How will electrification of vehicles impact auto workers?

Threats to traditional auto manufacturers are outlined in “The top trends killing the auto industry” in Corporate Knights (Feb. 3), including the climate crisis, the fall of fossil fuels, electrification and autonomous EV fleets, unfunded pension liabilities (US$14.4 billion for G.M., US$10.2 billion for Ford), as well as  shifting government policies, and dampened demand in general. All the more reason to celebrate the good news about investment in EV production in Canada by GM, Ford and Fiat-Chrysler , as well as GM’s January 2021 announcement that it will  sell only zero emissions vehicles by 2035. In February, Ford announced its target to sell EV’s only in Europe.  But the good news is complicated, as described in  “Auto industry peers into an electric future and sees bumps ahead” (Washington Post, Feb. 6)  , and by  “Canada and the U.S. auto sector’s abrupt pivot to electric vehicles” (National Observer, Feb. 15) . For Canada, the challenges include competition for the development of battery technology and the policy challenge of the new “Made in America” Executive Order by President Biden on January 25.  Despite the brief and optimistic overview presented in  “Jerry on the Job: How the president of Canada’s largest union, Jerry Dias, is driving the country’s electric vehicle push” (Corporate Knights, Feb. 4), our highly integrated North American auto industry has a complicated path forward. 

One of the most important issues ahead is how the conversion to electric vehicles will impact the jobs of current auto workers. In late 2020, Germany’s Fraunhofer Institute for Industrial Engineering conducted a detailed study of this issue on behalf of the Sustainability Council of the Volkswagen Group.  Employment 2030 Effects Of Electric Mobility And Digitalisation on the Quality and Quantity of Employment at Volkswagen (Nov. 2020) is an English-language summary of the full, detailed study, which modelled the impacts of digitization and electrification in the industry. Although the study is specific to  VW production in Germany, its findings are instructive, and include that job losses will be less than anticipated, ( a decrease of 12 percent in this decade, mainly due to planned output volumes and higher productivity).  Digitization will result in a need for new skills, “will necessitate a profound change in corporate culture”, and will include higher employee expectations for job flexibility. A summary appearing in Clean Energy Wire   states: “ …. there is no uniform employment trend in the ‘transformation corridor’ over the coming decade. Instead, there will be a complex, interconnected mixture of job creation, job upgrading and job cuts. It argues that it will be vital to ensure that small and medium-sized enterprises (SMEs) do not fall victim to this reorganisation, and warns that Germany’s automotive sector must establish new forms of cooperation so as not to “recklessly surrender the field of mobility to new market players.”  The study is also summarized in a press release by  VW (with links to the full study in German).

Benchmarking corporate Just Transition policies gives auto manufacturers like Tesla a low score

The World Benchmarking Alliance (WBA) announced in February that will combine its existing Corporate Human Rights Benchmarking  with its Climate and Energy Benchmarking of global corporations, to produce a Just Transition Benchmark Assessment .  The WBA has a practical objective:

“Trade unions and civil society organisations can use the transparency provided by these assessments to hold companies accountable, and governments can use them as evidence to inform policy making for a just transition. Additionally, investors and the companies themselves will be able to use the assessments as a roadmap to move towards practices to ensure no one is left behind in the decarbonisation and energy transformation.”

Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind  outlines the methodology of this new assessment exercise and invites stakeholders to contribute in an ongoing process till 2023. The proposed outcome is to publish Just Transition Benchmark assessments of approximately 450 companies in high-emitting sectors – in publicly available rankings,  as are the many other reports of the World Benchmarking Alliance. Assessing a just transition also includes results from a pilot project of the automotive sector to illustrate how the Just Transition assessments will be done. It synthesizes the findings from the WBA Automotive Benchmarking for 2020  with its Corporate Human Rights Benchmarking .

Global auto manufacturers are racing to produce electric vehicles, but are they respecting workers’ rights?

In combining the findings of the two existing benchmarking initiatives, Assessing a just transition states: “…. Some companies that demonstrated action on climate issues, such as low-carbon transition plans, emissions reduction targets and climate change oversight, disclosed very little, if any, information on how they manage human rights, and vice versa. This lack of correlation suggests that many automotive manufacturers still consider climate and human rights issues separately, to be addressed independently of each other, despite the fact that they are increasingly recognised as interconnected.”

