Leadership tips on EHS and sustainability

Background

About American Axle

As a leading global Tier 1 Automotive and Mobility Supplier, AAM (NYSE: AXL) designs, engineers and manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. Headquartered in Detroit with over 80 facilities in 18 countries, AAM is Bringing the Future Faster for a safer and more sustainable tomorrow. With its global presence, Ragan’s team focuses on consistency across all plants and programs. He refers to this as “a constancy of purpose” in the way his team delivers both EHS and sustainability programs.

The role of Enhesa

As an Enhesa customer, AAM’s EHS compliance programs start from knowing what’s required worldwide, Ragan said. “First, you had to understand what the requirements were,” Ragan said. “Enhesa was a big help for us in identifying that … Once we identified what we needed to do, it was easy” to work across teams, and throughout the supply chain, to collect the data they needed to understand their compliance status and demonstrate their compliance, he said.

Leadership for a changing future

With new sustainability reporting requirements rapidly emerging, alongside increasingly dynamic existing global EHS requirements, Ragan’s team has to continually adapt. Ragan said his organization has evolved to the structure it is today “because of the different regulatory requirements around the world.”

As a member of the executive team, Ragan reports to the Chairman and President of AAM, which gives the EHS team the chance to help shape the company’s future for sustainability compliance. Building a safer, greener, and more sustainable future for employees, customers, communities, and the environment, is all part of AAM’s sustainability mission.

“Having the opportunity to be part of the strategic executive team here, we mold all of the requirements into our plans for the future,” he said. AAM prioritizes sustainability and embeds it at each stage of their development — including their new, LEED-certified 180,000 square foot European headquarters and engineering center in Germany along with other new plants built in the last decade. “We’re taking into account what we can do to make our footprint better,” Ragan said.

Aligning EHS and sustainability

A culture of compliance throughout AAM has emerged from Ragan’s constancy of purpose and his teams’ ability to understand their compliance requirements at each of their global operations and standardize them across the entire business. For Ragan, this standardization and alignment enabled his teams not only to meet their EHS requirements and obligations worldwide but provided the foundation for their ability to meet new global sustainability requirements, which Ragan’s teams were preparing for as early as 2019.

“Our interpretation of the sustainability program on a global basis, and how it interfaces with EHS, was a really good marriage,” Ragan said. As a direct result of the compliance intelligence and information the teams already had, much of the data and topics required for their sustainability reporting was already embedded in their global EHS program.

Having already trained and resourced his global teams to meet and exceed corporate EHS standards by implementing a safety culture, Ragan’s “S4” program helped the company globally to mature from a reactive to a proactive approach. He applied the same principles to implement a “superior energy and sustainability performance” — their “E4” program — with similar maturity levels to his S4 program and an equivalent requirement to demonstrate performance at each level.

And it’s not just the methods of training and implementation that Ragan’s team applied to both EHS and sustainability compliance, he said. Many of the topics apply to both. Drawing on disciplines already embedded in the EHS program — water, waste to landfill, and energy data metrics — Ragan said his leaders designed a program that created ‘green teams’ at each one of their plants responsible for different aspects of the E4 program. Within each green team is a designated subject matter expert for each of the primary environmental metrics: energy, water, and waste. Armed with the knowledge that new sustainability requirements were coming, and confident in his teams’ ability to meet them, Ragan said his leadership organization could then build a team around both gathering the data and preparing the reports necessary for the new sustainability reporting directives.

Drivers for success and lessons learned

In the webinar, Ragan discussed drivers for success. Among them, AAM’s place in the global automotive supply chain, their accelerating growth as a company, and their adaptability to fast-moving emerging regulatory requirements for which he credits the strength of his team and their ability to align with EHS and sustainability directives.

And as for what Ragan’s journey can teach us about leading and resourcing a successful compliance program: lessons include gaining buy-in through direct access to the senior executive level, an understanding of EHS and sustainability compliance requirements in each of their jurisdictions and the overarching culture of compliance that seeks to both meet and exceed global standards.

Drivers

Consistency in growth

As the company grew, adding as many as 54 plants in one year through mergers and acquisitions, Ragan’s team sought to directly infuse every plant with his culture of “constancy of purpose” around global compliance.

In normalizing and comparing each plant’s performance, Ragan said, he and his team prioritized consistent processes across every plant: “We wanted to have people take a look at what works for them in their plants,” he said. And how does each plant achieve the vision set for them? “What motivates different people differs by culture, around the world,” he said. “So how they’ll get there is up to them.”

The result — a regional approach to management oversight for global compliance programs — including not just regional EHS leaders but also regional sustainability leaders. Ragan described how team leaders across both Sustainability and EHS have played a key role in supporting members at AAM’s global facilities to fulfill sustainability reporting and compliance needs, including data reporting, lifecycle analysis, and other elements of their sustainability programs.

Global supply chain requirements

Due to AAM’s position in the global automotive supply chain, this culture of compliance flows downstream from their customers to their own suppliers. AAM is required to adhere to the same stringent requirements as their automotive company customers — and they apply those same high standards to their own supply chain, Ragan said.

“If you’re not in compliance, we’re not going to buy from you” is the expectation AAM’s customers have established for them, Ragan said. This impacts both the applicable regulatory obligations and the requirements they expect their supply chain to adhere to.

