Road to Net Zero

Successful sustainability transformation is a collective endeavour that demands innovative, science-based collaboration between academia and industry. Striving towards Net Zero, the mutual learning and integration of their strengths are imperative. This chapter features the introductory discussion between Joachim Hornegger, President of FAU Erlangen-Nürnberg, and Oliver Zipse, Chairman of the Board of Management of BMW AG, exploring the why and how of collaborative efforts in Sect. 1.3. This chapter also serves as an introduction to the book, offering in Sect. 1.4 an overview of key topics on ‘The Road to Net Zero’. These range from science-based targets to integrated strategies, reporting, and the pivotal role of technological innovations. While not presenting a blueprint solution, the described transformation journey—‘Road to Net Zero’ in this book—outlines a roadmap and encourages robust university–industry collaboration.

The Road to Net Zero starts from the Paris Agreement, which sets a global goal to limit global warming to well below 2 °C above pre-industrial levels, and an ambition to limit warming to 1.5 °C. The Agreement represents a turning point in the approach to tackling climate change, moving from a mitigation logic focused on reducing carbon emissions to an exit logic focused on full decarbonisation. The challenge is to translate the ambitious goals of the Paris Agreement into practical and achievable action plans that can be implemented at national and local levels. This will require a coordinated and joint effort by governments, businesses, and civil society to mobilise resources, build capacity, and put in place the necessary policies and regulations to support the transition to a low-carbon future. After discussing basic climate science foundations in Sect. 2.2 and the global climate policy ‘Road to Paris’, as well as the implications of the Paris Agreement in Sect. 2.3, national policy frameworks and governance mechanisms that can be implemented at the national level to meet the Nationally Determined Contributions (NDCs) are reviewed in Sect. 2.4. While the expert discussion between Prof. Grimm, Dr Becker, and Oliver Zipse in Sect. 2.5 is dedicated to the balancing act between technology openness and energy policy control mechanisms, Sect. 2.6 gives an outlook on how the goals of the Paris Agreement can be broken down to the company level. In this context, future research questions for the evaluation of legitimised measurement and target-setting frameworks for the private sector are discussed.

Companies are increasingly integrating sustainability into their strategies. The main drivers include changing societal expectations, regulatory policies, financial market pressures, and changing customer behavior. The generic business benefits of sustainability include securing the license to operate, managing risk, reducing costs, and increasing revenues through improved innovation and future market opportunities. How companies realize these generic benefits depends on their specific position and the maturity of their sustainability strategy. Strategies with high maturity do not treat sustainability as a separate add-on, but instead integrate it into how the company creates value. Moreover, sustainability strategies that aim at real life cycle improvements, such as in the case of climate-oriented strategies, need not only to integrate firm operations, but also to consider the entire value chain. This integrated approach to sustainability changes the entire strategy process. Its first step, environmental scanning, needs to consider a richer set of factors and stakeholders. Regarding strategy formulation, the strategy’s effectiveness and credibility depend on reliable target setting, such as in the case of Science-Based Targets for climate action. Strategy implementation requires an integrated approach to management that also engages relevant value chain partners. Finally, strategy evaluation and control must produce reliable data that can inform integrated reporting. Integrating sustainability throughout the full strategy process adds complexity while significantly increasing the potential for long-term sustainability and business benefits.

The growing interest in a company’s sustainability strategy and performance means that solely providing financial information in corporate disclosures will no longer fulfil stakeholder needs in the future. Traditional financial reporting is primarily targeted at capital providers and therefore provides information on the company’s current and future financial performance. Today, a broader focus on non-financial, sustainability-related aspects is required to meet the information needs of other stakeholders, such as employees, customers, suppliers, government and society. Non-financial information is also increasingly important for investors to assess a firm’s risks and opportunities related to sustainability issues, such as climate change, and to understand how the firm is preparing itself for these future challenges. The transition of non-financial reporting—in particular, sustainability reporting—is evolving from voluntarily applied frameworks to mandatory regulatory requirements by standard-setting institutions. The aim is to provide higher transparency and comparability and to build the basis for linking the former separate financial and sustainability reports of a firm on a concise integrated report. A key challenge is the choice (and clear definition) of appropriate performance indicators to achieve comparability between firms. As a result, new rules and formats for corporate reports and for financial, as well as non-financial, disclosures are already appearing on the horizon and will sustainably change the future of corporate reporting. Adapting to these new regulations while balancing the interests of multiple stakeholders will become a continuous challenge for companies and will require them to engage in comprehensive, integrated thinking.

