When it comes to tackling climate change, scientists say making transformative changes to the transportation sector will be key. For example, curbing vehicle transportation emissions will require a rapid scaling up of electric vehicle charging infrastructure as well as EV manufacturing. At the same time, companies are grappling with how to ensure the low-carbon transition balances climate goals with social ones.
In this episode of ESG Insider, we talk with Hina Baloch, Executive Director for Data Analytics, Sustainability and Diversity, Equity and Inclusion and STEM Education Communications at General Motors, one of largest auto manufacturers in the U.S. GM has made several low-carbon pledges and is working on ensuring an equitable and just transition as it pursues those goals. The company is also moving to shore up access to new domestic resources for critical minerals after the COVID-19 pandemic and the Russia-Ukraine conflict exposed weaknesses in global supply chains.
"A resilient local supply chain is going to be very important for a sustainable manufacturing future," says Hina. "Ensuring sustainability, ensuring scalability, ensuring security and ensuring cost competitiveness of our supply chain locally is extremely important."
Correction: This episode was updated to remove a reference to the location of where GM's Cadillac LYRIQ is being built. It is being built in Tennessee and not in New York.
We'd love to hear from you. To give us feedback on this episode or share ideas for future episodes, please contact hosts Lindsey Hall (email@example.com) and Esther Whieldon (firstname.lastname@example.org).
Listen to our episode from the S&P Global Sustainable1 Summit in New York here.
Read more about expectations for electric vehicle sales, read this report by S&P Global Commodity Insights here.
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Transcript provided by Kensho.
Lindsey Hall: Hi. I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.
Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership Team.
Lindsey Hall: Welcome to ESG Insider, a podcast hosted by S&P Global, where we explore environmental, social and governance issues that are shaping investor activity and company strategy.
We talk a lot about climate on this podcast. And when it comes to tackling climate change, scientists say that making transformative changes to the transportation sector is going to be key. According to the Intergovernmental Panel on Climate Change, the transportation sector in 2019 accounted for 23% of global carbon emissions and 70% of those emissions came from road vehicles.
To tackle vehicle transportation emissions, we'll need to see a rapid scaling up of electric vehicle charging infrastructure as well as EV manufacturing. But at the same time, like we've talked about in past episodes, this low-carbon transition needs to take a holistic approach. So for example, we can't just achieve a transition to a net-zero economy if we're not also thinking about how to make it nature positive or just, and if we're not thinking about how the transition impacts lower income communities and the transportation sector workforce.
Esther Whieldon: Well, today, we're talking with one of the biggest carmakers in the U.S., General Motors. I spoke with Hina Baloch, who is Executive Director for Data Analytics, Sustainability and Diversity, Equity and Inclusion at General Motors. As we'll hear from Hina, GM has made several low- carbon pledges and is also working on ensuring an equitable and just transition as it pursues those goals. Here's my interview with Hina.
I understand General Motors has a goal of net-zero by 2040. How is it implementing that goal?
Hina Baloch: Yes. It's a very tall goal. It's a tall goal for the company, it's a tall goal for the industry. And it's also a very complex thing for the world to achieve, right? We've been on this high carbon path for a very long time. And now we are recognizing that, that's not sustainable, and that's not how we can operate as a world and as an industry.
Since we announced going carbon-neutral by 2040, we've done quite a few things. The first and the most important thing is the operations side of the business. So making all of our facilities in the U.S. 100% renewable by 2025 and then globally by 2030. We also have partnership with PJM, and we also have partnership with TimberRock, where we have a system of carbon tracking, how much carbon our facility is producing, at what time and how do we track that.
And then in the renewable energy side, our strategy is sort of 4-pillar or four-pronged. We want to focus on energy efficiency, so increasing the energy efficiency. We want to focus on sourcing renewable. We want to focus on adding intermittency and then we also want to focus on policy advocacy. So advocating for carbon-resilient power systems.
We also have a commitment to go zero tailpipe by -- 100% zero tailpipe by 2035. And then we also have the target of going with -- for 1 million EVs in U.S. and China by 2025. And then we also have the Ultium battery platform, which is sort of an adaptable building block for all types of EVs, starting from high performance as well as for mass production.
