ESG terms, in plain language

Benchmarking is comparing your own ESG performance and practices against peers or industry standards. Here's how Tier-2/3 suppliers can use it.

The circular economy is an economic model that minimizes resource input and waste while maximizing reuse and recycling. Here's what it means in the automotive supply chain.

A corrective action plan (CAP) is an action plan for fixing gaps found during an assessment or audit. Here's the follow-up process Tier-2/3 suppliers commonly get asked for.

The CSDDD is the EU directive that makes corporate human-rights and environmental due diligence a legal requirement. Here's why it matters to Tier-2/3 suppliers who aren't directly regulated.

An ESG rating is a score or ranking a rating agency assigns to a company's ESG performance. Here's how it connects — directly and indirectly — to Tier-2/3 suppliers.

Forced labor is work exacted involuntarily, a core concept defined by the International Labour Organization (ILO). Here's why it's a top item in Tier-2/3 due diligence.

Freedom of association is a worker's right to freely form and join labor unions. Here's why it shows up in Tier-2/3 due diligence.

A GHG inventory is the system a company uses to catalog its emissions sources and calculate them on a recurring basis. Here is the practical starting point for Tier-2/3 emissions work.

Greenwashing is promoting a product or company as more environmentally friendly than it actually is. Here's what Tier-2/3 suppliers should watch for when drafting reports.

A grievance mechanism is the process for receiving and resolving complaints and harms raised by workers and stakeholders. Here's how it differs from whistleblowing, from a Tier-2/3 perspective.

Due diligence is the process of identifying, preventing, and mitigating human-rights and environmental risks across a supply chain. Here's why Tier-2/3 suppliers get asked for it.

ISO 14001 is the international certification standard for environmental management systems. An overview for Tier-2/3 suppliers weighing whether to pursue certification.

ISO 37001 is the international certification standard for anti-bribery management systems. Here's the connection to Tier-2/3 ethics and compliance readiness.

ISO 45001 is the international certification standard for occupational health and safety management systems. Here's the connection to workplace safety at Tier-2/3 sites.

LCA is a methodology for quantifying a product's environmental impact from raw-material extraction through disposal. Here's why Tier-2/3 suppliers get asked for the underlying data.

A materiality assessment is the process of identifying which ESG issues matter most to a business and its stakeholders. Here's a concept worth knowing before drafting a report.

Responsible minerals sourcing is the due-diligence system for managing human-rights and environmental risk in raw materials such as conflict minerals. Here's the connection to Tier-2/3 parts supply chains.

An SAQ is a sustainability self-assessment questionnaire a purchasing company sends to suppliers. Here's how the format commonly used by EcoVadis and others works from a Tier-2/3 perspective.

SBTi is an initiative that verifies whether a company's emissions-reduction targets are scientifically aligned with climate goals. Here's how large customers' targets ripple down to Tier-2/3 suppliers.

Scope 1 and 2 are the greenhouse gas emissions a company directly owns or controls, plus emissions from the electricity it purchases. Here is the emissions boundary Tier-2/3 suppliers should tackle first.

Scope 3 refers to the indirect greenhouse gas emissions that occur across a company's value chain. Here's why it matters for Tier-2/3 suppliers.

A code of conduct is the minimum ethics and ESG behavior standard a customer expects from its suppliers. Here's what to check when asked to sign one.

A supply chain ESG assessment covers the full range of ways a purchasing company checks a supplier's ESG risk and management maturity. Here's why Tier-2/3 suppliers encounter it repeatedly.

A sustainability report is a document that periodically discloses a company's ESG activities and performance. An overview for Tier-2/3 suppliers asked for one for the first time.

A whistleblowing system is a reporting channel and protection mechanism that lets employees report illegal or unethical conduct. Here's why Tier-2/3 suppliers need one.