Managing Sustainability in Strategic Decision-Making, Life cycle thinking for sustainable innovation, - A case study at Volvo Cars

Abstract

To comply with the Paris Agreement, focusing on reduction of greenhouse gas emissions to keep global warming during the 21st century below 2°C, companies worldwide have to incorporate sustainability into their business models. The automotive industry is an example of an industry that needs to change to provide mobility in a more sustainable way, and to make a difference the change has to go beyond just shifting to electric motors. A pervasive shift involving all business units is needed to take lead in this. The study’s aim is to investigate how decision-making with regard to sustainability assessment is done in the automotive industry, where circular life cycle thinking will be considered. This qualitative study is designed with stakeholder theory in mind, where a literature review and iterative, semi-structured interviews with project leaders will be used to construct a sustainability assessment tool to support decision-making. Additionally, a sustainability benchmarking was performed to investigate Volvo Cars’ and ten other companies’ sustainability performance. The study found that to incorporate sustainability in strategic decision-making, the top-down perspective, integration with existing formal processes, and standardization are key. Carbon pricing could be a useful tool to prepare for upcoming regulations as it is easy to understand, but very risky if the wrong price level is used. Finally, the study also shows that a green tax change could incentivize companies to be more sustainable and increase their competitive advantages by becoming climate-neutral.