Global drivers

It is crucial to keep pace with a changing world. Today it is more important than ever to understand our operating environment, how it impacts the Volvo Group and, above all, to find ways to better fulfill future transport needs.

There are numerous factors influencing the business of the Volvo Group. In this section, some of the more significant global and long-term challenges are defined. How these challenges are addressed is explained throughout this report. Together with results from the dialogues conducted with the Group’s various stakeholders and business aspects connected to the Volvo Group’s operations, the challenges described form the base for the prioritization of the Volvo Group’s business activities and serve as the foundation for the redefined CSR and Sustainability strategy.

Challenges

  1. Population growth and urbanization
  2. Climate change and alternative fuels
  3. Shortage of natural resources and raw material
  4. Safety and security
  5. Competent employees
 Approximately 20 percent of the world’s population is expected to live in cities with populations in excess of two million inhabitants by 2015

1. Population growth and urbanization

The world’s population is steadily increasing. By 2050 it is expected to exceed nine billion. Since 2008 more than half the world’s population lives in cities and in fifty years, that figure is expected to reach two-thirds of the population. The most intensive pace of urbanization is taking place in Africa and Asia. In addition, the number of cities and regions with populations exceeding ten million is growing rapidly. Approximately 20 percent of the world’s population is expected to live in cities with populations in excess of two million inhabitants by 2015.

In many countries while the population is growing, the demographic balance is tipping towards aging populations and the working age share of the population is shrinking. These trends will raise the significance of health issues, and require greater focus on employee health.

Likewise, the complex demographic shifts combined with urbanization influence the demands on transport. The overall trend is leading to an increased need for transportation and infrastructure, with effects on the requirements for public transport systems and freight logistics.

The overall trend is leading to an increased need for transportation and infrastructure
Cities, particularly major cities, have specific requirements for urban and traffic planning. Congestion and noise pollution also need to be addressed through the availability of vehicles specially adapted for these environments. In addition, a growing population increases the need for housing, roads and facilities.

2. Climate change and alternative fuels

Climate change is one of the most complex and difficult questions of our time. Burning fossil fuel is the single largest source of anthropogenic greenhouse gas emissions. Oil has long been considered a reliable source of energy, but today, oil use is a highly contested issue. This is primarily attributable to the environmental problems associated with oil, but also because future access to oil is uncertain due to dwindling oil reserves, increasing price and instability in oil producing regions.

The development of renewable fuels differs widely among regions depending on the availability of natural resources
A shift to sustainable energy resources is crucial. Major efforts have already been made to develop the use of renewable energy sources. However, the development of renewable fuels differs widely among regions depending on the availability of natural resources, which in turn drives the development of vehicles and machines adapted for various types of fuels. The move towards the large scale use of renewable energy is also highly dependent on political decisions and investment capacity to create the necessary production facilities and infrastructure.

3. Shortage of natural resources and raw material

Population growth, a rapidly growing middle class and greater purchasing power leads to increased consumption. Mankind is utilizing an increasing amount of land, water and other resources. More efficient use of resources is required and the recovery of a greater proportion of material is becoming increasingly important to secure access to materials.

4. Safety and security

Traffic and road safety is becoming even more important as demands on transportation increases. The subject is a high priority for governments and institutions worldwide. There has also been an increase in awareness and the demand for safer products and safety guidelines at construction and operation sites.

In the future, the focus on security is also likely to continue to increase because of crime, military conflicts, terrorism and natural disasters. In relation to transportation this will impact the safety of drivers, vehicles, goods and the general public.

For many years, interest has waned for education and careers in the fields of mathematics, natural sciences and engineering in some developed markets, while interest has grown in some emerging markets

5. Competent employees

Increased global presence, new products, new technologies, demographic changes and more rapid fluctuations in the global economy will lead to challenges in the supply of expertise and resources. For many years, interest has waned for education and careers in the fields of mathematics, natural sciences and engineering in some developed markets, while interest has grown in some emerging markets. The need, however, for competent employees with these types of specialist skills will grow as products and services become increasingly sophisticated.