CRI Sustainability-in-Automotive 18102022

SUSTAINABILITY
IN AUTOMOTIVE
FROM AMBITION TO ACTION
#GetTheFutureYouWant
2
Sustainability In Automotive: From Ambition To Action
Introduction
“We can develop and make great vehicles, sustain and grow a Our research on sustainability in the automotive industry
strong business, and protect our planet at the same time – in fact, (published March 2020), found that:
those ideals complement each other.”1 This is the recently expressed
opinion of Bob Holycross, Vice President, Chief Sustainability
at Ford. However, the extent to which the rest of his industry sustainability is a strategic issue for the
shares Holycross’s vision (and, more importantly, is committed to
implementing it) is questionable. 01 automotive industry and the key aspect of
organizational purpose;
the implementation of sustainability
02 initiatives is fragmented and is frequently

marked by a lack of focus across the value
chain and a lack of central governance;
an estimated $50 billion is required over
03
the next five years to meet long-term
sustainability targets, in addition to the
current investment in electric vehicles (EVs),
autonomous vehicles (AVs), and digital
mobility services.
Capgemini Research Institute 2022

3
Introduction
Since then, sustainability has begun to arouse the interest of EV adoption is being powered by generous government subsidies,
automotive original equipment manufacturers (OEMs) and which, in Germany for instance, allow consumers to receive up
suppliers. Rising climate concerns, more widely and strictly enforced to €6,000 ($5,880) in subsidies for vehicles priced under €40,000
regulations, and stakeholder pressure are pushing the automotive (covering more than 15 percent of the overall price).5 Some
industry into the new era of sustainability and leading organizations of these subsidies will be phased out in the coming years, and
are focusing on sustainability goals: automotive organizations will have to find ways to competitively
price EVs to keep up consumer interest. The US Congress has
• net zero targets are front of mind for automotive
recently passed the Inflation Reduction Act, which provides
manufacturers, who are aggressively cutting manufacturing
up to $7,500 in subsidies for EVs assembled in North America.6
and tailpipe emissions. Volvo, for example, plans to reach net
Strict regulations, such as those recently passed by the EU, which
zero emissions by 2040 by eliminating fuel-powered vehicles
require automotive OEMs to phase out Internal Combustion
from its range2
Engine (ICE) vehicle sales by 2035, have been another shot in the
• electrification of vehicle fleets has accelerated, despite arm for the EV segment7. However, transitioning to EVs alone is
pandemic-related disruption unlikely to decarbonize the automotive sector to a large extent
as several considerations with regards to charging infrastructure,
GM has increased investment in EV and AV development to
and sustainable mining of minerals and metals will need to be
more than $35 billion for 2020-253
taken into account too.
Honda has pledged to increase the ratio of EVs and fuel-cell
vehicles (FCVs) to overall unit sales in all major markets of
electrification to 40 percent by 2030; 80 percent by 2035; and
then to 100 percent globally by 20404

4
Introduction
• Sustainable manufacturing: Sustainable auto manufacturing While leading automotive organizations’ sustainability initiatives are
entails minimizing production waste and the environmental gathering pace, we wanted to understand whether current efforts
impact of vehicle production. For instance, Ford has committed will be sufficient for organizations to meet their goals. To this end, we
to sourcing 100 percent carbon-free electricity for its operations conducted a survey of more than 1,000 automotive executives, across
by 2035. nine countries and all major functions – from Strategy, Sustainability,
Manufacturing, Supply chain, to Marketing, Sales, and Aftersales.
• Sustainable supply chain: Faurecia entered into an agreement
We also interviewed 20 automotive experts from a diverse range of
with Veolia to develop innovative compounds using recycled
countries and functions. More details of the Research Methodology
plastics for automotive interior modules, including side panels,
are in the Appendix.
door panels, and center consoles. The program aims to achieve 30
percent recycled content by 2025.

5
Introduction
In this research, we explore the following questions:
01 02
How much progress have automotive organizations What are the challenges behind the slowdown in
made on sustainability in the last 2-3 years? implementation of sustainability initiatives?
How can automotive organizations go from

03 What advantages do ‘Sustainability
Leaders’ have over ‘Laggards’?
04 ambition to action, and accelerate their transitions
to sustainability?

6
The automotive industry has shown little progress on sustainability in

the past three years:
Executive
Summary
• Given this slow progress, the industry is not on track to meet Deployment has improved only for initiatives on sustainable
the Paris Agreement target: supply chain and environmentally responsible sourcing of metals
Organizational investment as a proportion of revenue has fallen • Less than 10 percent of automotive organizations are both
from 1.22 percent in 2019 to 0.85 percent currently; larger advanced in their sustainability strategies and have high
organizations are curtailing their spend to a greater extent than implementation levels for top initiatives – we call these
are smaller organizations ‘Sustainability Leaders:
• Implementation levels for top sustainability initiatives have Sixty -two percent of organizations fall into the Laggards
either improved only marginally or fallen since 2019 category, who are neither advanced in terms of their
sustainability strategy, nor in terms of implementation.

7
Several challenges are causing implementation to stagnate:

• Linking sustainability with day-to-day activities is the biggest
Executive
hurdle to implementation:
Summary
73 percent of executives agree that the adoption of sustainability
practices in their day-to-day activities and processes has
increased only marginally or remained the same in the last
2-3 years
• Poor integration of key sustainability KPIs into performance
management is hampering implementation, especially as we
move down the organizational hierarchy:
Only 10 percent of organizations have aligned
performance objectives with key sustainability goals for
non-managerial employees
• Difficulty in collecting, managing, and analyzing sustainability
data is one of the top three challenges:
Only 12 percent of executives say that their organization has full-
scale deployment of a platform for measuring, monitoring, and
reporting sustainability initiatives

8
However, a small group of ‘Sustainability Leaders’ reaps larger benefits:

Executive
• On average, Leaders have already realized 9%

Summary
improvement, in their emissions since 2018,
compared to 5% for the industry:
Leaders are further expected to meet the Paris
Agreement target by reducing their greenhouse
gas (GHG) emissions by 35 percent by 2030,
compared to an average projected reduction of 19
percent across the automotive industry
• Leaders also enjoy a stronger employer ‘brand’ and
have seen an 18-percent (versus 10-percent for the
rest) boost to their attractiveness to talent owing
to their recent sustainability initiatives

9
To accelerate the maturity of sustainability initiatives and prepare to meet

regulatory targets, the industry must:
Executive
fast-track product and service evolution for the • incorporate sustainable design principles to minimize
Summary
sustainability era: vehicles’ environmental footprint
• Foster innovation in battery and vehicle tech to decarbonize • procure resources in an environmentally responsible manner
vehicle fleet faster
• adopt new tools for managing the transition to net zero
• create new services and business models to induce mobility-
put people at the heart of the sustainable transition:
behavior change and build monetization opportunities
• align organizational objectives with sustainability goals
• ensure sustainability of EV batteries from sourcing to
end-of-life • upskill the workforce for sustainable practices
establish new sustainability processes and enhance • create a culture of collaboration as part of a systemic
traditional ones: approach to sustainability
• Integrate sustainability practices into day-to-day activities

10
Figure.1
Sustainability across the automotive value-chain
What do we mean Sustainability across the automotive value-chain
by sustainability in
R&D and engineering
1. Sustainable R&D and product development
2. Product sustainability (including transition
automotive?
to fuel-efficient or electric vehicles)
Supply chain
3. Sustainable supply chain
4. Environmentally responsible sourcing
Mobility services and of metals (e.g., for EV batteries)
According to the UN, sustainability equates to meeting vehicle usage 5. Due diligence of all material and
the needs of the present without compromising the 10. Mobility and digital services product procurement
11. Lower emissions and improved vehicle safety
capacity of future generations to meet their needs.8
In the automotive industry sustainability includes
a comprehensive rethinking of industry standards, Manufacturing & operations
introducing and refining environmentally and socially Marketing & sales 6. Sustainable manufacturing
7. Recycling of waste and easy returns for
conscious operations, processes, products, and 9. Sales, marketing, and aftersales
end-of-life disposal
sustainability
services. We identified 14 elements that the industry is 8. Sustainable power procurement
pursuing in the field of sustainability. These elements
occur throughout the automotive value chain, from 12. Supporting and promoting a circular economy
R&D to mobility services. In this research, we have 13. Fair labor policy for automotive value chain
focused on the environmental sustainability aspect of 14. Sustainability in IT
Environmental, Social and Governance (ESG).

11
Sustainability initiatives in automotive
• Sustainable R&D involves • Due diligence of all material • Sustainable power • Circular economy is an
01 designing products to reduce 05 and product procurement 08 procurement includes activities 12 industrial or economic system
environmental impact and involves ensuring that all such as building or leasing that maximizes the use of
optimizing the use of natural processes and procedures are renewable energy assets. resources by being restorative
resources by ensuring compatible with human and and regenerative by design
their recyclability. environmental guidelines and • Sales, marketing, and after- and intention. It favours re-use
are independently verified. 09 sales sustainability includes of materials instead of the
• Product sustainability involves initiatives such as retrofitting traditional manufacturing cycle
02 moving to fuel-efficient • Sustainable manufacturing to improve emissions and of “take-make-use-dispose.”
or electric vehicles and 06 involves implementing improving efficiencies on older
biodegradable components. maintenance, quality, and models and refurbishing old • Fair labor policy components
production processes to components or vehicles. 13 include freedom of association
• Sustainable supply chain includes reduce waste and improve and unionizing, work safety,
03 adoption of environmentally recyclability and reuse
10
• Mobility and digital
services examples include
and child labor.
conscious operations in logistics, of materials.
distribution, warehousing and encouraging ride sharing, • Sustainability in IT examples
inventory management, etc. • Recycling of waste and subscription models, and 14 include energy consumption in
07 easy returns for end-of- connected services. data centers.
• Environmentally responsible life disposal involves the
04 sourcing of metals, materials and consumer being given • Lower emissions and improved
products ensures the mining, options to return their 11 vehicle safety ensuring
extraction and production are vehicles and parts for that the lifetime emissions
implemented with minimum responsible disposal. are accounted during any
effects to the environment, sustainability initiatives
mitigating long-term impact.
Source: Capgemini Research Institute, The automotive industry in the era of sustainability, March 2020.

