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Stakeholder Consultation on Responsible Business Conduct in the Automotive Sector
- Directors' Institute
- 2 days ago
- 6 min read
The automotive sector is currently at a critical juncture in its history. For decades, discussions around production efficiency, safety regulations and evolving customer demands shaped the industry. Today, however, a more complex and consequential dialogue has taken centre stage—Responsible Business Conduct in the Automotive Sector.
This is not just another sustainability buzzword. Responsible Business Conduct (RBC) is rapidly becoming a gateway to future competitiveness, boardroom credibility and long-term organisational resilience.
At Directors’ Institute, we have spent years observing how industries evolve through the lens of governance, risk management and societal expectations. What we are witnessing in the automotive sector today is a structural shift: companies are reassessing how they operate, whom they impact and how they will remain relevant in an era defined by transparency and accountability.
Recent stakeholder consultations on Responsible Business Conduct reinforce a message we have consistently emphasised—responsibility is no longer optional. It has emerged as a strategic advantage that directly influences trust, capital access and long-term value creation.
In this thought-leadership article, we explore the core outcomes of these stakeholder consultations, the insights they reveal and why they matter for industry executives, board members, investors and professionals shaping the future of the mobility ecosystem.
Why Responsible Business Conduct Has Become a Non-Negotiable Priority
For decades the automotive industry was regarded as a pillar of growth—generating employment spurring innovation and enhancing mobility. However this very industry now faces heightened examination due, to concerns, labor conditions, supply chain ethics and sustainability.
So what changed?
1. The rise of ethical and sustainable consumerism
Purchasers—the demographic—don’t just purchase a car; they commit to a brand’s values. They desire transparency, about emissions, sourcing, recycling and how vehicles are handled once their lifecycle concludes.
2. Global climate commitments
Authorities worldwide are accelerating decarbonisation schedules. This increases the demand, on the industry to electrify, innovate and provide precise reporting.
3. Supply chain vulnerability
From cobalt extraction to semiconductor production to battery reuse—stakeholders anticipate firms to guarantee equity, security and human rights, throughout the whole supply chain.
4. Increasing board-level accountability
Boards are expected to understand ESG risks, oversee compliance and integrate stakeholder concerns into corporate strategy. The days of treating ESG like a voluntary, good-to-have function are over.
5. Investors are steering the direction
Large funds are moving capital away from irresponsible businesses. Auto companies must now demonstrate risk mitigation, climate resilience and governance maturity.
Against this backdrop, stakeholder consultations are not mere formalities. They are strategic intelligence exercises shaping the next decade of the industry.
What the Stakeholder Consultations Reveal About Industry Expectations
Although each consultation presents details, some recurring themes frequently appear—highlighting the genuine expectations that society, regulators, investors and employees have for automotive companies.
1. Transparency across the product lifecycle
Throughout the process from extracting raw materials to manufacturing to scrapping vehicles, stakeholders demand transparent and verifiable information. Any attempts at greenwashing are quickly. Penalized.
2. Stronger workforce practices
Issues regarding employee safety, skill enhancement, equity in contract labor and safeguarding rights are key concerns. With the industry's transition to mobility, emerging skill requirements make developing the workforce increasingly critical.
3. Ethical and resilient supply chains
Stakeholders demand that companies identify, track and openly reveal the vulnerable parts of their supply chains. The emphasis is on transparency—not promises.
4. Circular economy integration
End-of-life management of vehicles, battery recycling frameworks, component reuse and waste reduction emerged as essential. This isn’t just environmental—it’s also economic.
5. Community responsibility
Communities impacted by manufacturing or resource extraction are calling for treatment, inclusive decision-making and sustainable development.
6. Fair competition and responsible marketing
Stakeholders want clarity around safety claims, vehicle performance, emissions data and ethical advertising that does not mislead consumers.
Collectively, these themes reflect a sector that must expand its definition of responsibility. It’s no longer limited to compliance or CSR; it spans strategy, design, human capital, innovation and transparency.
How Responsible Business Conduct Will Transform the Automotive Sector in the Next Decade
If we zoom out a little, the consultations are actually signalling the direction the automotive industry is headed.
Here’s a forward-looking view of what we believe is coming.
1. ESG-compliant manufacturing will become a competitive differentiator
Factories will need to optimise energy usage, reduce emissions, comply with global standards and adopt cleaner technologies. Manufacturers that invest early in these transitions will see financial and reputational advantages.
Boards that integrate these metrics into performance scorecards will lead the market.
2. Ethical supply chain mapping will become mandatory—not optional
Stakeholders increasingly expect companies to know exactly where materials come from and who is impacted. This means:
digital supply chain monitoring
verified sourcing
audits for labour and environmental compliance
blockchain-based traceability
Companies that fail to demonstrate ethical sourcing will face regulatory and market backlash.
3. Circular business models will redefine profitability
In the future, automotive companies won’t just sell vehicles—they will:
reclaim batteries
recycle metals
reuse components
design vehicles for modularity
Circularity will unlock cost savings, reduce emissions and open new revenue ecosystems.
