Ethics and Sustainability in Automobile Industry

Ethics and Sustainability in Automobile Industry 1
ETHICS AND SUSTAINABILITY IN AUTOMOBILE INDUSTRY
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Ethics and Sustainability in Automobile Industry 2
Ethics and Sustainability in Automobile Industry
Executive Summary
The purpose of the paper is to investigate key ethics and sustainability challenges that
face the automobile industry and provide recommendations for the next 50 years. Many
managers in different industries face several challenges for business progress related to business
ethics and sustainability. The automobile industry is an appropriate industry for the study
because of the current ethics and sustainability challenges that have continued to impact its
progress in the latest decades. Environmental problems, corporate scandals, and employee issues
are some of the widespread challenges in the automotive industry that the managers currently
face in the modern global environment brought about by globalization, competition, and
government regulations. Despite many measures to address these challenges in the industry,
there is a growing concern on the increasing sustainability and ethical issues in the industry in
the latest decades. The automotive industry faces many regulations in different countries that
they need to comply with that operate in this business, like GHG emissions and safety
regulations. The industry needs to adopt innovative strategies that will be geared towards
reducing the environmental impacts and corporate governance measures to deal with the current
scandals faced by the industry. These practices promote the renewal of the production systems
and practices in the industry, taking into consideration the local, ecological, social, economic and
cultural aspects.

Ethics and Sustainability in Automobile Industry 3
Table of Contents
Executive Summary.........................................................................................................................2
Introduction and Background..........................................................................................................4
Ethics and Sustainability..................................................................................................................6
Environmental Challenges...........................................................................................................6
Employee Health and Safety and Welfare Challenges................................................................9
Corporate Scandals in Automotive Industry..............................................................................10
Conclusions....................................................................................................................................11
Recommendations..........................................................................................................................12
Eco-innovation...........................................................................................................................12
Environmental Performance......................................................................................................13
Integration of Suppliers and Assemblers...................................................................................14
Corporate Governance...............................................................................................................15
List of References..........................................................................................................................17
Appendices....................................................................................................................................21

Ethics and Sustainability in Automobile Industry 4
Appendix1: Automobile manufacturing plants by country........................................................21
Introduction and Background
In the 21st-century many managers in different industries face several challenges for the
business progress related to business ethics and sustainability. The managers face challenges
regarding good use of human resources, ethical dilemmas, environmental issues, marketing their
brands in diverse markets, long-term planning for improved outcomes, as well as better use of
analysis for management processes. The institutional investors that have considerable financial
capital that is invested in firms have been demanded to promote sustainable and ethical practices
geared towards sustainable investment (Okushima, 2015, pp. 828). Business ethics is a vital
theory, which reflects the behaviour of a company and industry should ensure that it promotes
ethical and sustainable practices in the increasing world of globalization, competition and
technological advancements.
Business ethics entail the introduction of values along with moral in all business areas in
the industry, from consumer right to corporate social responsibility (CSR). One of the industries,
which have several ethical and sustainable business issues, is the automotive industry. The
automotive industry has many things that are connected to it, such as the company itself with its
consumers, how they offer after sales services, and spare parts available. This industry also has
been faced by sustainable issues that mainly are mainly environmental issues, mainly industry’s
pollutants (Cheng & Shiu, 2012, pp. 30).
In addition, the automotive industry faces many regulations in different countries that
they need to comply with that operate in this business, like emissions and safety regulation.

Ethics and Sustainability in Automobile Industry 5
These are controlled strictly to meet high standards of safety to promote sustainability along with
ethical practices in the automotive sector. The automotive industry and its suppliers are aware of
the ever-growing need to address environmental concerns in their processes, as well as products
by embracing ethical and sustainable practices. Several firms in the auto industry are very large
companies (General Motors, Ford, Toyota, and Daimler Chrysler) that are knowledgeable
regarding the sociological, technological and legal trends in the industry globally geared towards
environmental performance (Schulze, MacDuffie & Täube, 2015, pp. 604). However, many of
these organizations have been accused in the recent past of unsustainable and unethical practices
that have resulted in legal and ethical implications that have affected the reputation of the
industry. Each year, the industry releases over 70 million lately manufactured automobiles that
enter the international marketplace, a reality that makes the industry a non-stopping distributor of
cars as shown in Appendix 1.
The global automotive industry is a primary contributor to the global economy. In 2015,
it was approximated that the global automotive industry revenues surpassed $3.5 trillion and the
figure is anticipated to develop at the rate of 4.4 per cent annually through to 2030. Nonetheless,
as the industry seeks continued growth, the motivation for sustainability and ethical behaviours
will become an ever-increasing influencer of how the sector runs. The three widespread
sustainability issues specifically are shaping the future of the automotive industry: climate
change, urbanization, and population growth, as well as resource scarcity. In regard to
urbanization, the growing number of people living in urban cities and towns increases the use of
vehicles affecting the quality of air (Amatucci, 2015, pp. 45). Climate change carries on to a
primary consideration for companies in the industry and it is projected that the industry is

Ethics and Sustainability in Automobile Industry 6
responsible for about 15 percent of global carbon emissions-about 8 billion metric tonnes
annually. This implies that the industry must accelerate efforts to lower environmental impact
and fashion a sustainable platform for the sector to flourish. Lastly, population growth and its
impacts on resource scarcity will place pressure on what is by now a resource-intensive industry.
Both the production of cars and fuel needed for their use by clients draws heavily on the global
finite resources. Thus, the need to develop proactive sustainability and ethical practices are well-
known (Ceschin & Vezzoli, 2010, pp. 321).
Ethics and Sustainability
Since the early 1980s, the automotive sector has been passing via a transition, where
home sectors are embracing an integral worldwide marketplace. During the 21st-century, this
sector that had by now attained a height of maturity plus elevated structure has been pressed by
globalization and government laws regarding energy use, safety, emissions, as well as
technological developments in communication along with design. The industry has since then
experienced numerous sustainability and ethical issues that have created many challenges in the
industry (Resta, Gaiardelli & Pezzotta, 2009, pp. 147). Business sustainability may be
understood as the capacity to create funds to recompense the factors of production, restock the
used resources, and invest to carry on competing in the market.
Environmental Challenges
The majority of the actions related to the automotive industry, indirectly or directly have
a considerable effect on the environment. The direct operations are linked to the manufacturing
plus utilization of the vehicles, whilst indirect activities are connected to other operations, which