Transition product portfolio Companies should transition product portfolios from ICE vehicles to battery electric vehicles (BEVs) and other alternative solutions.211 This should follow a life cycle assessment of environmental impacts, including an evaluation of trade-offs between GHG emissions and other nature impacts. This process should be informed by certain considerations, such as efficiency of energy use (acknowledging analysis showing that EVs outperform other options in this area),212 and regional context, e.g. the local renewable energy penetration (see Case study 2 for more detail on impact accounting methodologies). For example, Volvo Cars aims to reach 100% EV sales by 2030 and Hyundai by 2035. Other companies are following, aiming for 30% to 50% electrification by 2030 or full electrification by 2035 to 2050.213,214,215 There are also opportunities to reduce nature impacts by optimizing and limiting the size and weight of vehicle bodies, as well as key components such as batteries, thereby decreasing the need for materials and reducing fuel consumption. For any portfolio shifts, it is critical that companies plan ahead for transitions and account for long lead times, as vehicles typically take four to six years from initial concept to market. To better measure and value corporate impacts on nature and society, the Value Balancing Alliance (VBA), a coalition of around 30 multinational companies, is pioneering impact accounting in its mobility cluster. It aims to contextualize sustainability data and translate it into comparable monetary values, reflecting corporate impacts across the entire value chain. Many nature-related impacts in the automotive industry originate within the value chain. Therefore, targeted efforts to reduce environmental impacts require a comprehensive understanding of the most material impact drivers, sectors or regions. Combining VBA’s impact accounting methodology with extended input-output modelling,216 Mobility Cluster member ZF Group employed the following four steps to identify hotspots: 1. Mapping tier 1 suppliers: Aligned purchasing data with Exiobase sectors and countries to connect suppliers to relevant environmental data2. Modelling the supply chain: Modelled environmental impacts from tier-1 to tier-n suppliers, using input-output modelling 3. Measuring environmental impacts: Used VBA impact accounting methodology to estimate impacts, capturing the regional context and differences 4. Identifying key impacts: Identified the impact drivers, sectors and regions that have the most material environmental impacts to guide strategic priorities, enabling a resource-oriented analysis, assessing impacts related to materials like metals and wood In addition to the hotspot analysis, impact accounting can also be used to measure and compare different nature impacts, such as GHG emissions and land-use change. This can help companies to evaluate nature-related trade-offs for potential supply chain interventions. CASE STUDY 2 Implementing impact accounting across the automotive supply chain 3.3 Transform product offeringPriority action 3 Nature Positive: Role of the Automotive Sector 35

Nature Positive Role of the Automotive Sector