Volvo chief executive Leif Johansson has stated; "The Greenhouse Effect is a reality and the automotive industry has a specific responsibility for coping with emissions of carbon dioxide. We also expect that it will eventually be profitable on a purely commercial basis." Columbia Corporate Social Responsibility Network Newsletter October 23rd, 2005. This shows the attitudes of Volvo regarding the Environmental direction they wish to pursue. It is key that the company can capitalise on its core value of the environment, at the same time profiling their brand and profitably on the notion of going green. But stakeholders are often faced with the questions; Is going green is going to hinder or increase its profits? And is the process going to a tedious and complex way forward? This is what stakeholders have been trying to understand in relation to the direction they want to adopt. The shortage of oil in conjunction with growing issues regarding Co2 emissions has caused issues to arise with regards to strategy. If Volvo wanted to target a more affluent market they would need to produce bigger and more powerful premium cars, which would in turn, undermine some of their environmental objectives. To conclude, the key to success is to understand how having environmentally sound vehicles and balancing this with the profitability which Volvo strives to make within a fiercely competitive motor industry.
Q2. Environmental footprint of Volvo
With regards to Volvo and the car industry in general there are two stages at which the business is making a significant environmental impact. Firstly during the raw material extraction stage where materials are obtained to create the car, then is the stage at which the product is sold where you have issues related to pollution in the respect of use of the product.
Extraction of raw material such as Steel, Iron, Rubber, Plastic and Aluminium causes copious amounts of air pollution and waste. Mining for metal has caused considerable damage in regards to deforestation in Brazil, in addition to this, there are the pollution elements where the extraction of raw materials creates dangerous pollutants such as Co2, Sulphur dioxide. Further extraction of materials such as Aluminium need large amounts of energy while at the same time causing pollution and soil degradation which can also harm the visual nature of an area. Other precious metals such as Platinum are required to be extracted in large amounts; millions of tonnes of ore must be refined each year for the cars catalytic converters. Further asbestos must be used in brake pads along with CFCs for seat foam, which are all polluting materials and hazardous to the environment and ozone layer.
The materials must then be transported to where the car will be produced, which again causes further environmental damage. Once the cars life span is at an end, then comes the stage of disposal which again creates considerable waste. Other contributing factors to this whole process are that of the constant growth of the human population therefore increases car ownership and thus having more of an environmental impact. Other factors such as a highly competitive automobile market means that car companies strive to gain economies of scale which requires obtaining large amounts of materials further adding to the environmental damage. Further factors are the costs that are associated with obtaining virgin and recycled materials, as obtaining recycled material can be more expensive due to the processes that are needed in order to recycle them and bring them back to use again.
Volvo has created an environmental load system, which aims to choose the least harmful material for each component of the car. Materials and processes are given scores, which help in identifying their environmental load. For example you would be able to calculate the environmental load of having a steel or aluminium bonnet. Extraction of raw materials is taken into consideration along with transport, production, disposal and recycling of vehicle.
Q3.Volvo’s position and values
The environment is amongst Volvos three core values; this means that the protection of it is taken very seriously. Volvo has been at the forefront with regards to the environment for a long time. Their main successes include engineering the first hybrid gas and electricity concept car whereby all the materials used in it’s production did not cause any damage to the environment while at the same time being recyclable. Their success is largely dependent on the interest of the markets they choose to sell their environmentally friendly cars to. For example Scandinavian countries such as Sweden and Denmark are very environmentally conscious, while some other countries show limited interest. Volvo has a very good reputation in China also in regards to their environmental practices which brings more publicity to their business practices. Car models such as the Volvo S70, V50, C30, and C70 convertible have made the Volvo brand a great deal more appealable to the younger generation which contributes to making the environmental movement more modern and sought after; As it is essential that the main core of the demographic market understand the importance of environmental awareness to bring more strength and publicity to the Volvo brand.
Volvo's commitment to the environment started in the early 1970s and it is present throughout the car's entire lifecycle, from design, engineering and production to use, service and recycling contains green aspects. Efficient energy and resource utilisation and reduced emissions are important components in their dedication, and also contribute to a healthy environment inside the car. Volvo Cars has considerably reduced the environmental impact of car manufacturing-for instance; emissions of solvents are among the lowest in the industry. And Volvo models are designed for 85% recyclability. They are also the first carmaker with environmental product information that helps the consumer customise their Volvo model on the basis of its environmental performance throughout its lifecycle.
“Volvo is a premium brand with a real heart and real emotional pull," said Pete Favat, chief creative officer at Arnold, in a statement. "We are so excited to build on Volvo's safety heritage and propel the brand to its rightful place in the marketplace."
Wednesday 31ST January Arnold finalists for $150 million advertising account www.boston.bizjournals.com/Boston/stories.
Volvo is involved in several environmental projects-everything from the Volvo Environment Prize to the Volvo Adventure, an environmental competition for young people throughout the world that they operate in collaboration with the UN Environmental Programme (UNEP). Volvo cars environmental thinking goes beyond planning new ways to replace oil-burning engines but their vision is to use renewable natural products for the textiles and materials in the car by 2020. In terms of its “perceived position” Volvo have the safest and most eco-friendly cars and trucks due to years of engineering safe cars and a very aggressive marketing campaign to promote the safety of their cars.
Volvo has teamed up with the ExelCompany which has become the UK's largest independent drinks distributor; the plan is to replace its fleet of around 200 custom-built Volvo FL drays with 306 new models. "The old trucks had reached the end of their lives," says Exel's Nigel Bailey, "and technology has moved on.” The unique aluminium gull-wing bodies were no longer needed because of modern, secure curtains. All-round air suspension meant they didn't need the ultra-low decks of the old vehicles. As well as wanting to invest in new technology the main reason for the depollution of the trucks was simply to improve customer image and improve environmental footprint.
Transport news Network “Volvos for old at Exel Tradeteam”
The U.S. Environmental Protection Agency has certified that “ 's new engines meet the lower emissions requirements that take effect from January 1st 2008. The new standards reduce allowable emissions of nitrogen oxides by 50 percent and emissions of soot by 90 percent compared to today's standards.”
Cited from: Monday November 13th 2006 VOLVOS New engines certified by Environmental protection agency.
Volvo still seems to be the brand that middle-class buyer most associate with safety; and that's still a strong selling feature. However, recently the Volvo brand has been able to drive solidly into the luxury market, where the prestige and the profits are greater.
Q4.Recommendations for performance and improvement
When analysing the Volvo car industry in detail with regards to their environmental footprint, recommendations in this area would be focused upon a more strategic method of implementing a stronger and more reinforced environmental footprint, focusing on delivering more eco-friendly cars to appeal to a wider market. More recently, other companies have taken over with stemming ahead to first position for eco-friendliness, such as Smart cars. Although Volvo has chosen to use flexifuel as another way of protecting the environment, it has not been widely publicised as much as it could have, perhaps more work should go into marketing it so more people would trust buying Volvo cars in favour of others and thus protect the environment.
References
Williander, R.M. (2006)
European Journal of Innovation Management, Vol. 9 No. 1, pp. 92-107,
ISSN 1460 1060.
Columbia Corporate Social Responsibility Network Newsletter
October 23rd, 2005
