Forty years from now an additional two billion people are expected to live on this planet. New megacities will emerge, and capital cities will continue to expand and become even more densely populated. This rapid urbanisation will place more vehicles on the roads, which will not only deteriorate the efficiency and safety of our existing transportation systems but will also have severe implications on our changing climate and air quality. Such a gloomy picture of the future may soon become a startling reality if cross-industry measures are not taken to tackle these complex issues. Collaboration amongst regulators, cities and industries is therefore essential, with the world’s major vehicle manufacturers leading the way to a solution that results in safe, reliable and low carbon movement of people and goods.
One of the biggest concerns over conventional combustion engine vehicles is GHG emissions: about 15% of manmade emissions contribute significantly to climate change and air pollution. In an attempt to tackle the issue, regulators in the EU and the USA have adopted more stringent requirements for tailpipe emissions. Driven largely by these new rules, manufacturers have now set ambitious targets to reduce emissions from vehicle use. However, over the years there has been only a slight improvement. In fact, most companies still do not show how they are considering the relationship between absolute emissions reduction and plans for business growth. The leaders of the future should be embedding low carbon solutions in their overall sales and growth strategy.
Why?
There are seven billion reasons why car manufacturers need to address company sustainability impact: every person has unique mobility needs, and with growing demand the automotive industry now faces the challenge of providing sustainable options to tackle the issues of road congestion and stay ahead of the evolving urban lifestyle.
As part of this year’s Tomorrow’s Value Rating (TVR), the largest car manufacturers were studied, to see how prepared they are for driving the change towards sustainable mobility. Findings revealed that the leaders in the sector have built partnerships and invested billions to bring about innovation in the field. The most promising technologies revolve around developing low carbon and alternative powertrains, advancing telematics and integrating vehicles into multi-modal commuting routines. Each of these areas of innovation represents a point of interaction and collaboration with other industries and governmental institutions.
The approach adopted by manufacturers is the development and introduction of alternative powertrains such as electric vehicles and plug-in hybrids. Although latest sales figures reveal that alternative powertrains have not yet passed the critical point of mass market adoption, there is already growing concern over potential disruption to the current electricity supply due to simultaneous charging of a large amount of EVs and PHVs. To address this, Toyota has taken advantage of smart grid technologies to pilot test the Smart Toyota City in partnership with the Japanese Ministry of Economy, Trade and Industry. In the period between 2010 and 2014 the Japanese OEM aims to understand the energy use dynamics at home, during transportation, and at destinations in a real city. Of course, the effects on global GHG emissions of electric powertrain technology also depends on decarbonisation of the power generation sector, which itself appears to be a long way off.
The second area of focus is the use of telematics such as wireless technologies, sensors and global positioning systems, with the aim of improving vehicle and road safety, increasing transportation system efficiency and enhancing connectivity. Daimler’s @YourComand – a preview of future infotainment features, including superior voice control, and car-to-X communication technology, which aims to significantly expand the vehicle’s range of vision and interaction is a great example of the level of current progress. Incredible prototypes and concepts have been developed by automotive leaders but they still seem to be far away from a launch date.
Combining several means of transport has become the daily routine of many mega city residents around the world. To enable such multi-modal commuting, each major car manufacturer has launched its own car-sharing programme: Volkswagen has Quicar, Daimler Car2go, BMW DriveNow, Peugeot Mu and Ford FORD2GO. BMW i Ventures has also invested in ParkAtMyHouse.com, an innovative solution for finding parking spots in the UK. This online marketplace is designed to link free spaces with drivers in search of parking. The service has more than 150,000 registered drivers, as well as parking spaces at over 20,000 locations in the UK. While making parking easier may encourage more regular driving, this solution improves the utilisation of parking space in the cities and thus reduces overall road congestion.
Co-pilots
However, pursuing innovation in isolation will not provide all the solutions. Companies need to strengthen their intra- and cross-sector collaboration, and search for solutions outside the boundaries of their business. For PSA Peugeot Citroën that is “a commitment to keeping the group one step ahead”. The French OEM’s Open Innovation programme includes partners from a variety of backgrounds, including universities, laboratories and other scientific organisations; technological institutes or agencies, such as Institut Français du Pétrole (IFP) and the French Alternative Energies and Atomic Energy Commission (CEA); technology companies in the automotive and other industries; and PSA Peugeot Citroën automotive equipment suppliers.
As evidence of innovation and one-off partnerships mounts through the TVR findings, there continues to grow the conviction that sustainable mobility is too big an issue for one company to solve alone. A radical lifestyle changing solution calls for large scale collaboration, such as the World Business Council for Sustainable Development (WBCSD) work on mobility. This dedicated working group taps into expertise, identifies synergies and considers the needs of not only the automotive industry but also energy utilities and smart grid providers, ICT companies, national and local governments, builders, consumers and other interested parties. As Henry Ford envisaged back in the day “coming together is a beginning; keeping together is progress; working together is success”.
The trophy
This approach of collaborative innovation towards sustainable mobility also presents a myriad of opportunities to stimulate economic recovery and growth. In the case of the UK, a leader in ultra-low carbon technology, there is good potential for further R&D investments to drive the already booming automotive manufacturing industry. Nissan’s Sunderland plant, the largest car factory facility in the UK, broke production records in 2012, and has created thousands of new jobs in order to respond to the growing demand for the 100% electric Leaf model.
Economic prosperity, more efficient and safer transportation systems, improved convenience and connectivity on the road, cleaner air and a stable planet are among the major benefits of working towards a shared vision of reliable and low-carbon mobility. The prize is no longer for the one who gets there first, but for the concerted effort of getting there on time.
Tomorrow’s Value Rating
The sustainability agendas of large automotive companies are dominated by the need to manage complex dynamics along the supply chain, tackle their significant contribution to climate change and air quality, and meet the mobility needs of the rising world population.
Despite the challenging economic context, the 2013 Tomorrow’s Value Rating (TVR) reveals that sustainability leaders in the automotive sector continue to invest in innovation, develop partnerships and enhance their risk management so that sustainability remains central to business performance. Out of the five industry sectors studied in the analysis, it is automotive that had the highest average score.
BMW, Ford and Fiat performed especially well and displayed many elements of sustainability leadership that will help them face and meet the challenges of tomorrow:
- The automotive sector demonstrated strong performance with an average TVR score of 70% – ahead of all the other sectors studied in the 2013 TVR;
- Unlike other sectors, there was a high score convergence: even the weakest performer scored 60%, with an average of 63% across all five sectors covered;
- BMW and Ford both scored 80% and retained their sustainability leadership position, while Fiat made a great debut in the TVR by ranking third;
- Leaders use stakeholder feedback to drive sustainable product innovation.
The report also identified several emerging sustainability issues which will play an important role in the future sustainability strategies of the automotive sector:
- Reporting on Scope 3 CO2 emissions;
- Sustainable materials in manufacturing;
- Low carbon vehicle affordability;
- End-of-life recycling and recovery;
- Building sustainable mobility infrastructure.
The full results of the 2013 Tomorrow’s Value Rating can be viewed at twotomorrows.com/tomorrows-value-rating.
The 2013 Tomorrow’s Value Rating examines the sustainability programmes of 50 companies eligible for the 2012 Dow Jones Sustainability Index (DJSI), providing in-depth analysis of sustainability practices and performance in each of five sectors: automotive, energy utilities, food and beverages, ICT and oil and gas.
Ivaylo Dimov is a Consultant at DNV GL.
