The automotive industry is a pivotal contributor to the UK’s GDP accounting for £74 billion in 2020, according to The Society of Motor Manufacturers and Traders. However, over the last five years, the acceleration of sustainability and the emergence of electronic car firms has forced competitive car organisations to shift their approach to the way in which they operate.
Public awareness of ESG has expanded and competitive brands must now meet minimum institutional requirements, demonstrating environmental consciousness. According to the UK Government, between 1990 and 2019, on-the-road transport was responsible for 25 per cent of the UK’s total carbon emissions.
In terms of real estate, the focus on moving to renewable electricity, the increasing importance of reporting and putting investment back into the supply chain have all pushed car manufacturers to reinvest in their facilities. As a result we expect that automotive brands will look to relocate from existing office spaces or industrial units in favour of facilities that better allow sustainable best practice, in locations with greater wellness or shorten the distance from their supply chain.
There are three key focus points for the automotive industry in its drive to become more environmentally sustainable: electric vehicles, supply chains and reporting.
Electric vehicles
As featured in the Top 10 real estate sustainability trends to look out for in 2022, the push for EVs has been greater accelerated by the COP26 declaration to sell only cars and vans with zero emissions by 2040. Automotive companies have released electric-fueled vehicles, or at least hybrid models, and have set goals such as ‘a fully electric fleet within the next 10 years’. A range of top car manufacturers have invested in charging station companies to facilitate the accessibility of their electric vehicles.
Supply chains
The automotive industry has a high dependency on its supply chain and the intensified ESG pressure has pushed further engagement from the leading companies with their suppliers. The most successful approaches have been around collaboration and strengthening the relationship, sharing resources to develop a rigid supply chain approach. Some outcomes have come in the form of improved carbon intensity of materials, easier recycled batteries, recycled plastic has been incorporated into manufacturing and plant-based interior leather.
Reporting
The Task Force for Climate Related Financial Disclosures (TCFD) has regulatory guidance which became active in April 2022, making it obligatory for the top 1,300 companies active in the UK to report all scope 1-2 and where appropriate scope 3 Green House Gas emissions (GHG). Automotive companies have had to gain greater visibility of their resource use and GHG output. Most of the larger automotive companies now engage with the Science Based Targets initiative (SBTi).
The driver for the automotive industry engaging with environmental sustainability is being progressed by a combination of factors including consumer demands, regulation and an institutional shift. Regardless of the cause, since 2000 in the UK the CO2 new car emissions have fallen by over 30 per cent and there has been a change in approach to environmental sustainability, which is a positive step.
Should the increasing necessity of institutional sustainability maintain, we will see a continued increase in demand for more sustainable spaces adept to car manufacturers. This stock of industrial and offices spaces is in low supply so organisations will likely look to retrofit or build new facilities closer to their supply chain.
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