The Confederation of Indian Industry’s (CII) GreenCo Council is developing a common ESG framework and digital platform for India’s automotive supply chain, to help OEMs address one of their biggest decarbonisation challenges: measuring and reducing Scope 3 emissions across their supplier networks. The platform is targeted to become fully functional by the end of FY27.
Being developed under the CII Green Supply Chain Coalition for the Automotive Sector, the initiative will bring OEMs and suppliers onto a common system for reporting environmental, social and governance data. CII says it will be a first-of-its-kind initiative globally, with the architecture eventually expected to extend beyond direct suppliers into the Tier 2 and Tier 3 ecosystem.
“Green competitiveness is becoming business competitiveness,” N. Muthusezhiyan, Executive Director - Green Manufacturing, CII GreenCo, told Autocar Professional.
The challenge, according to Muthusezhiyan, is increasingly moving beyond what manufacturers can control within their own factories. While companies have been working on Scope 1 emissions from their operations and Scope 2 emissions associated with purchased electricity, meeting wider decarbonisation and net-zero targets requires them to tackle Scope 3 emissions across their value chains.
For automotive OEMs, that means obtaining reliable sustainability and emissions data from hundreds of direct suppliers and, eventually, companies deeper in the Tier 2 and Tier 3 ecosystem. The same component supplier may, however, serve several vehicle manufacturers, each seeking similar ESG information through different questionnaires, formats and reporting systems.
The proposed platform seeks to address both sides of this problem: give OEMs more consistent supply-chain data to measure and reduce Scope 3 emissions, while allowing suppliers to report against a common framework instead of repeatedly preparing similar data for different customers.
The GreenCo Council, chaired by Vikram Kasbekar of Hero MotoCorp, is targeting participation representing around 75% of India’s automotive OEM ecosystem within the next three years, according to Muthusezhiyan.
The coalition was launched at the GreenCo Summit in New Delhi in June. CII will now develop the common ESG framework, expected over the next three to four months, followed by the digital platform, which is targeted to become fully functional by the end of the current financial year.
One Framework Instead of Multiple OEM Formats
At present, individual OEMs are increasingly seeking detailed sustainability information from suppliers as they attempt to understand emissions embedded within purchased components and materials.
However, the formats, questionnaires and reporting requirements can differ from one manufacturer to another.
“If I am a component supplier to four different OEMs, four OEMs are asking for data in four different ways, different questionnaires and at different times,” Muthusezhiyan said.
For a component manufacturer serving several vehicle makers, this can mean repeatedly compiling, restructuring and validating broadly similar information for different customers.
“Can we have one unified measurement approach on all environmental aspects, social aspects and governance aspects? Can we have a common framework for ESG? That is what we are trying to work on right now,” he said.
CII’s objective is to move the industry from this fragmented, company-by-company approach towards a shared and standardised reporting and assessment framework.
Framework First, Digital Platform Next
The initiative will broadly be implemented in two stages.
The first involves developing the common ESG framework, determining the data and supporting evidence suppliers need to provide and standardising how that information will be assessed. CII expects this framework to be ready within the next three to four months.
Development of the common digital platform will follow and is expected to require another three to four months, putting the targeted timeline for the overall system to become fully functional at around the end of FY27.
Once operational, suppliers will upload ESG data and supporting evidence onto the platform. Participating OEMs will then be able to access the relevant supplier sustainability information through the common system. CII will manage the platform and underlying framework.
The intention is that a supplier serving multiple participating vehicle manufacturers should not have to repeatedly provide substantially similar sustainability information through separate systems.
Importantly, CII does not see the initiative primarily as a mechanism for GreenCo ratings or consulting services. The principal objective is to establish common sustainability reporting and data infrastructure for the automotive industry.
From Tier 1 to Tier 3
The longer-term ambition goes considerably deeper than direct OEM suppliers.
An OEM may purchase a component from a Tier 1 company, but the environmental footprint of that component also depends on the materials, processes and sub-components used further down the chain. A Tier 1 supplier therefore eventually needs corresponding sustainability information from its own suppliers.