12
From an environmental sustainability front, we are focusing on the following

sustainability issues in our report:
Figure.2
Key issues in environmental sustainability
Emissions: According to the GHG Protocol Corporate

Standard, a company's GHG emissions are classified into three
“scopes”
Scope 1. Emissions that result directly from the activities of
Waste Energy an organization, such as fuel combustion from facilities and
management Utilization vehicles owned or controlled by the organization
Scope 2. Indirect emissions that result from the generation
Indirect of purchased electricity, steam, heating, and cooling
Emissions Water
(Scope 3) management
Scope 3 – upstream emissions. Emissions from other
Key Environmental
indirect sources in an organization’s value chain, such
Sustainability as purchased goods and services, distribution, and
Issues
Direct transportation
Emissions Conservation
of natural
(Scopes 1
and 2) resources Scope 3 – downstream emissions. Emissions from other
indirect sources in an organization’s value chain, such as
the use of sold products, and end-of-life treatment of sold
products

13
Waste treatment- Includes collection, transportation,

processing, and disposal of waste. Waste prevention, recycling,
reuse, and recovery are important waste-management
strategies that ease the burden on landfills, conserve natural
resources, and save energy.10
Energy utilization- Includes energy optimization, sustainable
power procurement, etc.
Water utilization - Using water in a way that meets current
ecological, social, and economic needs without compromising
society’s ability to meet those needs in the future.
Conservation of natural resources – Which includes
environmentally responsible sourcing of metals, materials,
and products, and due diligence on all material and product
procurement.11

14
The State of Sustainability in the Automotive Industry
Which of the following defines ‘sustainability’ at your organization?
70% of organizations focus on overall emission-reduction across their value chain (including scope 1/2/3 emissions) from sourcing to end-of-life
57% of organizations go beyond ESG compliance and make sustainability a business driver
55% of organizations focus on emission-reduction by transitioning to an EV fleet
Organizations' primary sustainability goals
49% Achieving net zero emissions in operations 35% Share of

organizations
28% Achieving carbon-neutral operations 57% planning to
achieve this
22% Reducing carbon emissions (e.g., using renewable energy
sources, remanufacturing) 64%
target by 2040
57% of organizations believe there is broad alignment with their suppliers on the definition of sustainability
60% Share of organizations with a dedicated governance body to oversee efforts to meet sustainability objectives

15

16
01
SINCE 2019
AUTOMOTIVE HAS
SHOWN LITTLE
PROGRESS ON
SUSTAINABILITY
17
Figure.3
Automotive industry not expected to meet Paris Agreement target
Automotive is falling Extent of reduction in overall GHG emissions,

short of Paris Industry average
Agreement target 5% improvement

already realized
174
Governments have set aggressive emissions-
162
reduction targets in a bid to spur industry to more 19% lower than 2018,
concerted efforts. Directives such as The European missing the target
Green Deal and The Paris Agreement are pushing
the automotive industry to pursue more sustainable 148
solutions to meet carbon-neutral targets. At the
current level of maturity, the industry will be unable
to reduce emissions sufficiently to meet the Paris Base emissions = Target of 30% reduction
Agreement target (see Figure 3). 182 million mtCO2e from 2019 levels
(2018 industry average)
Today Expected to realize by 2026 Expected to realize by 2030
Industry average Paris Agreement
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=183
automotive organizations, CDP, Bloomberg New Energy Outlook 2021.
Source: Capgemini
Industry Research
average Institute,
= Average Sustainability
of all emissions, in Automotive
including Executive
Scope 1, Scope Survey,
2, and ScopeJuly-August
3 of 20 large2022, N=183
global OEMsautomotive
for
years 2018 and 2021sourced from CDP (disclosed by organizations,
OEMs). More CDP, Bloomberg
on the methodologyNewinEnergy Outlook 2021.
the appendix.
Emission numbers are in million mtCO2e. Industry average = Average of all emissions, including Scope 1, Scope 2, and Scope 3 of 20 large
global OEMs for years 2018 and 2021 sourced from CDP (disclosed by OEMs). More on the Methodology in the Appendix.

18
Figure.4
Yearly investment in sustainability is declining
Investment in
sustainability Yearly investment towards sustainability is declining
initiatives is declining Average annual investment in sustainability initiatives as a % of revenue,

per organization
According to our 2019 research, on average,
organizations were investing 1.22 percent of their
revenue in sustainability initiatives. Our current data 2019 1.22%
shows that this proportion has fallen to 0.85 percent.
Moreover, organizations are not planning to increase
their spend significantly (see Figure 4).
Current 0.85%
1.22% vs 0.85% Planned 2022-2026 0.86%
Average annual investment as a % of *Please note, this does not include large investments towards EV R&D/design/production/sales and service etc.
revenue in sustainability initiatives in 2019 Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022. N=321
vs. 2022, per organization. executives.
*Does not include large investments towards EV R&D/design/production/sales and service, etc.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=321
executives. Capgemini Research Institute, The automotive industry in the era of sustainability, 2020.

19
Figure.5
Decline in investment is greater for larger organizations
“Larger organizations are

curtailing their spend (as a share of
Average annual investment in sustainability initiatives as a % of revenue, per
revenue) to a greater extent than organization, by organization size (in $bn)
the smaller organizations”
2.08%
Vice President of Safety and Sustainability strategy at
a global automotive organization adds: “A lot of OEMs
cannot invest money without showing returns. We
1.36%
have to be very cautious of the projects and initiatives 1.23% 1.22%
we undertake in order to understand whether they are 1.07%
0.97% 0.98%
saving or generating money.” 0.85%
A sustainability director of an automotive supplier
organization comments: “In the past few years, 0.39%
investors have been criticized for labeling things as 0.20%
‘green,’ ‘green investment’ or ‘green initiatives’, when,
in reality, very little has been done. Furthermore,
these pricing pressures, coupled with supply shortages Less than $5bn $5bn–10bn $10b–20bn More than $20bn Industry average
post-COVID-19 might have led to this investment gap.”
Interestingly, when we analyzed the evolution of 2019 2022
organization investment by size, we found that the
larger organizations are curtailing their spend (as a share
of revenue) to a greater extent than are the smaller Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022. N=321
organizations (see Figure 5). Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022,executives.
N=321 executives.
Capgemini Research Institute, The automotive industry in the era of sustainability, 2020.
20
Further, we also found that suppliers

Figure.6 Finally, by country, we found that the
Figure.7
invest more (as a share of revenue) than investments in sustainability initiatives
Suppliers invest more than OEMs in In the past three years, investment in
OEMs to meet their sustainability goals have declined across almost all regions
meeting sustainability targets sustainability has declined for most countries
(see figure 6). (see table below).
Suppliers invest more than OEMs to meet sustainability targets

Average investment in sustainability initiatives as a %
Average annual investment in sustainability initiatives as a % of
of revenue, by country
revenue, per organization, OEM vs. Supplier, 2022
2019 2022
Supplier 0.93% CHINA 1.20% 0.55%
FRANCE 0.99% 0.51%
OEM 0.79% GERMANY 1.24% 1.11%
INDIA 1.60% 0.93%
Industry average 0.85%

SWEDEN 0.91% 1.03%
UK 1.46% 0.94%
Source:
Source: Capgemini Research Capgemini
Institute, Research
Sustainability Institute, Sustainability
in Automotive in Automotive
Executive Survey, Executive
July-August Survey, July-
2022. N=321
August 2022, N=321 executives.
executives. US 1.22% 0.99%
The larger question remains whether the industry can realistically expect to meet its ambitious Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August
targets with current and projected levels of investment. In light of ever tightening regulations 2022, N=321 executives; Capgemini Research Institute, The automotive industry in the era of
and rising social expectations, current allocations look insufficient to meet the demands being sustainability, 2020.
made of organizations.

21
Organizations have
“A lot of OEMs cannot invest money
without showing returns. We have to only marginally advanced
be very cautious of the projects and their sustainability
initiatives we undertake in order to
understand whether they aresaving
strategies since 2019
or generating money.” The share of organizations with a comprehensive
sustainability strategy with well-defined goals has
improved by only 3 percentage points compared to
Vice President, Safety and Sustainability 2019 (see Figure 8).
strategy at a global automotive
organization

22
Figure.8
Automotive industry’s maturity in sustainability strategy has improved marginally since 2019
Automotive industry’s maturity in sustainability strategy has improved marginally since 2019
% of organizations stating their maturity of sustainability strategy
65%
62%
35%
30%
8%
0%
Don't have a sustainability Don't have a sustainability Have a comprehensive sustainability

strategy but are working strategy but have multiple strategy with well-defined
on developing one sustainability initiatives across the group goals and target timelines
2019 2022
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022. N=1,080
executives.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=1,080 executives.
23
Figure.9
A majority of automotive organizations believe that they are progressing in line with other industries
A majority of the automotive industry believes that they are progressing in line with
Further, automotive organizations’ assessments of their other industries
own sustainability maturity is becoming more realistic.
In our 2019 research, 72 percent of organizations % of executives on progress in sustainability in automotive industry vs other
believed that automotive had made more progress industries
on sustainability than other industries. However, at
present, only 32 percent think this (see Figure 9). By 72%
country, we found that 46 percent of respondents from
organizations based in South Korea agreed that they
have made better progress in sustainability than other 53%
industries, whereas only 28 percent from Japan, Sweden,
and Germany felt the same.
32%
72 %
VS 32% 11%
17% 15%
Share of automotive organizations who believe

that they have made better progress in sustainability Automotive industry has Automotive industry is Automotive industry is
made better progress in progressing in line with other lagging other industries in terms
than other industries, 2019 vs. 2022.
sustainability than other industries in terms of of sustainability
industries sustainability
2019 2022
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=1,080 executives ;
executives.

24
Figure.10
Deployment of sustainability initiatives has improved in only a few priority areas
Deployment of sustainability initiatives has improved in only a few priority areas
Implementation % of organizations indicating the deployment of sustainability initiatives
of top sustainability 75%
initiatives has
Level of deployment of initiatives

declined 57%
70% 60%
64%
The growing significance accorded to 51%

sustainability does not seem to translate into 44%
faster implementation. We found that, for the top 49%
automotive sustainability initiatives, there is only 45%
limited improvement and, in some areas, a reduction 42%
in implementation (see Figure 10): 29%
33%
Sustainable Environmentally Product Sustainable Sustainable Supporting and

supply chain responsible sourcing sustainability R&D and product manufacturing promoting a
of metals development circular economy
2019 2022
Increase in level of deployment Decrease in level of deployment
For definitions of sustainability initiatives in the chart, please refer page 11.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=1,080
executives; Capgemini Research Institute, The automotive industry in the era of sustainability, 2020.

25
Analyzing this trend across countries, we find a huge gap between Figure.11
planning and deployment levels. Certain countries (such as Germany,
US, France) were deploying initiatives in areas of sustainable Across countries, there is a high level of misalignment between priority and implementation of
manufacturing to a large extent in 2019, and may have curtailed their sustainability
Across countries, there is a high level of misalignment between initiatives
priority and in manufacturing
implementation
implementation, changing their areas of focus (see Figure 11). of sustainability initiatives in manufacturing
% lag in implementation compared to strategy, by country
40% Lag is the difference between priority and

implementation for each initiative
22%
21% 21% 21%
18% 19%
15% 14%
9%
France Germany US India Sweden UK South Korea China Japan Overall

average
executives.
[Lag is the difference between priority and implementation for each of the initiative, as specified by the organizations]

26
“In the past few years, investors have been

criticized for labeling things as ‘green,’ ‘green
investment’ or ‘green initiatives,’, in reality,
there has been very little that has been done.
Furthermore, these pricing pressures, coupled with
supply shortages post-COVID-19 might have led to
this investment gap.”
A sustainability director of an automotive
supplier organization

27
Figure.12
Only 41% of organizations have integrated circularity metrics into decisions
Deployment Only 41% of organizations have integrated circularity metrics into business decisions
of circular-economy
initiatives has fallen
While 73 percent of executives agree that a

contribution to the circular economy is necessary
to achieve long-term financial and competitive
53% 45% 41%
goals, only 53 percent attest to having a circular-
economy strategy (see Figure 12).
73
Adopted a circular Adhere to circularity Factor circularity
% strategy principle primarily in metrics into business
engineering, decisions
manufacturing, and supply
chain
of executives agree that a contribution to the
circular economy is necessary to achieve long-
term financial and competitive goals.

