THE COMPOSITION OF A RESPONSIBLE ORGANIZATION SUSTAINABILITY REPORT 2023
TABLE OF CONTENTS
3 4 5 7 9 11 14 14 15 16 19 20 22 23 23 24 26 29 30 31 36 37 39 40 42 42 43 44 45 45 47 49 51 54 55 57
CEO’s Welcome Letter Parts Authority At A Glance 50th Anniversary of Parts Authority Strategy & Sustainability VP’s Letter The Parts Authority Culture ESG Governance and Management Our Planet
Energy Management Managing Emissions Waste Management
Sustainability in Packaging Right to Repair Advocacy Our Supply Chain Supplier Policies and Procedures
Auto Care Association Sustainability Committee Materials E�ciency – Remanufactured Auto Parts Product Safety – Recalls Our People Labor Practices Women Leaders Key Policies and Programs Health and Safety Employee Engagement, Diversity & Inclusion Breast Cancer Awareness Our Community Community Spotlight – Eric Rosen Sponsorships Team Member Fundraising Business Ethics and Personal Conduct Data Security About the Sustainability Report United Nations Sustainable Development Goals SASB Disclosures Index
Conclusion Appendices Contact
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CEO’s Welcome Letter I am pleased to share this 2023 Sustainability Report, which o�ers a look at Parts Authority’s concerted e�orts to achieve business objectives while enhancing lives and preserving the planet we share. The news, data, updates and feature stories in this report give voice to our team’s progress in integrating environmental, social and governance (ESG) concepts into how we conduct business and interact with customers, suppliers, business partners and each other. Last year’s inaugural sustainability report described how Parts Authority serves as the heart of a sustainable community by supplying parts that enhance the e�ciency and longevity of millions of vehicles. This 2023 report delves more deeply into our expanded sustainability initiatives, metrics and reporting, and our newly formalized policies and procedures. In essence, this report reveals the composition of a responsible organization and how it drives innovation, teamwork and sustainability excellence. We’re publishing this report as we celebrate Parts Authority’s 50th anniversary. It’s a proud milestone for all team members who have contributed to the company’s business growth, cultural richness and passion for excellence over the years. At the core of our company’s success has been an intense focus on exceeding customers’ expectations, expanding team members’ opportunities, and driving positive change in the industry. We believe that our sustainability e�orts contribute to all three of these factors, and will continue to propel Parts Authority’s success in the years to come. Throughout this report you will �nd examples of Parts Authority's success in weaving sustainability themes into our business:
OUR PLANET Learn how we are saving energy, recycling and reusing materials, adopting planet-friendly packaging and advocating for “right to repair” legislation. OUR PEOPLE Learn how our labor, health, safety and other policies help us build a strong diverse team, and meet several of our women leaders.
OUR SUPPLY CHAIN See how we are engaging suppliers to enhance sustainable practices, and partnering with suppliers to conserve resources. OUR COMMUNITY Find out about our many sponsorships, volunteerism and leadership.
We hope that the following stories and themes resonate with you and bring our sustainability commitment to life.
Randy Buller President and CEO of Parts Authority
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PARTS AUTHORITY AT A GLANCE A leading national distributor of automotive replacement parts, tools and equipment Serving over 70,000 auto repair shops, dealerships, �eets and national account locations 800,000 stock keeping units (SKUs) o�ered and over 550,000 SKUs stocked at any given time
700+ suppliers globally, with emphasis on leading brands and highest quality Founded in 1973 to provide a range of in-demand parts to auto shops Company has grown organically and through ongoing acquisitions Over 250 locations in the U.S. and steadily expanding More than 6,000 dedicated team members across the country Precision service delivered by a professionally trained, experienced counter team
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50 th ANNIVERSARY OF PARTS AUTHORITY DRIVEN BY VISION AND INNOVATION
This year, Parts Authority is celebrating 50 years as a company that has grown, innovated and shaped the automotive aftermarket industry in numerous ways. The company currently has more than 250 locations and more than 6,000 team members across the U.S. These facilities and committed individuals serve the needs of 70,000+ commercial customers from an inventory of millions of auto parts. Founded in 1973, the company launched with a single location in New York – now called Store #1– where it competed with a plethora of other “jobbers” (another name for an auto parts store). In the early 70s far fewer part numbers were needed to satisfy customers. There seemed to be an auto parts store on every corner, and jobbers often competed by o�ering deep discounts. Parts Authority took a di�erent route, winning business by providing a superior value and an excellent customer experience. Early on, the company recognized that repair shops were operating ine�ciently and unable to maximize their resources. Cars were sitting on lifts and mechanics could not work on them because they were waiting for parts. In that era, the industry was delivering parts on scheduled routes, which pro�ted auto parts suppliers at the expense of the repair shops.
