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Volvo’s plan to address biodiversity across its supply chain

Volvo has pulled back on its EV sales targets, but its nature strategy offers lessons for other automakers and other types of manufacturers. Read More

A Volvo plant Source: Shutterstock/Tygve Finkelsen

While many corporations continue to view nature solely through the lens of regulation, Volvo Car Corporation has advanced further — recognizing the value of nature, reducing its impacts on biodiversity and investing in conservation and restoration. These ambitions are summarized in a position statement released Sept 9.

There’s no single path for establishing corporate nature ambitions, so companies are looking to peers to determine best practices. And it’s worth noting that Volvo has pulled back on its EV sales targets, relaxing its commitment to produce only fully electric vehicles by 2030. Its nature strategy, though, offers lessons for other automakers and other types of manufacturers.

Here’s a summary of Volvo’s approach.

Moving forward with the best data available

One of the main challenges companies face when evaluating their impacts on nature is the lack of high-quality data and of certainty about which tools to use. The stakes are especially high when assessing baseline impacts, which will be used as a point of reference well into the future.

Volvo used production and sales data from 2021 for selected car models representing its overall fleet. This is imperfect, as a single year of data doesn’t capture variation over time, but it provides a model for moving forward with existing resources rather than delaying action.

Using the baseline dataset, the Volvo team conducted a lifecycle impact assessment following the ReCiPe model. This model estimates biodiversity impacts from cradle to grave, from resource extraction in Volvo’s upstream value chain to impacts from water and fuel used by vehicles on the road through their end of life.

The output is a single metric — species/year — that represents the potential number of species to disappear in a given area over one year. As with all models for measuring biodiversity impacts, there are tradeoffs to the ReCiPe approach.

The ReCiPe Model for Measuring Biodiversity Impacts

Prioritizing action based on the highest impact

Unsurprisingly, 64 percent of Volvo’s biodiversity impacts are produced by vehicles on the road, largely from the production and use of fuels.  

The company is already working to reduce these impacts through its climate ambitions (although, as mentioned above, it has recently scaled back those ambitions). However, the looming question for the auto industry is whether increased mining for battery production for electric vehicles will counteract (or outweigh) the potential biodiversity gains from reducing greenhouse gas emissions.

Acknowledging this dilemma, Volvo was one of the first companies to call for a moratorium on deep-sea mining. It has not offered a solution, though, instead stating it will “continue to assess and develop actions to avoid and reduce the biodiversity impacts of batteries, while at the same time maintaining the climate impact abatement benefits.”

An additional 34 percent of the company’s biodiversity impacts occur in the upstream value chain. This is also where water usage has the greatest impact on biodiversity. The position statement doesn’t offer much detail about actions it will take to reduce upstream impacts; Volvo’s previously stated positions on sustainable materials and water management include:

  • Tracing raw materials of concern to their origin and performing basic and enhanced due diligence for responsible sourcing.
  • Phasing out the use of hazardous substances in car production.
  • Reducing per-car water withdrawal in all operations by 50 percent between 2018 and 2030.
  • Setting global pollution limits for basin-level nutrient loads and performing remediation where needed.

The remaining 2 percent of impacts occur in Volvo’s operations, and the company is looking into the state of nature around its facilities, beginning with its headquarters in Sweden.

Unfortunately, Volvo has not publicly released the full, detailed results of its biodiversity assessment, so we can only analyze information reported in its position statements.

Following the mitigation hierarchy

Volvo plainly states the truth of our current economic system that is rarely spoken aloud by companies: “It will be impossible to avoid and reduce all negative impacts on nature and biodiversity. As such, an investment in restoration and conservation will be required to counterbalance our residual negative impacts.”

The company states its intentions to carefully select restoration and conservation activities in landscapes directly affected by its business activities and recently hired someone to lead this effort. This differs from other companies that invest in projects far from their own operations and supply chains as a philanthropic endeavor rather than a true mitigation effort.

On the downside, it’s not clear from this position statement how much of the company’s impacts will be avoided and reduced before they turn to mitigation.

Ultimately, Volvo’s new statement sets the stage for action. The next steps — abating climate change without further harming biodiversity, achieving traceability, improving circularity and investing in ecosystem resilience — will demonstrate how far it is willing to go.

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