Advancing sustainability in the automotive sector: A critical analysis of environmental, social, and governance (ESG) performance indicators

Abstract

ESG (Environment, Social, Governance) is becoming increasingly important as sustainability concerns in the industry increase. The automotive industry is one that receives significant attention and pressure on sustainability, with the ever-growing regulations pushing it towards sustainability. However, ESG improvement could be more effective due to the many factors. Although previous studies have revealed the evaluation and prioritization of ESG key performance indicators (KPIs) in the automotive sector, there is still a need for other approaches to identify the priorities and interdependencies between critical factors that enhance organizational strategic improvement measures. The study aims to address the gaps by identifying critical indicators in ESG reporting standards and utilizing Fuzzy DEMATEL and Fuzzy TOPSIS methodologies to explore the priorities and causal relationships of ESG KPIs in the automotive industry. The findings indicate that the top three of 17 identified factors are the top priorities that influence others in improving ESG performance, including corporate governance, air emissions, and sustainable product development. The importance of addressing social sustainability issues in strengthening stakeholder relationships is also highlighted in the research findings, such as human rights and labor practices. Businesses in the automotive sector can use the study's insights to enhance their sustainability strategies, determine critical opportunities for improvement, and rank their priorities to achieve sustainability objectives. Policymakers can use it to promote industry-wide efforts for sustainable development and create regulatory frameworks.