The luxury automaker is shifting gears and becoming greener by the day

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Navin Soni Lexus

The luxury automaker is shifting gears and becoming greener by the day

The automotive industry is racing into a new world of sustainability.

Despite the lingering disruptions, both internal and external pressures are propelling the industry toward the next normal with more ESG (environmental, social, and governance) practices.

Health and the climate are at the top of the agenda in the green transition.

Auto maker Lexus in 2019 had announced ‘Lexus Electrified’ vision to achieve significant improvement in fundamental vehicle performance using electrification technologies and provide electrified vehicle solutions such as HEVs, PHEVs and BEVs.

At the Economic Times ESG and Net Zero Summit held on 16 December, Lexus India President Naveen Soni shared that the cars produced by the company now have 97% less carbon footprint. ”However, there is still some amount of greenhouse emissions from our vehicles that needs to be controlled,” he said.

As a counter measure Lexus India has started planting trees in equal measure to the carbon footprint they have created. ”In Bengaluru we have planted over 27,000 trees within an area allocated by the government to reduce the negative impact on the environment,” Soni said.

The luxury car maker has been building ‘green’ factories that have ‘zero’ discharge

“We have also been focusing on using materials that are renewable. For instance, we use bamboo charcoal-based resin diaphragm speakers inside our cars,” Soni said.

Lexus ensures that during production, they make repeated use of reusable items, work hard to efficiently use resources to minimise waste, and recycle any waste produced.

It has a created a 24-acre eco park inside its factory. This park has various sections allocated towards grooming, training, and educating people about the damages that have been caused to the environment and how can they work towards improving the situation collectively.

A balancing act: Driving profitability and sustainability objectives

While investing in ESG is seen as a lever for delivering value, it also acts as a cost-centre, and there can be pressures to manage it down.

“Businesses with ESG principles built into their strategy, can mitigate risk, and drive profitable growth. We believe in the yet philosophy. Can a car be fuel efficient yet be powerful. From this point of view, can we be sustainable yet be profitable? Yes, we can,” Soni said.

He added that the segment that the company will addressing 15-20 years down the line will prefer sustainable products.

“Sustainability is a competitive advantage, and it will have a profitable future.

Companies that think, practice, and promote ESG initiatives will benefit over the long term,” Soni said.

ET Insights opinion:

Car manufacturers need to reduce their carbon emissions both during vehicle manufacture and the emissions of the vehicles themselves. They need to look at alternative power sources like fuel cells.

As natural resources become scarce, sustainable value chains are becoming important for the automotive industry. They are based on the principle of reusing and recycling resources.

Creating transparency along the supply chain will be critical. For instance, tracing the origin of a part/component can ensure sustainability along the value chain. Many car manufacturers and suppliers are considering how to implement innovative solutions such as a circular economy, battery recycling, biodegradable components and sustainable processes in research, development, and manufacturing. 

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members