Assessing carbon readiness in the automotive sector: Insights from a new study
The automotive sector needs to be carbon neutral and decarbonise with exports going abroad to be competitive.
Nedbank and Naacam have done a study to determine carbon readiness in the automotive sector. The survey sought to assess industry awareness of local and global sustainability regulations, the current capacity to measure and reduce carbon emissions and water usage, and the type of support required to meet evolving sustainability expectations.
The study 67.9% of respondents indicated that they have some export-related component sales, with EU and UK being the most served export markets. The reliance on particularly European and UK markets is critical to note, as these markets are the most regulated in terms of carbon emission reduction.
The study looked at decarbonisation as a business strategy.
It asked respondents if a company familiar with current sustainability trends and carbon regulations. Respondents answered that 32.1% were very familiar, while 35.7% were moderately familiar.
Amith Singh of Nedbank Commercial Banking said, "The worrying part about 40% of respondents that they believe carbon readiness and neutrality in a long-term goal and initiative not the short term. The reason I am worried is that there is a belief and that we have, and I believe it's an opportunity that the early adoption of carbon readiness could be a differentiator in the market."
He said the early adoption of carbon readiness is critical because South Africa was up against other developing countries.
"So the quicker we adapt, the quicker we play ahead of the curve," Singh said.
Singh gave an example of Melbourne Engineering and how they migrated to green steel, saying it was ahead of the curve in South Africa and was the first of its kind. Subsequently, this put them at the forefront of advancement of technology and steel manufacturers.
"It was a costly exercise and did require investment but now they are market leaders, which is a benefit of early adoption," he said.
The study found immediate consideration of decarbonization remains limited across respondents. Those with higher prioritisation of decarbonization tend to be export-oriented multinational businesses, while businesses that are not exporting or are locally owned have suggested decarbonization to be a longer-term consideration for their business.
It said the lack of immediate urgency to decarbonize is likely a function of carbon regulations. Few component subsectors currently fall within CBAM, and the SA Carbon Tax currently has little impact on the sector.
While 36% of companies view decarbonization as an opportunity, 32% view it as a threat.
Singh said, "How do we multiply 36% of respondants viewing decarbonisation as an opportunity? We have a lot of work ahead of us. But it's a mountain we have to climb."
Non-exporters tend to have a more positive outlook on decarbonization (55.56%), potentially due to there being a less immediate and pressing need to pursue decarbonization to maintain a market
Similarly, multinational suppliers tend to be slightly more positive in their outlook on decarbonisation (45.45%), possibly an outcome ofaccess to greater resources within their multinational group to support their decarbonization strategy.
The study found that there is a significant drop off of companies tracking scope 3 emissions, suggesting from a sector perspective, support in a common methodology for collecting and reporting supply chain emissions is needed.
While more than 60% of companies have sustainability strategies, a minority (42%) have a time-bound target for decarbonisation. In general, decarbonization strategies and targeted timelines for net zero are significantly more prevalent in multinational companies as compared to locally owned companies.
The cost implications attached to sustainability initiatives is reflected upon as the largest barrier to decarbonization. Along with this, a lack of reason or business case to decarbonize, and uncertainty linked to regulations, measurement of emissions and the correct activities to implement are also hurdles.
BUSINESS REPORT
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
9 hours ago
- IOL News
Opel Mokka receives a nip and tuck for 2025: here's what you get for your money
The Opel Mokka, often seen as a 'boutique' crossover with plenty of European flair, has been given a nip and tuck for 2025. Newly launched in South Africa, the updated model is still available in two flavours, with the Edition model replacing the previous Elegance trim grade and the GS Line once again serving as the flagship. Expect to pay R519,900 for the 1.2T Edition and R564,900 for the 1.2T GS Line. It joins the recently launched new-generation Opel Grandland - read our driving impressions here. ALSO READ: Stellantis to raise its compact SUV game in SA with Opel Frontera, Citroen Basalt Power comes from the familiar 1.2-litre, three-cylinder turbopetrol engine, which delivers 96kW and 230Nm through the front wheels, via an eight-speed automatic gearbox. The slightly more powerful mild hybrid version, introduced overseas recently, does not appear to have been earmarked for the local market. What sets the new model apart? It's a subtle facelift, given that the second-generation Mokka was already quite striking in its own right. But for what it's worth, the model receives updated LED headlights, with a new magnifying glass that emulates the illumination of Matrix Intelli-Lux lights.