Building upon this innovation, Parts Authority undertook another initiative, one that would rede�ne and expand the role of jobber in the aftermarket value chain. In that era, auto parts manufacturers sold their products exclusively to large wholesalers, who would stock parts in warehouses and sell them to jobbers. For the fast-paced Parts Authority, however, this wholesale layer bogged down the �ow of parts and added costs. The company challenged the system by buying direct from manufacturers, which o�ered a distinct advantage in the marketplace. As a so-called “two stepper” Parts Authority was able to get newly released part numbers and to bene�t from the manufacturers’ marketing support, including signage, technical training and programs that contributed to the success of both the company and its customer base. Parts Authority’s building was large enough to carry a deep inventory and was able to ful�ll almost every order. They also sourced parts that they did not have in stock, sometimes buying them from dealerships. The focus was on servicing the customer by taking responsibility for sourcing parts, so the shop owner could concentrate on running their businesses. TWO-STEPPER Based on this market insight, Parts Authority developed and pioneered “hot shot delivery,” which aimed to get parts delivered to a shop within 30 minutes. By using this service, shops were able to repair more cars every day and, most importantly, keep their customers happy. Today, “hot shot delivery” is a staple in every auto parts distributor nationwide.
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GEARED FOR GROWTH In the 1970s the most popular foreign car brands were Volkswagen, Datsun, Fiat, Peugeot and Mercedes. Parts for these vehicles were only available from dealerships. Seeing a market opportunity, Parts Authority sourced parts from importers and opened a separate company in a di�erent location solely to supply foreign parts. This was another boon for Parts Authority’s customers, who made the company their �rst call for parts, coming from across the New York metro area. In the following years, recognizing underserved areas in the marketplace, Parts Authority established new locations throughout New York. Then, in 1996, the company took a transformative step by joining the Pronto Network, a buying group which helps its members grow their businesses by providing marketing programs and support to build customer loyalty. Through their association with Pronto they were able to o�er credit cards, tech support, free custom-built websites for customers, and rewards and travel programs. Parts Authority’s founders saw industry consolidation accelerating and were determined to control their destiny rather than become part of another company’s platform. Acknowledging that neither organic growth nor bank loans could adequately fuel an aggressive acquisition strategy, they engaged with capital partners who shared their vision and would help fund their growth. TALENT AND INNOVATION 50 th ANNIVERSARY OF PARTS AUTHORITY
More broadly, the company has sought continuously to attract and retain people who are eager to learn, grow and advance in their careers. Parts Authority continues to invest in training and development tools to help team members acquire new competencies, and it strives to provide opportunities to advance and contribute to the company’s success in new ways.
From its earliest days, Parts Authority has invested in and maintained a focus on the people who drive business success – its valued team members. For example, the company took steps to improve the counter professionals’ experience, by improving working conditions and building better facilities.
In addition to its focus on team member development, Parts Authority continuously invests in expanded levels of inventory in order to have more parts on hand for its customers. The company also invests in a spectrum of technologies, which include custom-made, inner-facing analytical software as well as a customer-facing parts catalog. This award-winning parts catalog has the most complete listing of parts, including OEM numbers. We re�ect with pride on our �rst 50 years and we are excited by the opportunities ahead for Parts Authority, its team members, its partners and the industry as a whole.
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In creating our �rst Sustainability Report in 2022, our team experienced a really steep learning curve. The process was new and exciting and frustrating – all at the same time. Ultimately, we were extremely pleased with the report’s positive reception from our customers, our vendor community, our peers and numerous other stakeholders. Surprisingly, as we composed this second Sustainability Report, our sense of excitement remained, while the newness was replaced by growing con�dence… THE COMPOSITION OF A RESPONSIBLE ORGANIZATION Strategy & Sustainability VP’s Letter
Con�dence that pursuing sustainability is good for our business and for our planet Con�dence that the investments we make today to demonstrate responsibility in these areas will make us a stronger, more resilient, and more e�cient organization.
Con�dence that we’re on the right path
Con�dence that we’re building a strong foundation for measuring where we are in our Environmental, Social and Governance (ESG) journey, and
Creating our 2023 Sustainability Report has been akin to composing and performing a new symphony. We had to map out our musical score and account for all of the contributing elements that would make it successful. These elements included the new policies we’ve adopted, new sustainability-related indicators we were tracking, and new initiatives we were launching. With this score assembled, we then had to ensure we had all the right pieces of the orchestra in place and in tune. In our case, we had no wind instruments, percussion, or string instruments; the contributions came from our �eet operations, our facilities management, our waste and recycling e�orts, our health and safety team, our HR specialists, our legal counselors, our operational managers, and our executive leaders. Ultimately, all of these essential contributors came together, under our CEO’s baton, to present a symphony of progress, development and growing environmental responsibility. In this report you’ll read and see documentation of a portion of our e�orts. In addition to rich data points that report various ESG metrics, we’ve provided narrative interludes that provide a human face, a snapshot, a story that illustrates impact in ways that data can’t always convey. Like music, such human stories must be experienced, not just read. Parts Authority’s advocacy for Sustainability in the aftermarket industry has led to the music being heard and shared broadly and powerfully across the wider auto care industry. Last year’s publication of our Sustainability Report, with its accompanying request that vendors sign our Supplier Code of Conduct, coincided with the formation of the new Sustainability Committee of the Auto Care Association. This committee, which had its inaugural, in-person meeting in May 2023, comprises leading companies in the manufacturing, distribution and service segments of our business. I have the distinct honor of chairing this new committee, and you will �nd meeting highlights relating to this engaged and motivated group further in this report. One important point arising from these thought-leaders was the a�rmation that our industry is intrinsically sustainable, though rarely appreciated as such. The economic segment that is dedicated to maintaining and repairing motor vehicles has three signi�cant environmental impacts: 1. Keeping a vehicle running e�ciently reduces emissions.