28
Figure.13
Highest share of organizations from Japan and South Korea have a circular economy strategy in place
Highest share of organizations from Japan and South Korea have a circular economy strategy
in place
For a country-on-country comparison, 85% of
organizations from Japan have a circular strategy, % of organizations that have a circular economy strategy
compared with only 38% from the US (see Figure 13).
Similarly, South Korea, Japan, and Germany strongly
adhere to circularity principles in manufacturing,
engineering, and supply chain. Countries such as Japan
and South Korea are characterized by a higher landfill 85%
cost owing to scarcity of space which, in turn, makes 75%
reusing and recycling of materials economically more
attractive. 64% 63% 60%
50% 53%
47%
40% 38%
85 %
38 %
Japan South Korea India Germany Sweden France UK China US Overall

of organizations from of organizations from average
Japan have a circular the US have such a
strategy. strategy.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022. N=162
organizations.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=162 organizations.

29
Head of Innovation & Digital Transformation at a global automotive Global Director, Innovation & Corporate Venturing at Maxion Wheels,
organization mentions the difficulties in implementing circularity adds: “By and large, the automotive industry is still taking a “wait
due to lack of proper tools: “The automotive industry might have and see” approach towards circularity and carbon neutrality. OEMs
overestimated the potential of closed-loop recycling. However, and suppliers will not achieve transformative change by acting
we have realized the importance of a wider range of tools and alone or being constrained to their business boundaries. Instead, a
technologies, and we have become more realistic.” Suppliers also collaborative approach encompassing cross-value chain partnerships
look to OEMs to support their circularity initiatives. Dr. Saul Reichman, across the entire ecosystem is needed to drive down total lifecycle
carbon emissions.”

30
Figure.14
Automotive organizations have improved sustainability maturity only marginally since 2019
Less than Maturity of sustainability strategies and its implementation: Automotive industry
10% of organizations
are mature in their
Deployment Specialists High implementation Leaders
2022 15% 2022 9%
sustainability 2019 13% 2019 10%
strategies and
implementation Nascent Strategy Mature Strategy
Our research indicates that overall maturity of
sustainability initiatives in automotive, on both strategy
and implementation fronts, has sat still since 2019.
Upon comparing the current maturity of organizations’
sustainability strategies against their level of
implementation, we observed that: while the proportion
2022 62% 2022 14%
of Laggards has decreased overall, the proportion of
Leaders (those who have an advanced strategy as well 2019 68% 2019 10%
as a high level of implementation) has remained broadly Low implementation
Laggards Strategy Specialists
unchanged since 2019 (see Figure 14). This indicates
that automotive organizations have been able to *Each dot represents one organization, and the placement of the dot corresponds to the comparative maturity of the
progress on sustainability in isolated areas of strategy organization in both strategy & implementation of sustainability. The percentages represent the share of
or implementation, but rarely to make coordinated *Each dot represents one organization, and the placement of the dot corresponds to the comparative maturity
organizations of the
in each organization
quadrant.
progress in both areas at once. in both strategy Source:
and implementation of sustainability.
Capgemini Research The percentages
Institute, Sustainability represent
in Automotive the share
Executive of organizations
Survey, July-August 2022.in each quadrant.
N=183
Source: Capgemini Research
automotive Institute, Sustainability
organizations; in Automotive
Capgemini Research Institute, Executive Survey,
The automotive July-August
industry 2022,
in the era N=183 automotive
of sustainability,
organizations (including OEMs and suppliers) ; Capgemini Research Institute, The automotive industry in the era of sustainability,
March 2020. 2020.

31
WHO ARE We looked for specific characteristics in two facets of sustainability

when identifying Leader organizations:
THE LEADERS ON
SUSTAINABILITY? 01 02
On the strategy front, Leaders: On the implementation front, Leaders:
• have a comprehensive sustainability strategy • deploy initiatives in most or all of the top
sustainability areas
• prioritize most or all of the top industry
sustainability initiatives • invest heavily in sustainability
• and establish leadership and governance for • and are committed to specific
planning and overseeing sustainability sustainability targets
For the purpose of comparison with the 2019 data, we have omitted organizations from Japan
and South Korea from the current sample, as they were not part of the 2019 study.

32
In particular, OEMs have advanced their strategies in “By and large, the automotive
the past three years, with the proportion of Strategy
Specialists increasing from 9 percent in 2019 to 17 percent
industry is still taking a “wait and
in 2022; however they have struggled with implementation. see” approach towards circularity
Emphasizing the importance of an all-encompassing and carbon neutrality. OEMs
sustainability strategy, Richard Leopold, Regional Director at
Bentley Motors, says: “As a luxury manufacturer, to remain
and suppliers will not achieve
relevant in the future, we had to develop a new vision that transformative change by acting alone
secures sustainability, not just in our products, but also across or being constrained to their business
our entire supply chain.”
boundaries. Instead, a collaborative
In contrast, suppliers have been able to increase considerably
their implementation of sustainability initiatives since 2019, with
approach encompassing cross-value
the share of Deployment Specialists increased from 11 percent chain partnerships across the entire
to 20 percent in 2022. Nevertheless, they have generally failed ecosystem is needed to drive down
to increase the robustness of their strategies and governance
(further details on the OEMs and suppliers analysis in the
total lifecycle carbon emissions.”
Appendix).
Amid heightened regulatory requirements, automotive Dr. Saul Reichman,
suppliers have little choice but to make their components Global Director, Innovation
more sustainable. Nolian Diaz, Director of Product Positioning & Corporate Venturing at
at Fisker, an EV automaker based in the US, adds: “We pick Maxion Wheels
suppliers that have manufacturing facilities close to us and
have adopted more sustainable practices that minimize our
carbon emissions.”

33
Further, large automotive OEMs are already preferring

more sustainable suppliers –
As a luxury manufacturer, to remain
relevant in the future, we had to
01 develop a new vision that secures
Ola Källenius, CEO of Mercedes-
Benz, states that sustainability will be
sustainability, not just in our
an awarding criterion for all its supplier products, but also across our entire
contracts.12 supply chain.
Richard Leopold,
02 Regional Director at
Bentley Motors
BMW has already entered into
more than 400 contracts with its suppliers
to use 100 percent green electricity.13
03
Toyota has launched its own
Green Purchasing Guidelines to prioritize
the purchase of parts with a low
environmental footprint.14

34
EVOLUTION OF
TOP FOCUS
AREAS FOR
SUSTAINABILITY
IN THE PAST
THREE YEARS
Sustainable manufacturing and supply chain
are the biggest focus areas for automotive
organizations today (and were among the top
three focus areas in 2019). In addition, the
focus on product sustainability (including the
transition to EVs) has increased significantly,
moving up by three places since 2019 (see Figure
15).
To address the adverse impact on supply chain,
organizations are focusing on responsible
sourcing of metals. While the circular economy
was automotive’s top sustainability focus in
2019, it has fallen to fourth place, while the
focus on sustainable R&D remains more or less
at the same level.
35
Figure.15
How automotive industry’s top-ranked sustainability priorities have evolved: 2019-22
2019 2022
Sustainable Manufacturing
Supporting and promoting a circular economy 1 (implementing maintenance, quality, and production processes to reduce 1
waste and improve recyclability and reuse of materials)
Sustainable Manufacturing Sustainable supply chain

(implementing maintenance, quality, and production processes to reduce waste 2 (adoption of environmentally conscious operations in logistics, distribution, 2
and improve recyclability and reuse of materials) warehousing and inventory management, etc.)
Sustainable supply chain Product sustainability

(adoption of environmentally conscious operations in logistics, 3 (Involves moving to fuel-efficient or electric vehicles and biodegradable 3
distribution, warehousing and inventory management, etc.) components)
Sustainable power procurement 4 Supporting and promoting a circular economy 4
Sustainable R&D and product development

(Involves designing products to reduce environmental impact and optimizing the 5 Environmentally responsible sourcing of metals 5
use of natural resources by ensuring their recyclability)
Product sustainability Sustainable R&D and product development

(Involves moving to fuel-efficient or electric vehicles and biodegradable 6 (Involves designing products to reduce environmental impact and optimizing 6
components) the use of natural resources by ensuring their recyclability)
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022. N=1,080 executives.
36
Organizations today, are focusing on emissions

“We pick suppliers that have manufacturing reduction, prioritizing initiatives over which they
have direct control – such as manufacturing and
facilities close to us and have adopted more decarbonizing vehicle fleets – and which have
a direct bearing on their sustainability targets.
sustainable practices that minimize our However, in the wake of upcoming stricter
regulations, such as the Supply Chain Due
carbon emissions.” Diligence Act in EU, organizations will need to
increase their focus on circularity and ensure that
environmental and social standards are observed
across their value chains, including direct and
Nolian Diaz
indirect suppliers, their own operations, and
Director of Product Positioning suppliers of products and services. 15
at Fisker, an EV automaker
based in the US

37
“As a luxury manufacturer, to remain

relevant in the future, we had to
develop a new vision that secures
sustainability, not just in our products,
but also across our entire supply
chain.”
Richard Leopold,
Regional Director at Bentley Motors

38
02
CHALLENGES
TO SUSTAINABILITY
INITIATIVES

39
Figure.16
There are several challenges facing the automotive
industry in its pursuit of sustainability (see Figure 16), Linking sustainability with day-to-day activities
which we will discuss later in the report. and misalignment of KPIs and performance
targets are major roadblocks
Linking sustainability with day-to-day activities and misalignment between KPIs and performance
targets are major roadblocks Executives cite a lack of awareness as to how to link
sustainability with day-to-day activities as the top
Top challenges faced by the automotive industry in their sustainability journey challenge (48 percent agree). More than seven in 10
executives (73 percent) attest that the adoption of
sustainability practices in their day-to-day activities and
Lack of awareness on linking sustainability processes has increased only marginally or remained the
48% same in the last 2-3 years (see Figure 17).
with day-to-day activities
Lack of connection between

47%
sustainability KPIs and performance targets
Difficulty in measuring and

42%
reporting emissions data
Lack of internal alignment on

40%
sustainability initiatives
Lack of sufficient / good quality data

37%
from sustainability initiatives
Source: Capgemini
Source: Research
Capgemini Institute,
Research Sustainability
Institute, in Automotive
Sustainability Executive
in Automotive Survey,
Executive July-August
Survey, 2022,
July-August N=1080
2022. executives.
N=1080
executives.
40
Figure.17
Adoption
Adoption of sustainability
of sustainability practices
practices in day-to-day
in day-to-day activitiesactivities has increased
has increased either only
marginally or remained the same in the past
marginally or remained the same in the past 2-3 years 2-3 years
A director of sustainability at an automotive
supplier firm comments: “One of the
How has the adoption of sustainability practices in day-to-day key challenges we face is in translating
activities and processes changed in the last 2-3 years? sustainability goals into our day-to-day
operations. To tackle this, we are building
these goals into our KPIs, and we track
3%
them on a monthly basis. We also reward
company-wide and group-wide facilities that
17% have come up with better ways to improve
23% our current operations and functions.”
Increased significantly
Increased marginally
73%
73
Has remained nearly
the same %
Reduced marginally
of executives attest that the adoption

of sustainability practices in their
56%
organization‘s day-to-day activities and
processes has increased only marginally
or remained the same in the past 2-3
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August years.
2022. N=1,080 executives.
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-
August 2022, N=1,080 executives.

