GREEN INITIATIVES AND SUSTAINABLE DEVELOPMENT IN

AUTOMOTIVE INDUSTRY

ABSTRACT

Sustainable development emphasizes the enhancement of environmental, social and economic

resources, with all of them being critical to meet the needs of current and future generations. But
despite the concept’s penetration into many segments of society and the rise of environmental
policies throughout the world, the impact on global environmental trends has been limited. In the
aftermath of the last world economic crisis, the Green Economy gained attention as a concept
that could overcome the connotation of environmental protection as a cost factor slowing down
economic development and bring the environment and the economy into a positive relationship,
in which the environment becomes an opportunity rather than a constraint, and a new driving
force for economic development. This paper develops an approach towards the adoption of the
green initiatives at the firm, and also tries to build a relationship between the performance of the
firm and sustainable development through the adoption of green initiatives.

The purpose of this paper is to focus on investigating and benchmarking the green initiatives in
the automobile industry. In this paper, we choose the leading automobile industries to dig deeper
how this sustainable trend influence the company’s financial performance.

Key words: Sustainability, automotive industry, green initiatives.

INTRODUCTION

Green economy is defined as low carbon, resource efficient and socially inclusive. In a green
economy, growth in employment and income are driven by public and private investment into
such economic activities, infrastructure and assets that allowed reduced carbon emissions and
pollution, enhanced energy and resource efficiency and prevention of loss of biodiversity and
ecosystem services.Sustainable development is development that meets the needs of the present
without compromising the ability of future generation to meet their own needs. Sustainable
development is about finding better ways of doing things, both for the future and the present.
Sustainability remains the vital long-term goal, but the green economy is describing a pathway to
sustainable development. In most of the discussions about environmental issues and policies,
transportation is highlighted as one of the main sources of pollutant emissions and energy
consumption. The automobile sector is rapidly increasing its market share worldwide in recent
years. It is because of various business strategies by automobile manufacturer such as more focus
on small cars and fuel-efficient cars having a low market price that are targeted to capture the
maximum market. But due to increasing market share of the automobile sector there are several
environmental issues are also arising such as carbon emission, global warming, etc. in such a
scenario, automobile manufacturers are facing dual pressure one, to save the environment and
another is to maintain the performance of the firm in the long run. the performance of the firm
can be judged on the basis of financial,operational and marketing capability of the firm.

LITERATURE REVIEW

Nowadays, more green initiatives have been developed in automobile industry for a sustainable
development. Automotive manufactures like Ford, GM, Honda and Toyota are working to
improve a host of environmental problems resulting from manufacturing through sustainability.
In 1920’s Ford began making several parts with “Fordite”, a unique mixture of wheat straw,
silica, rubber, and other compounds that were used to reduce wood consumption. By 1937, Ford
producing 300,000 gallons of soy oil a for use in car enamels. In 1941, due to metal shortages
during World War II, Henry Ford developed a plastic-bodied prototype “Soybean car” using soy,
wheat, rami, and hemp flax. This project was soon dismissed. Since 2008 soy foam has been one
of Ford’s crowning achievements- reducing the use of oil by more than 3 million pounds a year
and reducingcarbon dioxide emissions by 15 million pounds. This initiative led by Debbie
Mielewski pushes manufacturing to make design decisions to create lighter, cheaper and more
sustainable vehicles that also yield a greater number of recyclable or reclaimable parts and
materials.
General Motors manufactures around 9.9 million cars a year and has a creative materials reuse
program that reuses metal pieces, worn tires, and the packaging of supplies. A major reuse
project occurred in 2010 during the Deepwater Horizon oil spill in the Gulf of Mexico, where
more than 2550, miles of oil-soaked booms were recycled into vehicle parts. GM products have
been re-purposed as heating and cooling products, garden planters and even wildlife refuge
habitats. During 2015, about 8.9 million metric tons of carbon dioxide –equivalent emissions
were prevented from entering the atmosphere because of its reuse and recycling programs

Toyota Motor Corporation has created the “ Toyota Environmental Challenge 2050” to reduce
environmental impact and to aim for “ Challenge to Zero and Beyond”. Toyota has reached more
than 10 million cumulative units of hybrid vehicle sales globally, including plug-in hybrids. In
late 2015, Toyota introduced the Mirai fuel cell electric vehicle that provides over 300 miles of
driving range, a refueling time of around five minutes and the only tailpipe emission is water.
The Mirai was introduced in Japan, followed by Europe and California in 2016. Since 2002,
Toyota has saved more than 16 million kWh of electricity and a realized cost savings of $640
million across its 14 North American manufacturing sites.

Honda Motors are the first car manufacturer to disclose its greenhouse gas emissions from its
business operations and customer use of its products. In 1998, Honda was he first and only
automaker to mass-produce a passenger car that ran on natural gas, called the Civic GX. Then, 2
years later also the first to introduce a low emissions hybrid, called the Insight. Recycled or
natural materials like sugarcane are used in the manufacturing materials of the Honda Clarity
instrument panel, as well as the sun visors, roof lining, seat upholstery, step garnish and ultra-
suede trim on the touring version.