2. Components that we provide are directly responsible for reducing emissions. 3. Each vehicle that stays on the road longer cuts down on the emissions generated from manufacturing a replacement vehicle.
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THE COMPOSITION OF A RESPONSIBLE ORGANIZATION Strategy & Sustainability VP’s Letter
RESULTS
These themes are woven into the character of industry participants across the supply chain, whether it’s manufacturers producing needed components, distributors delivering them e�ciently to customers, or service providers repairing and maintaining vehicles. The camaraderie, the willingness to join hands (even among competitors), and the will to
articulate and promote additional sustainability initiatives for our industry were particularly moving, a broader symphony of collaboration and inspiration. Please read this report with the music of cooperation and joint responsibility playing in the
background. Sustainability is truly a collective e�ort, from our stores, to our regions, to our overall company, and across the industry. Take note of the numerical achievements and the descriptive reporting, but also hear the stories we’re telling, tune in to the themes we’re sharing, and listen to the symphony of teamwork that pervades this report. Our sustainability e�orts and this report, which seek to capture some of that music, are a labor of love. It is gratifying to witness our team members’ continued awareness of the importance of being a responsible company and of our roles as stewards of our planet. Across Parts Authority, we’re seeing more recycling activity, improved energy conservation, enhanced transparency, more e�cient operations, clearer policies, greater sensitivity, better governance, and a slew of e�orts, large and small, that add up to the composition of a responsible organization. May you enjoy a melodious experience from our 2023 Sustainability Report! ACTIONS
Ben Spitz VP of Strategy & Sustainability
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PARTS AUTHORITY CULTURE Parts Authority's culture defines how we achieve our vision and fulfill our mission for our stakeholders – customers, team members, suppliers and owners. It’s who we are as a company, what we stand for and how we work. We have been building our customer-centered culture across five decades of rapid growth, adapting to a world that’s been changing at warp speed. In 2021, we reflected on this journey by clearly articulating our mission, core values and the expectations we have for our team members. Our Mission
Our Mission is to be the customers’ �rst-choice warehouse distributor of automotive aftermarket parts in multiple market channels, including professional parts technicians, retailers, jobbers, �eets, chains, and e-tailers. Parts Authority is also focused on team member satisfaction, career development and professional growth, which have been core values of the company since its inception.
All team members must be devoted to the success of the organization and meet their own professional goals. We can only reach our goals when our team �res on all cylinders! This can be accomplished through a focused and concerted team e�ort, and each team member plays a vital role in our success.
Our Pillars for Success Our team’s decisions and actions must keep the interests of all our stakeholders in mind and must strive to create stakeholder value. Our company’s success and how we execute our mission are guided by four overarching pillars – which express what we expect from team members:
Passion, “Fire in the Belly”: We all must have a passion for our business, for our customers, and most importantly for our people. This means having the courage to take risks, challenge the status quo and go the extra mile to help others. Team members should exhibit “Fire in the Belly” and be determined to seize opportunities, drive results and focus on personal growth and development. Technology: We all must be adept at using current technology and tools, while also embracing new technology and innovation that will enhance organizational outcomes and advances in our industry. We transform, engage and evolve – and are empowered to make a di�erence.
Communication: Team members must be comfortable with direct communication – getting straight to the point, while always being considerate, professional and respectful in all interactions. We are transparent and share knowledge and information about what matters most. This builds trust, which leads to collaboration and collective decision-making. Customers: We put our customers’ needs �rst. This means we take on challenges, switch gears at a moment’s notice, �nd solutions and get results. Our success is our customers’ success.
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Our Values Parts Authority’s Values – which will never change – articulate our foundational beliefs and are part of who we are. They guide us in our decision-making and give us a sense of what is important in executing our Mission. These Values are: PARTS AUTHORITY CULTURE
Integrity: We are honest, and always act in the best interests of our stakeholders.
Teamwork: We grow and develop as a group and accomplish more than we ever could on our own.
Pride: As a team we are proud of our accomplishments but remain humble in our success.
Embrace Di�erences: Our team is the sum of our individual perspectives and experiences.
