Escalating Need for Auto Supply Chain Action to Align with Paris and Limit Warming to 1.5*C
While sustainability in the automotive industry is not new, it is becoming an increasingly vital part of doing business for many. In recent years, the industry has been coping with supply chain disruptions resulting from the pandemic and ongoing parts and semiconductor shortages. However, amid these enduring challenges, sustainability has become top of mind for many automakers and suppliers. Internal and external pressures are propelling the industry toward incorporating more sustainable practices throughout the supply chain.
As a result, environmental, social, and governance (ESG) initiatives, such as the demand to reduce greenhouse gas (GHG) emissions to meet the Paris Agreement target of limiting global warming to 1.5°C, have become increasingly commonplace across all aspects of automotive operations. Agencies such as the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) seek to further guide industry reduction of CO2 emissions, reaching net-zero emissions globally by 2050. As a result, many vehicle manufacturers have carbon neutrality targets in place, commonly announced through public annual sustainability reports, showcasing their sustainability efforts and goals. Topics included in these reports range from renewable energy to human rights efforts. These announcements are critical
in signaling to investors and stakeholders public-facing organizational sustainability initiatives. Still, some companies are limited in providing actionable and measurable data and often lack consistency in reporting from one manufacturer to the next. Despite the challenges from this significant shift in the automotive industry, there are also opportunities to further align across stakeholders, make additional commitments to broader climate initiatives, and advocate for more comprehensive regulations. A coordinated effort is an important step in achieving sustainability goals now that the industry has recognized accelerated action is required to limit global automotive operations’ environmental and social impact.
CAR researchers conducted supplier roundtable sessions, and interviews with vehicle manufacturers, and assessed publicly available industry information to help gain a better understanding of industry action in this area. The vehicle manufacturer interviews were a cornerstone of the research, which were conducted to explore sustainability efforts in the automotive industry across six topic areas including (a) Corporate Goals and Commitments, (b) Carbon, (c) Social, (d) Sourcing and Suppliers, (e) Products and Materials, and (f) Moving Forward. These interviews intended to gain a more comprehensive understanding of existing sustainability goals, strategies for meeting these goals, the existing obstacles to progress, and possible pathways to resolve these obstacles.
Based on these findings, this study has identified recommendations and targeted industry action that can help the automotive industry increase collaboration and accelerate efforts to achieve 1.5°C, limiting climate change throughout the supply chain.