Balancing global challenges
In order to drive development without saying no to growth, we need to balance our business operations with earth’s limitations and society’s resources.
Driving prosperity, in all aspects of the word, means that the impact on environment and the usage of our society’s limited resources are considered in our activities.
The illustration to the right, which is a simplified version of Kate Raworth’s Doughnut Economics model, visualizes how to achieve human development without damaging the earth system. 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 of usage of natural resources it will cause climate change or biodiversity loss.
By using this model and our PESTEL (Political, Economic, Social, Technological, Environmental and Legal) scenario analysis, a number of key trends for our industry emerge.
Environmental threats and resource scarcity
The burning of fossil fuels is a major source of CO2 and other emissions, which cause climate change and pollution. Businesses in our industry respond by improving fuel efficiency and moving towards lower carbon alternatives. Environmental concerns drive interest and opportunities in electro mobility, as well as alternative and renewable fuels. Development across regions and at city levels varies in speed and direction, depending on the availability of natural resources and fuels, infrastructure, political will and incentives. We strive to manage resource scarcity by finding better ways to utilize transport and to recycle, remanufacture, and refurbish products and components.
The United Nations Population Fund expects there will be over nine billion people in 2050. Half 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 or medium sized cities or mega cities.
Our 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 challenged to meet shifting economic, protectionist and regulatory conditions, to access and develop human capital, and to improve sustainability, effectiveness, safety and security in the value chain.
Safety and security
Every year there are more than 1.2 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 is part of the solution and 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 will 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 around 40% of 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 800,000 connected running vehicles. 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 comply with evolving data protection legislation and secure data integrity to avoid disruption in manufacturing and in our value chain.