Need for Green Innovation in the Auto Industry

The 21 st  century brought new concerns and pressures to the way companies innovate. If in the past innovation was predominantly driven by the intention of exceeding customers’ expectation or to create simpler and less costly processes; today many organisations are required to respond to environmental and social demands.
With regard to the environment, the major environmental concerns in the 21st century are: atmospheric pollution (and its consequences  for human health, global warming and ozone layer depletion), scarcity of freshwater, raw material and land availability. All these environmental impacts have a great impact on how companies manage their business, and therefore, they are also a driver to innovation. For instance, the availability of land can create a pressure on the prices for land disposal, which “forces” organisations to innovate in order to reducer the waste from their production sites.
Within this new context for innovation management, we would define green innovation as those innovations in the products, processes or in the business model that lead the company to higher levels of environmental sustainability. A higher level of organisational environmental sustainability is reached by the minimisation of environmental impacts, and mainly by, the creation of positive impact on the environment.

Looking back at the history, it is possible to note that the automobile industry has had few radical changes over the last 30 years. However, these few changes were often remarkable and had a significant impact on practice and academia. The mass production, Toyota Production System – “Just in Time” - and the modular consortium are important innovations from the production system perspective. Also, the transfer of the assembly plants to developing countries and global outsourcing are evident changes in the industry’s business and operations strategy. In addition, the automobile industry was the pioneer in the use of robots and it still is the main destination of the use of robotics, still being responsible for 60% of the total utilisation of robots in the world .

Nevertheless, these changes have been insufficient to make the sector more sustainable. As evidence of this the automotive industry is still struggling against economic, environmental and social challenges. The many economic challenges currently facing the industry: notably over-capacity; saturated and fragmenting markets;
capital intensity; and persistent problems with achieving adequate profitability. Strong dependence on fossil fuels and large consumption of raw material lead the environmental problems. As a result, in a near future, it is expected that the sector will face strong pressures and take initiatives in order to reduce the environmental burdens from car use and its production process.
Although the environmental impacts of the automotive industry are spread through out the whole life cycle (e.g. production, use and the end of life of vehicles), the use of the cars is where there is the major energy consumption and emissions. Nevertheless, environmental pressures occur to reduce emissions and waste throughout production, use and end-of-life vehicles.