And then last but last -- not the least, the most important piece of this, which touches on our Scope 3 emissions, which is our work with the suppliers. We recently announced the suppliers' pledge, where we invited all the suppliers to commit to an ESG target, a carbon-neutral ESG target. And what's interesting about this pledge is that not only does it include carbon-neutrality in the products and services from the suppliers' side, but it also includes ESG principles around governance and human rights, which is a huge challenge as you may already know, Esther, on the supplier side in the U.S. and globally.
Esther Whieldon: Yes, especially for raw materials, there's a lot of questions about how those are being handled and produced. I understand -- and quite obviously, the pandemic as well as what's happening with Russia and Ukraine, is making it very clear that supply chain risks are a thing, right? They really -- they're pretty high for companies. So how are you dealing with both the sort of social or equitable issues around sourcing materials as well as the supply chain risk side?
Hina Baloch: I think like you said, Esther, supply chain issues became very clear and visible to everybody in the world and particularly manufacturers in North America that a resilient local supply chain is going to be very important for a sustainable manufacturing future. And I would say GM has an approach where we want to focus on a secured supply chain. We want to focus on a sustainable supply chain. And we also want to focus on a cost-competitive supply chain. So ensuring sustainability, ensuring scalability, ensuring security and ensuring cost competitiveness supply chain locally is extremely important.
We're also looking at a supply chain -- local supply chain strategy that starts from procuring raw material to manufacturing batteries and then also entering into the recycling. So all of those steps are an important part of our supply chain strategy.
And to make that happen, we've gone into several local and global partnerships. So again, focusing on secure, sustainable, scalable and cost-competitive supply chain. We have partnership with CTR, Controlled Thermal Resources, and the partnership focuses on the procurement of lithium, which is an important part of EV batteries.
Esther Whieldon: And that's in the U.S., right, the one with CTR?
Hina Baloch: Yes. Yes. Yes. And then we have a partnership with MP Materials which focuses on rare earth minerals like alloy and magnet. And we have a Canadian-based partnership, in Quebec, with Glencore which focuses on cobalt materials.
So just to give you a sense that, like you said, the pandemic, the war made it very clear to all the manufacturers in the U.S. that our local supply chain is extremely important. I would also add that to be able to scale it, to be able to sustain it, we'll need a lot of policy measures as well on what the policymakers and regulators would do to make that secure, sustainable, cost-competitive supply chain a reality.
Esther Whieldon: Hina was also a keynote speaker at the S&P Global Sustainable1 Summit in New York City in May. In her talk, Hina explained how GM is engaging with suppliers to ensure an equitable low- carbon transition. Here she is during her keynote.
Hina Baloch: I would say that as you're working towards a suppliers' pledge and thinking about bringing suppliers along and like you say, sending out the signal that we are focused on carbon-neutrality, we're focused on governance, we're focused on human rights, we did have an honest conversation about all suppliers are at a different stage of the journey themselves.
And what would it take for them to get to the point where they're able to sign the pledge and then make the actions that would make them carbon-neutral, make them strong in governance, make them strong in human rights. So I would say that, that is a huge consideration for the company. What are the resources that we can provide to the suppliers, what kind of educational resources that we can give to them, what kind of other material resources that can be provided to bring the supply chain along in our journey towards carbon-neutrality.
And I always say this entire climate work that we are doing, and that's why it's such an exciting time to be in this work as well as sort of a -- it's a -- you're like a collage artist. You all have to work together. Each one of us have a different role, and we really would need an interdisciplinary, multidisciplinary, cross-disciplinary approaches here.
So in just our conversation now, we've talked about policy. We've talked about our role. We've talked about suppliers. We've talked about grassroot organizations. So I think in the transition to -- in the fast, equitable transition to an all-electric future and in a transition to a carbon-neutral world, suppliers would play a very big role for the manufacturing companies.
Esther Whieldon: If you'd like to hear more of our coverage from the Sustainable1 Summit, we'll include a link to that episode in our show notes.
Okay. Now let's return to my interview with Hina. Here she is talking about what regulatory and government policies can help GM with shoring up local supply chains and keeping vehicles affordable for all.
