Automotive firms should consider embracing a circular economy

With lot of good initiatives been taken by the auto sector on the sustainability front is expected to boost usage of green technology and rise in clean fuel technologies in India. Madhava Kumaraswamy, Project Manager, CNC Automotive takes a close look at sustainable initiatives taken by auto sector.

What sustainable initiatives have been taken by auto industry today?

Automotive organisations worldwide are accelerating their efforts in improving sustainability of supply chain and production process. Around 62 per cent of auto organisations have a comprehensive sustainability strategy, however, implementation is still fragmented, says a report by Capgemini.

The most commonly deployed initiative is ‘supporting and promoting a circular economy’, as per the report from Capgemini, which is being deployed by 52 per cent of the companies. In contrast, ‘sustainability in IT’ is only being adopted by eight per cent of the organisations, it added. Also, out of 74 per cent of automotive OEMs who have an electric vehicle strategy, only 56 per cent have it as part of their sustainability strategy. In addition, the investment and implementation levels along with governance of sustainability are still lagging, to keep pace with Paris Agreement targets.

The auto industry must meet a 20 per cent shortfall in its current investments in order to meet the defined international sustainability targets. It also found that only 9 per cent of the major 500 auto companies can be classed as ‘high-performing sustainability leaders’, with 91 per cent yet to reach maturity, 26 per cent of whom can be regarded as laggards.

What indicates that auto industry is keen on the upgrade on a sustainable path?

According to some reports, investor events in the automotive industry that featured sustainability topics have increased from 142 in 2015 to 320 today.

Germany and USA are leading in most priorities, such as ‘supporting and promoting a circular economy’ and ‘sustainable manufacturing’ while other countries are lagging in several of them such as ‘mobility and digital services’, ‘environmentally responsible sourcing of metals, materials and products’ or ‘sustainability in IT’.

There are also gaps in governance, with only 44 per cent of firms having a central body dedicated to overseeing sustainability objectives, and 45 per cent giving dedicated targets to key executives. Overall, only 19 per cent have at least four quantifiable targets aligned with areas identified as having maximum impact on sustainability performance (such as recycling of waste, use of fresh water and ethical labour guidelines). Also, currently, there is an existing $ 50 bn gap between what auto companies are spending on environmental protection, required to meet international sustainability targets.

What are some key sustainable programmes observed by you?

Electric vehicles (EVs) and circular economy are one of the key initiatives. Only 15 per cent of automotive OEMs according to the Capgemini research plan to deploy charging infrastructure aimed at powering EVs by renewables.

One of the most effective ways for sustainability is that the automotive firms should consider ‘embracing a circular economy’. This touches upon many key areas of sustainability, from supply chain to recycling, procurement and after-sales.

However, automotive companies still have a long way to go to become fully invested in a circular economy according to the report. Only 32 per cent of the companies through their supply chain contributes to the circular economy, with this share expected to rise to 51 per cent in the next five years.

What sustainable initiatives have been deployed by you?

We have decided to allocate 15 per cent of our budget to deploy solar roof on our various plants. While it has been on hold since last 1 year due to the slowdown, BS-VI and Corona situations. Apart from these, we have been reusing water in our plant while we do engage in society connection initiatives with our employees.