41
Figure.18
Lack of alignment of KPIs and performance management a key challenge
Poor integration
of key sustainability Major integration challenges of sustainability KPIs that organizations are facing
on their sustainability journeys
KPIs into performance
management is Lack of connection between sustainability
47%
hampering
KPIs and performance targets
implementation Lack of internal alignment on sustainability initiatives 40%

Lack of a connection between sustainability KPIs and
performance targets, and lack of internal alignment
on sustainability, emerge as critical challenges to
organizations. Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=1,080 executives.

42
Figure.19
Organizations have not sufficiently aligned performance
objectives with sustainability goals
At the highest level, organizations, at least to
some extent, align performance objectives with
sustainability goals. However, moving down the
hierarchy, we note an absence of this alignment (see % of organizations who have aligned performance objectives with their
Figure 19): sustainability goals
• 40 percent of executives say that their
organizations have aligned their performance 72%
objectives up to director/senior manager level, but
63%
a mere 10 percent agree that they are aligned for
up to non-managerial employees
• Only Japan (26%), India (16%) and Germany (14%)
have attested to aligning more than 10% of the 40%
performance objectives at non-managerial levels
Since the actions of non-managerial employees can
be extremely impactful on sustainability, this lack of
alignment results in sustainability failing to progress 10%
at the desired level.
For C-level and C-1 levels Up to SVP/VP level Up to Director/senior Up to non-managerial

manager level employees
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=378 executives.

43
Figure.20
Organizations struggle in collecting, managing, and analyzing
sustainability data
Lack of tools for data

collection and
management a key % of executives agreeing to full-scale deployment of the following tools and platforms
hindrance
15%
Organizations are under pressure to capture, monitor, 14%
and analyze sustainability data effectively. One of 12%
our recently published reports finds that, through
embedding emissions data in their decision-making,
organizations across industries have seen an average 4.6
percent annual reduction.15
However, difficulty in measuring and reporting
emissions data is one of the top three challenges for
the automotive industry; for instance, only 12 percent
of executives say that their organization has full-scale Tools to track products across Tools for lifecycle analysis Platform for measuring,
deployment of a platform for measuring, monitoring, supply chain and reduce of every vehicle model monitoring, and reporting
logistics carbon footprint in the fleet sustainability initiatives
and reporting sustainability initiatives (see Figure 20).

44
Finally, there is also a shortage of the

human skills required to make sense of the “One of the key challenges we face is in translating
sustainability data and further integrate it
into decision making. We found that only
sustainability goals into our day-to-day operations.
13 percent of executives say that their
business teams are “highly equipped” – while
To tackle this, we are building these goals into our
31 percent say they are only “moderately
equipped” to use emissions data to drive
KPIs, and we track them on a monthly basis. We also
decision-making.17 reward company-wide and group-wide facilities that
have come up with better ways to improve our current
operations and functions.”
12 %
Director of sustainability at an
of executives say that their
automotive supplier firm
organization has full-scale deployment of a
platform for measuring, monitoring, and
reporting sustainability initiatives

45

46
03
SUSTAINABILITY
LEADERS
DERIVE HIGHER
BENEFITS
47
Our research also finds that sustainable initiatives contribute positively to business KPIs. We found that Figure.21
Sustainability Leaders (as defined in Chapter I ) have realized (and expect to realize) larger benefits as a
result of their sustainability initiatives. Leaders are expected to meet the Paris
Agreement target
Extent of reduction in overall GHG emissions,

Sustainability Leaders 5% improvement
Leaders vs industry average
are reducing their GHG already realized
emissions faster 174

162
19% lower than 2018,
missing the target
165
As we saw in Chapter I, based on current maturity, 9% improvement 148
the automotive industry is not expected to meet the already realized
Paris Agreement target. However, with more mature
strategies and more effective implementation in 143
key focus areas, Leaders are reducing their GHG
emissions much faster than the industry average. Base emissions =
35% lower than
As a result, they are much better aligned with the 182 million mtCO2e
(2018 industry average)
119 2018, meeting the
Paris Agreement target of 30 percent reduction in target
GHG emissions by 2030 from 2019 levels (see Figure
21).18 (The Methodology behind this calculation is in Today Expected to realize by 2026 Expected to realize by 2030
Appendix.)
Leaders Industry average Paris Agreement
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=183 automotive
organizations, CDP, Bloomberg New Energy Outlook 2021.
Emission numbers are in million mtCO2e. Industry average = Average of all emissions, including Scope 1, Scope 2, and Scope 3 of 20 large
global OEMs for years 2018 and 2021 sourced from CDP (disclosed by OEMs).

48
One of the sustainable ways in which organizations can reduce emissions is by using lighter materials. Volkswagen uses hot-formed
components from sheet metal with different thicknesses at various points, eliminating 100 kg of a new model’s weight. Similarly, by
switching to aluminum bodywork for some models, Ford has reduced overall weight by over 360 kg.19
Sustainability Leaders
have better employer
brand image and higher
attractiveness for
talent
The workforce today, especially the younger
generation, prioritize sustainability over other factors
when determining the attractiveness of a job.20
Our previous research revealed that 78 percent of
employees working in the automotive industry feel
that it is important that their organizations have
a clear vision and lead with purpose, and not be
motivated solely by sales and profit.21
We find that Leaders, by being perceived as more
sustainable, are able to attract more talent than the
rest of the organizations (see Figure 22).

49
Figure.22
By demonstrating sustainable initiatives, Leaders attract more talent
Martin Charter, Professor of Innovation and

Extent of benefit realized and expected to realize because of sustainability initiatives, Sustainability and Director of The Centre for Sustainable
Leaders vs The rest Design at the University for the Creative Arts in the
UK, emphasizes: “The new green consumer wave post
COVID-19 is different from the past, since it is not just
about climate change, but also biodiversity, nature, and
22% the social dimension of sustainability. Organizations
will need to focus on these dimensions to engage
younger, more proactive generations as they move into
18% consumer and employee roles.” 22
16%
35 vs 19%
10%
%
Reduction in GHG emissions

by 2030, from 2018 levels, for
Higher attractiveness for talent, Higher attractiveness for talent, Leaders vs the rest
already realized expected by 2026
Leaders The rest
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022,
N=183 automotive organizations.

50
Figure.23
Leaders are expected to see a greater see a greater boost to their
operational efficiency
Sustainability Extent of improved efficiency realized and expected to realize

Leaders are because of sustainability initiatives,
Leaders vs The rest
improving operational
efficiency 22%
As sustainability improves transparency across the

automotive value chain, it also boosts operational
efficiency. Leaders, by virtue of being more
sustainable, can also expect greater efficiency- 16%
related benefits, of 22% improvement on average
through 2026, compared to 16% for the rest (see
12%
Figure 23). 11%
Improved operational efficiency, Improved operational efficiency,

already realized expected by 2026
Leaders The rest
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022,
N=183 automotive organizations.

51
“The new green consumer wave post A strategy director at an automotive organization
COVID-19 is different from the past, comments: “We are introducing more and more
sustainable methodologies because they lead to a
since it is not just about climate change, greater operational efficiency throughout the product
but also biodiversity, nature, and the lifecycle.”
social dimension of sustainability. Some examples of sustainability initiatives which have
Organizations will need to focus on helped organizations enhance their efficiency are:
these dimensions to engage younger, • at the BMW Group plant in Dingolfing, Germany,
more proactive generations as they through the development of new battery and electric
engine technology, energy and water consumption
move into consumer and employee per vehicle has been cut by more than one-fifth;23
roles.” • Renault is replacing its traditional auto
manufacturing plant in Flins, France, with recycling
and reconditioning activities, which has resulted in
Martin Charter improved operational efficiency. This program is
Professor of Innovation and expected to decrease the time required to prepare a
Sustainability and Director of The Centre used car for resale from 21 to 8 days.24
for Sustainable Design at the University
for the Creative Arts in the UK

52
ELECTRIC EV battery sustainability falls

VEHICLES – throughout lifecycle
NECESSARY BUT However, looking at our survey data, we see that
organizations are deploying initiatives in areas of battery
OEMs need to increase their EV-battery production
capacities and develop a battery ecosystem that
NOT ENOUGH manufacturing and material sourcing, but that the level
of deployment is reducing as we go down the value chain
(see Figure 24).This reduction is underpinned by several
incorporates the second-life and end-of life stages of
the battery lifecycle.
factors such as low volume of batteries leading to limited

According to the International Energy Agency (IEA),
market for second-life or end-of-life batteries; high cost
EV sales doubled, year on year, in 2021, to reach 6.6
of logistics for collecting and recycling used batteries;
million.25 A healthy dose of gove rnment incentives
and lack of consumer-friendly initiatives for battery
has helped accelerate this adoption.
disposal and recycling.
We found that implementation of battery
[Read more on EV battery manufacturing in the next
sustainability of EVs falls as the lifecycle progresses.
chapter: “Ensuring sustainability of production and end-
of-life of EV batteries.”]
EV manufacturers are failing to tap into these later
stages, which are crucial to perpetuating the circular
economy. Fewer than half (41 percent) of the executives
we surveyed said that their organization has a dedicated
sustainability initiative for battery end-of-life, while the
number is even lower (28 percent) for the second life of
batteries.

53
Figure.24
Implementation of battery sustainability reduces across the lifecycle stages
Sumreen Rattan, Co-founder and COO at

Moment Energy, says: “ By first repurposing
Does your organization have a dedicated sustainability initiative in this area? and creating a second-life application
appropriate to its stage of degradation,
we extend the battery’s useful life and
increase the capacity of clean-energy storage
Manufacturing 75% worldwide.” 26
Raw materials/minerals sourcing 72%
Design 58%
28 %
Assembly 52%
End-of-life 41%
of the executives said that their
Charging/swapping 36% organization has a dedicated
sustainability initiative for battery
second-life options
Second-life options (e.g., as energy storage) 28%
Yes

54
Figure.25
Higher prices of EVs and range anxiety are major roadblocks in customer adoption
Higher cost,
complicated charging
infrastructure and
insufficient benefits
information are the
biggest hurdles to 76% 61% 56%
EV adoption
Despite increasing sales of EVs, customers are
reluctant to switch to electric (see Figure 25). For
instance, 76 percent of executives attest to higher
prices of EVs compared to traditional ICE vehicles; Ease of availability of
Higher prices of EVs, Lack of information
moreover, complicated charging methods are a ICE vehicle spare parts
range anxiety, expensive on benefits of EVs
major impediment for consumers. and servicing options
and complicated charging (vis-à-vis ICE vehicles)
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=432 executives

55
76 % Greening of the charging

infrastructure
of executives attest higher prices of EVs,
range anxiety, expensive and complicated According to MIT research, cleaning up the grid Introduce smart charging, which optimizes energy
charging are major impediments for can reduce emissions from EVs by 75%, from about consumption and adapts to the need of EV users and
consumers. 200g of CO2 per mile today to about 50 grams of the grid. In November 2021, Hyundai introduced smart
CO2 per mile in 2050.27 Hence, it is critical that EV charging app that allows the grid to be optimally
manufacturers have a clean charging infrastructure. balanced and promotes greener charging.29 Jason
Jeong, president of Kia Europe adds: “By pushing more
Roll out green charging stations. Using renewable
green energy into the grid, we can increase the energy
sources of energy for charging is a significant
mix in favor of more sustainable sources”. 30
sustainability lever, a fact that OEMs have recognized.
For instance, Mercedes-Benz earlier this year Support the advancement of charging
announced it would meet more than 70% of its infrastructure to facilitate longer trips and reduce
energy needs through renewable energy by 2030. range anxiety. The EU requires its member states to
OEMs are increasingly electrifying their vehicle Using renewable sources of energy for charging is a install EV charging stations no more than 60 km (around
fleets to reduce emissions and attempting to significant sustainability lever, a fact that OEMs have 37 miles) apart throughout the entire European road
resolve customer challenges. However, increasing recognized. For instance, Mercedes-Benz earlier this network by 2025. Nevertheless, our survey shows that
the adoption of EVs is in sufficient to combat year announced it would meet more than 70% of its fewer than half of OEMs (47 percent) have a strategic
climate change, as, when powered by non- energy needs through renewable energy by 2030.28 partnership with utilities/suppliers in the battery
renewable fossil fuels, they leave a significant Kia and Hyundai are harnessing solar energy for their charging/swapping space.
carbon footprint. charging networks.

