汽車可持續(xù)性報(bào)告 AUTOMOTIVE SUSTAINABILITY REPORT 2023 DATA

AUTOMOTIVE

SUSTAINABILITYREPORT

2023DATA

Environmentalperformance

Socialperformance

Economicalperformance

CONTENTS

"Thisyear’sreportisa

waymarksheddinglight

onhowourindustryhas

transformedoverthepast

25yearsandsignpostingtheroadtofuturesuccess.

Welookforwardtoworkingwiththenewgovernmentanditsfreshpolicyagendawhichwillbepivotaltothenext25yearsofsuccess."

CONTENTS

3FOREWORD

42023SUSTAINABILITYSUMMARY

6INTRODUCTION

16CHAPTER01:

ENVIRONMENTALPERFORMANCE

24CHAPTER02:

SOCIAL

PERFORMANCE

30CHAPTER03:

ECONOMIC

PERFORMANCE

35SIGNATORIES

2

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

FOREWORD

MikeHawesChiefExecutive

TheSocietyofMotorManufacturersandTraders(SMMT)

LETTERFROMTHECEO

Aquarterofacenturyago,theUKautomotiveindustrymadeclearitscommitment

tosustainabilitywiththepublicationofSMMT’sfirstannualsustainabilityreport.Asconsecutivereportsoverthefollowing25yearshaveshown,theindustryhasdrivensustainedsuccess–insocial,environmentalandbusinessterms–makingproductionmoreefficient,reducingwaste,andsourcingenergyfromrenewables.

Theresultisamajorreductioninthecarboncostofvehicleproductionandthe25theditionofthisreportshowsasignificantmilestonehasbeenreached,withdirect

CO2emissionspervehiclemanufactureddownbymorethanhalfsince1999.Itisanachievementthatcomesthroughlong-termdedicationandgrit,andagainstabackdropofchallenges–thefinancialcrash,Brexit,Covid-19andthemajorglobalsupplychaindisruptionthatfollowed.

2023sawsignificantdeclinesinCO2emissions,energyandwaterusageasBritain’s

factoriesturnedouttheirhighestvolumesinfiveyears,exceedingonemillionvehicles.Butlastyearwasalsomomentousforthehugeinvestmentssecuredinournetzerotransition,withalmost￡24billionannouncedtoproduceanewgenerationofzero

emissionvehicles,electricbatteriesandcomponentsintheUK.Thesepositionourindustrywellforthefuture.

Suchgrowthisthelatestchapterinourgreentransitionbutit’sevenmorecritical

amidfierceglobalcompetitionbetweenrivalcountriesseekingtoattractinternationalinvestmenttotheirownindustries.Maintainingacompetitiveedgeisbecomingharderbutthosecommitmentsin2023underlinetheUKautomotiveindustry’sglobalappeal–witharenownedR&Dexpertise,ahighlyskilledandflexibleworkforce,ourfirst-

classproductsandfamousbrands,andoureconomicopenness.

Industrycannot,however,restonourlaurels,norcanwealonedeliversuccess.

Collaborationbetweenoursectorandgovernment,withthewholegamutofadjacentindustriesandstakeholders,isessential.AutomotivecanbethedrivingforcebehindBritain’sgreengrowthagendabutweneedasuitablyambitiousindustrialstrategy,

onethatdeliversourlong-termsustainabilitygoals.Thisincludescleanandaffordableenergy,strongfreetradeagreementswhichprovideaccesstocriticalrawmaterials,

enhancingourzeroemissionsupplychains,andaskilledupworkforcethat’sfitforagreenerfuture.ImplementthesemeasuresandamillionEVswillberollingoffourproductionlineseveryyearby2035,bringingmassiveenvironmental,economicandsocialbenefitswiththem.

Thisyear’sreportisawaymark,therefore,sheddinglightonhowourindustryhastransformedoverthepast25yearsandsignpostingtheroadtofuturesuccess.Welookforwardtoworkingwiththenewgovernmentanditsfreshpolicyagendawhichwillbepivotaltothenext25yearsofsuccess.

