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Leadership in the era of automotive sustainability

Markus Winkler
07 Apr 2022

Over the last decade we’ve witnessed a seismic shift in the way automotive firms approach the topic of sustainability, as well as the wider idea of Environmental Social Governance (ESG).

Today, and for obvious reasons, it has become a strategic imperative to rival concerns of cost and quality for any Original Equipment Manufacturer (OEM).

Yet central to any transformation is the need for senior leadership teams to adapt traditional ways of thinking. Sustainability demands a new mindset that moves away from the ‘reactive stance’ that has defined the approach of many OEMs, toward the proactive embedding of sustainable thinking into everything they do. An outlook that encompasses their company’s end-to-end operations as much as it does the full lifecycle of every vehicle produced.

What’s more, this new mindset needs to manifest as a green lens through which to view every component of an OEM’s operation. Rather than focusing on specific challenges such as vehicle CO2 emissions, electrification, or ‘greening’ the supply chain, sustainability demands a multi-dimensional holistic view. From initial design, through low-carbon production, to delivery, aftermarket, and vehicle recycling, leaders are now tasked with finding the ESG potential in each – thereby turning sustainability into the key driver of future growth.

Extending the strategic focus

Achieving a position of leadership in sustainability requires a distinct focus on both the internal and external components of an OEM’s operation.

The internal focus: covering ‘direct assets’ such as employees, production facilities, and the extended supply chain, where leadership has the critical role of ensuring:

  • Corporate sustainability ambitions are translated into clear and measurable KPIs that are cascaded down to individual teams, business units, and suppliers – with two-way feedback factored in to adapt and refine them
  • Employees, partners, and suppliers are empowered to imagine and inspire incremental change, thereby enabling a culture of continuous improvement
  • Sustainable thinking is ingrained in the total end-to-end operation, from initial design through to end-of-life and material recycling

The external focus: which covers the wider automotive ecosystem outside of an OEM’s immediate influence. This could include consultancies specializing in cloud connectivity, digital apps, or cybersecurity. Equally, it could involve close engagement with resellers, independent service centers, recycling companies, customers, and even competitors, as the OEM embraces the realities of the circular economy.

Throughout all these interactions, sustainable leadership means:

  • Acting as a unifying force that brings these disparate groups together, infusing every relationship with a purpose geared toward clear sustainability goals
  • Finding original and innovative ways to collaborate on the sustainability challenge, seeking new voices and ideas to help shape future strategic priorities
  • Re-shaping the automotive eco-system, and re-imagining relationships with competitors to adopt a more sustainable approach to concerns such as access to essential raw materials – and the associated environmental impact

Utilizing resources

There is clearly a lot for automotive leaders to consider when embedding sustainable thinking into their operation. That said, it’s a task made easier by two powerful tools at their disposal:

Innovation: with the inevitable merging of IT and engineering practices, OEMs are beginning to operate in an environment of real-time, event-driven processing. For example, vehicle design can now directly incorporate the needs of sustainability. This is shown via features and materials that encourage greener operation, support new usage models favorable to the environment, and are sympathetic to re-use and recycling. With the correct leadership imperative, innovation can be directed towards both sustainability and commercial targets, with the two becoming indivisible over time.

Real-time insight: Infusing innovation, and indeed every process and activity, is the availability of real-time, data-driven insight. Visibility that grows with every new sensor, app, and embedded system, giving OEMs a clear line of sight into the carbon footprint of both their business and their products. The challenge for leaders is to put this data to work, and extending it to support more intensive stakeholder scrutiny. Data that can be comprehensive in scope, ranging from sustainability metrics to wider ethical concerns such as human rights and slavery.

Innovation and information, flowing like water across an OEM’s extended operation. Ready to be tapped into by leaders looking to inform their sustainability objectives, optimize future planning, and deliver more dynamic problem-solving capabilities.

This is the essence of Capgemini’s TechnoVision for Automotive Playbook 2022.

In summary

ESG requirements present a unique leadership challenge for OEMs. Overcoming it requires a degree of sustainable thinking to rival the traditional priorities of cost and quality. Most important of all however, the challenge requires a central vision that all can buy into. A vision, infused with innovation and information, that’s able to turn the concept of sustainability into a clear competitive advantage.

Click here to access Capgemini’s TechnoVision for Automotive Playbook 2022.