When looking at being both environmentally and socially responsible, an automobile brand can express their good intentions by making public commitments, but also by following through with concrete objectives. Brands like Jeep, BMW, Lexus, and Volvo are actively working to improve environmental problems resulting from manufacturing through sustainability, as well as working towards CSR programs that show consumers that they care about the same societal issues they do.
We curated eight pieces of information, data, and/or statistics surrounding how the global automobile industry overall is focusing on sustainability, and to round out the entire project, we have presented nine pieces of information, data, and/or statistics examining global consumer sentiment surrounding sustainability efforts in general for brands.
Global Automobile Industry: Sustainability Efforts
- The automobile industry and the vehicle brands that operate within it are focusing on all aspects of sustainability. This encompasses supply chain sustainability, procurement procedures, and even looking at the suppliers they use. Automotive News shared that “[t]he North American auto industry is now heavily invested in more environmentally conscious products [including] lower-emission vehicles, components made of lighter-weight materials, vehicle systems that siphon off less engine power, and a widespread adoption of electric technologies and more efficient factory processes.”
- Early in 2019, Volkswagen Group revealed that it would move towards giving more business to suppliers that focus on sustainability, which effectively “punishes” those who do not make it a priority. According to Automotive News Europe, “[t]he automaker plans to introduce a performance rating this year that takes account of environmental impact and social responsibility, and could add another layer that focuses specifically on each supplier’s effort to reduce carbon dioxide emissions.” The first step that Volkswagen Group will take is to closely examine its Tier 1 suppliers on sustainability issues that include social responsibility and environmental impact. This will be accomplished by requiring their suppliers to complete a sustainability questionnaire, where ratings will be given based on their answers. The suppliers will also have to produce comprehensive documentation, and be willing to have on-site audits. According to Marco Philippi, who at the time was head of strategy for group procurement, “Every one of our business partners will have to submit themselves to this. Will this mean that there are repercussions for a negative rating? Definitely. Those that don’t correspond to our ideas will be shut out.” [NOTE: Marco Philippi is now head of strategy and procurement for Audi].
- There are other automobile brands that are laser focused on sustainability initiatives. “Three outstanding examples are Nikola Motors’ plan to build a North American hydrogen-fueling network of 700 stations by 2028 in addition to zero-emission trucks; Mercedes-Benz’s use of blockchain technology for more transparency in complex supply chains; and Volvo’s XC60 T8 Twin Engine plug-in hybrid SUV, which contains high levels of recycled plastics.”
- Research conducted by The Capgemini Research Institute reveals that there is much fragmentation when it comes to sustainability initiatives with the automobile industry. Capgemini found that sixty-two percent of automobile companies did indeed have concrete sustainability initiatives, but when it comes to the supply chain, the focus is not consistent. “Fifty-two percent of auto companies were found to be rolling out an initiative that involved ‘supporting and promoting a circular economy’, while a lackluster eight percent reported that ‘sustainability in IT’ was a priority.” Only nineteen percent of respondents had four or more measurable targets that would have a significant impact on sustainability. When digging into governance, less than half (45%) said that they had given solid targets to key executives, while forty-four percent had a dedicated sustainability body within the company.
- When viewing country data, there are key differences in the sustainability initiatives that have been rolled out. Looking specifically at ‘sustainable manufacturing’, in Germany, fifty-five percent of the companies surveyed are implementing this initiative. However, in France, only thirty-one percent of organizations are using it. As illustrated by the following graphic, Germany and the US monopolize the leader table, occupying 8 of the leading spots.
- According to Markus Winkler, global head of the automotive sector at Capgemini, “[t]he automotive industry has made steady progress on sustainability, but a more rapid acceleration towards a systemic approach is now needed. To catch up and become a more environment-friendly industry, auto companies need to have a clearer focus on two key priorities: the need for them to more closely link their sustainability and electric vehicle strategies, and to increase investment in circular economy initiatives. It’s also critical for companies to make senior executives accountable for results in this area, make use of intelligent technology solutions across the whole value chain, and take a collaborative, partnership-based approach to developing more sustainability processes and standards as an industry.”