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

3

SINCE1999

TotalScope1&2

energydown-55%

CO2

Losttimeincidentsdown-91%

VOCemissionsdown-53%

Scope1&2energypervehicledown-33%

Waterpervehicledown-42%

CO2pervehicledown-54%

-99%

Manufacturingwastetolandfilldown-99%

ExhaustemissionNO2down-78%

Exhaustemission

particulatesdown-89%

CO2

SUMMARY

2023SUSTAINABILITYSUMMARY

2023:

ENVIRONMENTAL

CO2

Averagenewcartailpipe

CO2emissionsdown-2.2%

Scope1&2CO2emissionsdown-5.1%

Scope1&2CO2pervehicledown-18.2%

Overallenergyusedown-4.8%

Energypervehicle

produceddown-18.0%

Overallwaterusedown-2.1%

Waterpervehicle

produceddown-17.7%

46GWhofon-site

renewablegeneration

4

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

2023:

SOCIAL

813,000sectordependentjobs

131,447trainingdaysdeliveredtostaff

Losttimeincidentsdown-14.3%

Newapprentices

andtraineesup40.8%

Proportionofemployeesthatarewomenrises

to14.3%

SUMMARY

2023:

ECONOMIC

21%morenewzeroemissionvanssold

17.8%morenewzeroemissioncarssold

￡

Manufacturingturnoverup19.4%

ManufacturingGVAup20.5%

Engineproductionup9.4%

Car&CVproductionup17%

Newcar&CVregistrationsup18.4%

2023NEW

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

5

INTRODUCTION

Introduction

Thisyearmarksthe25thanniversaryofSMMT’sannualsustainabilityreport.Intheyearssincethisreportbegan,UKautomotivecompaniesspecialisinginmanufacturing,remanufacturing,supplychain,logistics,R&Dandaftermarkethavedemonstratedaclear,ongoingcommitmenttoimprovetheirsocial,

environmentalandeconomicsustainability.

6THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

INTRODUCTION

SMMT’sfirstsustainabilityreportwaspublishedin2000,presentingautomotivesectordatafor1999andprovidingaclearindustry

commitmenttomakeyear-on-yearandlong-termprogressacrossavarietyofsustainabilitymetrics.1Atthetime,thekeysustainabilitychallengesforthesectorwereidentifiedas:

–thestrengthofsterlingagainsttheEuro

–theimpendingintroductionoftheClimateChangeLevy,and

–theUK’sadoptionoftheEUEndofLifeVehicleDirective

SubsequentSMMTsustainabilityreports,publishedeachyear,have

demonstratedandquantifiedtheongoingprogressoftheautomotive

industry.Andwhilethenumberandmakeupofsignatoriestoourannualreporthasgrownandevolvedovertheyears,companieslikeBMW,Ford,Nissan,Bentley,Toyota,UnipartandVauxhall(Stellantis)haveprovideddataeachyear,everyyearsincethereport’sinception.

MostsignatoriestothisreportarecertifiedtoISO14001,whichprovidesaframeworktodesignandimplementanEnvironmentalManagement

System(EMS)andcontinuallyimproveenvironmentalperformance.

Byadheringtothisstandard,organisationscanensuretheyaretaking

proactivemeasurestominimisetheirenvironmentalfootprint,complywithrelevantlegalrequirements,andachievetheirenvironmentalobjectives.2

1

https://www.smmt.co.uk/wp-content/uploads/1st-Sustainability-report.pdf

2

/standard/60857.html

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

AUTOMOTIVE

SUSTAINABILITYREPORT

2023DATA

Environmentalperformance

Socialperformance

Econmicalperformance

7

INTRODUCTION

25YEARSOFTRANSFORMATIONANDCHANGE

Overthepast25yearstheUKhasproduced38.6millionvehicles,of

which28.5million(73.7%)havebeenexported.Duringthisperiod,

thesustainabilityprogressmadebytheindustryhascoincidedwith

adramaticchangeintheUKautomotiveecosystem.Backin1999,

whenourfirstsustainabilityreportwaspublished,justunder2millionvehicleswereproducedbyadozenUK-basedmanufacturers,eightofwhichexceeded100,000unitsayear.62%ofUK-builtvehicleswere

exportedoverseas,withtheremainderaccountingfor28%ofdomesticregistrations.

Today,theUKishometoabreadthofvolume,premiumandhigh-

value,smallvolumespecialistmanufacturers,with4manufacturers

producingmorethan100,000vehiclesayear.WhilethenumberofUK-

manufacturedvehicleshasdroppedtohalfofwhatitwasin1999,2023productionexceededamillionunitsforthefirsttimesince2019,risingby17.0%.Exportsstilldominate,accountingfor77.1%ofproductionin2023.

AtthetimeofSMMT’sfirstsustainabilityreport,allUKvehicles

producedandregisteredwerepetrol(86%)ordiesel(14%).However,

thiswasalsotheyearinwhichtheToyotaPrius,thefirstmass-

producedhybridvehicle,arrivedontheglobalmarket,firingthestartinggunforthevehicledecarbonisationracethatcontinuesapacetoday.

