The aim of this research to conduct a study on environmental sustainability practices in the automobile industry by focusing on the environmental sustainability practices by Nissan, UK in comparison to the sustainability practices by Mercedes-Benz, UK. The objectives of this study are a) to review the literature related to environmental sustainability practices in the automobile industry; b) to analyze the impact of automobile industry operation on environmental sustainability; and c) to assess the impact of environmental sustainability practices on business performance of Mercedes-Benz and Nissan, UK
As methodologies, this study applies positivism research philosophy, descriptive research design, and deductive research approach. Both qualitative and quantitative research methods are used and data are collected only from several secondary data sources to meet the research aims and objectives. The thematic analysis technique for developing themes focusing on the research objectives and analyzing the data gathered. As research ethics, data confidentiality and anonymity are maintained very strictly and other ethical issues are deeply considered.
The key finding of this study is environmental sustainability practices in automotive focuses on three components: economy, environment and society, where these three components are consistent with the terms of the triple bottom line: profit, planet, and people. The study shows operations (mainly energy and water usage, CO2 emissions and waste production) of the automobile industry including Nissan and Mercedes-Benz have a significant impact on environmental sustainability. Although the water usage and waste production reduced 3.2% and 24.2% in 2015 in UK automotive industry, the CO2 emission and energy usages have increased due to the increase in vehicle products and registration of vehicles.
However, environmental sustainability practiced by automotive companies including Nissan and Mercedes-Benz has a positive impact on their business performance. Companies have been able to recover their useful resources and improve fuel efficiency in recent. Energy usage per vehicle has decreased by 0.1% due to the plant upgrades and new model lines. In addition, the renewable energy production in UK automotive industry increased in 2015 by 27.7%. The CO2 emissions in the UK new car industry fell by 121.4g/km (2.6%) in 2015. Hence, outstanding performance (including production growth, revenue and profit) is shown in UK automotive industry in recent years.
People at the present are becoming more aware of environmental issues than ever before. A report of IBISWorld (2010) disclosed that an increase in fuel price and customer awareness of environmental factors has been reshaping customer preferences in the automobile industry. Also, the government regulations and global concern of greenhouse gas emissions, increasing fuel price, and social responsibility of automakers are motivating consumers towards environment-friendly and hybrid electric vehicles. Heutel and Muehlegger (2010) said high greenhouse gas emissions and fuel prices are encouraging customers towards alternative fuel solutions and environment-friendly vehicles.
In addition, government policies (like low-interest financing, tax reduction, cash rebates) are encouraging manufacturers to design and develop fuel-efficient and environment-friendly vehicles. The high consumer demand and government initiatives for environment-friendly vehicles are attracting manufacturers in the automobile industry to increase their R&D resources to bring technological innovation for reducing greenhouse gas emissions and improving fuel efficiency. Therefore, nowadays, some manufacturers (including Toyota, Nissan) have strategically expanded their production line in hybrid and fuel-efficient vehicles. However, other automakers (like Ford, GM and Chrysler) are struggling to manufacture environmentally-friendly vehicles and fail to meet the consumer changing demands (Deaton, 2018).
1.1 Research Background
In the 1970s, the need to improve the quality of human lives lead to a number of worldwide meetings that focused on clean water, decent housing, sanitation, and the establishment of a UN agency. In 1992, the UN hold a conference, called “The Agenda 21 Framework” that introduced the idea of sustainable development in the management and planning of human settlements, mainly in development. In 1996, the City Summit and the development of the Habitat Agenda addressed social, economic, and environmental issues faced by urban areas (Diacon, 2012). In that time, the sustainability transition focused on information to feed, energy and materials, nurture, education, housing, and employment of 2050 by targeting to reduce poverty and hunger and preserve the basic life support system of the planet (Kates et al., 2012). However, fifty years ago people had little understanding about the impact of climate changes on human lives that have been a gradual realization overtimes, and now it is a serious issue. This is because climate change is now affecting the social and physical infrastructures of human settlements over the world.
The current forms of urbanization, constant flooding, encroaching deserts, and environmental refugees (that is the key source of social tension and migration) are affecting human lives significantly (Diacon, 2012A). The term “sustainability” has a different meaning in a different perspective of contexts. According to Vezzoli and Manzini (2008, p. 5-7) “Environmental Sustainability” means the use of natural resources and to improve the alternative energy sources to reduce several pollution and harms create in the environment. For the environmental sustainability practices in the automobile industry, reserves of fossil fuel have come into question. This is because the reserves are reproduced on the demand of millennia but can be depleted on the order of centuries. Many wastes are produced by fossil fuel (such as greenhouse gas emissions) that harms the environment by carbon dioxide (CO2) in the atmosphere. A large number of produced carbon dioxide (CO2) has created a greenhouse effect (such as excessive heat, global warming in the world) in the environment. Linton, et al, (2007, p. 1075-1082) opined that several greenhouse gas emissions on the earth have a great impact including several feedback mechanisms and the effects of global warming.
