Contributing to a better world
Megatrends
The world is changing. In many aspects the world is becoming a better place. Opportunities arise from global decrease in poverty, increase in life expectancy and declining cost for renewable energy. But there are also challenges and the need of driving development – and to grow within the planetary boundaries – is greater than ever. As a global transport solution company we need to understand the world around us in order to stay ahead and to stay competitive.
Global Perspective
The simplified version of Kate Raworth’s Doughnut Economics model is a way of visualizing how we can achieve human development without damaging the earth system. For us, in the Volvo Group, it reflects our vision of driving prosperity. It means to consider the impact on environment and the usage of our society’s limited resources in our activities.
There are two boundaries: the inner social boundary and the outer environmental boundary envisaged by the social foundation and the ecological ceiling. Between these two there is an area representing an environmentally safe and socially just space for people to prosper in. In this area, inclusive and sustainable economic development takes place.
If there is a shortfall of society’s resources it means that people do not have enough food, water, health care, energy, etc. This will negatively impact human rights. If there is an overshoot in the usage of natural resources it will cause climate change or biodiversity loss.
These boundaries have increasingly gained attention also for the private sector in recent years in an effort to manage this balance in concrete and pragmatic ways. On the one hand, the UN Guiding Principles for Business and Human Rights is focusing on the social foundation, and on the other hand initiatives such as the Paris Climate Agreement set the direction to avoid an overshoot.
Through the conclusions of this model together with the Volvo Group's PESTEL scenario analysis (Political, Economic, Social, Technological, Environmental and Legal) a number of key trends for our industry have been identified.
Industry perspective
Environmental threats and resource scarcity
Increased insights and awareness of the impacts of greenhouse gases and other emissions drive changes in climate and energy policies. This speeds up the progress of new mobility solutions powered by low carbon energy and fuels. The development across markets, regions and cities varies in speed and direction, depending on the availability of natural resources and fuels, infrastructure, political will and incentives. Other consequences of this development include extreme weather events or resource constraints, which could in turn lead to higher operating costs.
The industry develops transport solutions and production systems that better manage resource scarcity and with less emissions to air and water. In addition to more energy and carbon efficient solutions, the Volvo Group works to better utilize transports, recycle, remanufacture, and refurbish products and components.
Urbanization
The United Nations Population Fund expects that there will be over nine billion people in 2050. Half of the world’s population already lives in cities. In the next decade, we will see a much greater shift from rural to urban areas in Asia and Africa in particular. As urban populations grow, so do mobility demands. Cities face increasing social as well as environmental challenges, including congestion, pollution, noise, and traffic accidents.
The transport and infrastructure industry must continue to provide safer, cleaner, and more efficient solutions for all types of urban development, whether small, medium sized cities or mega cities.
Geopolitical uncertainty
Transport and infrastructure solutions are demanded in diverse markets across the globe. When the world is becoming more fragmented and geopolitically unstable it is manifested by divergent trade rules, transport regulations, customer requirements and competitive dynamics, both between markets and within markets.
Our industry is striving to meet shifting economic, protectionist and regulatory conditions and to improve sustainability, effectiveness, safety and security in the value chain.
Safety and security
Every year there are approximately 1.35 million fatalities and 50 million people injured in traffic accidents around the world. There is a need to improve traffic safety and transport efficiency.
Greater traffic safety education and better planning of roadways are parts of the solution together with active safety features and technology (vehicle stability, emergency braking and visibility support) as well as passive safety components (airbags and body protection in the cab). Progress is also made in terms of automation for commercial vehicles and other machinery. We expect the development to intensify, also for automation within manufacturing. The use of self-driving vehicles is expected to allow the industry to provide greater safety, fuel savings, and transport efficiency.
Digitization and technological transformation
We live in a hyper connected world with multiple technologies, the internet of things (IoT) and the cloud. In 1995 about 1% of the world’s population had an internet connection – today over half the population is connected and the number of IoT connected devices will continue to increase at a high pace during the next few years.
Digitization sparks transformation across industries and it impacts all aspects within our industry – from how we create customer value to how we develop, produce, work and interact. The Volvo Group has over 1,000,000 connected running vehicles and machines. Based on data insights we are providing new services for our customers as part of our total offer. We see potential for increased customer value connected to digitization. At the same time, we must secure data integrity to avoid disruption in manufacturing and in our value chain and comply with evolving data protection legislation.
