Cutting greenhouse gas emissions is critical in meeting the ambitions of the Paris Climate Agreement. Our ambition is to reach net-zero in our value chain by 2040. To do this, we have set science-based targets.
Climate change is one of the biggest challenges of our time. We support the ambitions of the Paris Agreement – to keep the increase of the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C. To this end, we believe the most meaningful effort we can make in the global climate transition is to drive decarbonization of the transport industry and other sectors of society where we are active.
Developing products and solutions that reduce the CO2 footprint is therefore a primary priority in our climate strategy. This is the foundation of our strategy and science-based targets.
The Science Based Targets initiative offers a framework that enables companies to set robust, transparent, and credible net-zero targets in line with a 1.5° C future. SBTi’s team of experts provide independent assessment and validation of these targets, and by setting a net-zero target for Volvo Group, we ensure that we are addressing and limiting GHG emissions across the value chain.
By setting science-based climate targets, we future-proof innovation and competitiveness, while also demonstrating our sustainability commitment. We are convinced that reducing emissions in-line with climate science is good for our business and for the world around us.
Own operations (Scope 1 and 2)
The Volvo Group’s total own scope 1 and 2 emissions make up less than 1% of total GHG inventory. The main ways to reduce these emissions are continuous work with energy efficiency improvements and sourcing of more renewable energy, where possible. Initiatives to reduce energy use by 18 GWh were implemented during 2022 and the target is to implement saving worth of 150 GWh between 2021 and 2025.
The GHG emission from own operations were 23% lower 2023 compared to 2019. Direct emissions (scope 1) have been reduced by approximately 10% compared to 2019, of which the most important contribution comes from a higher proportion of renewable fuels used at sites with direct combustion for testing and heating. The indirect emissions from own operations (scope 2) were almost 50% lower 2023 compared to 2019, of which the most important factor is a higher share of energy from renewable sources.
Calculated GHG emissions from use of sold products amounted to approximately 266 million tons 2022 compared with 323 million tons in 2019. The calculated reduction in total GHG emissions is a combination of impacts from energy efficiency measures, changes in sales volumes and product mix. In addition, reduced GHG intensity for fuels and energy in several markets have had a positive effect. For construction equipment, lower sales volumes in China compared to baseline is the most important factor to the significant lower emissions.
Trucks (Scope 3)
The reduction in 2023 amounted to –6% vs 2019 baseline for the -40% intensity target. In addition to the lower GHG intensity in fuels, the result is explained by overall improved energy efficiency across several truck models.
Buses (Scope 3)
The result for buses in 2023 was –5% vs 2019 baseline for the -40% intensity target. The reduction is mainly due to product mix effects with more products with relatively low GHG intensity being placed on the market
Construction Equipment (Scope 3)
For construction equipment, the result was -40% vs 2019 baseline on the absolute emissions target. This significant reduction is mainly explained by lower sales volumes of machines in China. In total, the Group delivered just over 60,000 machines in 2023, compared to almost 87,000 in 2019. Emissions may increase with increased sales volumes before a more sustainable reduction can be seen.
Volvo Penta (Scope 3)
The result for Volvo Penta was +11% vs 2019 baseline on the absolute emissions target. The result is mainly driven by product mix and volumes, with increased volume demands particularly on engines and solutions with higher displacement and power.
Overall, different regulatory requirements, availability of low GHG energy sources and associated infrastructure impacts market conditions and customer demands. These market factors have significant impact on average GHG intensity of products sold and used in different countries and regions. At the same time, since the Volvo Group is operating in cyclical industries which are linked to economic activity and GDP development, sales volumes and mix can vary considerably from one year to the next. Together, these factors can significantly impact the result in the total calculated GHG emissions.
Technology roadmap above illustrates the decarbonization of our customers’ use-phase. In addition to the technology development and Volvo Group offer, the needed decarbonization of energy is illustrated in the background. The arrows illustrate an uncertainty in future preferences and viability of propulsion alternatives. This was developed since 95% of life-cycle emissions related to the products we sell occur when they are used by our customers. This is also why we have set science-based targets for scope 3 use-phase by segments: trucks, buses, construction equipment and Volvo Penta.
In order to deliver on the Paris Agreement, our customers' running fleets need to be net-zero by 2050. As it takes around ten years to renew a running fleet, our ambition is to reach net-zero by 2040.
As illustrated above, there will a gradual shift to electric propulsion, both battery and fuel cell electric. The share of Internal Combustion Engines will decrease over time. We expect electrification and other transitions towards decarbonization to happen segment-by-segment, and market-by-market. It is currently not possible to make reliable predictions of transition pace or technology preferences in the longer term in a particular market or region, however, the Group aims to drive transformation in business segments where it is active, regardless of whether it will happen at a faster or slower pace than expected. Overall, significant effects on GHG emissions of fully electric vehicles are expected during the second half of this decade.