- Based on Capgemini research which included talks with respected industry thought leaders and industry executives, as well as leveraging the experience of working with leading automotive firms, Capgemini analysts believe “two critical areas will drive maximum sustainability impact for the automotive industry: One: ensuring that electric vehicles are truly sustainable. Two: incorporating circular economy practices across the automotive value chain.”
- Electric vehicles accounted for a mere three percent of United States automobile sales as of 2018, as reported by the International Council of Clean Transportation. Juxtapose that with a McKinsey study that revealed that global growth of EV’s has risen by sixty percent since 2014. NASA research asserts that greenhouse gases and pollutants that vehicles release are direct contributors to global warming. This is likely to be the driver that could have a significant impact on the way auto brands view sustainability.
Consumer Sentiment: Brand Sustainability Efforts
- The Millennial generational cohort is particularly concerned with climate change, and their concern is at all time highs. Generation Z fully expect brands to take a stand on sustainability, ninety-three percent of them want brands to address environmental issues. Both cohorts will go out of their way to buy environmentally friendly products over the alternatives.
- Futerra looked directly at the United Kingdom and the United States and asked over 1,000 people how they felt about their own sustainability actions. “Although consumers think they can make a difference, they want more help doing it, and they want that help to come from brands and companies.” According to Futerra research, eighty-eight percent of consumers made it clear that they want brands to step up on sustainability.
- The 2020 Retail and Sustainability Survey shows that 51% of American consumers rate sustainability as important. When these same consumers were asked if fashion, apparel, and footwear brands offer enough visibility into their sustainability practices, 23% said brands offered enough, 27% said that some brands are, but they could offer more, but half of the respondents revealed that they felt brands are not demonstrating sustainability practices.
- If a brand objective is to drive reputation, sustainability messaging can help. “Multiple testing programs show that Americans did view brands more favorably after viewing sustainability messaging. Arguably, this type of favorability can drive brand preference over time. Messaging can include raising awareness of a brand’s sustainability programs or initiatives designed to help consumers easily engage in sustainable behaviors.”
- Companies need to understand that simply talking about the brands values surrounding sustainability isn’t enough. “Consumers want brands to help them live theirs.” A shift has to occur from brand marketing that is cause-related, or the brand listing its sustainability efforts and/or the brand messaging of the corporate social responsibility (CSR) activities promoting what the company is doing. Instead, a brand should focus on assisting the consumer to make their own difference. This isn’t an issue just for consumer brands. “Governments and even many NGO’s take for themselves the role of ‘actor/hero/change-maker’ and relegate the public to mere ‘audience/beneficiary/cheerleader’. Perhaps this is why today, consumers feel that companies are actually making it harder for them to make a difference in the world.”
- According to the 2017 Cone Communications CSR Study, a majority of consumers in the United States look for brands and companies to focus on sustainability efforts. Sixty-three percent of them don’t want businesses to wait for the government to regulate them to do it, and are hopeful businesses will just do it themselves and take a leadership role to drive social and environmental change.
- Ethics, sustainability, and origins of the products they purchase are all things that consumers in the United States are increasingly concerned about. According to a Nielsen survey, “forty-eight percent of Americans would “probably” or “definitely” change their purchasing behaviors in order to reduce the environmental impact.”
- In a study performed by Accenture Strategy, sixty percent of the respondents assert that they lean toward businesses that appear to prioritize the environment and assist with reducing plastic waste. Being sustainable wasn’t the only criteria that consumers took into consideration when supporting a company and its products, however. Another sixty percent of respondents prioritize corporate social responsibility (CSR). Those consumers revealed that they positively view brands that treat employees well, and that are transparent. Half of those surveyed said they would purchase from companies that supported charitable causes and social issues.
- As part of the same study, 6,000 people were asked about ownership sentiment surrounding electric vehicles. The results came up with two top factors that would sway them to buy an electric vehicle. One factor was environmental concerns and the other key factor was the potential for long-term cost savings.