A brief case study highlight of Tesla states:  “….. when observing the company’s approach to managing human rights, Tesla scores in the bottom third of companies assessed in the CHRB with an overall score of 6.3/100. This approach has come under recent scrutiny, with a 2020 shareholder resolution demanding Tesla improve its disclosures on human rights governance, due diligence and remedy. While the resolution did not pass (24.8% voted in favour), it highlights that even when a company contributes to decarbonisation, a lack of essential human rights policies and processes to prevent abuse of communities and workers cannot be overlooked.”

Related reports:

The WBA  Corporate Human Rights Benchmarking Report for 2020 Key Findings  includes five sectors: Agricultural products, Apparel, Extractives & ICT manufacturing – and for the first time ever, 30 companies in the Automotive manufacturing sector.   The report states: “The average score for automotive companies is 12%, the lowest score ever for a CHRB-benchmarked sector. Two thirds of the companies scored 0 across all human rights due diligence indicators. These poor results suggest implementation of the UNGPs is weak across the sector.”

Twenty-five “keystone” companies in the automotive industry have been benchmarked for their progress towards Paris goals since 2019. Results of the 2020 report are here , and a blog in December 2020 summarizes the results in  “A tale of two automotive companies: sluggish incumbents and opaque disruptors in the race to zero-emissions vehicles”.

 

50% Clean Power by 2025: 3 Amigos Summit sets tone of international cooperation

3 amigos waving.jpgOn June 29, 2016 the Three Amigos – the leaders of Canada, Mexico and the U.S.,  issued a  “North American Climate, Clean Energy, and Environment Partnership Action Plan”   , summarized by Clean Energy Canada here .  The Plan sets a target of 50 per cent clean power generation by 2025 for North America – with “clean” including energy from nuclear, fossil fuels if produced with carbon capture and storage technologies, and improvements in energy efficiency. The Plan also calls a for shared vision for a clean North American automotive sector, including harmonized regulations, and for collaboration on cross-border electricity transmission projects, specifically naming the Great Northern Transmission Line, ( Manitoba to Minnesota), and the New England Clean Power Link, (Quebec to Vermont). The recent Brexit vote loomed large over the leaders’ meetings; as  the Institute for Energy Economics & Financial Analysis stated: “As Europe is disintegrating, North America is integrating, and it’s integrating in a way that I think provides real and substantive and tangible benefits to the citizens of the three countries.” In a similar vein, Inside Climate News verdict was, “Whatever their respective individual contributions, the three nations’ vow to work in concert is what most excites advocates of strong climate action. And the possibility of a common price on carbon. ”

What might excite advocates of Just Transition for workers is the final statement of the joint press release , which pledges to:  “Invest strategically in communities to help them diversify economies, create and sustain quality jobs, and share in the benefits of a clean energy economy. This includes promoting decent work, sharing best practices, and collaborating with social partners such as workers’ and employers’ organizations and nongovernmental organizations on just transition strategies that will benefit workers and their communities….Protect the fundamental principles and rights at work of workers who extract and refine fossil fuels, and who manufacture, install, and operate energy technologies.”

A group of economic think tanks, including Pembina Institute, Canada 2020, and the World Resources Institute collaborated on Proposals for a North American Climate Strategy   in advance of the Summit meetings. Their recommendations are mostly recognized,if not resolved:  “.. . the United States, Canada, and Mexico should consider the cost of carbon in long-term decision-making; commit to a methane reduction goal and cooperate to reduce black carbon; coordinate their leadership efforts in international forums; work to ensure effective carbon pricing throughout the continent; collaborate to accelerate the shift to clean energy; develop a North American strategy for sustainable transportation; work to strengthen resilience and equity in a changing climate; and develop a coordinated forest and land use strategy.”    For some reaction, see “Dirty or Clean, politics drive cross-border energy deals”    in the Globe and Mail (July 4) , or “ Steering toward a North American electric auto pact ”   in  Policy Options  (August) .  And from the Montreal Gazette, an Opinion piece to bring things back to earth: “After the Three Amigos summit, Canada has work to do on carbon pricing”  .