Team members are responsible for living up to the Values every day and being an example to others in the company. Working together helps us de�ne our legacy.
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ESG GOVERNANCE AND MANAGEMENT Parts Authority has formed an ESG company-level committee to guide its progress in embracing and advocating for sustainability. Board The board meets annually to review progress of our ESG activities and o�ers guidance and direction regarding strategies Parts Authority should pursue to further its ESG progress. The most recent meeting was held in October 2023. Company-Level ESG Committee
The company-level ESG committee meets bi-annually. The most recent meeting was held online in May 2023. This company-level ESG committee comprises individuals from a spectrum of Parts Authority’s departments and divisions. These include people with the following roles: • EVP, Chief Human Resources O�cer • EVP of Supply Chain • VP of Strategy & Sustainability
The role of the company-level ESG committee is to (A) represent the company’s multiple departments and divisions to help gather information related to our ESG activities and to bring their subject-matter expertise to bear on ESG initiatives and decisions; and to (B) help disseminate ESG-related training and education to their respective teams. The company has updated and formalized a number of policies and guidelines, including: 1. Discrimination, Harassment, Retaliation Prevention Policy 2. Whistleblower Policy 3. Anti-Bribery & Anti-Corruption Policy 4. Sanctions Compliance Policy
• VP of Marketing • General Counsel
• Assistant General Counsel • 2 Regional Vice Presidents • National Safety & Compliance Director • National Facilities Manager • Director of Fleet Operations • Director of Warehouse Operations • President, Eastern Warehouse Distributors • General Manager, IMC • General Manager, Fast Undercar
5. Telecommuting Policy 6. Vacation & Leave Policy 7. Lactation room & Break room Policy 8. Forced Labor Policy 9. Supplier Code of Conduct 10. Business Ethics & Personal Conduct 11. Disabilities & Religious Accommodation 12. Health & Safety 13. Open Door Policy & Suggestion Program
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ESG GOVERNANCE AND MANAGEMENT To support our Sustainable Procurement e�orts, we’ve also created a Supplier Code of Conduct as well as a Supplier Assessment Questionnaire, which we have shared with our suppliers to complete and sign.
2022
In order to track the multiple metrics related to our various ESG e�orts, we’ve also organized a KPI (Key Performance Indicators) Dashboard. As part of our e�ort to improve our ESG standing, we underwent an independent assessment by EcoVadis in the fall of 2022. We are proud that EcoVadis, based on this assessment, assigned its Bronze sustainability rating to our company.
Throughout this report and unless stated otherwise, target goals use 2021 as a baseline year; �gures are based on a 2022 reporting year. The report includes all of our locations throughout the United States, as well as all of our subsidiaries, including Eastern Auto Parts Warehouse (EAPW) and Fast Undercar, but excluding Fast Undercar franchisees.
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Like many other businesses today, Parts Authority seeks to grow its business while simultaneously shrinking its environmental impact. Fortunately, we have two advantages as we pursue this two-pronged goal. The �rst is that our innovations and investments in enhancing operational e�ciency often provide parallel bene�ts in mitigating our e�ects on the environment. Our second advantage is that the core of our business – extending the lives of automobiles – delivers considerable environmental bene�ts by helping people reduce their vehicles’ lifetime carbon intensity. We de�ne “the planet” in a way that reaches beyond the natural environment near our operating locations. As you would guess, we embrace recycling, reusing and repurposing resources, and try to reduce reliance on virgin raw materials when possible. We believe that our company’s output – auto parts provided to professionals who repair and optimize the performance of millions of cars – has the potential to in�uence global environmental processes such as climate change. [see for example “A generalized framework for analyzing car lifetime e�ects on stock, �ow, and carbon footprint” by Yuya Nakamoto and Shigemi Kagawa ] In this year’s report, we are pleased to have expanded some of our reporting, including more details and data on our recycling e�orts, as well as �gures related to reducing paper use in our o�ces.
