Carbon accounting and disclosure – Automobile sector

Posted on January 20, 2011 by


Amount of greenhouse gases produced as a result of activities caused by an organization, event, product or person can be termed as carbon footprint.  Carbon Footprint is a measure of the anthropogenic impacts on the environment resulting in climate change. Total quantity of GHG emission associated with the above parameters can be measured by assessing the entire life cycle i.e. from the initiation stage to the disposal/recycling stage. Life cycle assessment is a technique to assess all the impacts associated across the stages of the Product from raw materials through materials processing, manufacture, distribution, use, repair, maintenance, and disposal. This approach, which analyzes the carbon emissions in this manner, is also known as the Cradle-to-grave approach.

India’s automobile sector has seen rapid growth starting from the 1990s.  The growth is not just restricted to the domestic market for Indian companies. Indian Auto makers are now operating globally, becoming major exporters to countries in Africa and east Asia. Over the last decade, the average annual growth rate of Indian automobile industry is more than 15%. India manufactures over 11 million two and four-wheeled vehicles and exports about 1.5 million every year. It is the world’s second largest manufacturer of motorcycles, with annual sales exceeding 8.78 million in 2009.

Driven by the growing concern to climate change and associated global warming, many auto makers are trying to reduce their environmental footprint in different ways. Because of material and energy-intensity, the GHG emissions associated with the manufacturing of automobiles and automobile components are significant. Giant auto companies such as the Honda Motors have recently launched an initiative to green their supply chain. Suppliers who have considered environmental aspects like energy efficiency, waste management and eventually assessment of carbon footprint and have acted on them on an ongoing basis would be recommended as a part of Green Purchasing Guidelines of the company. Other significant players such as Ford, Tata , Toyota and Nissan have similar plans to introduce green supply guidelines to the suppliers. In partnership with the Carbon Disclosure Project (CDP), the World Resources Institute, and World Business Council for Sustainable Development, Ford plans to survey 35 of its top suppliers worldwide with regard to their sustainability practices.

The reason for such activities is not purely CSR/environmental citizenship, there are energy, regulatory and cost advantages associated with carbon accounting and management. Driven by their customers, we will soon see this movement trickling down to the smaller suppliers of these corporations. This is expected to have a much more significant GHG reduction impact as against a single organization taking measures internally.

References

  • Economy watch website
  • Honda motors website
  • Ford motors website
  • The Hindu website
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Posted in: Sustainability