TimesLIVE
10 hours ago
- TimesLIVE
EU's Von der Leyen hopes to 'advance and rebalance' China ties at summit
EU Commission President Ursula von der Leyen and European Council President Antonio Costa met China's President Xi Jinping in Beijing on Thursday, kicking off a tense summit likely to be dominated by trade frictions and Ukraine. Both European leaders will raise issues including the trade imbalance, market access and rare earths during meetings with Xi and Premier Li Qiang. Shortly before the summit, Von der Leyen struck a more conciliatory tone, writing that it was an opportunity to 'advance and rebalance our relationship' in an X post on Thursday morning. 'I'm convinced there can be a mutually beneficial co-operation,' Von der Leyen wrote. The weeks leading up to the summit were dominated by tit-for-tat trade disputes and hawkish rhetoric from European officials. State news agency Xinhua also appeared to downplay Beijing's rivalry with the 27-member bloc in a morning commentary, saying China is a 'critical partner' to Europe with a range of shared interests. 'As the international landscape grows increasingly fraught, the anniversary offers a timely reminder: China is a critical partner to Europe, not a systemic rival,' Xinhua wrote, pointing out common interests including trade, climate and global governance. 'These areas of common ground should not be eclipsed by isolated points of friction,' it said. The EU defines China as a 'partner, competitor and systemic rival', which frames its strategic approach to China policy. Other issues, including electric vehicles and Chinese industrial overcapacity, will also be raised by European leaders at the summit marking the 50th anniversary of diplomatic relations between the EU and China. Expectations for the summit are low after weeks of escalating tensions and wrangling over the format, which was abruptly shortened from two days to one at Beijing's request. 'Like all major economic players, China and the EU do not agree on everything. But disagreement does not equal confrontation,' Xinhua said, adding the relationship needs more trust. The EU is likely to seal a trade deal with the US that would result in a broad 15% tariff on EU exports to the US after intense negotiations, avoiding a harsher 30% levy threatened by US President Donald Trump.
eNCA
17 hours ago
- eNCA
ECB expected to hold rates as more Trump tariffs loom
BRUSSELS - The European Central Bank looks set to keep interest rates unchanged on Thursday while the introduction of higher US tariffs threatened by US President Donald Trump hangs in the balance. A pause would bring an end to a string of cuts that dates back to September last year, as the ECB progressively lowered borrowing costs in response to sinking inflation. The pace of consumer price rises has settled around the central bank's two-percent target, having soared to double digit highs in the wake of the coronavirus pandemic and Russia's full scale invasion of Ukraine. But the relatively more favourable monetary policy conditions look fragile with an August 1 deadline for the possible imposition of punitive tariffs on European exports into the United States set by Trump. With Washington and Brussels still in talks over a possible tariff deal, ECB rate-setters would want "more clarity... before considering any further adjustment to monetary policy", UniCredit analysts said. A pause would give policymakers the summer to see whether Trump follows through with his threat to slap EU exports with a flat 30-percent tariff, in addition to existing levies on cars, steel and aluminium. Higher barriers to trade risk delivering a fresh blow to the eurozone economy, and encourage the ECB to contemplate further rate cuts. After seven straight cuts and eight in total since June last year, the ECB has brought its benchmark deposit rate down to two percent from its peak of four percent in the midst of the inflation wave. "Neither the economic data nor latest data regarding price dynamics demand an immediate response from the ECB," according to Dirk Schumacher, chief economist at German public lender KfW. The ECB would also want to "keep some powder dry for the case of emergency" if Trump were to apply harsh tariffs, Berenberg analyst Felix Schmidt said. "A further escalation in the trade dispute would have a significant negative impact on the eurozone economy," leading to more rate cuts, Schmidt said.