For example, the European Union (EU) — has implemented new data collection standards (starting in 2024) along with new consequences (2025): with taxes and penalties levied for nonconformance. LCAs apply from the raw material production stage to end-of-life, Ragan said, “regardless of where we get our products” throughout the supply chain, including parts they use that are manufactured elsewhere, as well as those manufactured within their own company.

Programs like LCAs and legislation such as the EU Carbon Border Adjustment Mechanism (CBAM), though not in full force yet, are helping to formalize reporting requirements — making them a key pre-requisite of doing business in the EU, Ragan said. Similarly, the Carbon Disclosure Project (CDP) — a voluntary reporting standard, of which AAM is a signatory — requires companies to “evaluate multiple environmental impacts, from greenhouse gas emissions to land use changes,” Ragan described.

“We had to have a method put in place to trace the carbon footprint and the energy usage of that product, wherever it was made” — regardless of where around the world that product was shipped to for the next stage in the manufacturing process, Ragan said.

Aligning EHS and sustainability compliance

Aligning local teams to meet worldwide standards for EHS and sustainability required Ragan’s leadership team to look across global needs and implement them facility-by-facility: “Each regulatory body requires different types of reporting and different types of records,” Ragan said. As a management team, “we had to determine the best approach for going forward… In addition to running our [environmental and] safety program, we had to look at data collection and management” for emerging sustainability reporting requirements.

The integration of EHS and sustainability was a top priority when forming teams to tackle these emerging new requirements, Ragan said. They needed to ensure that both organizations — EHS and sustainability — teamed up to cover data collection and management where issues overlapped for both topics. This included, as Ragan cited, in the areas of energy usage and energy sources, water usage and water sources, and waste management specific to hazardous and non-hazardous recycling and disposal.

With their robust “S4” safety program in place across their global facilities, the teams moved into a similar rollout for their sustainability and environmental program, “E4”, using lessons learned and even personnel and structures already in place to implement it in a similar way. “Sustainability and LCA … is another branch of our EH&S responsibilities and our people’s responsibilities,” Ragan said.

Lessons learned

Exceed — don’t just meet — global standards

In developing the company’s compliance program from regulatory requirements both present and forecasted, global consistency and “constancy of purpose” was important throughout AAM’s growth. Ragan applied this consistency of approach to both EHS and sustainability reporting, which has helped his team to meet and exceed regulatory requirements — an outcome that has helped to solidify their place in the automotive supply chain.

As highlighted, Ragan’s team began addressing sustainability requirements in addition to their EHS priorities as far back as 2019, building their program with input from each plant on how to do a better job with energy management. Now almost five years later, AAM’s goal to be operating with “fully renewable energy by 2025 in the US and 2035 globally” is a product of both the sustainability and EHS programs combined, Ragan said.

The combination of Ragan’s leadership, the E4 and S4 programs and the experience of the compliance teams has been so successful that AAM now aims to achieve the Zero Waste to Landfill Initiative by 2027 — although the regulatory target is eight years later, in 2035. Ragan also credits their adherence to ISO standards 14001, 45001, and 50001 as an additional factor in helping them meet these goals.

Ragan’s leadership, alongside the inception of these programs, has also led to the company’s already-low incident rate dropping even further: from 3.0 to 0.5 in just 18 months. “This gave us a lot of visibility among our customers” who consistently benchmark us as having one of the best safety programs among the suppliers they work with,” Ragan said.

Resource teams to meet requirements

Resources are a constant challenge in all industries and Ragan’s approach was to support and help the existing EHS teams who now had to accommodate new sustainability requirements. He did this by mapping what had to be done with existing resources, Ragan said: “We put together a functional organization chart with what had to be done within each of the programs. Then, we overlaid it with the functions that we were already in place.”

Ragan’s organization saw a lot of similarities, despite some differences in reporting and data collection. “There was a lot of overlap between what was being requested and required compared to what we were already doing as part of our [EHS] program. So, it was a pretty easy transition for us … There were a lot of things that were similar between the two programs.”

And if they didn’t have the resources internally? They hired them in. Roles like regulatory consultants, report writers, and database managers were among those added, Ragan said. And with their help, “the existing team worked on collecting and reporting the data together,” he said.

Leadership beyond compliance

Since Ragan reports “straight into the Chairman and President of the company,” he said, it’s easy to get support for his programs. He sees executive support at the highest levels of the organization as one of the best ways for any compliance program to work.

And Ragan sees the compliance management services provided by Enhesa as a strategic priority underpinning support for his teams. Enhesa’s business is providing this intelligence, thus allowing his teams to be more efficient at understanding and implementing compliance requirements so they can focus on what they do best: keeping their workers safe.

As Ragan puts it: “I want more time from our EHS coordinators, on the shop floor where they belong, keeping our associates safe. I don’t need them engrossed in front of a computer, trying to figure out what the regulatory compliance needs are.”

That’s where Enhesa comes in, he said, and “it helps us significantly,” because, as Ragan explained, “The more you sit in front of a computer, the more you don’t go out onto the shop floor and look at your hazards.”

With Enhesa, Ragan said, he can instead empower his teams with the knowledge of what’s required for compliance to improve safety  and  sustainability across all AAM facilities.