Of Energy Transition, Tesla And Watchmaking’s Environmental Impact

The world operates by setting infinite tiny fires everywhere. From combustion in automobile engines to heat generation in factory furnaces, our reliance on fossil fuels is major. According to the World Energy Outlook 2024 study by the International Energy Agency, the global economy continues to be fueled with 80% fossil fuel-based energy. Even amidst the fervor of significant technological advancements and financial investments, the rate of climate change continues to escalate. The global economy’s dependence on fossil fuels indicates a substantial deviation from the established target of carbon neutrality. Achieving this objective necessitates a strategic and comprehensive reduction in fossil fuel utilization to mitigate greenhouse gas emissions and safeguard the delicate equilibrium of our planet.

Every call to action with an objective to mitigate fossil fuel reliance and impactfully cut emissions finds a singular remedy:

Electrification of everything!

As a low-hanging fruit posing a viable solution to fossil fuel-generated pollution and its consequent detriments, mass electrification is a potent and inevitable means to decarbonize the global economy. Not only limited to that, it’s a promising and practical strategy to support optimized, safer and sustainable processes as well as systems. According to an insight by McKinsey & Company, “It is technologically possible to electrify up to half of the industrial fuel consumption today!” This comes with not only an amelioration of the hefty carbon-emission footprint, but enables better energy-efficiency. The fruitful is most evident and impactful in the domain of buildings and transport, where electrification yields lifetime savings in regards to energy costs by more than cost of the equipment itself. The fiscal attractiveness of electrification is also evident by the low capital costs and increasing energy efficiency of electric equipment. Thus, many factors hint at a complete switch to electricity being economical as well. The significant potential of electrification has already been justified, although currently to a restricted factor, by its adoption at scale by emergence of electric vehicles (EVs), switch to electric in household applications, installation of heat pumps as replacements to fuel-fired boilers in buildings as well as by subsidizing renewable energy systems and processes. All of this hints at one inevitable: the future is electric.

Global Energy Diet In Transition

It is a general rule that everything eventually must become electrified. Just looking at the number of things or processes that once required no electricity, but now do, amazes. Beyond the buzz of the phrase “electrification of everything,” the scale and adoption of energy transition is mega. Driven by the need for more sustainable solutions and technology advancement in general, global infrastructure across disciplines is becoming electrified. This shift in energy diet is lending a significant contribution in measures to reduce greenhouse gas emissions. Moreover, as already established, it is economically viable and efficient. In every way, there are many supportive facts pointing that the “electrification of everything” is an absolute no-brainer. And at its core, there’s a singular objective - sustainability.

The expanse of electrification and its requisite rate is defined by the levels of detriment of the environment. According to the WHO, 99% of people breathe air that exceeds WHO’s global air quality guidelines limits. Air pollution accounts for 8.1 million deaths globally, becoming the second leading risk factor for death - a gruesome number concluded from the State of Global Air Report 2024. There’s no greater justification supporting massive and rapid deployment of electrification globally at scale. According to physicist Saul Griffith, a leading global specialist in clean and renewable energy technologies, by electrifying everything at a global scale, “We’ll need less than half the energy we currently use.” By opting for renewables, electrifying transportation, eliminating fossil fuel mining as well as refining and by electrification of buildings, the global dependence on primary energy can be reduced by about 60%.

In the list of action items to reach that objective, electrification of transportation alone will reduce overall fossil fuel consumption by 15%. This is a number that definitely posits car makers like Tesla as the future of mobility. The American automotive and clean energy giant has its sights set on India where electric is the fastest growing automobile segment and the overall market in 2023 was capped at $129.28 billion. Tesla’s long-anticipated entry into the Indian domestic car market is taking major shape with hiring ongoing for its India launch scheduled anytime in the next couple of months. It could consequently lead to setting up of Tesla’s manufacturing plant here in India as well. Moreover, the recent favorable changes in government policy would lead to Tesla’s import duty for India being cut to almost 15% thereby reducing the on-road prices for its models for an even better India-fit product. In its impact report for 2023, Tesla reported that its customers avoided releasing over 20 million metric tons of CO2e into the atmosphere. In a way, Tesla is leading a sustainable revolution in a traditionally emission-hefty sector for a robust and lasting impact. In the current state of India’s challenges with air pollution, that could be monumental!

Watchmaking And Its Environmental Implications

Equating emissions with watches doesn’t make sense. For all its intents and purposes, a wristwatch in its devised state of utility doesn’t have any actual environmental impact. It’s usually restricted to social, cultural and financial impacts. In its state of function, there’s no inherent sustainability gain from an electrified iteration of a timepiece. Although the watch industry has been one of the earliest in mass-electrification adoption with the advent of the battery-powered Seiko Quartz Astron as early as in 1969, in contrast the Nissan Leaf of 2010 is considered one of the first mass produced electric vehicles, the choice to go electric had a totally different objective. Same goes for solar-powered watches populating the catalogs of Citizen, Seiko, Tissot and Casio. There’s even a solar-powered Cartier, the Cartier Tank Must SolarBeat. The preference and intent to go electric in horological inventiveness was never to replace any fossil-fuel dependability. It simply didn’t exist. Hence, the responsibility towards sustainability for the watch industry goes beyond the buzz of electricity.

