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ESG (Environmental, Social, and Governance) in Automotive – Thematic Research

ESG is now the defining mega-theme of the automotive industry. Environmental, social, and governance (ESG) considerations are inexorably tied to the future of the automotive industry. While the industry’s environmental impact has long been a challenge, social and governance factors are now coming to the fore, particularly as connected, autonomous, shared, and electric (CASE) megatrends transform the industry. Automakers are increasingly marketing ESG as central to their value propositions, reflected by the decision in 2020 by several to integrate their financial and sustainability reporting methods.

The pressure faced by the industry is both external and internal. Governments have legislated to ban the sale of internal combustion engine (ICE) and hybrid vehicles in phases over the next two decades, while the EU’s average fleet emissions standards have become more stringent. Additionally, automakers compete among themselves regarding the speed of and strategy behind their sustainability shifts. A significant challenge is managing the transition profitably, without which innovation and survival won’t be possible, no matter the strength of ESG credentials. The complexity of ESG is that it is not zero-sum.

This thematic research report takes an in-depth look at the impact of environmental, social, and governance (ESG) factors on the automotive industry.

What are the main trends shaping the ESG theme in automotive sector?

Technological trends

Sustainable use cases for blockchain are coming to the fore, most of all in sectors in which the authenticity of goods is paramount and those with complex supply chains. Supply chain visibility will be an increasing issue for automakers looking to mitigate risk and ensure regulatory compliance during the EV transition. Many of the trends involved in the internet of things (IoT), ecommerce, and ambient commerce can also be applied to connected vehicles. The significance of these will increase alongside the development of 5G and vehicle-to-everything (V2X) infrastructure.

Electrification is the most visible and widespread of all ESG trends in the automotive sector. Virtually all major automakers announced a move to EVs in 2020 or early 2021, responding to and preempting aggressive government policies for fleet emissions and restricting the sale of ICE vehicles within the next two decades.

Macroeconomic trends

Affordability is a vital trend impacting the automotive sector, especially in emerging economies. Vehicle affordability improves social factors by allowing more citizens to travel independently and reflects an increasing standard of living.

Greenhouse gases (GHGs) and carbon emissions are longstanding ESG issues. The ubiquity of vehicles means that they are seen as significant contributors to the changing climate. Automakers will be keen to anticipate emissions legislation for the ICE vehicles that they continue to produce during the transition to electrification and wean themselves off costly carbon credits

What are the ESG challenges in automotive sector?

Environmental challenges: The most relevant environmental challenges facing the automotive industry concern pollution and the consumption of natural resources.

Social challenges: The automotive industry’s most relevant social challenges concern human rights in developing countries, worker rights in developed countries, and health and safety.

Governance challenges: The automotive industry’s most relevant governance challenges concern corporate structure, risk management, and ethics.

Which are the leading companies focusing on ESG theme in automotive sector?

Leading automotive companies focusing on ESG include Bosch, BMW, Bridgestone, Continental, Denso, Ford, Honda, Hyundai, Nio, Rivian, Tesla, Valeo, and Volkswagen.

Market report scope

Companies in the ESG theme Bosch, BMW, Bridgestone, Continental, Denso, Ford, Honda, Hyundai, Nio, Rivian, Tesla, Valeo, and Volkswagen

This report is a thematic analysis of ESG (Environmental, Social, and Governance) in Automotive. It provides:

  • GlobalData’s ESG framework, which breaks down sustainability by identifying contributing factors and mitigating actions.
  • Ten important technology and macroeconomic trends that will shape the ESG theme in the automotive sector over the next 12 to 24 months.
  • GlobalData’s ESG action feedback loop, which explains the incentive behind taking ESG-related actions.
  • A deep-dive into the key challenges that traditional automakers and suppliers face from each of the ESG sub-themes (environmental, social, and governance)
  • Case studies identifying leaders and laggards in each of the ESG sub-themes and the reasons behind this.
  • Detailed profiles of what moves major automakers and suppliers are making in the ESG theme.
  • GlobalData’s ‘Parts and Tires’ and ‘Vehicle Manufacturing’ scorecards, which rank the leadership of companies in the key themes disrupting their industry.

Reasons to Buy

  • This report is crucial to understand how ESG is changing and will continue to change the automotive industry. It is essential reading to identify trends and track competitor activity and innovation in the ESG theme. This report shows how the theme can both serve to challenge but also differentiate brands in the face of the long-term industry threats in the automotive sector.
  • Prioritize investments in ESG-related areas which will deliver the best results using case studies and information on competitors’ activities.
  • Develop value propositions for your sustainability credentials that will resonate with prospective clients in the automotive industry and consumers.
  • Identify and get ahead on the emerging trends in ESG specific to the industry and how these developments might advance in the future.

Companies Mentioned

Bosch, BMW, Bridgestone, Continental, Daimler, Denso, Ford, Honda, Hyundai, Hyundai Mobis, General Motors, Magna International, Michelin, Stellantis, Tesla, Toyota, Valeo, Volkswagen, Volvo.

Table of Contents

| Contents

Executive summary

GlobalData’s ESG framework


The ESG action feedback loop

ESG challenges in automotive

Case studies

ESG timeline


Sector scorecards


Further reading

| Our thematic research methodology

| About GlobalData

| Contact Us

Frequently Asked Questions

Leading automotive companies focusing on ESG include Bosch, BMW, Bridgestone, Continental, Denso, Ford, Honda, Hyundai, Nio, Rivian, Tesla, Valeo, and Volkswagen.

Ford, Nio, Rivian, Tesla, Valeo and Volkswagen are the leaders in environmental theme in automotive sector.

BMW, Daimler and Ford are the leaders in social theme in automotive sector.


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