56
“At present world’s battery production combined represents well under

Sustainable mining 10% of what we will need in 10 years”
of rare minerals/
metals
RJ Scaringe
CEO at Rivian Automotive
Production of a battery with a capacity of 40 kWh

emits approximately 2,920 kg of CO2 , of which 40%
is generated by mining, conversion, and refining. The
momentum towards EVs has resulted in an increase
in demand for rare metals such as lithium, cobalt, and
nickel, triggering over-exploitation of these metals
that, in turn, may lead to scarcity. R.J. Scaringe, CEO,
Rivian Automotive, says: “At present, global battery
production represents well under 10% of what we will
need in 10 years.”32 Currently, 85% of global lithium
61 %
production comes from China, Chile, and Australia;
manufacturers are planning to diversify sources to
meet rising demand.
of executives say that lack of

information on benefits of EVs (vis-à-
vis ICE vehicles) is a hurdle in customer
adoption.

57
“We have an ambition to be a 100 percent electric

brand in Europe by 2030. It is an aggressive
goal; however, we believe that it’s possible with
competitive and affordable electric cars. With a
number of in-house innovations, we’re able to have
smaller batteries, yet higher energy density and a
modular vehicle design. All this helps us produce
EVs as affordably as possible, while also being
profitable.”
Andreas Chochod,
Director Strategy, Plan & Organization of
Research & Advanced Engineering at
Renault Group

58
04
HOW CAN AUTOMOTIVE
ORGANIZATIONS
ACCELERATE TOWARDS
A SUSTAINABLE
FUTURE?
59
Figure.26
Automotive requires combined action to boost
sustainable progress
While Sustainability Leaders are progressing towards

net zero goals at a good pace, the broader industry
is in the slow lane. Through our research, discussions Fast-tracking product and service evolution for the
with industry experts, and experience of working on sustainability era
automotive sustainability initiatives with top OEMs and • Fostering innovation in battery & vehicle tech
suppliers, we believe it is possible to boost automotive • Creating monetization opportunities and inducing
sustainability with combined action on three key pillars mobility-behavior change via service innovation
pertaining to product, processes, and people (see • Ensuring sustainability of production and end-of-life of
Figure 26). EV batteries
Establishing new processes and enhancing traditional ones

for sustainability
Accelerating • Integrating sustainability practices into day-to-day activities
sustainability in
the automotive • Incorporating sustainable design principles to minimize vehicles'
environmental footprint
industry
• Environmentally responsible procurement
• Using new technologies and tools to manage the transition to
net zero
Putting people at the heart of the sustainable transition
• Aligning organizational objectives with sustainable goals

• Building sustainability skills
• Creating a culture of collaboration as part of a systemic
approach to sustainability
Source: Capgemini Research Institute analysis.

60
Fast-tracking product and service evolution

for the sustainability era
Fostering innovation in battery and vehicle commercial vehicles, will lead the charge in decarbonizing the global
vehicle fleet. Global sales of ICE cars have likely peaked in 2017 and
technology EV adoption has surged; nevertheless, recent estimates suggest
Innovation will be an important lever to fast-track the transition to that the ICE fleet will keep growing through 2030.35 It would require
zero-emission vehicles. Innovation drives advances in vehicle and a much stronger push from OEMs, governments, and policymakers
component quality, while also moderating the cost of high-quality to decarbonize the vehicle fleet and phase out ICE vehicles. At the
products over the long run. Driven by efficiencies in battery-cell COP 27 climate summit held in 2021, 30 countries agreed to “work
production, lithium battery costs have fallen by an astonishing 98 together and make zero-emission vehicles the new normal by making
percent in the past three decades.32 In the early 1990s, the battery them accessible, affordable, and sustainable in all regions by 2030 or
capacity to power a house would cost about $75,000; today, sooner.”36
it would be about $2,000. Renault, for instance, is working on Likewise, advances in automotive technology have substantially
pioneering a unique battery technology, and software to improve reduced CO2 emissions and increased vehicle economy. According to
battery performance, and efficiency.33 It expects to reduce the cost recent data from US EPA, CO2 emissions for new vehicles fell by 24%
of its ZOE line of batteries from $170/kWh by 36% to $100/kWh by between model year 2004 and 2020.37 In the same time period, new
2024 through upgraded cell energy density, standardized cell and vehicle fuel economy has improved by 32%, and new vehicle weight
module design, and simplified pack and vehicle integration. Such has increased by just 1%. Technological advancements like these will
innovations have significant potential to reduce vehicle cost and continue to benefit zero-emission vehicles, even though some of
spur demand, as the cost of an EV battery is 25-35% of the overall these advancements have been nullified by greater sales of larger
cost of an EV.34 vehicle types such as SUVs and trucks, particularly ICE ones. This
Zero-emission vehicles, such as EVs, plug-in hybrid vehicles, trend gives further boost to calls for rapid decarbonization of the
and those powered by new fuels such as hydrogen, particularly global vehicle fleet.

61
Andreas Chochod, Director Strategy, Plan and Organization of

Research and Advanced Engineering at Renault Group, says: “We have
an ambition to be a 100 percent electric brand in Europe by 2030.
It is an aggressive goal; however, we believe that it’s possible with
competitive and affordable electric cars. With a number of in-house
innovations, we’re able to have smaller batteries, yet higher energy
density and a modular vehicle design. All this helps us produce EVs as
affordably as possible, while also being profitable.”
[” Read more on EV battery manufacturing and supply chain in the
next sub-section on “Ensuring sustainability of production and end-
of-life of EV batteries.”]
Creating monetization opportunities and inducing

mobility-behavior change via service innovation
OEMs and suppliers will need to innovate new services and business
models to create monetization opportunities for customers and
themselves. EV fleets create new services around vehicle-to-grid
(V2G) smart charging – allowing EV batteries to give back to the
grid, creating revenue from reusing batteries, and reducing the cost
of battery recycling and thereby the cost of EV ownership over its
lifecycle.

62
Renault has plans to roll out its V2G service by 2024 with an
estimated value of €400 per battery per year, which will be shared
between the customer, Renault, and the ecosystem. In addition, it
estimates €500 in incremental value on each EV battery through the
potential to generate value by using these batteries in stationary
and mobile energy storage (e.g., in smaller vehicles requiring shorter
trips on average) in their second life. It expects that its expertise in
appraising batteries value and industrial-scale battery repackaging
will help generate competitive advantage. Further, it estimates that
it will be able to reduce the cost of recycling of batteries by two-
thirds. Renault’s Mobilize suite of mobility and energy services are
designed to take the company beyond automotive, harnessing new
growth opportunities. Renault expects it to contribute more than
20% of Renault Group’s turnover by 2030.38
Reducing vehicle emissions during its use-phase will be critical to
achieving net zero. Experts believe that it will be crucial to change
people’s mobility and vehicle ownership habits to fully decarbonize
the transport sector.39 This means allowing people to lease or rent
vehicles as required, rather than owning a vehicle for its entire
lifecycle. It reduces per capita vehicle emissions while also increasing
vehicle utilization. Mobility habits are heavily influenced by cultural
and local contexts; for instance, more than 90% of passenger
kilometers travelled in the US are in cars, whereas in the Netherlands
it is only 69%, as people rely on other modes of transport, such as
bicycles, trains, and waterways. Volkswagen recently launched its
EV sharing service, WeShare, in Hamburg with 800 EVs.40 The fleet is
charged with 100% green electricity.
Audi has rolled out an app called ecomove which helps users
assess and reduce their mobility-related GHG emissions and offers
ways to offset unavoidable emissions. It also has gamification to
induce a behavior change among users to make more sustainable
mobility choices.

63
Ensuring sustainability of production and end-of-

life of EV batteries
“A culture that considers sustainability
In 2021, EV battery demand was 340 GWh, more than twice the 2020 in day-to-day decisions is critical to
level.41 It is expected to grow more than sixfold by the end of this
decade, to 2.2-3.5 TWh. This will lead to a surge in demand for the any organization. There needs to be a
relevant metals and minerals that make up batteries, such as lithium, strong top-down, bottom-up approach
cobalt, and nickel. that pulls together innovation and
The battery lifecycle is a fairly complex, resource-intensive and, skill-building. It is about spending time
therefore, carbon-intensive process. As such, it requires careful design
considerations for supply chain, sourcing, processing, and second-life/
getting leadership walking side by side,
end-of-life approaches. training your employees and involving
OEMs need to increase their EV-battery production capacities and them in your decisions.”
develop a battery ecosystem that incorporates the second-life and
end-of-life stages of the battery lifecycle. We believe this is possible Magdalena Gerger,
through a set of four coordinated key actions (see Figure 27): VW Group Sustainability
Council Advisory Board to the
Management Board
90 %
of passenger kilometers travelled in the

US are in cars, whereas in the Netherlands it is only 69%,
as people rely a on other modes of
transport such, as bicycles

64
Figure.27
Ensuring sustainability of EV batteries from sourcing to end-of-life
The Battery Value Chain of a more sustainable

Raw Materials are crucial for battery supply
future
• OEMs must diversify their battery supply chains • React to materials markets price volatility
aw Materials
• Production facilities must be set up to meet 2| R • Reduce uncertainty over future battery
growing demand compositions
• OEMs must build a strong battery network • The need for transparency, data and risk
management
io n tre n d s
4 | 2 n d Lif
1| Battery Value
Chain
Recycling & 2nd Life Solutions as success factors R&D and Production Trends enable continuous
and business opportunities improvement
uct
e&
od
• Players must consider battery end-of-life
Re
yc • Flexible production to scale up for future
Pr
scenarios now d
c
li n an technologies
g
• No one-size-fits-all solution - individual strategies &D
3| R • Battery design must meet design-for-recycling
tailored to meet specific targets standards
• Relevance of a strong partner ecosystem to • Production must reach full digitalization potential
tackle challenges
Source: Capgemini Research Institute analysis. Capgemini, Powering Change: How Batteries Can Foster the
Electric Vehicle Revolution, September 2022.

