Auto industry falls short of EU sustainability targets

Auto industry falls short of EU sustainability targets

Automotive News Europe — 2022-10-17

Automotive Industry

Investments in sustainability initiatives this year have fallen to 0.85% of overall average revenue from 1.22 % in 2019.

Automakers' sustainability initiatives have slowed as the auto industry battles challenges ranging from the pandemic to ongoing supply chain problems such as the chip shortage, according to a recent report.

The Capgemini Research Institute study concluded that overall maturity levels of sustainability initiatives isn't high enough to meet the goal of net-zero emissions by 2050 under the Paris Agreement.

Investments in sustainability initiatives this year have fallen to 0.85% of overall average revenue from 1.22 % in 2019. The trend is projected to continue until 2026, with suppliers outpacing automakers on sustainability investments during the period.

The industry has reduced its carbon footprint by just 5% since 2018 and is on track to further reduce greenhouse gas emissions (GHG) by another 19% by 2030, falling far short of the net-zero emissions goal.

While there has been improvement in initiatives on sustainable supply chain and environmentally responsible sourcing of metals, less than 10% of industry players could claim progress in both sustainability strategies and boast high implementation levels for top initiatives.

The small group of companies that have more robustly implemented GHG reduction initiative are reaping the benefits in the form of a brand boost and operational efficiencies gained by increased transparency across the value chain.

The slow pace of policy implementation is due to several factors, ranging from poor integration of key performance indicators to challenges in collecting and analyzing sustainability data.

Just 14% of the companies surveyed said they had tapped technologies and tools to advance their sustainability initiatives.

The industry is at the start of a "crucial decade" as the push to develop full-electric vehicles gains traction, Capgemini Global Head of Automotive Industry Alexandre Audoin said in a release.

"While sustainability is credited as a top priority, the industry as a whole is falling behind," Audoin said. "Automotive organizations must think practically about their sustainability approach if they are to reach the targets set out in the 2050 Paris Agreement."

The report recommends fast tracking the shift to EVs from combustion cars, along with more robust development of comprehensive sustainability practices and design principles.

Part of that transition must be people focused, the report added, for example upskilling the workforce on sustainable practices and creating a "culture of collaboration" around sustainability goals.

The Capgemini Research Institute's finding come as a result of 1,080 surveys of senior executives from large organizations including automakers with more than $1 bn in annual revenue, suppliers and pure-play EV manufacturers across nine countries.