On the Road to Net Zero, products must not only become CO₂-neutral in the consumption phase, but the environmental impact needs to be mitigated from the extraction of the raw materials to their end-of-life disposal. The consideration of the entire life cycle—cradle to cradle—as well as rising consumer demand for sustainable products—requires a new paradigm in product design: Design for circularity. Circular design focuses on developing design strategies that enable circularity, such as material selection, design for disassembly, product lifetime extension strategies, and the design of closed-loop systems. Thus, the first section after the introduction of this chapter (Sect. 5.2) provides an overview of the research field of design for circularity. After reviewing the concept of the circular economy (CE), different frameworks for operationalizing the CE are outlined. Based on this review and discussion, we derive three implications for circular design: a change in product design, a change in service design, and a change in user behavior. Finally, we address the implementation challenges that manufacturing companies face when transitioning to a CE. In the subsequent expert discussion (Sect. 5.3) between Oliver Zipse and Prof.-Ing. Sandro Wartzack, these issues are reflected upon from a practitioner’s perspective. In the final section of this chapter (Sect. 5.4), future avenues of research are presented, and the challenges and opportunities of circular design strategies are discussed.

Achieving the Paris goal of limiting global warming to well below 2 °C requires radical decarbonization of our economy, including a shift to renewable energy. In the automotive sector, electromobility offers a promising option for making this transition. However, while electric vehicles (EVs) have lower emissions during their use phase, a significant part of the carbon footprint is shifted upstream in the value chain to raw material extraction and battery production. Against this background, this chapter provides an in-depth look at how the automotive industry’s transition to electromobility leads to far-reaching implications for the EV battery value chain. The chapter begins with a brief review of resource scarcity as a relevant strategic background for the circular economy. It continues with the different steps of the linear EV battery value chain. The chapter then uses a circularity perspective to discuss the technology and value chain steps for closing the loop in the EV battery life cycle. It concludes with an outlook on the challenges of circular EV battery value chains.

While consensus often exists regarding the principles of sustainability, their implementation on the shop floor is a challenge for every manufacturing company. The three dimensions of sustainable production—social, ecological, and economic—must be considered equally when planning investments or improving operational efficiency. In doing so, the implementation reveals additional efficiency potential because the three dimensions interact positively. For example, improved working conditions address the social aspect of sustainability, but they also have a positive impact on motivation and productivity. However, sustainability in operations depends strongly on innovation and research. First, electrification technologies to generate, store, and transport electrical energy will play major roles in the factory of the future. Second, circular processes that close loops in material and energy use will increase efficiency and positively impact sustainability. Finally, innovative manufacturing and digitalization technologies provide further improvements in sustainability. Successful companies on the path to sustainability do not interpret sustainability principles as an end in themselves. These companies have a clear vision of the factory of the future in mind, characterized by sustainable manufacturing processes on the shop floor, a high degree of digitalization and the use of artificial intelligence (AI) to generate data compatible with accepted sustainability standards, and the coupling of different systems and processes.

Achieving the urgent need for rapid decarbonization to meet the 1.5 °C target requires disruptive technological change. In the automotive industry, technological progress is closely linked to improved sustainability, and sustainability goals drive the need for technological innovation. However, new technologies in the mobility sector are fraught with uncertainties that challenge both original equipment manufacturers (OEMs) and their stakeholders, such as suppliers, customers, and policy-makers. Therefore, this chapter focuses on the technical, economic, and environmental evaluation of alternative powertrain concepts and the management of uncertainties associated with emerging technological innovation as part of the broader transition to net zero.

Electric mobility plays a central role in the sustainability transition and is characterized by a high degree of variance. Battery electric vehicles (BEVs) are expected to dominate private transport in the future due to their greenhouse gas and pollutant-free operation and high efficiency. In addition to charging infrastructure, the technical challenges currently lie primarily in cell chemistry and power electronics. Advances in battery technology and infrastructure electrification will help eliminate the range problem in the future. Another important future fuel is hydrogen. One application is the fuel cell vehicle, which combines the advantages of a chemical energy carrier with high gravimetric energy density with those of an electrical energy converter. Hydrogen also plays an important role as an energy carrier for specific energy supply processes in manufacturing processes and simplifies the transport of regeneratively generated energy. In addition, hybrid vehicles are a transitional technology, and alternative fuel internal combustion engines can contribute to the decarbonization of the existing fleet and to specific applications.

This chapter assesses the performance of alternative powertrains; highlights the interrelationship between powertrain systems, energy ecosystems, and sustainability goals; and identifies future research directions for electric and hydrogen mobility.

The Road to Net Zero is an iterative, rather than a linear journey. This concluding chapter revisits the insights and lessons learned from each preceding chapter, while also looking beyond to reflect on overarching lines of thought. First, the Road to Net Zero calls for both integrative thinking and integrative management. As a moving target, sustainability is a race that cannot be won alone, thereby demanding robust collaboration with multiple stakeholders. Second, the Road to Net Zero is a data-driven journey that requires measurable indicators and targets, and implies digitization to ensure transparency across value chains. Third, sustainability transformation transcends mere decarbonization based on emission pathways and reducing negative impacts. It also involves creating balanced, sustainable business solutions that generate positive societal impacts. Lastly, championing change for sustainability necessitates a multitude of innovations in technology, management, and policy. Catalyzing these innovations calls for the persistent advancement and refinement of innovative, inclusive, and effective platforms for interdisciplinary, cross-sector, and global learning.