Consider the impact and marketing opportunity the end-use of your products, services, and solutions represent.
by Paul Pierroz
Strategy | Sustainability | Marketing
September 14, 2021 - We can all relate to the prolific sustainability profile of its electric vehicles. In a 2021 J.D. Power APEAL survey of owners, they have unofficially ranked Tesla at the top, scoring 896 out of a possible 1,000 points. The survey measured the car’s emotional appeal and customers’ attachment to their new vehicles. They ranked ahead of Porsche at 881 and the average rating for all luxury vehicles at 861. 1 Tesla is part of the global automotive industry, typically classified under the heading of capital goods. It shares space in the NASDAQ global automotive index with 33 others, including Daimler, Ford, General Motors, Toyota, and Volkswagen. 2
All the index companies procure components, run factories making cars, manage distribution and provide after-sales service support. Their operations all generate greenhouse gas emissions from their factories which they are obliged to report and work to reduce. So, why does Tesla stand out in the field? They can point to the advantage of a bigger “Big E.” Their product line’s end-use has benefits, and they are not shy about talking about it.
"BIG E" IS YOUR GOLDEN OPPORTUNITY
There is something here for your organization as well. Ask yourself what the impacts of the actual use of your product or service are versus alternatives, and you are on your way. Tesla uses its impact report to compare its product's in-use emissions versus those of hybrid and internal combustion engine vehicles.
With zero emissions from its tailpipes, it has a compelling story for consumers and the market. Its 2019 report indicates that the average internal combustion engine (ICE) emits the equivalent of 69 tonnes of carbon dioxide emissions over its lifetime. If we consider the EPA suggests that the average car produces 4.6 tonnes per year, the average ICE vehicle lasts about 15 years. Tesla estimates 17 years. 3
The most exciting fact is the average life cycle emissions of electric versus ICE vehicles. They peg average ICE vehicles at 420 grams of carbon dioxide equivalent per mile, with their electric Model 3 vehicles in the range of 0-100 grams based on the charge’s emissions, the “fuel” for batteries in electric cars. The charge is emissions-free as it’s drawn from renewable sources, such as combining solar panels and wall charging units, with up to a 100-gram range based on the power grid’s efficiency providing the charge, which differs across geographies.
Like Tesla, your opportunity to communicate your in-use impact versus alternatives can be more significant and potent than the story around your direct emissions from operations.
PUSH INTO THE ENTIRE ECOSYSTEM
Assuming all of your benefits reside in your core operations, value chain, or development life cycle, this may limit your options. We must extend our efforts into examining a larger ecosystem, even if it means crossing sectors and international borders. Follow your unique opportunities right to the end.
Completing any large infrastructure project is challenging. However, in the example below, we consider an energy project that had some clear sustainability advantages, including providing Mexican industry and residents access to reliable and affordable power.
In late 2019, TC Energy, a Canadian energy infrastructure company, and its partners brought the Sur de Texas marine pipeline into production. It runs underwater for almost 500 miles (800 kilometers), from Brownsville, Texas, in the US, to Tuxpan, Veracruz, in Mexico, with the capacity to deliver up to 2.6 billion cubic feet of natural gas per day. 4
The Texas gas is processed and compressed onshore in Altamira, Mexico, where the power is generated and distributed to approximately six million residents and businesses. The system’s environmental benefits come from reduced GHG emissions, improvements in air quality, and moving away from higher-emission fuel oil and diesel as source fuels to cleaner-burning natural gas. Ultimately, these have a positive public health impact. 5
An analysis of the sustainability benefits extends beyond the environment and access to more affordable and reliable power. The project also facilitated job creation and training, economic development, technology transfer, international cooperation, and regional energy security for Mexico.
It’s inevitable that, based on our national and enterprise-level accountability system, emissions accounting would be complicated. TC Energy can point to the long-term Scope 3 emissions improvements in Mexico, based on the change from fuel oil to natural gas. But, what of the countries involved? In one scenario, the United States, as the new supplier, would likely see elevated carbon emissions, while net carbon emissions may decrease in Mexico. You can see this as a potential weakness in segmented reporting and measurement regimes, which could stall future development.
For improvements to be made, investments need to be evaluated on a total ecosystem basis, compared to the status quo and the next best alternatives in this context, without considering borders.
1 This information is from the J.D. Powers website, Press Release, “Most Owners Satisfied with New Vehicles; Some Truly Love Them Despite Their Flaws,” July 22, 2020. https://www.jdpower.com/business/press-releases/2020-automotiveperformance-execution-and-layout-apeal-study
2 This information is from the Nasdaq website, Nasdaq Global Indexes. “OMX Global Automobile (QAUTO).” https://indexes.nasdaqomx.com/Index/ Overview/QAUTO
3 This information is from the Tesla website, Impact Report 2019. https://www. tesla.com/ns_videos/2019-tesla-impact-report.pdf
4 This information is from the TC Energy website, Stories, “Sur de Texas – Tuxpan 1st Anniversary,” September 18, 2020. https://www.tcenergy.com/ stories/2020/2020-09-18sur-de-texas--tuxpan-1st-anniversary/
5 This information is from the “TC Energy 2020 Report on Sustainability,” page 17. https://www.tcenergy.com/siteassets/pdfs/sustainability/report/tc-rosreport-en.pdf 10.