The Green Initiative by The Automobile Sector

The trend of “Going Green” is gaining significance recently across sectors. Investors are concerned about the day-to-day operations of firms. Corporate Social Responsibility is increasingly becoming relevant.

The advancement in modern society has made people realize that resources are not perennial. Companies are under scrutiny for their operational efficiency. Profits are not the only benchmark for evaluating an organization’s success.

According to research by Economist Ron Robins, “The majority of executives believed Corporate Social Responsibility (CSR) could improve profits and the last thing they would do was avoid engaging in CSR”.

The automotive sector has been under the scanner for its negative impact on the environment and its contribution to global warming. On the other hand, the automotive sector contributes two to three% of national GDP in many nations. There is a connect between fuel efficiency of the automobiles and CO2 emissions.

Automotive manufacturers are facing increasing risk due to a rise in oil prices and the regulations pertaining to C02 emissions. Developed economies, including the EU, Japan, and the US have established policies to check CO2 emissions.

Other than the CO2 emissions, the complete supply chain process of automobiles has a negative impact on the environment.

Many automobile manufacturers have launched green operation initiatives with an emphasis on utilizing green supply chain management methods that can be a solution to the CSR issues affecting the automotive sector.

They have implemented several green operations practices – green buildings, eco-design, green supply chains, green manufacturing, reverse logistics, and an innovation of alternative fuel solution for cars among others.

As per IBIS World (International business intelligence organization), “increasing gasoline prices and consumers’ awareness of environmental issues has reshaped consumers’ preferences from fuel-guzzling pickup trucks to smaller, more fuel-efficient cars”.

Some automobile manufacturers such as Toyota shifted to hybrid and fuel-efficient production, thereby witnessing a boost in sales.

The skyrocketing fuel prices, government regulations of CO2 emissions and CSR initiatives of automobile manufacturers drove the sales of hybrid electric vehicles which are cost effective in terms of fuel consumption and lesser CO2 emissions while comparing with standard vehicles.

Several governments have not only checked CO2 emissions, but also established policies – tax reduction, low-interest rate financing, and cash rebates to encourage the use of fuel-efficient automobiles.

The transformation in the consumers’ preference along with the government incentives for fuel economy solutions made the automobile manufacturers invest in R&D to accomplish the objective of better fuel efficiency and decreased greenhouse gas emissions. Hybrid electric vehicle (HEV) technology is becoming popular in many nations.

As per findings by international agencies, “Global energy consumption is likely to rise by 53% between 2006 and 2030, and about three-quarters of the projected increase in oil demand is likely to come from the transport sector”.

The governments are encouraging the development of alternative propulsion systems.

Technology combined with a response from the industry, policies, customer preference and investment opportunities would facilitate the growth in “Green Manufacturing” which looks at the environmental aspect and resource utilization across the product lifecycle – design, fabrication, packaging, and transportation to waste disposal.

According to experts, a wide range of green vehicle technologies together could improve fuel economy by 30 to 55% during the next decade.

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