The tires driving the race to net-zero

The study explores the concept of the circular economy and details circular and sustainable business models within the automotive and tire sectors. Specifically, it seeks to answer:

• What are the key elements of a circular economy? What characteristics must a business model have to be considered circular and sustainable?
• What are the main steps toward transitioning to a circular business model?
• Which companies in the automotive and tire industries stand out as successful examples of managing this transformation?

To address these questions, the study began with a systematic review of the relevant literature, aiming to define the circular economy, its core principles, and levels of application. It then outlined circular and sustainable business models, identifying their key components. The research also analyzed the main drivers and barriers to implementing circular practices and strategies.

In the automotive sector, the researchers conducted a case study analysis of key global players (BMW, BYD, Toyota, and Volkswagen) to assess major trends at a macro level.

For the tire industry, a benchmarking analysis was carried out to identify best practices among all the major global producers.

The analysis focused on gathering information related to sustainability and circular economy strategies, policies, and initiatives (both environmental and social) at the process and product levels.

Three clusters emerged from the analysis:

• Runners-up: Companies that have begun to define sustainability and circular economy strategies but have yet to formalize them into a clear strategic and operational framework.
• Best players: Companies that have integrated these strategies into their sustainability plans, outlining areas of action, intervention lines, and initiatives with multi-year goals and targets.
• Best practice: “Best players” that stand out for their virtuous practices, stronger commitment, and early achievement of set targets.

The analysis revealed that Pirelli is the only company in the sector positioned in the “best practice” cluster.

The Pirelli case highlights the advantages of being a first mover: the company began incorporating these principles as early as 2004 and has now fully integrated sustainability into its operations. Early adoption has had a significant impact, fostering a strong culture of sustainable management.

All of Pirelli’s short- and long-term goals have been approved by the Science Based Targets initiative, the leading standard setter that provides companies with scientifically grounded tools and guidelines for reducing greenhouse gas emissions. These validated targets underpin Pirelli’s ESG strategy, which aims for carbon neutrality by 2030.

Pirelli’s strategy is built around setting ambitious goals and pursuing bold action. The company pushes the boundaries of its targets, accelerating progress while carefully evaluating risks and opportunities. Its approach remains cautious to avoid setbacks.

Despite the progress made, the widespread adoption of circular economy principles in the automotive and tire sectors still faces challenges. These include the availability of sustainable materials at competitive prices, the need for stricter regulations, and raising consumer awareness of sustainable choices.

Policymakers at both national and international levels have recognized these challenges and are working on implementing more rigorous regulations to accelerate the circular transition. Additionally, collaboration between industry and governments in promoting innovation and the adoption of eco-friendly tires can significantly reduce environmental impact. Ultimately, a joint effort from consumers, producers, and regulators is essential to drive the transition toward more sustainable and responsible mobility.