The decibel levels about implementing steps to enhance sustainability in the transportation sector has been increasing. But there is a huge gap in terms of investment and implementation by the auto industry. A recent study by Capgemini Research Institute indicates organisational investment for enhancing sustainability has fallen to 0.85 percent currently from 1.22 percent in 2019. This definitive slip in the last three years is an outcome of lack of full scale deployment and mismatch in implementation is the key concern.
According to the report, larger organisations are curtailing their spend to a greater extent compared to smaller ones. Implementation levels for top sustainability initiatives have either improved only marginally or fallen since 2019.
The Capgemini Research Institute report added that deployment has improved only for initiatives on sustainable supply chain and environmentally responsible sourcing of metals.
Dr Saul Reichman, Global Director, Innovation & Corporate Venturing at Maxion Wheels said “By and large, the automotive industry is still taking a ‘wait and see’ approach towards circularity and carbon neutrality. OEMs and suppliers will not achieve transformative change by acting alone or being constrained to their business boundaries. Instead, a collaborative approach encompassing cross-value chain partnerships across the entire ecosystem is needed to drive down total lifecycle carbon emissions.”
Less than 10 percent of automotive organisations are able to match strategies and implementation levels for sustainability strategies. Capgemini Research Institute points out that as much as sixty -two percent of organisations fall into the laggards category, neither advanced in terms of strategy nor implementation.
So the question is what’s stagmating implementation? Capgemini Research Institute outlines some key aspects-
-73 percent of executives agree that the adoption of sustainability practices in their day-to-day activities and processes has increased only marginally or remained static
-Only 10 percent of companies have aligned performance objectives with key sustainability goals for non-managerial employees
-Only 12 percent of executives say that their organisation has fullscale deployment of a platform for measuring, monitoring and reporting sustainability initiatives
That said, Capgemini Research Institute also highlighted the benefits, that companies that are playing the strategy card right, are reaping. According to them-
-On average, these companies- the Leaders in sustainability realised 9 percent improvement, in their emissions levels since 2018, compared to 5% for the industry
-These companies are further expected to meet the Paris Agreement target by reducing their greenhouse gas (GHG) emissions by 35 percent by 2030, compared to an average projected reduction of 19 percent across the automotive industry
-The auto companies that have successful implementation of sustainable strategies also seeing 18 percent boost in attracting talent Vs an industry average of 10 percent.
In this context, Richard Leopold, Regional Director at Bentley Motors pointed out that, “As a luxury manufacturer, to remain relevant in the future, we had to develop a new vision that secures sustainability, not just in our products, but also across our entire supply chain.”
Therefore, Capgemini 2022 report suggested that to accelerate the maturity of sustainability initiatives and prepare to meet regulatory targets, the industry must
-Fast-track product and service evolution
-Foster innovation in battery and vehicle tech
-create new services and business models and build monetisation opportunities
-Ensure sustainability of EV batteries from sourcing to end-of-life establish new sustainability processes
-Integrate sustainability practices into day-to-day activities
-Incorporate sustainable design principles to minimize vehicles’ environmental footprint
-Procure resources in an environmentally responsible manner
-Adopt new tools for managing the transition to net zero
-Upskill the workforce for sustainable practices
-Create a culture of collaboration as part of a systemic approach to sustainability
“We pick suppliers that have manufacturing facilities close to us and have adopted more sustainable practices that minimize our carbon emissions,” explained Nolian Diaz Director of Product Positioning at Fisker.
Therefore, it is important to understand that sustainability is hardly about zero tailpipe emission. It is only one aspect of it and the focus needs to build a comprehensive ecosystem that is instrumental in making sustainable mobility possible.