Hina Baloch: Yes. Yes. I think the policymakers would have to play a role at state level, but also at the -- helping suppliers locally. So what kind of support with suppliers need to be able to procure materials locally. What kind of regulation would we need to be able to mine for minerals locally. So I think that would be a big part of it.
And then outside of that, a lot of R&D investments would be required in the supply chain. A lot of incentives should be in place for R&D investments that the manufacturers are making as well as the supply chain is making from the point of extracting rare minerals locally and then also the R&D investments that's needed across the ecosystem. So I think a lot of work at the source, which I 'm referring to procurement of the minerals from earth, sea and all of that and then supporting the entire ecosystem.
Esther Whieldon: So give me a couple of quick examples. Are you talking about like just literally allowing a permitting process for the extraction as one of the things just like what they call soft costs, right? Like the -- is that the kind of thing you're referring to? Or does it also include things like tax incentives or -- just trying to get a sense of what that might include, yes.
Hina Baloch: Yes. I think a combination of that, Esther, I think it's important absolutely sourcing at the extraction level. But then also -- I mean this is an entire ecosystem we're talking about, right? How do you set up a set of manufacturing facilities, factories for the processing of these materials. So I'm talking about incentives, tax incentives, I'm talking about R&D support, and I'm talking about strong regulations at the extraction side.
Esther Whieldon: Okay. Great. And then on the cost balancing side, you've mentioned that a couple of times thinking about costs as you're making these decisions. How do you balance needing to do the right thing by ESG, right, versus still needing to make it affordable to consumers?
Hina Baloch: Yes, I think that is always a challenge, and that's a big challenge for, I would say, for the industry, right? But I think what is different this time compared to, I think, any time before of my career in the industry, is that there is an industry-wide acknowledgment of the impact that emissions have been having on the planet.
So while the costs are a challenge, they are a challenge for across the industry. On the other hand, there is also a strong push for having the sustainable carbon management system. So starting from emissions to carbon sequestering technology to carbon storage technologies, all of that. So I think that the industry level -- global level, regulatory level push for a strong carbon management system is going to help with the cost element of this.
Esther Whieldon: It makes sense. Yes, a price on carbon will make carbon less attractive, right? So what are the challenges for rolling out EV infrastructure? You said there's 1 -- it was 1 million vehicles, right?
Hina Baloch: Yes.
Esther Whieldon: Where are we at now in terms of getting to that goal? And then kind of what needs to happen to get you there? And you said it's both U.S. and China. So I imagine the struggles are different depending on which country you're talking about.
Hina Baloch: Yes. Yes. I think definitely, manufacturing capacity is a big part of that, right? And I would say affordability is also a big part of that. So not just producing -- manufacturing EVs, but being able to manufacture EVs at different price points.
GM has a partnership with Honda that focuses on producing EV at high volume for the mass market. GM also has -- and going to the point of manufacturing, right? Like I said, manufacturing is going to be -- scaling your manufacturing is going to be a big challenge. We've made a $2 billion investment at Spring Hill, Tennessee plant that would focus on EV production. We have made an investment in Lake Orion, Michigan plant that would focus on EV production. We have an investment at Hamtramck Michigan at Factory ZERO, which is solely focused on EV production. And then we have $154 million investment to produce Cadillac LYRIQ. So...
Esther Whieldon: To produce what?
Hina Baloch: Cadillac LYRIQ. Yes.
Esther Whieldon: Model?
Hina Baloch: Yes. We're getting into models now. Yes.
Esther Whieldon: My husband would be excited.
Hina Baloch: Yes. Yes. So I think all of that sort of points to answer the question around what is the challenge. I think producing at scale and producing fast and producing for different lifestyles and different price points is going to be the key to be able to make a progress faster towards an all-electric future.
Esther Whieldon: It's interesting because -- so my background is actually -- I was an energy reporter for quite a while. And as utilities -- electric utilities are thinking about EVs, they're thinking about how can we leverage our grid capacity, how can we leverage build-out of EV charging infrastructure. I'm just wondering what -- to what extent is GM -- are the GM companies partnering with other sectors or other entities, including potentially at the community level also to help facilitate this rollout?
