obligations for operators and traders, the questionnaire helps suppliers, particularly those in high-risk categories, prepare the necessary due diligence statements (DDS) required under the regulation.

The EUDR SAQ has undergone preliminary testing and is slated for a pilot phase in September 2024, with a full launch expected in October 2024 - a timeline designed to give companies ample time to adjust to the new regulatory requirements.

Furthermore, Drive Sustainability is ensuring its own understanding of the EUDR and that of its members is thorough through the organisation of webinars and the development of a scoping document in collaboration with the leading automotive supplier's partnership Drive Plus, the German Association of the Automotive Industry (VDA), CLEPA, and the law firm contrast. In line with this effort, Drive Sustainability also offers in-depth risk analysis of the Leather value chain on the Raw Material Outlook platform, which will be complemented by the Natural Rubber risk profile by the end of this year.

EU Batteries Regulation in the SAQ to advance responsible sourcing

In a parallel effort, and in line with its responsible sourcing of raw materials strategy, Drive Sustainability has also incorporated the EU Batteries Regulation's due diligence requirements into its SAQ. The new Battery SAQ reflects the risk categories outlined in Annex X of the regulation, making it a first-step screening mechanism and the first layer of a risk assessment in the complex battery supply chain. In other words, the assessment lays the groundwork for further engagement, giving OEMs the possibility to develop specific measures, such as audits, training sessions, and on-the-ground projects.

The development of the Battery SAQ followed a rigorous gap analysis, extensive stakeholder dialogue, and consultations with key industry players - with the last one still open and closing on 15th September. Although the tool is already in use, it may undergo further adjustments to align with guidance expected from the European Commission in February 2025.

The questionnaire has been specifically adapted for all actors within the battery supply chain, from tier 1 to tier N, taking into account their usage of the SAQ. Unlike the standard SAQ, which primarily targets direct suppliers, the Battery SAQ has been designed to encompass the entire battery supply chain. For suppliers who have already completed the SAQ, only a limited number of additional questions will be required, and their previous SAQ results will be fully taken into account.

Continuous Alignment with Global Standards

Since its inception in 2014, the SAQ has served as a cornerstone in Drive Sustainability's strategy to improve the sustainability performance of the automotive supply chain. Based on the Global Automotive Sustainability Guiding Principles, the SAQ evaluates suppliers on a wide range of topics, including social and environmental sustainability, business ethics, responsible supply chain management, and responsible sourcing of raw materials.

The SAQ's primary function is to assess and verify whether suppliers have implemented robust management systems that support continuous improvement in sustainability. This often marks the beginning of an automotive buyer's due diligence process, enabling the identification of Environmental, Social, and Governance (ESG) risks. While the SAQ results are used to guide further due diligence, the tool is not designed to exclude suppliers but rather to highlight areas for improvement.

While the SAQ is reviewed bi-yearly, ad hoc revisions align with passed or upcoming legislations relevant to supply chain due diligence. In the adaptation process, Drive Sustainability aims to continuously reassess current and forthcoming global standards to ensure the SAQ remains a recognized evidence-based tool for assessing the sustainability performance of suppliers in the automotive industry.

For more information:

• Visit the Drive Sustainability website

• Subscribe to the Drive Sustainability Newsletter

• Contact Luciana Randace, Senior Project Manager, and Vera Gaouad, Project Manager.

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