CII expects the architecture to progressively extend into the Tier 2 and Tier 3 ecosystem, creating a chain of sustainability information through the automotive value chain. This is likely to be one of the more difficult parts of tackling Scope 3.
Large OEMs and major Tier 1 companies increasingly have dedicated sustainability teams. Smaller component manufacturers may not have personnel with the expertise required to calculate emissions, compile ESG information and respond to sophisticated sustainability questionnaires.
“The challenge from the supplier side is: I don’t have people to do it, I am not aware about how to do it,” Muthusezhiyan said. Training, awareness and capability building will therefore form an important part of the initiative.
Standardisation could itself reduce some of this burden. Instead of a smaller supplier responding separately to several customer formats, it could prepare information against one common industry framework.
Why Automotive First?
CII sees automotive as particularly suited to an industry-wide sustainability system because of the maturity of the relationship between OEMs and suppliers. India’s automotive supply chain has spent decades developing systems through which manufacturers work closely with suppliers on quality, cost and delivery.
“From day one, quality is so high, so the supply chain and procurement teams are always working with the suppliers in terms of quality, cost, delivery and all those things. Now, adding green is easier,” Muthusezhiyan said.
CII believes sustainability could consequently become another important parameter in the established OEM-supplier relationship.
The coalition remains a voluntary industry initiative and CII cannot mandate participation. However, OEM adoption could provide a powerful mechanism for bringing suppliers onto the platform as sustainability disclosure becomes increasingly important to doing business with vehicle manufacturers.
The target: 75% of the OEM ecosystem in three years
CII Expects Adoption to Happen Progressively.
One challenge is that several automotive manufacturers have already invested money, manpower and time in developing their own sustainability systems and supplier-data platforms. Moving towards a common system therefore requires companies to determine how their existing infrastructure will work with an industry-wide platform.
CII argues that maintaining proprietary systems also creates recurring costs and perpetuates duplication for suppliers. Once the common platform is operational and has demonstrated its effectiveness, the council expects adoption to accelerate. CII is targeting participation representing around 75% of India’s automotive OEM ecosystem within the next three years.
Its potential reach would be considerably larger than the number of participating OEMs. Each large vehicle manufacturer works with hundreds of direct suppliers, while those companies procure from a much larger network of Tier 2 and Tier 3 companies.
CII Exploring External Funding
CII is also exploring external funding for developing the digital infrastructure rather than requiring automotive manufacturers to bear the entire development cost.
Muthusezhiyan said discussions are underway with organisations supporting climate-mitigation initiatives for potential funding of the platform.
Even companies that have developed their own sustainability platforms face recurring costs for operating and maintaining them. CII believes common infrastructure could ultimately reduce these costs while simultaneously reducing the reporting burden on suppliers.
Participating companies may still have to contribute towards maintaining the ecosystem over time, but CII’s proposition is that this would be substantially less expensive than operating multiple parallel systems.
Built on 15 years of GreenCo
The supply-chain initiative builds on more than a decade of work under CII GreenCo.
Pilot work on GreenCo began in 2011, before the first version of its rating framework was formally launched in 2013. It was developed as a voluntary, industry-led mechanism to help manufacturing companies move beyond minimum environmental compliance towards higher levels of sustainability performance.
GreenCo covers areas including energy efficiency, greenhouse-gas mitigation, renewable energy, water management, waste management, material conservation, recycling, green supply chains and lifecycle considerations.
According to CII, more than 1,600 organisations are now engaged with GreenCo, while around 750 plants have been rated. The initiative has expanded beyond ratings into certifications, consulting, training, capability building, circularity and supply-chain programmes.
The Green Supply Chain Coalition for the Automotive Sector represents a potentially significant next step.
Rather than assessing the environmental performance of individual manufacturing facilities, the proposed system seeks to establish a common sustainability language across an entire automotive value chain.
If CII achieves its targeted adoption, the platform could eventually connect OEMs with thousands of companies across multiple tiers of the supply chain, allowing ESG information to flow through a common framework rather than multiple OEM-specific systems.
For an industry where cost, quality and delivery have historically determined supplier competitiveness, sustainability could increasingly become the next parameter added to that equation.