The automotive industry is addressing pressing environmental issues of carbon dioxide

emissions, waste and fossil fuel dependence. Key strategies for global sustainability in
automotive companies are taking innovative ways. From Ford utilizing sustainable materials
from plants to General Motors reusing oil booms for manufacturing, automotive manufactures
are showing that sustainable solutions are good for business and the environment.
OBJECTIVES

1. To study about green initiatives of automotive industry from the period of 2013-2018.
2. To study about the contribution of automotive leaders on maintaning environmental
sustainability.

RESEARCH METHODOLOGY

This study is mainly conceptual in nature and it uses secondary data sources such as journals,
websites, reports and other manuals.

ANALYSIS AND FINDINGS

1. TOYOTA(billion yen)

YEAR AMOUNT SPEND ON PROFIT

GREEN INITIATIVES
2013 313.13 346.7
2014 368.17 408.76
2015 406.12 437.53
2016 541.82 575.75
2017 551.19 589.31
2018 584.97 630.5
22222

In the year 2013,the total amount spend on green initiatives was 313.13 (billion yen) and the
profit was 346.7(billion yen). In the year 2014 there is an increase of 17.5% in their investment
and in case of profit there is an increase of 18%.And from the year 2015-2019 there was an
increment of 44% in the case of investment and 45% in case of profit.

2.BMW(euro million) (((23((

 YEAR AMOUNT SPEND ON PROFIT
GREEN INITIATIVES
2013 32353 7803
2014 34524 8707
2015 39109 9224
2016 87837 9665
2017 33436 10675
2018 37242 9815

In the year 2013 amount spend on green initiatives by BMW was 32353 (euro million) and the
profit gain was 7803 (euro million). It shows an increase of 6.7% on investment on the year 2014
and 11.58% increment on profit.There is a gradual increment in investment on the year 2015 and
a large increment of 87837 euro million can be seen in the year 2016 with 124% rise. Then it got
reduced back in the succeeding years.32353n

3. HONDA(million yen)

YEAR AMOUNT SPEND ON PROFIT

GREEN INITIATIVES
2013 287654 367149
2014 324565 574107
2015 245387 509435
2016 276843 344531
2017 285660 616569
2018 291138 1059337

The amount spend by Honda on green initiative in the year 2013 was about 287654million yen)
and the profit was about 367149 (million yen). In 2014 it is increased upto 12.83% in case of
investment and 56.36% increase in the case of profit. There was a decrease of 24.4% in the
succeeding year of 2015 and 11.26% increase in case of profit. Then the trend is gradually
increasing upto 2018.
TOYOTA: Although Toyota has worked hard to increase sustainable activities within their
manufacturing plants, including utilizing renewable energy and low carbon production
technologies, one of the main initiatives is to reduce carbon dioxide emissions, not just in global
operations, but also technologies, improvement of traffic flows, and the creation of clean-energy
vehicles. However, this is not at all. Toyota has even gone a further step and is now giving back
to the environment- Toyota through research and development, created two new species of plants
derived from the gardenia and cherry sage and they actually offset carbon dioxide emissions.
Toyota has also been instrumental in the process of Greenification- “green” buildings in urban
locations and plant trees to improve surrounding environment.

BMW: BMW fulfills their social responsibility towards planet by developing eco-friendly cars
that emit les carbon dioxide emissions. BMW is developing vehicles that are electric, hydrogen
and hybrid, where they use less harsh chemical gases and more natural energy. These vehicles
are more expensive to produce and purchase, but they run more efficiently and function longer
than gas and diesel vehicles. These vehicles also produce less waste and pollution into the
environment and it helps decrease vehicle carbon dioxide emission contribution that may be
affecting the climate change.

HONDA: Japanese automobile manufacturer Honda has been involved in green initiatives since
the 1970s.This has included the manufacturing of hybrid vehicles, fuel cells and having the first
automobile to comply with the SULEV(Super Ultra Low Emissions Vehicle) requirements in
California. Other corporate activity efforts include creating a number of Green factory projects,
recycling industrial water and installing solar panels at their plants. Some of the developments ot
Honda facilities include electric vehicles, home energy stations and solar cell technology.

SUGGESTIONS
 There are a few suggestions to improve green economy and sustainability in
automotive industry:
 Reduce vehicle weight through smart design and material selection
 Increase the levels of vehicle electrification
 Alternative fuels
 Bio-based materials
 All the challenges put forward by the automobile companies should be
properly accomplished

CONCLUSION

The automobile manufacturers are pursuing various environmental initiatives including green
buildings, eco-design, green supply chains, green manufacturing, reverse logistics and
innovation. By analysis and findings we found that automobile industries are spending a huge
amount in for green initiatives. However, there might be a gap between what companies say in
their environmental reports and what they actually do. E-vehicles are poised to cause a major
disruption in the automobile as well as the energy industry across the globe. Indian government
has set a target of 100% e-mobility by 2030. In the 2019-20 union budget, government has
announced an additional income tax deduction and custom duty exception for E-vehicles. The
main roadblock in the growth of E-vehicles is availability and viability of charging infrastructure
in India. It is essential to come up with new innovations thereby maintaining sustainable
development.

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