Sustainability in the Automotive Industry: A Review

In the face of global climate change, the automotive industry is leading a transformative shift and innovating for a more sustainable future. Companies are redefining the essence of mobility, steering away from fossil fuel use, and embracing innovative technologies. This evolution is about more than meeting regulatory requirements; it’s a proactive acceleration toward environmental stewardship, social responsibility, and economic viability.

Today’s blog explores how sustainability is an engine propelling the industry forward into a better future. It also reviews strategies that are being adopted to increase resilience across the automotive sector—such as aligning with United Nations (UN) Sustainable Development Goals (SDGs)—that can help companies boost financial performance and competitive advantage while also meeting evolving stakeholder demands for accountability and protecting people and the planet.

Drivers of Change in the Automotive Industry

With around 10 percent of global carbon emissions attributable to the automotive industry, companies are demonstrating a commitment to change and looking beyond the traditional bottom line by considering the environmental and social impacts of business operations.

Aerial overview of car driving on a forested road.

This shift is influenced by several factors, including:

• Regulatory pressures: ambitious greenhouse gas emissions reduction targets, such as those referenced in the Paris Agreement, European Green Deal, and the UN Global Roadmap, have been set worldwide, signaling the need for innovation.
  

• Technological progress: advanced technologies continue to become available to help achieve emissions reduction, increased fuel economy, and higher performance goals.
  

• Stakeholder demand: customers, investors, and other stakeholders increasingly seek to understand a company’s sustainability goals and its progress toward meeting them, which is influencing purchasing decisions and brand loyalty.

For example, with regard to changing stakeholder expectations, the 2022 Bentleys Environmental, Social, and Governance (ESG) Insights Report reveals that the sustainability beliefs and values of company stakeholders influence how they decide where to invest, choose a place to work, and whether to buy or advocate for a brand.

Aligning with the UN Sustainable Development Goals

One of the ways that original equipment manufacturers (OEMs), Tier 1 suppliers, and others across the automotive industry are navigating challenges and adapting to change is by actively integrating the United Nations (UN) Sustainable Development Goals (SDGs) into business operations.

United Nations Sustainable Development Goals.

The UN SDGs are a set of 17 global targets for addressing urgent social, economic, and environmental challenges by 2030. With a focus on development that is responsible and sustainable, they aim to promote prosperity while also protecting people and the planet. In the automotive industry, the SDGs serve as a guide for reducing emissions and environmental impact, improving resource and energy efficiency, fostering innovation, and more.

Examples of how the industry is aligning with specific SDGs include:

• Climate Action (SDG 13): automakers are increasingly focusing on the reduction of greenhouse gas emissions by improving fuel efficiency in traditional cars and developing electric vehicles (EVs).

• Affordable and Clean Energy (SDG 7): exploring renewable energy sources for manufacturing processes and promoting the use of clean energy in vehicle operations.
  

• Responsible Consumption and Production (SDG 12): efforts are being made to promote the circular economy by recycling and reusing materials, reducing waste, and improving the lifecycle management of vehicles and their parts.
  

• Industry, Innovation, and Infrastructure (SDG 9): autonomous driving vehicles and other innovative smart mobility solutions are in development to create more efficient and sustainable transportation systems.
  

• Clean Water and Sanitation (SDG 6): automotive companies are reducing water usage in manufacturing processes and treating and reusing wastewater.
  

• Good Health and Well-being (SDG 3): as the automotive industry continues to adopt more sustainable business practices, reduce emissions, and design safer vehicles, it is actively contributing to improved public and environmental health outcomes.

• Decent Work and Economic Growth (SDG 8): this goal focuses on promoting inclusive and sustainable economic development, employment, and fair labor practices in supply chains such as the responsible sourcing of materials.

UN SDG 12: Responsible Consumption and Production.

These efforts reflect a spirit of continuous improvement and responsible stewardship that is becoming increasingly prevalent in the automotive sector. Integrating specific SDGs into core business practices can support a multifaceted approach to sustainability that fosters innovation and invites collaboration between public and private sectors.

Sustainability is Good for Business, People, and Planet

A UN Global Compact-Accenture CEO Study titled, “Towards a New Era of Sustainability in the Automotive Industry” provides insights from business leaders worldwide, particularly in the automotive sector. According to the study, 100 percent of automotive CEOs surveyed believe that sustainability issues environmental, social, and governance aspects covered by the UN Global Compact’s Ten Principles.

The report highlights differences in sustainability perceptions among CEOs across various industry sectors and emphasizes the growing trend of viewing sustainability as an opportunity for value creation and business success. Additionally, the study was based on extensive conversations with business leaders and a survey of over 800 global CEOs conducted in partnership with the United Nations Global Compact, making it the largest CEO study on sustainability to date.

The study is but one example of how the automotive industry’s integration of sustainability and the UN Sustainable Development Goals represents a transformative shift that will continue to benefit not only businesses, but also people and the environments upon which we all depend. By taking steps such as reducing greenhouse gas emissions, improving the range of electric vehicles and embracing new smart mobility technologies, and adopting circular economy principles, the industry is not only mitigating its own environmental and social impact but also driving innovation and economic growth.

A strong commitment to sustainability provides a powerful example of how companies in the automotive sector and beyond can thrive while contributing to a greener and more equitable world for all. OLEDWorks is also dedicated to advancing sustainability across our operations and to collaborating closely with OEMs, Tier 1s, and other industry stakeholders in ways that ensure we are a value-adding partner in their sustainability work. 

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