OUR PLANET
Energy management for Parts Authority encompasses fuel consumption and purchased electricity consumption at each of our warehouses and stores in 2022 and fuel consumption in all leased and directly owned delivery vehicles and corporate vehicles during the same year. For 2022, our energy management calculations do not cover upstream or downstream third-party suppliers or distributors. We have started the process of reporting our greenhouse gas emissions. We have identi�ed Scope 1 emissions: those produced directly at our locations or in delivery vehicles; and Scope 2 emissions: indirect production of emissions through purchase of electricity. ENERGY MANAGEMENT - RETAIL AND DISTRIBUTION Beginning in 2021, using data provided by our regional managers, we identi�ed areas of ine�ciency at our distribu - tion centers and began a series of energy-e�cient upgrades such as: replacing �uorescent lighting across 32 distribution centers with energy-e�cient LED bulbs, prioritizing loca - tions with the oldest light �xtures. In addition to a lower carbon footprint, this is helping us reduce our exposure to �uctuating energy prices. gas and diesel vehicles leased or owned by Parts Authority and are further discussed under Managing Emissions. Based on this information, we arrived at preliminary Scope 1 and Scope 2 emissions for all �eet vehicles and all locations in 2022, as shown in the �gures below. We estimate that in 2022 our continuing program of replacing traditional lights with LED lights saved up to 2.5 million kWh. More information on energy management can be found under our SASB Disclosures Index. We gathered data on natural gas and electricity usage. Estimates of fuel usage have been collected for all 3,620
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ENERGY MANAGEMENT
More information on energy management can be found under our SASB Disclosures Index. Looking forward, we have several initiatives in the pipeline to improve our energy management. To further reduce the Scope 2 emissions of our locations, in 2023 we are installing sensor-enabled lighting in locations nationwide. Our energy management goals are also informed by industry standards developed by the Sustainability Accounting Standards Board (SASB), and the UN Sustainable Development Goals (SDGs). Our goal for 2024, aligned with SDG 12.6, is to have a more comprehensive Scope 1 and Scope 2 emissions calculation. We believe this is the best path forward and intend to set reduction targets once we have calculated our emissions.
Scope 1 Tons of CO 2 e 37,785
Scope 2 Tons of CO 2 e 8,952
CO 2
Total: 46,738 mT CO 2 e
MANAGING EMISSIONS
A key priority in our business is to get needed parts to our customers quickly. Customers are repairing cars that are sitting on a hydraulic lift, and they are e�ectively losing money if they don’t yet have the parts they need to �nish the job. Hence, prompt delivery of the part for this “last mile” is critical for the e�ciency and pro�tability of our customers’ businesses. To keep vital parts �owing, we maintain our own �eet of vehicles. As of the end of 2022 the Parts Authority �eet was composed of: • 3,497 gasoline-powered vehicles and 123 diesel vehicles. • Our gas vehicles drove over 91 million miles, consumed 3,202,866 gallons of gasoline and produced CO² equivalent emissions of 28,463 mT . • Our diesel vehicles drove over 3.2 million miles, consumed 308,554 gallons of diesel and produced CO² equivalent emissions of 3,140 mT . We have invested signi�cantly in initiatives and capabilities involving intelligent and e�cient delivery routing algorithms. Our routing algorithms enable us to batch deliveries for pre-programed delivery zones in order to minimize miles driven while meeting customers’ service level expectations. This is in addition to out�tting each vehicle with a tablet that enables route optimization.
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WASTE MANAGEMENT Waste management for Parts Authority involves taking an in-depth look at how we manage several key streams of waste and then discussing how existing protocols can be improved, what new strategies can be implemented, and how data collection can be streamlined for future goal-setting and reporting. As a major automotive parts distributor, the waste we produce
is mainly from packaging materials for inbound and outbound goods. Many locations have locally organized recycling of paper and cardboard packaging and wood pallets. Also, select locations collect scrap metals from customers. • Cardboard Recycling – Collection and baling or compression of cardboard boxes for local pickup. • Pallet life cycle management – Reuse of pallets in good condition, repairing minimally damaged pallets, or looking at ways to recycle broken pallets. • Scrap Metal Recycling – Collection of scrap metal and resale to local recyclers to help keep materials out of land�lls. We collected recycling data for 2022 from 270 of Parts
Authority warehouses and stores, which identi�ed recycling or reuse processes at each location. We gathered additional data about the amount of recycled material or waste avoided in most locations. To assist with our data collection in 2022, we partnered with Integrated Waste, a company that helps businesses assess current waste management and create or optimize recycling programs. Integrated Waste has helped us standardize waste collection nationally, which will enable more accurate data and facilitate end-of-life disposal of the major waste streams. Our 2022 recycling assessment showed that Parts Authority has robust recycling programs for some wastes, and highlights areas where we can improve the management of products at the end-of-life. The image on the following page o�ers a high-level view of our 2022 activities nationwide. Additional locations with lower volumes of scrap metal have locally organized resale and reuse of scrap metal. For 2022 and beyond, we are assembling waste type and weight data for the amount of waste produced in the above categories.
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WASTE MANAGEMENT
All Waste "All waste" encompasses trash, compost, scrap metal, commingled waste, cardboard, pallets, and other materials.
Scrap Metal Recycling 61% send scrap to regional warehouses, and 39% handle it through local recycling programs.
16 Composting Locations 7,433 Tons of Waste Generated 4,451 Tons of Recycled or Repurposed Waste 37% Recovery Rate
100% of Locations have organized Scrap Metal Recycling 536 Tons of Scrap Metal Recycled
Cardboard Recycling At 63% of Locations 20 locations have cardboard balers to help compress used cardboard for easier removal.
Pallet Reuse and Recycling We reuse pallets whenever possible. Additionally, many locations work with a pallet recycler to give excess or damaged pallets a second life.