65
1. Carefully design the battery supply chains. Disruption responsible sourcing and mining practices to develop a more
caused by geopolitical developments, as well as cyclical delivery sustainable and ethical battery value chain.
shortages, poses a major risk to OEM battery supply chains. OEMs A related issue is price movement of battery minerals due
need to mitigate this through diversification by establishing to automotive industry supply-chain challenges; if supply is
partnerships and joint ventures with companies that have proven constrained, input prices rise, which, ultimately, must pass
battery production expertise. In its Gigafactory in Nevada, Tesla, through to the price of batteries and EVs. The price of lithium,
in partnership with Panasonic, manufactures battery packs for for instance, rose 400 percent between September 2021 and
its EVs and energy-storage solutions. In 2018, the Gigafactory September 2022, and 220 percent in 2022 alone.44 More effective
reached an annual production level of 20 GWh of battery capacity, tracing and tracking of materials can bring transparency and also
making it the highest-volume battery plant in the world.42 assuage ESG concerns of potential investors. The EU’s Digital
2. Ensure resiliency in supplies of raw materials for battery Product Passport – providing a digital twin for every product that
production. Most of the minerals consumed in battery captures data throughout its lifecycle – is expected to come into
production are mined in just a few countries, such as China, effect from 2026. This would offer reliable, comparable product-
Australia, the Democratic Republic of Congo, and Indonesia.43 sustainability data, helping stakeholders (including consumers,
Moreover, the industry is dominated by Chinese organizations. businesses, and policymakers) make better-informed choices.45
However, efforts are being made to identify sources in North 3. Capitalize on improvements in battery R&D and production.
America and Europe, to offer local supply to manufacturers, OEMs and suppliers should adapt their manufacturing systems
improving security of supply and reducing price volatility and to keep their production facilities flexible and scalable. Suppliers
transportation emissions. Currently, some mineral supplies such as BYD and CATL have developed cell-to-pack (CTP) and
are sourced via a web of suppliers and contractors located in cell-to-chassis (CTC) technologies that have an optimized pack
conflict zones; manufacturers are taking steps to inculcate more structure, reducing volume by up to 70 percent compared to
conventional lithium batteries.

66
Figure.28
Four major options for managing battery life
4. Treat recycling and second-life solutions as key
success factors. Reusing and recycling batteries
will be instrumental in reducing resource depletion
and GHG emissions. In general, battery end-of-life
entails a 20-percent fall in cell capacity from the
rated value.46 There are four major management Reuse/ Second Life
options: reuse (second life), recycling and raw-
material recovery, incineration, and disposal (see Recycling/ Raw
Figure 28). A number of second-life use cases are Material Recovery
becoming popular, particularly, mobile applications
(e.g., in light-duty vehicles, and EV charging stations),
residential and commercial energy storage, and Incineration
utility-scale storage. Battery
End of Life (EOL) EV Battery Manufacturer
The automotive organizations are treading Disposal
cautiously with respect to second-life use cases for
batteries. Only about one in four organizations in
our survey (28%) have initiatives around second-life
uses of batteries. The second life of batteries is likely
to be a game-changer in the battery economy, with
the potential to close the gap between battery life Source: Capgemini Research Institute analysis. Capgemini, Powering Change: How Batteries Can Foster the Electric Vehicle
(5-8 years) and vehicle life (~15 years). The market for Revolution, September 2022.
second-hand batteries is quite fragmented, informal
and predominantly local (except for very high- forth; it can be challenging to locate and transport be assessed with care, as a high level reduces the cost
end products). Second, these markets depend on the correct level of second-hand battery on demand. benefit significantly.
manageable cost of transporting batteries back and Third, the remanufacturing level of a battery needs to

67
Establishing new sustainability processes

and enhancing traditional ones
Integrating sustainability practices into setting and reviewing environmental goals and targets,
day-to-day activities and are regularly documented and communicated to
all employees. Additionally, every GM manufacturing
Translating sustainable goals and objectives of the site has one or more environmental leaders. They are
organization into practicable activities and processes supported by a regional environmental leader and
is both crucial and is proving to be the biggest hurdle a team of subject matter experts in regional central
to the implementation of initiatives. Organizations offices. Similarly, Volvo has constituted “Functional
should take a top-down approach to aligning individual Management Teams” whose responsibility is to ensure
activities and processes with sustainability goals. that sustainability becomes an integrated part of
General Motors has instituted a common Global everyone’s daily work. This includes ensuring that
Environmental Policy which serves as a guiding light necessary resources and funding are secured to enable
for environmental stewardship, under which all GM delivery of their respective targets and ambitions. This
facilities operate. The policy helps reduce the impact team is separate from a “Global Sustainability Team” that
of GM’s actions on environment by ensuring that local is centrally responsible for the day-to-day governance
plant policies reinforce a commitment to environment and coordination of sustainability.
and applicable laws. It also provides a framework for

68
Mickael Aubry, Global Innovation Program Manager at Faurecia, Although sustainable R&D and product development is a top-five
explains how his organization breaks down broad sustainability strategic priority among all sustainable initiatives, it is yet to achieve a
goals into specific targets: “We divide up the long-term target of greater scale of implementation:
emissions-reduction and set internal milestones on that basis. So,
this long-term target has been segregated into two different work • as many as 85 percent of automotive organizations in our survey
packages and each one is linked to a specific target within the have only up to 40 percent of their current engineering, R&D, and
overall goal of emissions-reduction.”47 design landscape implementing sustainability initiatives at scale;
• more than three in four automotive organizations (78 percent)
Incorporating sustainable design to minimize conduct vehicle lifecycle assessments, including environmental
vehicles’ environmental footprint impacts, for less than 40 percent of their products;
Our recent research into sustainable product design has found that • fewer than half of the organizations (44 percent) have a
it is a business imperative to reach net zero.48 Nearly two-thirds (65 sustainability initiative for the prototyping phase of R&D/
percent) of automotive organizations in our research have seen engineering (for instance, use of digital technologies such as digital
a reduction in carbon emissions due to the implementation of twins, virtualization, 3D printing, etc.).
sustainable product design strategies. Moreover, an estimated 80
Vehicle design needs to incorporate Design-for-Recycling (DfR)
percent of the environmental impacts of a product are linked to
keeping in mind vehicle end-of-life recycling, recovering, or disposal.
decisions made at design stage.49
Currently, a sizeable share of end-of-life automotive products is
Oliver Zipse, Chairman of the Board of Management of BMW AG, subjected to disassembling, shredding or crushing which leaves an
comments: “We must design our vehicles for sustainability from unavoidable GHG footprint. Thus product design and development
the very first day of development, reducing the amount of material has to be done keeping in mind dismantling strategies, residue
used and, above all, planning for reuse and recycling from the very recovery, recycling, and reuse. OEMs also need to design end-of-
beginning. In the face of rising raw-material prices, this is not just an life processing strategy, and develop technologies and processes to
environmental, but also a business imperative.”50 achieve maximum recovery.

69
Environmentally responsible procurement

“We must design our vehicles for Our research finds that fewer than two in five automotive
organizations (38 percent) conduct sustainability due diligence
sustainability from the very first on all material and product procurement, and only about half
day of development, reducing the (54 percent) have adopted ethical resources management
amount of material used and, above and procurement at scale. Volvo Cars has made sustainability
requirements an integral part of its contractual agreements
all, planning for reuse and recycling with suppliers. Since 2019, it has administered a self-
from the very beginning. In the face assessment questionnaire (SAQ) as a mandatory requirement
of rising raw-material prices, this is of all material suppliers. In 2021, 847 of its supplier sites (82
percent) completed this assessment. It places a strong emphasis
not just an environmental, but also a on proactively addressing sustainability-related issues and
business imperative.” driving improvement. Since 2015, Volvo Cars has performed
182 sustainability audits among its tier-1 and directed sub-
tier suppliers and, as at 2021, had addressed 94 percent of
Oliver Zipse
improvement findings identified in its audit program.
Chairman of the Board of Management
of BMW AG However more sustainable products and components are
generally costlier than their traditional counterparts; 77 percent
of supply-chain executives and 79 percent of manufacturing
executives believe that product costs have increased as a result
of the adoption of sustainable practices and initiatives (e.g.,
requiring use of more lightweight or sustainable material, which
is more responsibly sourced). OEMs have traditionally expected
suppliers to bear this higher cost.

70
Our survey data shows that suppliers believe customers (OEMs or Using new tools and technologies to manage the
other suppliers) would be willing to pay 8.5-8.7 percent more for
sustainable products, features, and aftersales purchases. For suppliers,
transition to net zero
however, the challenge is to prove the additional value to OEMs. To On average, fewer than one in five organizations (14 percent) in
command a premium, suppliers will need to bundle additional services our survey have harnessed tools and technologies to advance their
with sustainable products. For instance, Bosch provides a state-of-the- sustainability initiatives. Only about one in six (17 percent) has
art customer-support service, one of the largest in the industry.52 Its deployed artificial intelligence (AI) and data analytics (e.g., predictive
seven logistics centers, which are in close proximity to its production maintenance [see Figure 29, below] to support energy conservation
facilities, store over 200,000 replacement parts, reducing time to and emissions reduction. The director of sustainability at a large
resolve issues and conserving resources. The Bosch eXchange program US-based tier-1 supplier, adds: “We have a tool that allows us to
allows customers to have defective vehicle components replaced monitor our KPIs at a granular level from different locations to
with remanufactured products. It remanufactures around 2 million understand the energy consumption and GHG-emission patterns; that
components, saving nearly 3,100 metric tons of material and the way, we know which operations to improve to reduce our emissions.”
equivalent of 8,600 metric tons of CO₂.
79 %
of manufacturing executives believe that product costs

have increased as a result of the adoption of sustainable
practices and initiatives (e.g., requiring use of more
lightweight or sustainable material, which is more
responsibly sourced).

71
Figure.29
Deployment of tools and technologies for advancing sustainability initiatives
Data is a significant lever to accelerate organizations’

journeys to net zero. The use of emissions data can
Does your organization have the following systems or technologies for enhance organizational decision making in three key
advancing sustainability initiatives? ways: increasing visibility of baseline emissions levels
and identifying emissions hotspots; improving existing
40% business processes by streamlining carbon-intensive
36% activities; and predicting and prescribing business
outcomes to identify further emissions reduction
opportunities. However, our recent research on use
28% of data by organizations to reach net zero goals found
that organizations are not adequately embedding
emissions data in decision-making 45% of organizations
in our research use data only for mandatory reporting.53
17%
Further, while 55% say they embed it in decision making
13% in some form, we found that they largely use emissions
11% data to measure sustainability performance, and few
use it to improve existing processes or to predict and
prescribe opportunities for emissions reduction using
forecasting and scenario-analysis techniques.
AI and analytics for analysis IoT devices for Blockchain for sustainability To enhance data coverage, granularity, and accuracy,
and predictions (e.g., for predictive monitoring environmental data tracking (e.g., supply organizations should automate the ingestion of
maintenance) data chain visibility) emissions data from multiple external (emissions factor
databases, ESG data providers, LCA databases, supplier
Deployed at limited scale (at some facilities or countries) Deployed at full scale (at all locations globally) data, etc.) and internal (ERP systems, IoT, sensors,
facility-management systems, etc.) sources and eliminate

72
manual, spreadsheet-based data collection. To date,

only 6 percent of organizations in the automotive
industry have automated collection of emissions data
at-scale.
Once the collection and reporting of individual
data from various systems has been accomplished,
organizations must strive to establish a sustainability
control tower: that is, a connected and customizable
dashboard of sustainability data that provides end-
to-end visibility, scenario-planning features, and
control of all sustainability initiatives across the
organization. A control tower can aid decision-making,
reduce reaction time in uncertain scenarios, and
ensure progress on key sustainability KPIs. Our survey
suggests that fewer than half of organizations (45
percent) have deployed a sustainability control tower
to date, with about half (48 percent) planning to do so
in the next 1-3 years.
45 %
of organizations in our research use data only for

mandatory reporting.

