What is Sustainability?
Sustainability has long been critically important to the automotive industry. This broad concept means different things to different stakeholders, however. Sustainability typically is measured along three main dimensions: environment, social, and governance sustainability.
Environment: A company’s impact and consideration on the environment (i.e., reducing CO2, waste management, use of alternative energy, low-carbon supply chains, etc.)
Social: A company’s relationship with people (i.e., diversity, equity, & inclusion; labor relations; professional development/training; etc.)
Governance: A company’s leadership and management (i.e., internal controls, board, shareholders, etc.)
This article focuses on the environmental piece of sustainability and the elements suppliers & stakeholders need to consider to begin transitioning towards a circular economy.
What is the Circular Economy?
According to a report conducted by the American Chemistry Council (ACC), “a circular economy by design, does not waste any molecule as long as the part continues to meet performance requirements and bring value throughout the supply chain (American Chemistry Council, 2020).” Compared to a traditional linear economy, a circular economy views this process more comprehensively from supply chain structure to material and product design and through end-of-life materials recovery. The benefits of a circular economy could support longer product lifetimes, reduction in environmental concerns, and a potential USD 400 to 600 billion value to automakers and suppliers (American Chemistry Council, 2020).
Things to Consider to Support the Transition to a Circular Economy
Transitioning to a circular economy will radically change how the automotive industry approaches material design, use, and end-of-life processes. Many automakers have already announced sustainability targets in transitioning to a circular economy, and the table below lists some of these significant automaker announcements.
Examples pulled from automakers’ sustainability reports and press releases
- BMW: One-third of vehicles BMW sells in Europe should be electrified
- Ford: Use 20% sustainable materials
- GM: 50% of all energy use in factories sourced from renewable sources & 40% of U.S. models offered will be EVs
- Nissan: Aiming for one million EV sales
- Toyota: Achieve a 25% introduction rate for renewable electricity
- VW: Reduce CO2 emissions per vehicle of all plants by 50%
- BMW: Double the energy density of EV battery cells
- Ford: Eliminate single-use plastics
- GM: 100% renewable energy use in the U.S. for vehicle manufacturing; 31% GHG reduction from factories; & phase out fossil fuels. Set goal of offering only EV light vehicles by 2035
- Toyota: Complete establishment of battery collection & recycling globally
- VW: 75 new EV models
- BMW: 50% of all vehicles leave factories via green logistics providers
- GM: 100% renewable energy use globally; carbon neutral in 2040
- Honda: Achieve carbon-neutral status
- Nissan: Achieve carbon-neutral status
- Toyota: Reach zero CO2 emissions across global plants & 90% reduction of CO2 from new vehicles
Although automakers have begun to announce their sustainability goals, the industry is far from a completely circular economy. Below is a list of a few elements industry stakeholders should consider to support their efforts to move towards this goal.
- Repurposing waste into materials/parts
- Utilizing renewable biomaterials
- Advancing separation & cleaning of materials
- Designing materials for longevity, recyclability, and disassembly
- Developing advanced recycling technologies
- Optimizing manufacturing processes
- Investigating recovery models
- Funding alternative R&D solutions
Suppliers and other stakeholders should be prepared for this transition to a circular economy to take a significant amount of time. The industry needs to anticipate and overcome numerous hurdles throughout this process. To support the transition policies, infrastructure investment and educational development will enable additional growth in innovative sustainability efforts across the automotive industry.
Industry Analyst & Assistant Director, ACP
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