Hina Baloch: Yes. So I think probably on the side of energy, we have a number of partnerships with -- I mentioned TimberRock, I mentioned PJM. We work very closely with energy providers across the country. We also, on the renewable energy side, really push for policies that -- push for a clean, resilient power system. So there's that side of things, right? Because like you said, energy is going to be a big part of that. And if the grid is not green, then that has a ripple effect throughout the chain. So that's one part of it.
In terms of the community partnerships, I do want to mention General Motors’ equitable climate action program that really focuses on work of the future. So what kind of workforce would you need, what kind of reskilling would you need for the workforce to be able to make an equitable transition to an all- electric future because you don't want to leave the workforce behind. You want to retrain, reskill and take them along.
There is also a focus on infrastructure equity, so accessibility to EV infrastructure, not just in high income communities but also in charging deserts, but also in rural areas, but also in multi-dwelling housing, low- income housing, all of that. And then EV affordability and EV accessibility, again, focusing on producing EV at all different types of price points.
And then lastly and most importantly, I would say, our Climate Equity Fund. It's a $50 million commitment that GM has towards grassroots organizations to really work with them on what are the needs of the community that we can help address through these skills that grassroots organizations bring and then how do our dollars and dollars of the entire industry really support those organizations.
Esther Whieldon: So I want to make sure I understand, when you say PJM, you're talking about the grid operator, right? That manages basically the Mid-Atlantic bulk power grid?
Hina Baloch: Yes.
Esther Whieldon: Okay. So when you're talking about training and sort of helping workers transition from building maybe, right, fossil fuel-heavy cars to electric vehicles, is that a program you offer? Do you like to partner with schools or kind of how does that transition from their expertise to where it is now to where it needs to be to -- for them to be – you know, have a viable future?
Hina Baloch: Yes, yes. So I think within the company level, we have an entire workforce strategy program that really looks at where is the total workforce at their skill level right now? What has to be done as we retool plants, as we manufacture -- expand manufacturing of EV and the Spring Hill and Lake Orion and Hamtramck, Factory ZERO, all of these manufacturing facilities that I talked to you about, along with this expansion of manufacturing or scaling up of manufacturing EV. We have a full program that focuses on what do we have to do to bring GM's workforce along. So that's that part, which deals with reskilling of the workforce that we have right now.
The other part is around what can we do in partnership with community organizations again that are working in areas, for example, EV technicians. That's going to be a big gap that we would have to fill as we transition from internal combustion engines to electric vehicles. And we have a partnership with an organization called Valley CAN that focuses on training future EV technicians. So it's a combination of what GM is doing within its workforce strategy in the company, but then also what are the organizations outside of the company that we can work with that would train that future workforce.
Esther Whieldon: So an EV technician would be basically your mechanic equivalent, type person, although definitely less nuts and bolts and more computer software-type stuff.
Hina Baloch: Right. Yes. Yes.
Esther Whieldon: So as you can hear, Lindsey, GM is taking steps internally as well as with suppliers and regulators to pursue an equitable low-carbon transition. And GM is also working outside of its own operations to ensure the world will have a workforce in place that is able to maintain and repair electric vehicles after they've left the dealership lot.
But there's still plenty of work to be done to achieve a net-zero future for the transportation sector. For example, as of November 2021, there were more than 10 million electric cars on the road. That's according to the International Energy Agency. But under a net-zero emissions by 2050 scenario, the IEA says the world will need way more than that, about 300 million electric cars on the road. Moreover, electric vehicles would need to make up about 60% of new car sales. In comparison, EV has accounted for only 4.6% of vehicle sales in 2020 globally.
Lindsey Hall: So clearly, we still have a long way to go. And if you'd like to read more about expectations for EV sales, we'll include a link in the show notes to report from our colleagues at S&P Global Commodity Insights. And please stay tuned as we track on this podcast how companies, governments and investors help advance the low-carbon transition for transportation as well as other key sectors.
Thanks so much for listening to this episode of ESG Insider and a special thanks to our producer, Kyle Cangelosi. Please be sure to subscribe to our podcast and sign up for our weekly newsletter, ESG Insider. See you next time.
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