73
Figure.30
Stellantis has linked performance incentives to achievement of
climate-related KPIs
Putting people at the Examples of incentives plans for the management of climate-related issues
heart of the sustainable
transition Organizational Divisions
All Stellantis employees eligible

Climate-related targets
Annual CO₂, emission target is used as a payoff trigger for the variable
for the incentive plans compensation.
Aligning organizational objectives with
Annual and multi annual CO₂, reduction targets on the CO₂ emissions of the
sustainable goals Chief Executive Officer
vehicles sold.
As we saw in Chapter II, a majority of automotive Targets dealing with Stellantis' position in vehicle efficiency (vehicle CO₂
Top Executive Team members emissions, new mobility services development, share of electrified vehicles, etc.).
organizations struggle to align individual performance
objectives with sustainability goals. When performance
objectives and metrics are not updated to reflect the Short-term CO₂, related targets, on the implementation of specific programs
Planning aligned with the ambition to reduce average CO₂, emissions of the vehicles sold
sustainability goals of the organization, the workforce worldwide.
is unlikely to feel incentivized to prioritize them. Vehicle project managers can have targets based on vehicle CO₂ performance.
Stellantis has tackled this issue by rolling out incentive
Short-term CO₂, reduction targets based on improved energy consumption and
plans linked to climate-related targets (see Figure 30). increased share of decarbonized electricity.
All Stellantis employees eligible for incentive plans Manufacturing Energy, environment and facility managers are operationally involved in facilities
have their variable compensation linked to annual environmental management and energy saving and have targets related to
energy savings in terms of CO₂, emission reduction.
CO2 emission-reduction target. Similarly, members of
various functional units are set climate-related targets. Short-term CO₂, reduction targets based on the increase of the share of strategic
suppliers demonstrating a CO₂ trend compliant with the Paris Agreement and on
Purchasing and Supply Chain the implementation of processes allowing to reduce CO₂, emission of purchased
parts for EVs.
Source: Stellantis, Corporate Social Responsibility Report 2021, February 2022.

74
Besides aligning performance objectives with sustainability goals, strategy. Further, Sustainability Leaders place much higher emphasis
organizations must incorporate sustainability KPIs into critical on mandating sustainability in all corporate training (41 percent) and
business decisions, moving away from the traditional business new employee induction, than do the rest (27 percent).
framework of cost-benefit, break-even/payback period. While a New initiatives to tackle skills shortages can be modified to
majority of Sustainability Leaders have integrated metrics such as incorporate sustainability training. Such initiatives include setting up
use of renewable energy in operations (56 percent) and recycling software academies; launching reskilling programs; and spinning off
manufacturing waste (53 percent) into business decisions, only about subsidiaries, often in partnership with tech companies, to create long-
one-third (31 percent and 37 percent, respectively) of the rest have term career perspectives for potential candidates. Jaguar Land Rover
done so. recently announced that it will train 29,000 of its own employees, as
Magdalena Gerger, VW Group Sustainability Council Advisory well as workers in franchised dealerships, to develop, manufacture,
Board to the Management Board, says: “A culture that considers and service EVs54. Along similar lines, Mercedes-Benz recently
sustainability in day-to-day decisions is critical to any organization. announced that it will invest more than €1.3 billion in the qualification,
There needs to be a strong top-down, bottom-up approach that pulls training, and continuing education of its employees by 2030.55
together innovation and skill-building. It is about spending time Laura Nunnery, Head of UX - Infrastructure & Online Sales at Volvo
getting leadership walking side by side, training your employees and Cars says, “We educate people about sustainability at a very
involving them in your decisions.” fundamental level because not everyone knows or understands what
goes into, say, carbon emissions of cars. And it starts with educating
Building sustainability skills
our internal stakeholders and sales representatives. For the benefit
The automotive industry is currently undergoing a transformation of our consumers, we have integrated sustainability awareness into
that involves blending skills from both traditional engineering and our cars as well.”
IT. Candidates that fit the required profile (insomuch as it can be Specialist skills in sustainability will still be required and will often
defined at this point) are in high demand, not only in automotive but be available through ecosystem partnerships. We asked automotive
across all industries, as transformations develop in parallel. With the executives which areas are experiencing the highest demand for
added requirement for sustainability, the situation looks bleak. Our sustainability skills, and found that product innovation, reporting, and
survey indicates that the majority of automotive organizations (55 risk assessment are top (see Figure 31).
percent) are upskilling/reskilling existing employees as a dominant

75
Figure.31
Top five areas with the largest talent gap on sustainability skills
Creating a culture of collaboration as

part of a systemic approach to
% of executives who rate the following as a top area with the most critical talent sustainability
gap
No single OEM or supplier acting independently
72% 72% can deliver measurable environmental benefits
on a global scale – certainly not with the speed
64% 63% dictated by the climate emergency. A wide range of
collaborative initiatives at industry level and above are
54%
already emerging, such as the German government’s
Innovate2030-SDG11, designed to foster climate-smart,
sustainable cities and communities.
It makes sense for automakers to work together, share
knowledge, and establish standards, as is happening
in initiatives such as Catena-X.56 Automakers are also
assembling their own ecosystems to help them meet
sustainability goals. Each ecosystem is likely to include a
wide range of organizations.
Sustainable Climate/sustainability Environmental health Marco Philippi, Head of Procurement Strategy at Audi,
product innovation risk-assessment and safety specialists says: “We interact with more than 14,000 direct suppliers
specialist Sustainability reporting, experts Data-collection and from more than 60 countries. That adds up to a large
metric development, and data-management responsibility but, at the same time, it offers enormous
management experts
potential. If we succeed in steering the network in the
right direction, then this not only has a positive effect on
Audi, but also on our entire sector.”57
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August 2022, N=1,080 executives

76
CONCLUSION
The automotive industry is poised to enter a
crucial decade, as it pivots its product portfolio
from ICE vehicles to EVs – a transformation
on a scale not witnessed since the dawn of
the automotive era. Even as automotive
technology is increasingly driven by software and
customer experience, long-term sustainability
is becoming the requirement for all stakeholder
types. Leading organizations have positioned
themselves well for this change, yet the industry
as a whole is still on a side-road, slowing down on
the path from ambition to action. A combination
of actions on rapid decarbonization, sustainable
operations (from design and procurement, to
end-of-life), and inclusivity, can get it back on
course and in the fast lane.

77
APPENDIX
Elements on which the maturity analysis is based (Chapter I)
The following are the elements based on which we conducted an analysis to segregate the
organizations into Leaders and The rest:
Elements on which the analysis for the x-axis (i.e., Elements on which the analysis for the y-axis (i.e.,
‘Maturity of Strategy’) was based ‘Maturity of Implementation’) was based
• Presence of a comprehensive sustainable strategy • Level of deployment of top sustainability initiatives, as

identified by the industry
• Assessment of current portfolio of products and
assets in terms of sustainability and long-term • Level of investment in sustainability
environmental impact
• Existence of dedicated sustainability targets for
• Priority assigned to the top sustainability initiatives, as key executives
identified by the industry
• Presence of a central governance body, and a
dedicated leader for sustainability

78
Maturity of OEMs and Suppliers (Chapter I)
In the past three years, OEMs have advanced Suppliers have improved their implementation of sustainability
their sustainability strategies initiatives in the past three years
Maturity of sustainability strategy and its implementation: OEMs Maturity of sustainability strategy and its implementation: Suppliers
Deployment Specialists High implementation Leaders High implementation Leaders

Deployment Specialists
2022 17%
2022 9% 2022 20% 2022 7%
2019 14% 2019 9% 2019 11%
2019 10%
Nascent Strategy Mature Strategy Nascent Strategy Mature Strategy
2022 57% 2022 17% 2022 61% 2022 12%

2019 68%
2019 9% 2019 66% 2019 13%
Laggards Low implementation Strategy Specialists Laggards Low implementation Strategy Specialists
Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August Source: Capgemini Research Institute, Sustainability in Automotive Executive Survey, July-August
2022, N=93 OEMs; The automotive industry in the era of sustainability, March 2020. 2022, N=90 suppliers; The automotive industry in the era of sustainability, 2020.
*Each dot represents one organization, and the placement of the dot corresponds to the comparative *Each dot represents one organization, and the placement of the dot corresponds to the comparative
maturity of the organization in both strategy and implementation of sustainability. The percentages maturity of the organization in both strategy and implementation of sustainability. The percentages
represent the share of organizations in each quadrant. represent the share of organizations in each quadrant.

79
Methodology to calculate GHG emission reduction for Leaders and the

industry (Chapter III)
To determine the average industry emissions rate, we took an average of the actual yearly data (including
scope 1, scope 2, and scope 3), as reported by the top OEMs. We arrived at average emissions of 182 million mtCO2e
for the industry in 2018:
For the Paris Agreement target, we used the 2018 For Leaders, we applied the actual and expected
01 industry average emissions as base the to arrive at

the 2030 target. 02 percentage improvement, calculated from our survey
data, on the average 2018 emissions to arrive at
future emissions
Finally, for the industry, we used the expected rate of
03
improvement in emissions, on average, for the entire
industry (from our survey data) and applied it to the
actual industry average emissions in 2018 to arrive at
future emissions

80
RESEARCH METHODOLOGY
This survey aims to address the current state, The distribution of respondents and their organizations is provided below:
challenges, and the future of sustainability
for the global automotive industry. We will
be looking at automotive organizations’
sustainability strategy, initiatives, governance, Organizations by country Organizations by sector
investments, and any benefits and outcomes
from those. We also want to understand the
nature of impact, significance, and criticality of Sweden
these initiatives. 4%
Others 5%
Executive survey 25%
SouthKorea 6%
During July–August 2022, we surveyed 1,080 US 50% 45%
India 7%
senior executives (director level and above). The
organizations comprise OEMs and suppliers. For
the purpose of this survey, we are considering France 7%
environmental sustainability and associated 13%
issues and are not looking into the social and Japan 9% Germany
governance aspects of sustainability.
11% 12% 5%
UK China
OEMs Suppliers Pure-play EV
manufacturers

81
Organizations by annual revenue Executives by title
9%
11%
10%
11%
11%
42%
6%
42%
21% 37%
Less than $1 billion $10 billion - $20 billion