4. Skill transformation will become a board priority
The workforce will need future-ready capabilities:
EV manufacturing skills
battery technology knowledge
safety training
digital and AI-based manufacturing competencies
Boards must anticipate workforce transitions, not react to them.
5. Community-centric decision-making will shape reputations
Industrial growth cannot happen at the cost of community welfare. Stakeholders want companies to:
conduct social impact assessments
share grievance redressal mechanisms
engage communities before expansion
deliver measurable development outcomes
Social license to operate will be earned—not assumed.
6. Product safety will become even more scrutinised
Safety standards will increase significantly with the implementation of driver-assistance systems (ADAS) connected vehicles and autonomous functionalities.
Authorities and buyers will require openness regarding:
software reliability
accident data
cybersecurity vulnerabilities
over-the-air updates
Companies must prepare early to avoid reputational damage.
From Stakeholder Pressure to Boardroom Strategy
In boardrooms, the shift is already evident. Directors are discussing:
Climate-resilient business models
Governance maturity and board effectiveness
Risk mapping for electric mobility and clean technologies
Cyber-risk in smart and connected vehicles
Global sustainability and ESG reporting standards
Ethical sourcing and supply-chain accountability
But consultation findings highlight something deeper—stakeholders no longer want “responsibility reports.” They want responsible leadership.
Boards must drive the transition from compliance-centric thinking to value-creation thinking.
Here’s what that means in practice:
Aligning RBC with core strategy: RBC cannot sit in a CSR corner; it must influence product design, plant operations and supply chain strategy.
Integrating stakeholder expectations into KPIs: Directors need to guarantee that managers are assessed based on long-term sustainability than solely, on quarterly figures.
Bridging the knowledge gap: Several board members possess industry knowledge but lack, in-depth ESG skills. Ongoing skill development is crucial.
Strengthening disclosures: Clear and uniform disclosures convey trustworthiness to both investors and regulators.
Embedding ethical leadership at every level: RBC is not a project; it is a culture. Companies must build systems where responsibility becomes standard behaviour.
Practical Recommendations for Automotive Companies
From a governance and strategy perspective, here are actionable steps companies should adopt over the next 12–36 months.
1. Conduct a detailed RBC maturity assessment: Map current practices against global best standards. Identify gaps in environment, labour, supply chain, community and governance.
2. Create a cross-functional RBC task force: Include engineering, procurement, HR, sustainability, legal and operations so that decision-making isn’t siloed.
3. Strengthen supplier codes and audit mechanisms: Develop mandatory ESG clauses for suppliers. High-risk suppliers should undergo independent assessments.
4. Invest in clean manufacturing innovation: Be it power, energy-saving equipment or AI-driven optimisation—innovation cuts down long-term expenses and enhances reputation.
5. Build community engagement models: Proactively include local communities in consultations, grievance mechanisms and impact monitoring.
6. Prioritise workforce transition programs: Invest in EV-related skills development, digital capabilities and worker safety programs.
7. Strengthen reporting and transparency: Embrace international standards such as GRI, ISSB or TCFD. Consistent reporting fosters confidence.
8. Prepare for circularity: Start designing products and processes with recycling and reuse in mind.
9. Improve marketing responsibility: Make sure that assertions about performance, safety aspects and sustainability messages are supported by evidence.
10. Institutionalise board-level ESG oversight: Create dedicated committees or strengthen existing risk/governance structures to supervise RBC.
Why This Matters: The Larger Vision for India’s Automotive Future
India is positioned to become one of the world’s largest automotive hubs—with strong manufacturing capacity, a young workforce and growing EV adoption. Responsible Business Conduct isn’t a regulatory checkbox; it’s the foundation for building a globally admired industry.
Companies that get this right will:
attract investment
expand global market access
retain customer loyalty
build resilient supply chains
earn community trust
secure long-term brand value
In many ways, RBC is the passport to global leadership.
Looking forward the businesses that engage genuinely in stakeholder discussions—and respond to them—will define the chapter of mobility.
Our Closing Perspective
At Directors’ Institute we have witnessed changes spanning industries, boardrooms and leadership conduct. However, it is uncommon for a whole sector to be positioned at such a yet hopeful crossroads.
The discussion on Responsible Business Conduct goes beyond fulfilling requirements—it involves reshaping the core values of the industry.
Do we desire an industry that simply adheres?
An industry that drives worldwide transformation?
The discussions occurring today represent the phase. However, they need to lead to efforts, clear communication and mindful governance.
Should the automotive sector approach this opportunity with sincerity, determination and vision, it will not just boost its competitiveness—it will transform mobility for a sustainable future.
And that, truly, is the road ahead.
Our Directors’ Institute - World Council of Directors can help you accelerate your board journey by training you on your roles and responsibilities to be carried out efficiently, helping you make a significant contribution to the board and raise corporate governance standards within the organisation.
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