96% of Locations Reuse and Recycle Pallets 381 Tons of Pallets Reused and Recycled
462 Tons of Baled Cardboard 1,458 Tons of Loose Cardboard
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Electronic Waste Recycling Initiative Across the globe, electronic waste, or e-waste, is among the fastest-growing domestic waste streams, according to the UN’s Global E-waste Monitor 2020. Electronic waste consists of products with electrical cords or batteries that have reached their end of lives; although many parts can be recycled, these products often wind up in land�lls complete with toxic chemicals and hazardous materials. Parts Authority is beginning to identify electronic waste generated by our operations, with the intent of keeping such waste out of land�lls by recycling it. We are partnering with quali�ed electronics recycling companies to assist us with our own recycling process as they reach their end of life. Among the types of electronic equipment and devices our teams are recycling are: • Computing – Desktop computers, circuit boards, monitors, keyboards, CD-ROM drives, video cards, docking devices, dongles • Peripherals – Scanners, printers, modems, fax machines, speakers • Networking – Routers, switches, servers • Power Units – Uninterruptible power supply units (UPS), small batteries, surge protectors, converters • Transactional Devices – Check readers, cash registers, calculators, scales We strive to take advantage of digital technology to reduce the environmental impact of our accounting processes. For accounts receivable, depending on the customer’s preference, we may submit invoices and receive payments electronically. Similarly, for accounts payable, we may accept invoices and pay them electronically. Already, we estimate that more than 1 million sheets of paper a year are saved by Parts Authority because we are employing digital tools rather than sending and receiving printed documents through the mail. Digital Documents Reduce Paper Usage INTRODUCTION OUR PLANET OUR SUPPLY CHAIN OUR PEOPLE OUR COMMUNITY ABOUT THE REPORT
• Portable devices – Two-way radios, phones, tablets • Environmental devices – Thermostats, smoke alarms
We intend to set waste reduction goals based upon information gathered in 2022. Key targets include: • Tracking the amount of waste produced in order to set reduction targets for facilities by 2025. • Implement a formal, nationwide recycling program concerning paper and cardboard by 2025
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WASTE MANAGEMENT
Sustainability in Packaging: Product Sourcing, Packaging & Marketing
Our packaging materials are bought from third-party manufacturers, and our team members use these materials to protect the integrity of auto parts and other products from damage in transit to the end customer. In essence, packaging materials constitute whatever the customer receives that is not the purchased auto part itself.
Parts Authority provides customers across the U.S. with a variety of auto parts, many of which are delivered by our �eet drivers or sent via shipping services. To protect parts from damage in transit we employ various types of packaging, taking steps to reduce our environmental impact in the process. Packaging materials include but are not limited to: • Corrugated paper (cardboard) boxes • Heavy-duty paper mailers • In�atable air pillows • Paper void �ll • Paper cushions
Several years ago, we looked at the third-party packaging materials we buy to seek ways to reduce environmental impact. We assessed the marketplace’s packaging o�erings and chose to make sustainability-oriented manufacturer Pregis our exclusive packaging supplier. In 2022, we generated multiple positive outcomes from this partnership. Two examples were:
Void Fill Paper – By using 100% recycled content paper, rather than non-recycled material, for packaging we achieved: • 9% reduction in fossil fuel use, saving more than 119 barrels of oil • 14,594 trees saved due to adoption of recycled paper
Air Pillows – By using pillows comprised of 30% post-consumer recycled (PCR) content, rather than non-recycled material, for packaging we achieved: • 24% reduction in fossil fuel use, saving more than 520 barrels of oil • 26% reduction in water use, using 15,500,000 fewer gallons • 15% reduction in greenhouse gas emissions, equivalent to over 185,000 miles driven by passenger vehicles
We are well on our way to reaching our sustainable packaging targets of: • Ensuring that more than 80% of our packaging is Forest Stewardship Council® certi�ed by 2025. • Using plastic packaging composed of more than 20% recycled plastic by 2025 for our shipping �ller material.
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Our Advocacy: Right to Repair Empowering Independent Repair Shops to Optimize Vehicle Performance Automakers generally provide three- to �ve-year “bumper-to-bumper” warranties for new vehicles, with the stipulation that the car owner visit an o�cial dealer for covered repairs and maintenance. After the warranty period has ended, the owner may choose to continue getting service from an authorized dealer or visit one of more than 200,000 independent repair centers nation-wide. A simple choice, right? Actually, it’s not. The dealer has an advantage in preserving the existing service relationship because it often has exclu - sive access to data about the car’s operation and history – data that’s been accumulating since the car was built. This vehicle-speci�c data, combined with proprietary diagnostics, can give the dealer an edge over independent repair shops that may have limited access to this data and insights such data might provide. The car owner, who is usually blocked from seeing the data, faces a few less-than ideal choices if a new issue arises with the vehicle: Take it to the dealer for service, worried that the repair bill might be substantial due to typically higher labor rates and non-discounted Original Equipment Manufacturer (OEM) parts
Delay the maintenance to put o� the anticipated charges, even if the car behaves or smells “o�” Trade in the car for a new vehicle, leaving the undiagnosed issues for the buyer to resolve, or Take the car to an independent repair shop, which may not have the same level of data access as the dealership.