The possibility to successfully introduce transitionary products and services will depend on the competitiveness of our offer, but also on several external factors, such as customers’ climate ambitions, regulatory developments, public subsidies to different sectors of the economy and availability of low-carbon energy.
For electric applications, this would be access to charging and renewable energy. For combustion technology, this would be development and access to zero or low carbon fuels, such as hydrogen and liquefied biogas.
Sustainability is an integral part of Volvo Group’s business. Today, the key driver for achieving our science-based targets is to put electric trucks, buses, construction equipment and drivelines in use. Electric vehicle volume has therefore been included in the Volvo Group’s short term incentive program.
The target at Group level is to reach 35% electric vehicle volumes by 2030. This is being translated into business area specific targets and sales targets which, in turn, drive investments in zero direct emission technology. One example of a business area that has set its own individual target is Volvo Trucks, who have set out to reach 50% fully electric vehicles by 2030.
Internally, we follow up revenues and investments related to fully electric on a monthly basis, and the Volvo Group Executive Board reviews the Group’s progress on science-based targets every quarter. The Executive Board reports this progress to the AB Volvo Board continuously.
The environmental footprint of our operations is relatively small compared to that of the use-phase of our products. We are constantly working to reduce climate and environmental impacts from our industrial activities through our environmental and climate strategy. In our operations, the focus areas to reduce our footprint are energy and emissions, waste and chemicals.
We work with our suppliers in two main ways to support our path towards net-zero. Firstly, we identify suppliers that can help deliver fossil-free transport solutions for our customers. Secondly, we collaborate to reduce supply chain emissions.
Today, these emissions represent a smaller part of the total GHG inventory (~4%). It is also distributed across a range of commodities and components making them complex to deal with in a common manner. We have identified hotspots of materials and suppliers that are critical to decarbonize over the next decades.
The transition to net-zero emissions in the transport sector depends on a variety of factors, but we believe the main long-term solutions are electrification and development of other zero emission technology. This, in turn, depends not only on the product and service offering, but also on external factors such as the existence of a functional charging infrastructure and access to renewable energy sources to power battery electric and fuel cell electric products.
Recognizing the need for collaboration on a system-wide basis, the Volvo Group has taken part in a number of multi-stakeholder initiatives.
One such initiative is the First Movers’ Coalition, which assembles cross-industry purchasing commitments to drive development of low carbon technologies.
Sustainability reporting is included in our Annual Report. In our GRI Index we disclose the specific economic, environmental and social sustainability topics that are material to the Volvo Group.
The Volvo Group follows up revenues and investments related to fully electric on a monthly basis, and every quarter, the Executive Board reviews the Group’s progress on science-based targets. The Executive Board reports this progress the AB Volvo Board continuously.
Climate change is a real threat to people, nature, and the world economy - and there is a need to collectively cut global greenhouse gas emissions. In the 2015 Paris Agreement, world governments committed to curbing global temperature rise to well below 2°C above pre-industrial levels.
According to a report by the Intergovernmental Panel on Climate Change (IPCC), to limit global warming to 1.5°C above pre-industrial levels and avoid the most catastrophic impacts of climate change, the world must halve CO2 emissions by 2030 and reach net-zero CO2 emissions by mid-century.
The IPCC defines net-zero as that point when “anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period”. Net-zero often refers to the economy at large. The Science-Based Targets initiative (SBTi) has developed the first global standard for businesses to set net-zero targets, based on a science-based targets methodology.
As part of our climate work, we set out to advocate for progress in line with the Paris Agreement.
The Volvo Group’s net-zero targets were validated by the SBTi in June 2021. Our targets take into consideration an average time “on the road” of approximately ten years for our products. The base year for measurement is 2019. We have set our first interim targets and follow up and report on the Volvo Group’s CO2 emission reductions progress continuously and in a transparent way.
The interim targets cover approximately 95% of our emissions, where almost all are indirect emissions from the use of sold products. Direct and indirect emissions from own operations (scope 1 and 2) make up less than 1% of the total emission inventory but are also included in the interim targets.
The Volvo Group’s targets and ambition levels within the Science-Based Targets initiative are pushing the boundaries of the industry even further:
In an industry-first, the Volvo Group developed its own pathway towards the 1.5⁰C target for trucks and buses, with a targeted emissions reduction of 40% per vehicle km by 2030.
Our targets for indirect emissions cover approximately 95% of the products sold. This is industry-leading and well above SBTi’s minimum requirement of 67%.
Our ambition is to reach net-zero value chain emissions by 2040 at the latest, ten years earlier than the SBTi commitment. For our customers’ rolling fleet to have net-zero emissions by 2050, all products delivered after 2040 should have net-zero emissions.