Andwhilecustomerdemandhasdrivenmuchofthesustainability

anddecarbonisationprogressoftheindustrytodate,theregulatory

environmenthasalsoexpandedandtransformedinthisregardoverthelast25years.In1999,theEUhadonlyrecentlyintroducedregulationstomonitorandreducevehicleCO2tailpipeemissions.However,itwasnotuntil2008thatmonitoring,alongwitha140g/kmCO2fleetaveragelimit,wasmadeamandatoryrequirement.Today,manufacturershavereducedtheirfleet-widetailpipeaveragetobelow109g/kmCO2asaresultof

investmentincleanerICEandhybridtechnologiesand,morerecently,theincreasedfocusonzeroemissionvehicles.Morethanamillion

batteryelectricvehicles(BEVs)havebeenboughtbyUKcustomers.

By2030,thenewlyintroducedZeroEmissionVehicleMandaterequires80%ofallnewcarand70%ofallnewvanregistrationstobezero

emission,withallmajorpoliticalpartiescommittedtoendingthesaleofallnon-zeroemissionroadvehiclesinthecomingyears.

TheUKautomotiveindustryisproudoftheprogressithasmadeoverthelast25years,aperiodinwhichthesustainabilitylandscapehas

transformed.Theintroduction,andsubsequentamendment,oftheUKClimateChangeActhascreatedalegallybindingcommitmentforUK

GovernmenttodelivertheParisClimateChangeGoalsandachievenetzeroby2050.Theautomotiveindustryhaslong-recogniseditscriticalroleinmeetingthistarget,deliveringthezeroemissionvehiclesand

technologiesonwhichtheUK’swidernetzeroeconomicprogressrelies,andalsothroughthedecarbonisationofitsownmanufacturingand

supplychainactivities.Theindustryhasinvestedbillionsinthezero

emissionvehicletransitionandtherearenowover100batteryelectriccarandvanmodelstochoosefromintheUK–upfromzeroin1999

andfromjust16adecadeago–withanaveragedrivingrangeof236miles.3Additionallythereare27zeroemissionHGVmodelsand13zeroemissionbusmodelsavailableintheUK.

Whilemuchoftheregulatoryattentiontodatehasfocussedon

thedecarbonisationofthevehiclesthemselves,decarbonisationof

manufacturingprocesseshasalsoseensignificantimprovementoverthistime.TheClimateChangeLevy(CCL),ataxaddedtoelectricityand

fuelbills,wasintroducedin2001shortlyafterthepublicationofSMMT’sfirstsustainabilityreport.Whiletheimpactandcostofthislevywas

significantforarelativelyenergy-intensiveautomotiveindustry,the

introductionofClimateChangeAgreements(CCAs),alongsidetheCCL,hasincentivisedandsupportedmanufacturerstoreducetheirenergy

use.CCAsarevoluntaryagreementsmadebetweenUKindustryand

theEnvironmentAgencytoreduceenergyuseandcarbondioxide(CO2)emissionsinreturnforasignificantCCLdiscount.4SMMTnegotiatedtheautomotiveindustry’sCCAwiththeEnvironmentAgency,andcontinuestofacilitateitonbehalfofthesector.5

Since1999,welcomeprogresshasbeenmadebymanufacturers

inmonitoring,measuringandreducingtheirdirectscope1emissions

(fromownedorcontrolledsources)andindirectscope2emissions

(fromthegenerationofpurchasedenergy).6Sinceourfirstreport,the

averageamountofscope1&2energyrequiredtoproduceavehiclein

theUKhasfallenby-14%but,overthesameperiod,thecorrespondingaveragescope1&2CO2pervehiclehasbeenhalved(-54%)dueto

thesignificantinvestmentsinlowercarbonfuelsources,renewable

electricitygenerationandenergyefficiencymeasures,alongwithan

increasinglydecarbonisednationalgrid.Whileautomotivemanufacturersseektocontinuouslybuildonthegoodprogressmadealreadyin

addressingscope1&2emissions,bothgovernmentandindustry

understandtheurgentneedtoalsoaddressindirectscope3emissionsthatoccurinmanufacturingvaluechains,includingbothupstreamanddownstreamemissions.Thechallengesofthisforaglobalautomotiveindustrysupplychainaresignificant,andexploredinmoredetaillaterinthisreport.ContinuedengagementandpartnershipbetweenindustryandGovernmentwillbecriticaltoensurealignmentwithemerging

internationalregulatoryframeworks.

