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The automotive industry is putting the pedal to the metal for sustainability

Growing geopolitical instability and a series of unprecedented crises have disrupted the automotive and transportation industries. These disruptions have had a significant impact on our global businesses and supply chains. 11 million vehicles were produced globally in 2021 due to semiconductor shortages alone. 

Adding to the complexity are the regional and global shutdowns caused by the COVID-19 pandemic, current energy shortages, and inflationary headwinds from the ongoing conflict in Ukraine. How can we reduce supply risks and price fluctuations so that sustainable transport ecosystems are accessible to all?

Ensuring sustainability is especially difficult given the supply chain transformation efforts undertaken as part of the decarbonization program: we have reached a tipping point in our efforts to reduce emissions by 2050.The significant footprint of the automotive and transportation industries on our planet is undeniable, accounting for approximately 10 percent of annual global greenhouse gas emissions. In addition to greenhouse gas (GHG) emissions, other Sustainable Development Goals (SDG) can be supported, such as air quality (Goal 3), reduction of water and energy consumption (Goals 6 and 7), and recycling of material waste (Goal 12), due to the activities of the automobile industry.

The state of global value chains and the effects of the automotive industry require cooperation on various fronts. We prioritise the following three areas of cooperation to achieve a one-size-fits-all approach:

 

1. Coordination between the public and private sectors unlocks transparency in the global automotive value chain.

Because a modern vehicle has over 30,000 components, the challenge is to develop a comprehensive view of its entire value chain, from raw materials to the end of its life.

A growing number of sustainability regulations, standards, tools, and collaborative initiatives make this difficult to achieve. To accelerate the transition to net zero, there is a great need for private-public cooperation and an assessment of shared responsibility.
Creating transparency in value chains is key to identifying risks and jointly developing effective mitigation strategies at an early stage and requires the sharing of relevant information between trusted partners. 

To understand this, as business leaders representing companies in the global mobility ecosystem, we are ready to work together with governments and engage in a public-private dialogue that represents a non-competitive exchange of information that benefits all stakeholders in the automotive and transportation industries.

2. The Sustainable Footprint Compass acts as a navigation tool to accelerate the transition to net-zero

Currently, the automotive industry lacks a unified vision for resources for sustainable development. This creates confusion and makes the transition to a sustainable industry difficult. To solve this, we are creating a map of mobility-related standards, regulations, tools, and cooperation for sustainable development worldwide. Using this compass, we can identify opportunities for collaboration in non-competitive situations and set priority areas for the industry.

 

3. Toolkit to increase value centre transparency as a sustainability enabler

The trends identified above highlight the importance of transparency in key automotive value chains such as semiconductors and batteries. To this end, we are creating a toolkit that provides transparency on supply-demand balance and regional consolidation and highlights strategic recommendations to address key industry risks through non-competitive collaboration. Identifying potential disruptions in the future value chain at an early stage would allow us to respond to sustainability challenges while also meeting sustainability goals.
Only by working together can we build a truly sustainable automotive and transport industry of the future. And time is of the essence here. That is why we invite colleagues from the private sector to join us in achieving our goals. It must be shared if we want to increase transparency and meet the challenges of flexibility and sustainability going forward.

Source: WEF

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