OTF Business Information Standards and Integration for Sustainability Gahl Berkooz Richard Riff

OTF Automotive Sustainability – total lifecycle 2 GHG Emissions Energy GHG Emissions Effluents Waste Other Users Materials Energy Water Manufacturing Product UseEnd-of-Life Raw Material Extraction Distribution & Retail Spills The car and the environment interaction can be summarized into two main categories: Material (Scarce Resources) Usage and Externalities Waste

OTF Regulation? We’ll see more of it in the future… 3 Sources: Industrial Environmental Performance Metrics, National Research Council, 1999; Forecasts: Internal analysis. Pre s 1980s1990s2000s2010 and beyond Noncompliance Waste Pollution Pollution Control Compliance Pollution Prevention Environmental Management systems Product Stewardship Design for environment Life-Cycle assessment Eco-efficiency Environmental cost accounting systems Unprepared Reactive Anticipatory High Integration MATERIAL USAGE Sustainability Product Design Stricter Pollution Prevention Low/Zero Carbon Technology Life-Cycle Reporting EXTERNALITIES TRANSPARENCY Environmental Management Learning Curve

OTF Environmental Regulation Drivers 4 Business Activity Usage of Scarce Resources: Unsustainable consumption of limited natural resources comes on the expense of future generations… Raw Materials EnergyWater Environmental Externalities: The manufacturing process as well as the car usage phase have negative impacts on the environment and on bystanders. Air Pollution WasteNoise Public Awareness Regulation Identifying regulation drivers (scarce resources and environmental externalities) provides visibility into future environmental regulatory developments

OTF The Information Challenge and Opportunity 5 Fundamental Economics of Regulation: The Big Picture Future IT Framework: PROACTIVE Future IT Framework: PROACTIVE Current IT Framework: REACTIVE Current IT Framework: REACTIVE Flexible Reporting Mechanism Decreases Compliance Costs Helps to Assess Risks Business Activity Public Awareness Regulation Usage of Scarce Resources Externalities Compliance New systems for new regulations Increases Compliance costs Redundant information flow

OTF Current IT Challenges New systems or adding complexity to existing systems to comply with new regulations. Results in increasing IT costs. Reactive 1 6 Replication of data from source systems. Resulted in duplicated data storage, inconsistencies and non-value-add functionality. Replicated 2 Different laws that have similar information requirements but different reporting structures and supported by different systems. Duplication of investments to develop common analytics core. Inflexible Reporting Mechanism 3 Point to point integration of product and test information into regulatory compliance reporting hampers ability to apply sustainability analytics to product and process data in different phases of the lifecycle consistently Non-Standardized Data Collection 4 The current model of standalone sustainability tools is not working

OTF LevelCategoryAspect Reporting Requirement Materials Source Definition/ Notes PLANT FINAL PRODUCT SUPPLY CHAIN END-OF-LIFE OTHER 7 Level The database is designed to track information standards of environmental reporting requirements throughout the entire vehicle’s life-cycle Proposal: Standards for efficient Environmental Reporting

OTF LevelCategoryAspect Reporting Requirement Materials Source Definition/ Notes PLANT Material Usage - Sustainability Product Design Material Usage - Hazardous Materials Energy Consumption Water Consumption Land Emissions Effluents Waste Management Lower-Carbon and Zero- Emissions (ZEV) Technologies 8 Category The categories help to frame the data according to the regulation drivers and forecasted environmental trends in the automotive industry Proposal: Standards for efficient Environmental Reporting

OTF LevelCategoryAspect Reporting Requirement Materials Source Definition/ Notes PLANT Material Usage - Sustainability Product Design Content Certification Reducing Weight Materials Recycled input materials "Reuse" Initiatives End-of-Life Potential Recycling and Reuse Rates Packaging of input materials 9 Aspect Similarities in the reporting aspects of different categories are helpful for creating a comprehensive information standards architecture Proposal: Standards for efficient Environmental Reporting

OTF LevelCategoryAspect Reporting Requirement Materials Source Definition/ Notes PLANT Material Usage - Sustainability Product Design Content Material Identification Weight/Volume Location Labeling/ identifying markings information Origin Country Performance Metrics 10 Reporting Requirement The database includes reporting requirements of future regulations as well as of recent and on-going trends (such as GHG emissions and chemicals) Proposal: Standards for efficient Environmental Reporting

OTF Standards Based Lifecycle Sustainability Analysis and Compliance Reporting 11 No Duplication Standards based extraction of information from back end systems Lifecycle Assessment Same analytics applied to product and process information at any point in the lifecycle Information Standards Single Set of Sustainability Analytics EnvironmentalSafetyOther Regulation Enterprise Product and Process Back End Systems Bridging Mechanism VisionThe Opportunity Reduce cost of Compliance New regulation reporting require only formatting of data or new analytics Standardize Data Collection Single mechanism of collecting data for sustainability analysis and reporting The future PROACTIVE state of lifecycle sustainability analysis needs to be based on standards that enable integration, not replication, and application of same analytical core to all enterprise data