All of these choices generate confusion, frustration and additional costs for car owners. But, they also have implications for the environment. Every day a car underperforms mechanically it could be emitting more pollutants or consuming more fuel. Also, if a car is traded-in prematurely, it may end up in a scrapyard while triggering demand for a new car to be built, which generates an array of environmental impacts (materials, energy, shipping, etc.) Fortunately, there is movement across the U.S. and globally – Right-To-Repair – that seeks to create a level playing �eld among repair service providers, both in the automotive industry and others. Here in the U.S., several legislative initiatives have been put forward in Congress and there is growing bi-partisan support to pass a bill that will regulate automobile-da - ta access to protect consumer interests and foster fair competition in the auto servicing sector. This e�ort received a boost in March 2023, when 27 state attorneys general sent a letter to Congress to urge passage of Right To Repair legislation. Parts Authority works with the Auto Care Association and other industry groups both to advocate and encourage legislators to act on an issue of importance to their constituents. We believe that Right To Repair should be codi�ed as the way our auto repair industry should operate. For more information about automotive Right-To-Repair advocacy in the U.S., visit: https://www.autocareadvocacy.org .
20 Sustainability Report 2023: The Composition of a Responsible Organization
INTRODUCTION OUR PLANET OUR SUPPLY CHAIN OUR PEOPLE OUR COMMUNITY ABOUT THE REPORT
Cars are among the most complex mass-produced devices ever created. Yet the capacity and convenience a vehicle provides can make us oblivious to the plethora of moving parts that sustain our access to this mobility mode. And, if something breaks down, as it
inevitably does, a robust automotive aftermarket allows for most repairs and maintenance to be done fairly quickly – if the car owner can get the right parts. Traditional vehicles have 30,000 distinct parts, while some electric vehicles have 15,000 parts. What’s more, manufacturers create distinctly di�erent versions of various parts; such “parts proliferation” makes it challenging for distributors to stock parts that are ordered less often. However, Parts Authority has chosen to di�erentiate itself in the marketplace by making a signi�cant investment in stocking a larger percentage of the “long tail” of aftermarket components. Today, we stock over 550,000 SKUs from over 700 global suppliers that can support more than 15 million vehicle repair applications.
OUR SUPPLY CHAIN
Parts Authority’s focus on building an outstanding supply chain organization has made us a leader in the warehouse distribution ecosystem of the automotive aftermarket. As a leader we take responsibility advancing our sustainability, and for supporting the sustainability progress of our broad supplier network. Our company is strengthening its sustainable procurement processes to better assess suppliers’ sustainability e�orts and to spark collaboration to reach higher sustainability goals – and further enhance their business success. As a starting point, Parts Authority has developed a Sustainable Procurement Policy, which sets goals for our supply chain from environmental and social perspectives. In support of the policy, we seek to have at least 60% (by sales volume) of our top vendors sign our Supplier Code of Conduct (or share their own equivalent code of conduct) by 2023. Our Code outlines our expectations for suppliers on material topics such as energy consumption, greenhouse gas emissions, health and safety, human rights and other topics. It helps to ensure that we prioritize working with companies who accept the principles of our Supplier Code of Conduct. To assess our suppliers’ maturity on ESG topics, we have a supplier questionnaire to gather information on relevant topics, actions, policies and certi�cations. The questionnaire supports conversations with our suppliers about how we can provide support to improve their sustainability. In addition, we train our company’s buyers on sustainability topics to ensure they grasp both the challenges and bene�ts of sustainable procurement and how to integrate these factors into supplier selection. Supplier Policies and Procedures • Sustainable Procurement Policy: Contains objectives and measures for each of Parts Authority’s material issues, including general corporate social responsibility performance of our supply chain; social performance; environmental performance; materials sourcing, and supply chain resiliency. • Supplier Code of Conduct: Parts Authority is committed to conducting business in a sustainable manner, which means ensuring that our actions as well as suppliers’ are aligned with sustainability principles. We ask them to complete a sustainability-focused questionnaire and to sign our Supplier Code of Conduct. • Forced Labor Policy: Our Purchasing team is responsible for ensuring that our vendors have signed the Supplier Code of Conduct (the “Code”). As part of signing the Code, a supplier a�rms that its operations remain free of forced and child labor; the supplier also agrees to respect international agreements regarding human rights, such as the United Nations Declaration on Human Rights.
