Car companies in danger of missing Paris climate targets, new analysis warns
Car companies in danger of missing Paris climate targets, new analysis warns
New benchmark reveals companies not selling enough low carbon vehicles and must rapidly shift gear to reach Paris goals.
December 6th, 2019: A lack of investment in low-carbon vehicles is putting the automotive sector in danger of missing the Paris climate targets, a new study from the World Benchmarking Alliance (WBA) and CDP reveals.
The assessment looks at 25 leading car manufacturers and finds that the bulk of companies have a low carbon vehicle in their range, but are not selling enough right now and are not ready to scale up as needed to meet the Paris goals.
The findings are drawn from the first benchmark of the automotive sector using CDP and ADEME’s new ACT (Assessing low Carbon Transition) methodology, which looks at companies’ performance on climate by sector. The news comes as world leaders meet to discuss the climate emergency at COP25 in Madrid.
The report shows that companies have so far failed to shift consumers and markets away from high emission vehicles. It calls on automotive manufacturers to reshape their industry around low-carbon transport and mobility. It says companies must work with policymakers and investors to create markets which reward this shift, and infrastructure which enables it.
Vicky Sins, Climate and Energy Benchmark Lead at WBA, said: “The vast majority of car companies aren’t hitting their current targets or setting new ones for the future. Unless that changes right now, they won’t hit the Paris goals and will face disruption to their business in the future. The transport industry is responsible for 25 % of global emissions from fossil fuels so this should be a major concern to the industry, governments, investors and the planet. Currently we’re seeing a transition to a low carbon economy with the brakes on.”
Some 21 of the 25 companies assessed have a low-carbon vehicle on the market in 2017. However, for 16 of the 25 companies assessed, low carbon vehicles represent less than 1 percent of total annual sales. Only 5 companies currently meet the International Energy Agency’s (IEA) criteria for reducing their emissions across their fleet that aligns with the Paris goals. They are Groupe PSA, Renault, Ford, Mazda and Nissan. The full rankings can be found in the notes to editors below.
The organisations are calling on companies to set clear and detailed targets and plans to work towards the Paris goals. This includes appointing climate change experts to their board – and doing more to push their trade associations to lobby for climate safe transport. At present, only one company (VW) has a climate change expert on its board.
“The building blocks are in place for a shift to low carbon vehicles and business models, but progress is being stalled by lack of market incentives and leadership. Governments and companies must work together to make low carbon vehicles accessible and desirable to consumers, that’s the critical step. The ACT methodology provides insights to help companies understand where they are and what more they need to do to stay on track with Paris,” said Tony Rooke, Global Technical Director at CDP.
French, German and Japanese companies perform the best, with the US lagging behind. However, the benchmark shows the whole industry needs to step up its commitment and performance and accelerate to reach Paris goals.
The report notes that more than half of the companies assessed had explored initiatives like car-sharing, car-pooling or other similar activities, but says more investment and support was urgently needed. It also highlights examples of positive innovation which could help overhaul the transportation system for a low-carbon economy, but which are currently too small in scale. They include BAIC’s ‘Optimus’ initiative for solar battery charges and swap stations, and Honda, Nissan and Toyota’s joint initiative (with the Development Bank of Japan) to accelerate the construction of Fuel Cell Electric Vehicle fuelling stations.
David Cumming, Chief Investment Officer, Equities & Head of UK Equities at Aviva Investors, said: “The global auto sector is a major contributor to climate change and companies must adapt quickly to technological changes and environmental regulations. In launching its climate and energy benchmark, the World Benchmarking Alliance has provided investors with a critical tool to help identify those companies that are prepared to step up to meet global demand shifts and those that risk falling behind.”