Nicolas Meilhan is a Scientific Advisor for France Stratégie and works on transport and energy issues.
His main areas of expertise are electric cars, the mobility of the future, the energy of the future and the increasing scarcity of resources, including fossil fuels and metals. Nicolas regularly participates in several think-tank reflections on the energy transition.
Following the recent launch of our EcoVadis 2019 Index, used to monitor and compare the CSR progress of companies worldwide, we sat down to talk with Nicholas Meilhan, a Scientific Advisor for France Stratégie who specializes in transport sector issues. Companies in the transport sector are the subject of a specific analysis in the Index, with more than 900 companies (including 700 small and medium-sized companies) included in the 2018 sample. Interestingly, large companies as well as small and medium-sized companies in the transport sector are among the worst performing sectors in terms of CSR management. So, we interviewed Nicholas Meilhan to get his insights on what may be contributing to this sector’s low sustainability performance.
Sample 2019 Index for the Transport Sector
EcoVadis Index: description of companies in the transport sector: https://index.ecovadis.com/isic-categories#transport
By way of introduction, could you give us an example of the importance of the supply chain in the transport and automotive sectors?
In the transport sector, the electric vehicle is a very good example representing supply chain challenges: If the electric car is really a future solution for individual mobility, it is important to redirect the market toward lighter cars and to start thinking about limiting the environmental impacts related to their production today.
For example, in France Stratégie’s analysis paper, “How can we now reduce CO2 emissions from cars?” I recall that manufacturing an electric car battery consumes as much energy as the car itself.
Source: ICCT (2018), effects of battery manufacturing on greenhouse gas emissions over the life cycle of electric vehicles.
If electric cars do not emit CO2 at the exhaust pipe outlet, their environmental gain will be all the greater, as CO2 emissions related to their manufacturing will be contained and the electricity used to charge and recycle their batteries will be decarbonized.
Consequently, the blend of energy sources that the manufacturing country uses will have a significant impact on the total environmental gain, especially when considering the car’s full life cycle. As such, countries with mostly carbon-free electricity, like France, will have a great environmental gain. Conversely, countries that continue to use a lot of coal, like Germany, Poland, or China, will have a minimal environmental gain.
In addition, the development of electric cars equipped with high-capacity batteries (50 kWh) could compromise the availability of certain rare materials, such as cobalt, by 2025. This puts Europe at risk of becoming strongly dependent on those countries that control its supply: the Republic of Congo (50 percent of world extraction) and China, which already controls 80 percent of refining for battery applications.
As with the production of all raw materials and industry materials in general, this raises ethical questions (modern slavery) and associated reputational risk. Hence, consumers are becoming more and more careful about what they buy and how it is made.
As its third edition, EcoVadis has just published its 2019 Index based on more than 40,000 CSR assessments of companies around the world. What is your first reading of the results of the transport sector?
I wasn’t familiar with EcoVadis, so this data is new for me. Being able to move up the entire value chain through the EcoVadis Index data is very interesting.
Overall, the trend in the transport sector is not good. When we look at the sector’s results, the trend is more towards deterioration, both for small and medium-sized companies and large companies. However, I note that small and medium-sized companies in the transport sector perform better relative to large companies (40.3/100 against 38.8).
Sectoral analysis by evaluation theme is, in my opinion, the most interesting part of the EcoVadis Index results.
In the transport sector, no matter the size of the company, the supply chain score is far behind the other three indicators, 33.8 against 35.7 on a world average for small and medium-sized companies and 31.6 against 34.7 for large companies.
The Supply Chain is the Next Critical Step in the Energy Transition
For a long time, France has outsourced its supplies. In the automotive sector, the example of manufacturing batteries for our electric vehicles in countries such as Poland, which still use a lot of coal, is similar to the example of the French photovoltaic sector, which, for the time being, has been summed up by the installation of Chinese solar panels (produced in deplorable conditions with respect to our environment in China). We are improving the environment a little in France while degrading it significantly in China, which makes no sense and renders the environmental bill generally negative for the planet.
In order to support not only the development of local populations but also the preservation (and repair) of our environment, the world economy must gradually turn back from excessive globalization to the partial relocation of activity, given the inexorable increase in the cost of oil in the medium term and the desire of States to promote local employment in their companies in a context of high unemployment.
Browse through the EcoVadis Index Online for direct access to sustainability performance results based on industry and region.
Interested in learning more about the methodology behind the data? Check out the third edition of the Global CSR Risk and Performance Index.