ESG and the motor industry – where do all the engines go?

As big businesses around the world try and jump on the ESG agenda, one sector in particular is coming under increased scrutiny. The motor industry with its long history of air pollution and fossil fuel consumption has finally embraced the electric vehicle, thanks in no small part to the marketing activities of Elon Musk and his Tesla brand of EVs. However, as more EVs are built, what happens to all the old petrol and diesel powered cars? Can ESG and the motor industry ever exist in harmony?

EVs (electric vehicles) accounted for 8.3% of new light vehicle sales worldwide last year.

However, internal combustion engine (ICE) vehicles replaced by EVs are often shipped down the value chain rather than scrapped. Old cars are sent to regions including Eastern Europe and developing countries in Africa and South America, where they continue to pollute.

This raises questions about the environmental benefits of EVs.

An article from Wired neatly outlines this greenwash-offshoring dilemma, which as of yet doesn’t have a catchy name – ‘Greenshoring’? 

As bans on ICE vehicles in the global north are gradually introduced, older cars will increasingly be shipped to countries with less stringent regulations on ICE and pollution, effectively outsourcing air quality issues. Also, the total level of global emissions remains the same. 

The United Nations Environment Program (UNEP) found that in some African countries, the average age of an imported vehicle being introduced to the roads was as high as 18 years old.

The automotive industry, including manufacturers and retailers, can expect greater scrutiny on this issue as it grows in the public consciousness and may face queries about ICE vehicle lifecycle and export practices as EV adoption accelerates.

Your ESG strategy needs to be thorough and far reaching to make the right impact.

This article was originally published in a Sillion ESG briefing.