Whilethedecarbonisationagendadominatesmanyoftoday’s

headlines,theautomotivesustainabilityprogressofthelast25years

goesfarbeyondthis.Forexample,vehiclesproducedintheUKtoday

aremanufacturedusing-23%lesswaterandcoatedwithpaintthat

produceslessthanhalfthevolumeofvolatileorganiccompounds(VOCs)persquaremetre(-53%).Soonafterthepublicationofourfirstreport

in2000,theEUadoptedtheEnd-ofLifeVehicleDirective,requiring

memberstatestointroduceregulationstoensureend-of-lifevehicles

wererecycledorreused,withtargetsrisingby2015to85%forreuseandrecyclingand95%forreuseandenergyrecovery.TheUKadoptedthis

legislationin2003.

Duringthisperiod,therehasalsobeendemonstrableprogressmade

byUKautomotivecompaniesacrossavarietyofsocial,aswellas

environmental,sustainabilityissues,particularlyinregardtothesafety,wellbeinganddiversityoftheirworkforceandcustomers.Forexample,losttimeincidentstodayhavereduceddrasticallyby-91%since1999.

3

https://www.smmt.co.uk/2024/05/brits-enjoy-best-ever-ev-choice-with-more-than-a-hundred

-models-now-available/

4

.uk/guidance/climate-change-agreements--2

5

https://www.smmt.co.uk/industry-topics/environment/energy-efficiency-regimes/

6

/calculation-tools-faq

7

.uk/uksi/2003/2635/contents/made

8https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_40439

/

10

/corporate-standard

11

/resources/files/SBTi-criteria.pdf

12

https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting

-standards-2023-07-31_en

8THESOCIETYOFMOTORMANUFACTURERSANDTRADERS

INTRODUCTION

THEGROWINGDATACHALLENGE

Whilegreatstrideshavebeenmadeoverthelast25years,the

automotiveindustryrecognisesthatthereisstillalongwaytogoto

fullyembednetzero,circularityandsocialequitythroughouttheentireUKautomotiveindustryandglobalsupplychain.Indoingso,theindustrymustcontinuetooperatewithinacomplexwebofoverlappingand

interactingregulatoryandmarket-ledframeworksandinitiatives.

SMMT’sfirstsustainabilityreport,published25yearsago,highlighted

the‘increasinglycomplexbusinessenvironment’inwhichtheautomotiveindustrywasseentobeoperatingatthetime.Itisachallengethathasclearlyonlycontinuedtogrowintheyearssince.

Dataiskeytosustainability.Aswelooktothenearfuture,theability

ofautomotivecompaniestomeasuretheirimpact,tracktheirprogress,comparethemselvestoothers,andreflectthisinformationtocustomersinanopenanddigestiblewayisbecomingincreasinglycritical.In

thiscontext,ourindustrymust–asaminimum–ensurethatwecan

continuetodemonstratecompliancewithanincreasinglycomplexset

ofdomesticandinternationalreportingrequirements.Theseinclude

regulatoryrequirements,likethosecontainedwithintheEU’sEuropeanSustainabilityReportingStandards(ESRS),8aswellasthosecontainedwithinmorespecificpiecesofregulation,forexampleCO2footprint

requirementscontainedwithintheEUBatteriesRegulation.Thereare

alsoavarietyofmarket-ledinitiatives,liketheGlobalReportingInitiative(GRI),9GHGProtocolCorporateStandard,10andtheScienceBased

TargetsInitiative(SBTi)11which,whilenotmandated,areincreasinglydemandedbycustomersandinvestors.

Currentsustainabilityreportingrequirements,largelydrivenby

internationalregulationsandstandards,alreadydemandsignificant

investmentoftime,resourceandexpertisebycompaniesoperatingin

differentsectorsandacrossdifferentmarkets.Atagloballevel,the

InternationalSustainabilityStandardsBoard(ISSB)hasbeenestablishedinrecognitionoftheneedtoreducereportingburdenandalignregulatoryrequirements.Whiletheneedforreliable,transparentsustainability

dataisbeyondquestion,theworkoftheISSBhighlightsthecriticalityofensuringthatregulatoryandmarket-ledreportingrequirementsacrossbothdomesticandinternationalmarketsarealignedinsuchawayastominimiseduplicationandmaximiseefficiency.

