at Volkswagen Group and supply chain impacts for the industry in the hundreds of millions of euros.86,87 –Metal, mineral and energy resources: Provision of metal and mineral resources for input materials and a stable supply of energy to operate are crucial. Energy is currently sourced from both renewable and non-renewable sources, with an increasing shift towards renewable sources as a decarbonization lever. –Cultivated biological resources: The sector relies on the provision of rubber for tyres, crops for the production of fibres and dyes, and livestock farming for leather. For example, rubber shortages in recent years due to flooding and leaf disease have put pressure on tyre production supply chains.88 According to the World Economic Forum’s report Nature Risk Rising, more than 40% of the gross value-added across automotive companies’ direct operations and supply chains is moderately dependent on nature. These dependencies can materialize as risks to businesses if not properly assessed and managed and if action is not taken to safeguard nature. This strengthens the business case for investing in protecting and restoring nature to build sustainable, responsible and resilient supply chains and ensure the long-term viability of business models. However, the automotive sector continues to impact nature, contributing to drivers of biodiversity loss such as pollution, water use, land-use change and ecosystem disturbance, and GHG emissions.89 Wherever possible, automotive companies should avoid then reduce these drivers of nature loss in their operations and value chains, alongside related negative social impacts on communities at and around project sites, to mitigate risks and unlock nature-related opportunities across the value chain. Company-specific impacts and dependencies vary by business model and position within the value chain, and companies should conduct individual assessments to understand their own unique interfaces with nature (see Box 2). For OEMs specifically, the shift in the automotive sector towards alternative business models, notably from ICE vehicles to EVs, will support the reduction of GHG emissions but may exacerbate other nature impacts. Automotive companies will need to perform a life cycle assessment of nature impacts to evaluate trade-offs in decision-making. Top four drivers of nature loss in the value chain of the automotive sector TABLE 2 UpstreamMidstream (direct operations)Downstream Pollution Water use Land-use change and ecosystem disturbance GHG emissions Pressure materiality rating (ENCORE): High Medium *Manually adjusted based on expert feedback. Note: See methodology in the Appendix. While GHG emissions are one of the highest materiality drivers of nature loss for the automotive sector, this is included last in this document given the automotive sector’s net-zero transition has been covered extensively elsewhere. More than 40% of the gross value-added across automotive companies’ direct operations and supply chains is moderately dependent on nature. Conduct company-specific assessment of impacts and dependencies BOX 2 The analysis of impacts and dependencies presented in Chapter 2 is a sector-average analysis for companies in the automotive sector, but company-specific impacts and dependencies will vary according to their activities, supply chains and operational locations. Companies will need to conduct assessments to locate their interface with nature and evaluate their impacts and dependencies using company-specific operational and supply chain information. TNFD’s LEAP approach,90 as well as the SBTN’s step 1 (assess)91 and step 2 (prioritize)92 are useful frameworks to guide companies through their own assessments. The full methodology and results of this sector-average assessment can be found in the Appendix. Nature Positive: Role of the Automotive Sector 20

Nature Positive Role of the Automotive Sector