Truck OEMs and sustainability:
Realizing the ambition

Climate change is now widely recognized by commercial vehicle (CV) manufacturers as one of our generation’s biggest challenges, and most companies seem determined to tackle it. However, many find that, while it’s relatively easy to define net zero targets, creating a coherent strategy for achieving them is trickier.

This article takes a general look at the CV industry’s sustainability ambitions and concerns and proposes a holistic response. In subsequent articles, I’ll delve deeper into some key aspects of this topic.

A strategic imperative

Until recently, automotive OEMs tended to view the “sustainability agenda” as a box to be ticked for PR purposes. That picture has now changed drastically. With transportation accounting for 37% of global CO₂ emissions in 2021 according to the International Energy Authority, stakeholders including regulators, customers, and the public are piling on the pressure for OEMs to lower emissions in line with the Paris Agreement and similar targets.

As a result, automotive industry boards now recognize the strategic importance of sustainability and have put it at or near the top of their agendas. One sign of this recognition is that more and more corporations are appointing Chief Sustainability Officers. The Harvard Business Review recently reported that in 2021 more CSOs were appointed than in the previous five years together – that’s for all industries but we see a similar trend in automotive.

In line with this trend, all the major truck OEMs communicate clear, ambitious goals. Many of these companies have signed up for the Science Based Targets initiative (SBTi) to help them achieve Paris Agreement objectives, for example.

Truck OEMs’ goals include phasing out diesel in favour of fossil-free trucks within the next decade. While there’s general agreement that this needs to happen – at least in most markets – many OEMs have yet to formulate a clear strategy regarding battery electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs). BEV will most probably be appropriate for regional and distribution trucks, while FCEV will be the usual choice for the long haul – and so both are likely to be in the portfolio.

What’s still missing?

While OEMs’ product plans for zero-emission vehicles are already well advanced, they are not yet able to realize their overall sustainability vision. That’s because most companies do not yet have a holistic, systematic approach. Such an approach needs to look beyond the product portfolio and address the whole automotive product lifecycle, and much more besides.

The other thing that’s lacking is speed. To stand a chance of reaching the Paris Agreement and similar targets, the industry urgently needs to move from talking the talk to taking meaningful action.

A holistic approach to Commercial Vehicle Sustainability

In planning the approach, it’s helpful to think in terms of three building blocks:

1. Sustainability culture

Companies need to work toward sustainability across the end-to-end lifecycle. This requires the creation of a whole portfolio of sustainable products and services, with an emphasis on the circular economy.

For that to happen, the whole organization – and its ecosystem – needs to move to a sustainability-aware culture. Senior management should communicate clear targets and KPIs that support sustainability ambitions. These targets and KPIs must be translated into meaningful goals and incentives for everyone involved, from the boardroom to the shop floor.

With the right culture in place, the journey to sustainability will rapidly gather momentum, as leading OEMs are already discovering.

2. Reliable analysis and reporting

To navigate and manage the journey, it is critical to be able to measure progress. Sound metrics are also vital to substantiate sustainability claims and fend off accusations of greenwashing.

OEMs, therefore, need to gather accurate, up-to-date data about all activities and projects. They also need to put in place the analytic tools to report progress against baselines and targets at any required level, as well as to deliver comprehensive ESG reports.

The right data and connectivity architecture is critical because real-time or near-real-time data may be needed on occasion. Our report Driving the Future with Sustainable Mobility makes the case for implementing an “intelligence nerve centre” to address this requirement.

3. Methodical innovation

Innovation is a key enabler of sustainability, and OEMs need to have clear strategies for achieving it – whether in-house, via partnerships, or most likely through a combination of methods.

It’s not just technical innovation that’s needed. New business models will also be required – particularly circular economy models.

The need for collaboration

Sustainability can’t be achieved by any one company in isolation. Let’s look at just a few examples where collaboration with other organizations is essential.

1. Working with governments

OEMs should lobby governments to incentivize the take-up of EVs, as well as to put in place low-emission zones and similar restrictions. Governments also have a part to play in establishing the necessary infrastructure for BEVs and FCEVs.

2. Working with ecosystem partners

Charging and power companies can make a big contribution to sustainable transportation. Less obviously, perhaps, the same is true of technology providers developing digital services for customers, because such services can facilitate more sustainable vehicle use.

OEMs also need to collaborate with parts suppliers to ensure that inputs are produced and delivered as sustainably as possible.

Don’t forget the opportunities

This article has focused on the challenges of sustainability, but there are great opportunities as well, not least in terms of securing access to investment by demonstrating compliance with stakeholders’ ESG targets. Circular economy models, too, have the potential to generate new revenues, as well as help companies overcome sustainability challenges.

These opportunities will be covered in more depth in future articles, as will the topic of collaboration and the need for a sustainability culture.

Meanwhile, please contact me if you’d like to discuss any of the issues raised here or learn how Capgemini can support your sustainability journey.