That the Board of Directors expand its annual disclosure to shareholders, at reasonable cost and omitting proprietary information, to include key performance indicators (KPIs) on human capital management and human rights due diligence related to the company’s global manufacturing sites and its global supply chain. The report should include:
- Within global manufacturing sites: Comprehensive workforce metrics including the number of temporary workers at Magna’s manufacturing sites, health and safety KPIs, responsible labour recruitment measures currently in use, and the number and types of complaints received and remedies offered under its grievance mechanism; and
- Within the global supply chain: KPIs on the number of supplier audits conducted, the most salient human rights risks identified and corrective measures implemented to avoid adverse human rights impacts.
In order to provide comparable and consistent information, the metrics reported should align with internationally recognised good practice for reporting such as the Global Reporting Initiative (GRI) and/or the Workforce Disclosure Initiative (WDI) along with guidance provided through industry initiatives, such as the Automotive Industry Action Group.
In recent years, Magna has been expanding its manufacturing and sourcing activities in or near growth markets such as China, India, Thailand and Mexico where certain risks tend to be higher as a result of less stringent regulatory oversight. These risk factors include, but are not limited to, a weaker enforcement of fundamental rights and principles at work, including freedom of association, the weak management of health and safety issues, excessive and sometimes illegal working hours, forced labour, and a disproportionate reliance on temporary and migrant workers.
While Magna has taken the encouraging step of including a sustainability report in the Annual Information Form it published in 2018, the report provides insufficient metrics to help investors ascertain the company’s approach to human capital management and human rights due diligence and remedy in its global manufacturing operations and supply chain. For instance, it does not disclose any metrics on health and safety performance (e.g.: number of fatalities), it does not provide a breakdown of permanent versus temporary employees nor does it provide metrics on the types of complaints received and corrective action plans adopted to remedy adverse human rights impacts. Given that the company employs more than 174,000 employees across 348 manufacturing sites in 28 countries, this gap in disclosure undermines the ability of investors to ascertain the key risks described above.
Auto parts suppliers face increasing scrutiny by their Original Equipment Manufacturer clients over their management of environmental and social issues. The Automotive Industry Action Group and Drive Sustainability, the two leading auto industry bodies, recently updated their Global Automotive Sustainability Practical Guidance which calls on companies to disclose information regarding their labour force and health and safety practices. Some of Magna’s largest clients, including Ford, Fiat Chrysler and Volkswagen all participated in the revision of the Principles thereby creating an added incentive for Magna to demonstrate good performance.