AtanEUlevel,theearlysignsarethatthismessagehasalsobeen

understoodbypolicymakersandregulators.InJuly2023,theEU

CommissionformallyadoptedtheEuropeanSustainabilityReporting

Standards(ESRS)covering‘thefullrangeofenvironmental,social,andgovernanceissues,includingclimatechange,biodiversityandhuman

rights’.12ESRSreportingisnowmandatoryforallcompaniessubject

totheCorporateSustainabilityReportingDirective(CSRD)13.CSRD

requirementsapplydirectlytoanylargeorlistedcompanyoperating

intheEUmarket.Forthepurposesofthisregulation,companiesare

consideredinscopeiftheyexceedtwoofthefollowingthreethresholds–€50millionnetturnover,€25millionassets,250employees.Non-EUcompanies,includingthosebasedintheUK,willalsobeinscopeiftheirturnoverexceeds€150millionintheEUmarket.

Inmanycases,thesereportingrequirementswillbepassedonthroughthesupplychaintoSMEs,includingthosebasedintheUKandsupplyingtotheEU.ManyoftheseSMEswillneedsupportandguidancefrombothgovernmentandtheirlargersupplychaincustomers–especiallyOEMs

andTier1suppliers,inordertostaycompliantandcompetitiveastheytransitionandadapt.AndwhilethefocusofCSRDisondemonstrating

datatransparency,theEU’sforthcomingCorporateSustainabilityDue

DiligenceDirective(CSDDD)willincreasetheemphasisondemonstratingmeasurablereductioninenvironmentalandsocialimpact.Sotheneed

foraccurate,representative,consistentdataisclear.

Importantly,ESRShasbeendesignedtotakespecificaccountofISSB

andGRI,minimisingtheriskofduplicated,misalignedorcompeting

requirements.Inaddition,theEU’sEuropeanFinancialReportingAdvisoryGroup(EFRAG)hasrecentlydevelopedsector-agnosticguidancefor

ESRSimplementation,withsector-specificguidancetofollow.

AtaUKlevel,theneedtodevelopinternationalreportingstandards

andgloballycomparablesustainabilityinformationhasbeenrecognisedbysuccessivegovernments.TheGreenFinanceStrategyexpressed

supportinprincipleforimplementingISSB’sInternationalFinancial

ReportingStandards(IFRS)intheUK,withacommitmenttoassess

thesuitabilityofbothIFRSS114&IFRSS215oncetheywerepublished.AsthenewGovernmentseekstoconfirmaregulatoryframeworkforimplementingasinglesetofsustainabilityreportingstandardsacrosstheUK,itmustcarefullyconsiderthebenefitsofalignmentwith

internationalregulatoryframeworksandmethodologies,minimisingduplicationandregulatoryburden.

Theincreasinglycomplicatedreportingandcompliancelandscapeis

verymuchacross-sectoralchallenge.However,theautomotivesectorhassomeuniquechallengesrelatedtothecomplexandglobalnatureofitssupplychain,significantcross-bordertrade,thecomplexityand

highvalueofitsproducts,andtheenergyintensityofitsmanufacturingprocesses.Theincreasingfocusonsustainabilitydatareportingalso

comesatatimeofunprecedentedtransformationoftheindustrymorebroadly,withtherapidtransitiontozeroemissionvehiclescreatingnewchallengesrelatedtotechnologydevelopment,accesstorawmaterialsandevolvingglobalsupplychains.

Muchoftheautomotiveindustry’sprogressoverthelast25yearscanbeattributed,inpart,totheraftofpassionatesustainabilityexperts

employedwithinindividualcompaniesandthroughoutthesector.An

efficient,alignedsetofreportingrequirementswillreduceunnecessaryregulatoryburdenandmaximiseresourceandtimethatcanotherwisebededicatedtoguidingcompaniestowardsinnovativeandimpactfulsustainabilityimprovements.Therefore,Government,industryand

investorsmustworkcollaborativelytoensurethatanyUKregulatoryframeworkforsustainabilitystandardsanddatareportingisambitious,achievable,andalignedacrossdifferentsectorsandmarkets.Such

aframeworkshouldactivelydrivetheUK’sstrategicsustainability

outcomesandidentifyareaswherefurthersupportorguidanceis

required.Thesestrategicoutcomesshouldbeclarifiedwithinan

overarchingGreenAutomotiveTransformationStrategytosupercharge

UKautomotivetoachievenetzero,whichenablesinnovation,attracts

investmentandsecuresmanufacturingofcleantechnologiesintheUKtodelivereconomicgrowthandzeroemissionmobility.