As with all commodities, the aspects of manufacturing, supply chain and consumption associated with watches contributes to climate change, environmental destruction, deterioration of water resources and biodiversity loss. In its industry report for the watch and jewellery sector, the World Wide Fund for Nature (WWF) states, “The extraction of non-renewable raw materials, like precious metals, involves deforestation, emissions to air, soil and water, and bares a high number of social risks (Dehoust et al. 2020). About 85% of GHG emissions from the luxury industry are indirect emissions that occur along the value chain (Watch & Jewellery Initiative 2030 - 2023).” The stages of extraction, preparation and processing of the materials that go into making a watch can have a significant negative impact on the environment and people. With the watch and jewellery sector consuming 50% of the world’s annual gold production and the brands’ dependence on extractive industries for its input, mitigating the environmental issues along this spectrum of the supply chain holds monumental significance for the watch industry. Owing to the fact that 1000 kg of soil needs to be moved to extract 10 grams (0.01 kg) of gold, the impact at scale is worryingly detrimental. As the process requires large amounts of water, even small-scale gold mining affects surface and groundwater supplies as well as water in the vicinity. These stats are fractional in the greater scheme of processes defining the many stages of realizing a manufactured watch.

As a positive, both consumers and brands of watches lay an increasing emphasis on sustainability being a purchase-driving factor for the former and an organizational objective for the latter. In the 2023 instalment of The Deloitte Swiss Watch Industry Study, the report stated that, “When it comes to materials, industry executives believe that certified ethical gold, recycled packaging and upcycled materials will be the most important in the next five years.” Moreover, “Sustainability has been integrated into brands’ and retailers’ corporate strategy, thereby becoming a catalyst for further investment. They are investing in making their manufacturing facilities and boutiques more carbon neutral. They are investing in R&D to make materials more circular and be less reliant on extracting raw materials. They are investing in their governance structures and in dedicated sustainability functions.”

The 2024 instalment of the same study reported that, “Gen Z consumers rate sustainability as a crucial factor influencing buying preferences. They place considerable importance on the sustainability initiatives of both watchmaking brands and their products. Aspects of sustainability that most resonate with the Gen Z include the ethical sourcing of materials and respect for human rights. This underscores the growing demand for accountability and ethical practices within the luxury watch sector.”

Sustainability Rating For Watch And Jewelry Sector

In its 2023 sustainability rating and industry report for the watch and jewelry sector, the World Wide Fund for Nature (WWF) demanded more transparency and responsibility from the same. WWF published in this report titled “Time For Change” a sustainability performance rating for 21 of the most well-known luxury watch and jewellery brands.

The results demonstrated that brands affiliated with larger conglomerates such as Kering (relevant brands: Pomellato, Boucheron), Richemont (relevant brands: A. Lange & Söhne, Cartier, IWC, Jaeger-LeCoultre, Vacheron Constantin, Panerai), and LVMH (relevant brands: Tiffany & Co., TAG Heuer, Bulgari) have benefitted from sustainability efforts at the group level. Among these, seven brands (Pomellato, Tiffany & Co., IWC, Boucheron, Cartier, Panerai and Bulgari) were labelled as “ambitious” in this rating, signifying a commitment to responsible business practices.

The majority of brands assessed were classified within the “upper midfield” score range, indicating a moderate level of sustainability performance. These included A. Lange & Söhne, Jaeger-LeCoultre, Vacheron Constantin, Pandora Jewellery, TAG Heuer, Omega, Tissot, Breitling, Swatch and Longines. Conversely, Rolex, Audemars Piguet and Chopard received “lower midfield” ratings. Patek Philippe stood out as the only brand categorized as “non-transparent,” reflecting a deficiency in publicly available information concerning its sustainability commitments. Notably, no brand attained a ranking within the two highest categories, “Frontrunner” and “Visionary,” underscoring the substantial potential for enhanced sustainability performance across the luxury goods sector. As a positive takeaway, the study indicated substantial progress in certain areas since 2018, especially in regards to “materiality analysis and monitoring as well as reporting and disclosure.”

Concluding Thoughts

At Rolex alone, a total of 150 internal sustainability projects are in action. Coupled with their publication of a detailed sustainability report since 2017 and setting up of an alert system enabling anyone to report environmental protection violations, the measures for sustainability at large in the industry are gaining traction for the good. With the fate of the planet inextricably linked to our own, immediate action as such is imperative. If Tesla’s automotive creations can inspire awe among purist petrolheads, what’s preventing luxury watch brands from creating their version of a solar-powered Cartier Tank on a vegan leather strap.