1.2 Background of Company
Mercedes-Benz is a global brand in the automotive industry. Although it is a Germany-based company, it is now serving in the global markets by its around 290,000 employees. The key products of this company are automobiles, trucks, buses, luxury vehicles, and internal combustion engines. Mercedes-Benz gained €89284 million of revenue in 2017 by selling 2197956 units. The vision of Mercedes-Benz is to connect, be autonomous, integrate into mobility and service concept and powered by electricity (Automotiveworld, 2018).
Sustainability is one of the key principles of Mercedes-Benz’s corporate strategy and benchmark for its success in the automotive industry. It is committed to legal and ethical standards, and to use the power of innovation to manufacture as environmentally friendly and safe vehicles as possible to reduce CO2 and pollutant emissions and conserve resources. It aims to ensure an environment-friendly operational process through an effective environmental management system and developing and implementing pioneering mobility solutions. It also ensures a safe and attractive workplace for its about 290,000 employees (Mercedes-Benz Sustainability Report, 2017 p.90-100).
Nissan is also a worldwide recognized brand in the automotive industry. This is a Japanese company but now is operating across the world. The main products of Nissan are luxury vehicles, automobiles, forklift trucks, outboard motors, and commercial vehicles. Nissan gained 11720041 million in 2016 selling of total 5556241 units by its 137250 dedicated and devoted staff. Nissan’s mission is to improve people’s lives and building trust with its stakeholders including customers, employees, shareholders, dealers, and partners (Nissan-global, 2017). The core philosophies of Nissan’s sustainability efforts are zero emissions and zero fatalities. Nissan aims to ensure a safe and sustainable mobility society by reducing greenhouse gasses emission and mortalities due to traffic accidents. As part of sustainability efforts, Nissan also aims to provide more comfortable and enjoyable vehicles to its customers (Nissan Sustainability Report, 2017 p.4-10)
1.3 Research Problem
Many manufacturers in the automobile industry have started to focus on several innovative green operations by using different techniques on green supply chain management to improve environmental sustainability (Linton et al, 2017A). Several alternatives (eco-design, green manufacturing, green building, green supply chains, and reverse logistics) of fuel solutions for vehicles have encouraged automobile makers to design and manufacture environment-friendly vehicles and to improve environmental sustainability. However, the automobile industry is criticized because of its role in global warming and its negative influence on environmental sustainability. Although the automobile industry contributes 2% to 3% of the national GDP in many countries (including China and the US), greenhouse gas emissions seriously threaten environmental sustainability (The guardian, 2016). In addition, manufactures of the automobile industry have been facing several risks coming from increasing oil prices and government rules and regulations related to greenhouse case emissions.
Many governments (including EU countries, the US and Japan) have concerned with the vehicle’s greenhouse gas (such as CO2) emissions. Although disclosed manufactures of the fuel-efficient vehicles of the automobile industry showed good performance during the global economic recessions, many automobile manufacturers (like Ford, GM and Chrysler) are struggling to manufacture environmentally-friendly vehicles and fail to meet the consumer changing demands. Most importantly, they have been suffering in terms of financial performances (Martinuzzi et al., 2011). On the other hand, strict regulations of governments related to greenhouse gas emissions have reduced the performance of lower fuel efficiency of automobile makers in comparison to the fuel-efficient peer. In a word, the whole supply chain (including greenhouse gas emissions from vehicles) of the automobile industry has a huge impact on environmental sustainability (Slezak, 2017).
1.4 Research Rationale
The automobile industry has been facing challenges to illustrate its contribution towards environmental sustainability practices. This is because common practices and theories of management mainly have focused on economic performance, whereas social and environmental performance has been removed from the equation (Morelli, 2011). Social and environmental performance is also represented and measured differently from economic performances. In addition, the traditional instruments are not able to measure and analyze sustainability parameters of economic, social and environmental issues in standard.
The efficiency of social, environmental and economic resources is measured by the sustainable value. In addition, sustainable value deals with the use of social and environmental resources precisely to evaluate the capital return and performance of business operations (King et al., 2016). However, measuring the performance of environmental sustainability is very significant, mainly in the automobile industry. This research examines and compares the environmental sustainability practices by manufacturers in the automobile industry. This study also considers the use of several resources in the production process and the approach of sustainable values of automobile manufacturers.
1.4 Research Question
- What is the importance of environmental sustainability practices in the automobile industry?
- How does the operation of the automobile industry affect environmental sustainability?
- How do environmental sustainability practices affect the business performance of Mercedes-Benz and Nissan, UK?
1.5 Research Aims and Objectives
The aim of this study is to analyze the environmental sustainability practices in the automobile industry. Then, the study compares the environmental sustainability practices by Mercedes-Benz with Nissan in the UK. Finally, this study recommends the automobile industry (including Mercedes-Benz and Nissan, UK) improve environmental sustainability practices……..