Director/Senior Director/Principal Executive VP/Corporate VP
$1 billion - $5 billion $20 billion - $50 billion
VP/Senior VP C-level executive
$5 billion - $10 billion More than $50 billion

82
In-depth interviews
We also conducted 20 in-depth interviews with senior
Executives by functional area industry executives and experts.
Corporate Strategy/Product Strategy/

20%
Planning / Finance
Supply Chain (including distribution) 15%
Sustainability 15%
Aftersales/Mobility services 10%
Sales and marketing 10%
Manufacturing/production and
Operations 10%
IT/Tech 10%
Engineering/R&D/Design 10%

83
Capgemini’s framework for sustainable mobility
CAPGEMINI CAN • Strategies
HELP ACCELERATE
SUSTAINABLE STRATEGY & • Business models
NEW BUSINESS MODELS • Value drivers
COMMIT • Corporate culture
YOUR SUSTAINABILITY to a systematic,

holistic approach
INITIATIVES SUSTAINABLE PRODUCTS,

SERVICES, & EXPERIENCE
• Emphasis on circular economy
As we have seen, automotive companies can boost • Procurement

SUSTAINABLE OPERATIONS • Factory
their progress toward sustainability by taking action ACT • Supply chain
on products, processes, and people. working towards
sustainability • User hardware and devices
To achieve such far-reaching change, automakers throughout the • Networking and communications
SUSTAINABLE IT
need a holistic and systematic sustainability approach lifecycle • Cloud computing
that addresses the entire automotive product • Applications and data
lifecycle, as well as the business as a whole and all of
its value chain.
Capgemini is here to support automotive companies
DATA
in realizing their sustainability goals as fast and MONITOR • Intelligence nerve center
FOR • Modern data tools and techniques
smoothly as possible. To help us do that, we have & REPORT SUSTAINABILITY • Data sharing – internal and external
developed our own comprehensive approach because we can only
based on a three-step framework, summarized in act on what we can
measure
the figure below.

84
In addition to our three-step framework (in the figure), Capgemini For the monitoring & reporting step, we assist automakers in using
has the capabilities and offers to assure success at each step of an data to steer the business toward sustainability while also delivering
automotive company’s sustainability journey. on conventional KPIs such as profitability. Modern data management
techniques make it possible to provide end-to-end transparency of
As clients commit to sustainability, we guide them in developing and
the supply chain and product lifecycle, equipping decision-makers
adopting new strategies, business models, and value drivers, along
to optimize overall sustainability. We help companies select and use
with a sustainability-oriented corporate culture.
the most appropriate tools, including sophisticated analytics and
The act step entails working toward sustainability across the end-to- advanced machine learning (ML).
end lifecycle. Here we advise organizations on building a portfolio of
The circular economy is at the heart of our approach. At each step of
sustainable products and services, always with an emphasis on the
the journey, we ensure its requirements are addressed, and that the
circular economy. We also help them achieve sustainable operations
best use is made of enablers such as innovation, industrialization,
throughout the vehicle lifecycle and right along the supply chain.
talent management, and ecosystem working.
When it comes to IT, we empower clients to realize technology’s
potential to make the business more sustainable while minimizing Let’s drive the future together for a world of sustainable mobility.
environmental damage associated with IT itself.

85
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Agency, The EPA Automotive Trends
for manufacturers, June 2021. of its employees,” July 2022.
Report 2021, November 2021.
50. GM Sustainability Report 2021. 60. Catena-X website. Catena-X sees itself
39. Renault, “Renaulution: all about our
51. Volvo Car Group Sustainability Report 2021. as a rapidly scalable ecosystem in which
strategic plan,” January 2021.
all participants in the automotive value
40. BloombergNEF, “Net Zero Could 52. Capgemini Research Institute, “Rethink:
chain participate equally. The goal:
Mean Fewer Cars on Top of Why sustainable product design is the
to provide an environment for the
Switching to EVs,” June 2022. need of the hour,” September 2022.
creation, operation, and collaborative
41. Audi, “Audi on the road to climate- 53. European Commission, EU Science Hub, use of end-to-end data chains along
neutral mobility,” August 2021 retrieved from https://ec.europa.eu/jrc/en/ the entire automotive value chain.
research-topic/sustainable-product-policy
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car sharing in Hamburg,” February 2021. 54. BMW, “Over 200 million tonnes: BMW operations: A comprehensive guide
Group sets ambitious goal to reduce for manufacturers, June 2021.
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CO2 emissions by 2030,” May 12, 2021.
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44. Tesla company website.
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87
AUTHORS
Alexandre Audoin Markus Winkler Pascal Feillard
Executive Vice President, Executive Vice President, Senior Solution Director,
Head of Global Automotive Industry Global Automotive Industry Capgemini Engineering
[email protected] [email protected] [email protected]
Jean-Marie Lapeyre James Robey Sebastian Tschödrich

Chief Technology & Innovation Officer, EVP Global Head of Environmental EVP, Global Head of Automotive,
Global Automotive Industry Sustainability, UK Architects of Positive Capgemini Invent
[email protected] Futures Lead [email protected]
[email protected]
Siegfried Adam Vera Schneemann Maryem Sahnoun

Global Lead Sustainable Mobility, Global Lead Sustainable Operations and Sustainability Accelerator,
Capgemini Invent Supply Chain, Capgemini Invent Capgemini Engineering

88
Jerome Buvat Subrahmanyam KVJ Amol Khadikar

Head of Capgemini Senior Director, Program Manager,
Research Institute Capgemini Research Institute Capgemini Research Institute
Hiral Shah Navya Atmakuri

Manager, Consultant,
Capgemini Research Institute Capgemini Research Institute
[email protected] [email protected]

89
For more information, please contact:

The authors would like to especially thank all industry experts
and executives who participated in this research. Global contact
The authors would also like to thank Emmanuel Lochon,
Benjamin Alleau, Brad Young, Klaus Feldmann, Philipp Haaf, Alexandre Audoin Markus Winkler Jean-Marie Lapeyre Pascal Feillard
Capgemini Group Capgemini Group Capgemini Group Capgemini Engineering
Simon Schäfer, Jean-Baptiste Perrin, Thomas Svahn, Clément
alexandre.a.audoin@capgemini. [email protected] [email protected] [email protected]
Chenut, Sven Dahlmeier, Daniel Garschagen, Lucas Birn, com
Philipp Kolbeck, Ruth-Anne Peters, Findikdali Guelmez, Henrik
Norrman, Katie Neck, Patricia Noble Gonzalez, Masahiko
Mochizuki, Anil Kandpal, Sandhya Sule, Nithin Divakar Naik, Sebastian Tschödrich Findikdali Guelmez Klaus Feldmann Ruth Peters
Ashish Sharma, Baljeet Yadav, Laurence Jumeaux, Clément Capgemini Invent Capgemini Group Capgemini Engineering Global marketing – Capgemini
sebastian.tschoedrich@ [email protected] [email protected] Group
Falquet, Per Holmblad, Vivek Kamath Mulki, Jayashree
capgemini.com [email protected]
Ravichandran, Anuraag Bharadwaj, Benjamin Fritz, Ralf
Blessmann, Olivier Saignes, Roshan Batheri, Suparna Banerjee,
Aparajita Paul, Rupali Chakraborty, and Punam Chavan for
their contribution to the research.
France North America Germany UK
Arnaud Bouchard Andy Howard Ralf Blessmann Robert Pears
About the Capgemini Research [email protected] [email protected] [email protected] [email protected]
Institute
The Capgemini Research Institute is Capgemini’s in-house India Nordics China Japan
think tank on all things digital. The Institute publishes research Anuraag Bharadwaj Caroline Segerstéen Runervik Chu Yan Yonoshin Mori
on the impact of digital technologies on large traditional [email protected] caroline.sergersteen-runervik@ [email protected] [email protected]
businesses. The team draws on the worldwide network of capgemini.com
Capgemini experts and works closely with academic and

technology partners. The Institute has dedicated research Italy Spain Belgium
centers in India, Singapore, the United Kingdom, and the Gerardo Ciccone Yoann Groleau Belgium Evy Nerinckx
United States. It was recently ranked number one in the world [email protected] [email protected] [email protected]
for the quality of its research by independent analysts.
Visit us at www.capgemini.com/researchinstitute/

90
More Capgemini
Research Institute
Publications Rethink: why sustainable product Data for Net Zero Intelligent products and services:
design is the need of the hour Unlock the opportunity of a
connected business
Next destination: Software How Circular economy for a Sustainable IT Data Mastery: How data- Sustainable The automotive industry
automotive OEMs can harness sustainable future powered organizations operations in the era of sustainability
the potential of software-driven outperform their competitors
transformation

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SUSTAINABILITY

the implementation of sustainability

02 initiatives is fragmented and is frequently

an estimated $50 billion is required over

Capgemini Research Institute 2022

Capgemini Research Institute 2022

Capgemini Research Institute 2022

How can automotive organizations go from

Capgemini Research Institute 2022

The automotive industry has shown little progress on sustainability in

Capgemini Research Institute 2022

Several challenges are causing implementation to stagnate:

Capgemini Research Institute 2022

However, a small group of ‘Sustainability Leaders’ reaps larger benefits:

• On average, Leaders have already realized 9%

Capgemini Research Institute 2022

To accelerate the maturity of sustainability initiatives and prepare to meet

Capgemini Research Institute 2022

What do we mean Sustainability across the automotive value-chain

Capgemini Research Institute 2022

Sustainability initiatives in automotive

Capgemini Research Institute 2022

From an environmental sustainability front, we are focusing on the following

Emissions: According to the GHG Protocol Corporate

Capgemini Research Institute 2022

Waste treatment- Includes collection, transportation,

Capgemini Research Institute 2022

The State of Sustainability in the Automotive Industry

Which of the following deﬁnes ‘sustainability’ at your organization?

55% of organizations focus on emission-reduction by transitioning to an EV ﬂeet

Organizations' primary sustainability goals

49% Achieving net zero emissions in operations 35% Share of

Capgemini Research Institute 2022

Capgemini Research Institute 2022

Automotive is falling Extent of reduction in overall GHG emissions,

Agreement target 5% improvement

Today Expected to realize by 2026 Expected to realize by 2030

Industry average Paris Agreement

Capgemini Research Institute 2022

initiatives is declining Average annual investment in sustainability initiatives as a % of revenue,

1.22% vs 0.85% Planned 2022-2026 0.86%

Capgemini Research Institute 2022

“Larger organizations are

Further, we also found that suppliers

Suppliers invest more than OEMs to meet sustainability targets

Supplier 0.93% CHINA 1.20% 0.55%

FRANCE 0.99% 0.51%

OEM 0.79% GERMANY 1.24% 1.11%

INDIA 1.60% 0.93%

Industry average 0.85%

Capgemini Research Institute 2022

Capgemini Research Institute 2022

% of organizations stating their maturity of sustainability strategy

Don't have a sustainability Don't have a sustainability Have a comprehensive sustainability

Share of automotive organizations who believe

Capgemini Research Institute 2022

Level of deployment of initiatives

The growing significance accorded to 51%

Sustainable Environmentally Product Sustainable Sustainable Supporting and