22 Sustainability Report 2023: The Composition of a Responsible Organization
INTRODUCTION OUR PLANET OUR SUPPLY CHAIN OUR PEOPLE OUR COMMUNITY ABOUT THE REPORT
Auto Care Association Sustainability Committee Formed to Enhance Industry Collaboration, Develop Solutions
Parts Authority, along with other industry partners, advocated for the establishment of this new committee. Subsequently, the Auto Care Association nominated Ben Spitz, our Vice President of Strategy & Sustainability, to chair the new committee. Joining the committee are executives from throughout the aftermarket supply chain, including leaders from top manufacturing, distribution and service companies ( see list of committee members ).
The committee plans to focus on legislation, education, best practices, recycling, and supply chain sustainability to drive industry-wide progress towards a greener, more sustainable future. Here is a high-level view of the committee’s plans: Legislation: Fostering an Environmentally Supportive Framework The committee actively supports legislation that enables the Right To Repair (see page 20) and ensures access to repair information, tools and a�ordable aftermarket parts. Simultaneously, it seeks balanced legislation that acknowledges the industry's role in reducing waste and environmental impact. Education: Empowering Professionals and the Public for Sustainability Action The committee's Education focus group emphasizes equipping industry professionals with the knowledge and skills to drive positive change. It will develop education and training content that raises awareness of sustainability, highlights best practices, and provides practical tools for integrating sustainable approaches. Additionally, the focus group will educate the public about responsible car care and maintenance that can reduce their environmental footprint.
Recycling: Embracing the Circular Economy The Recycling focus group seeks to encourage transforming waste into valuable resources. It explores recycling options for used parts, tires, �uids, and other components within the industry. The group will seek partnerships with recycling facilities, develop recycling opportunities, and educate stakeholders on responsible disposal practices that can reduce land�ll waste.
Best Practices: Pioneering Sustainable Strategies The committee’s Best Practices focus group will collaborates with industry leaders to identify and promote sustainable strategies. Such strategies encompass energy e�ciency, waste reduction, responsible supply chain management, product lifecycle analysis, and sustainable procurement. The focus group will share insights, develop guidelines, highlight model organizations and take other steps to foster collaboration and adoption.
Supply Chain: Driving Positive Change The committee acknowledges the importance of adopting responsible practices throughout the entire automotive aftermarket supply chain. This includes encouraging sustainable manufacturing processes, responsible sourcing of raw materials, and reducing environmental impact. Collaboration, transparency, and accountability are key to achieving a sustainable supply chain that reduces the industry's carbon footprint. Responsible car care reduces consumer emissions and promotes positive social and environmental outcomes. Ultimately, through the collective e�orts of all stakeholders in the value chain we can shape a more sustainable, prosperous and impactful automotive aftermarket for future generations.
23 Sustainability Report 2023: The Composition of a Responsible Organization
INTRODUCTION OUR PLANET OUR SUPPLY CHAIN OUR PEOPLE OUR COMMUNITY ABOUT THE REPORT
Materials Efficiency – Remanufactured Auto Parts Value for Vehicle Owners, Environmental Bene�ts for the World Car owners and repair professionals can access a vast universe of aftermarket parts to keep vehicles running well and lasting longer. Within this universe are parts that have been remanufactured to provide high performance, as well as lower environmental impact and costs, compared to building a new part. Remanufacturing typically involves complex auto parts that have multiple components. A portion of the components get worn down by daily use while the balance of the part (the “core”) remains undamaged. Remanufacturers salvage the cores and rebuild the worn-out components, thus giving the auto part a “second” life (possibly several more lives, with the right component replacements). Technicians disassemble the used part, clean it, install new components, and conduct tests (see “Reman: How It Works” below). The resulting part is warrantied and meets OE specs, while delivering equal or better performance. Sustainability is at the heart of remanufacturing. When compared to producing a new auto part from raw materials, by some estimates a remanufactured part: • Consumes less energy (as much as 80% less) • Requires fewer raw materials (such as aluminum, copper and steel) • Uses less water (more than 80% less) • Produces less waste (as much as 70% less) By some estimates, remanufactured products conserve roughly the equivalent of 400 trillion BTUs of energy per year, which can translate into signi�cant reductions in greenhouse gas emissions when compared to creating new parts. Parts Authority is proud to play a role in the remanufacturing value chain. When customers buy certain parts there is a “core charge” fee, which we refund when they return the part after it is worn. We package returned cores and send them to the suppliers for remanufacturing. We also follow this process for lead-acid batteries, which are technically recycled but still involve a core-charge fee with subsequent refund for returns, and which align with the same “second life” value proposition as remanufacturing. We conducted a survey of all parts in our inventory that carry a “core charge” to calculate the volume of remanufactured parts we sell: We estimate that nearly 1 out of every 10 parts (9%) Parts Authority sells is remanufactured.* The following is a sampling of systems which may contain remanufactured components.
• Car battery • Alternator
• A/C compressor • Disc brake calipers • Starter motor • Rack and pinion • Power steering pump • Fuel injectors * Recycled batteries are included in these calculations
24 Sustainability Report 2023: The Composition of a Responsible Organization
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