13

https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting

-and-auditing/company-reporting/corporate-sustainability-reporting_en

14

/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general

-requirements/

15

/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate

-related-disclosures

THESOCIETYOFMOTORMANUFACTURERSANDTRADERS9

INTRODUCTION

MAKINGTHENEXT25YEARSASUCCESS

Astheautomotiveindustryseekstocontinueitsprogresstowardsacircular,netzeroeconomy,itmustalsomaintainitsglobal

competitiveness,providingthousandsofhigh-value,greenjobs,andcontinuingtocontributesignificantlytotheUK’seconomythroughitsturnover,investmentsandexports.Itisachallengetowhich

theautomotiveindustryisfullycommitted,andthisyear’sSMMT

sustainabilityreportprovidesanopportunitytoassessprogresstodate,aswellaslookingaheadtothechallengesandopportunitiesofthenext25years.

Aspartofthislook-ahead,SMMTrecentlycarriedoutamateriality

assessmenttoidentifythecriticalsustainabilityissuesforthe

automotiveindustryandourstakeholders,bothtodayandinthefuture.Thedetailsofthisassessmentareexploredlaterinthisreport.However,thefindingshighlightageneralconcernexpressedbybothindustry

membersandstakeholdersalikerelatingtothesignificantexpansioninthesheernumberofissuesconsideredlikelytobecomecriticaloverthenext5-10years.

MAKINGSUSTAINABILITYA

COMPETITIVEADVANTAGEINTHEUK

Publishingagreenautomotivetransformationstrategy

thatsetsoutaholistic,joined-upapproachandprovidesapathwaytowardstheUKautomotiveindustry’sultimatesustainabilityandcircularitygoals

Adedicated,government-ledstrategyshouldensurethat

sustainabilityandcompetitivenessgohand-in-hand.Sucha

strategyshouldinclude:acombinationofregulatoryreformtoreduceredtapeandspeedupinvestment;globaldiplomacytomaximisetradeopportunitiesandreducesupplychainrisk;andgenerousincentivesandsubsidiesthatde-riskprivatecapitalinvestment.Itshouldalsoprovideasupportivepolicyand

regulatoryframeworkforreuse,remanufacturingandrecycling,ensuringthatcircularityandproducerresponsibilityareviewedasacompetitiveadvantageintheUK.

Introducingapackageoffiscal,taxandregulatorysupportmeasuresthatattractnewinvestmentandensuredomesticvehicleproducersaregloballycompetitive

Accessible,abundant,lowcostzeroemissionenergyisa

prerequisitetothis,combinedwiththeabilityoftheautomotivesectortoattractglobalnetzerotalentandexpertise,retain

andupskillitsexistingworkforce,andeffectivelydevelop

futuredomestictalent.Manufacturersshouldbeencouragedtoinvestindecarbonisedandmoreefficientplants,forexamplebyenhancingtheIndustrialEnergyTransformationFund,ensuringthatClimateChangeAgreementsarebroadenedtoinclude

newtechnologieslikebatterymanufacturing,andacceleratingelectricitygridconnectionsandupgrades.

10

Thematerialityassessmenthighlightsthegrowingregulatory,

investorandcustomerpressuresrelatedtoavarietyofautomotive

manufacturing,supplychainandcircularityissues,withsignificant

reputationalandfinancialrisksforthosethatarenotequippedtomakethetransition.

However,thematerialityassessmentalsohighlightsareasofpotentialgrowthandinvestmentinourever-evolvingindustry.Withtheright

supportandstrategicapproach,thetransitiontoanetzeroandcirculareconomywillcreatenewopportunitiesforacompetitive,decarbonised,sustainableautomotivesector.

Theautomotiveindustryandgovernmentmustworktogethertocreateacompetitivetransitiontoanetzeroandcirculareconomyby:

Providingsupportandguidancetoempowerasustainable,transparentUKsupplychain

Thereisagrowingregulatoryfocusonscope3emissionsand

supplychainduediligence.LargeOEMsandTier1suppliers

willneedtoworkcollaborativelywiththeirsmallersuppliers

tosupportwithsustainabilitydatacollectionandreporting,

maximisetransparencyacrosstheentirevaluechain,andensureregulatorycompliance.Regulatoryrequirementsshouldensuresmallersuppliersaregiventimeandsupporttoupskilltheir

workforceandimplementrequiredchangestodataprocesses.

Mobilisingaskilled,diverse,empoweredUKworkforce

Theautomotiveindustrymustc