2020 Measurement area finding

Targets

Module 1, targets, assesses emissions targets, as these are an essential north star for companies navigating the low-carbon transition. They provide a framework in which strategy, capital expenditure and research and development can be aligned to deliver emissions reductions. Public targets demonstrate the credibility of companies’ climate ambition to stakeholders including investors, consumers and regulators.

It is crucial that targets in the automotive sector are set for vehicle in-use emissions, also known as fleet emissions. These are the average emissions produced per kilometre by the vehicles sold by a company each year. These emissions account for the vast majority of auto manufacturers’ total emissions impact. Therefore indicator 1.2 on vehicle in-use emissions targets accounts for 1.8 out of the overall performance assessment score of 20, and this module as a whole for 3 out of 20.

Shockingly, 20 out of the 30 keystone companies do not have medium to long-term vehicle in-use emissions targets. These companies should rapidly set clear, robust and science-based vehicle in-use emissions targets.

Some companies performed well on this indicator:

  • Five companies – Ford, Groupe PSA, Mahindra & Mahindra, Renault and Volkswagen have set targets compatible with their well below 2-degree decarbonisation pathways.
  • Nissan’s target to reduce vehicle in-use emissions by 90 percent by 2050 scores highly, but even this is not fully aligned with its individual company decarbonisation pathway, calculated to show what the company must do to contribute its share to achieving a well below 2-degree future.
  • Daimler’s main subsidiary, Mercedes-Benz, and Volvo, a subsidiary of Geely, have set ambitious 1.5-degree-aligned science-based targets. Daimler and Geely therefore score 80 percent and 33 percent respectively on the fleet emissions target indicator, reflecting the share of total parent company vehicle sales that Mercedes-Benz and Volvo accounted for in 2019.

It is crucial that emissions targets are set at the parent company level, or that separate targets are set for every subsidiary, to ensure that there are no inconsistencies or gaps in a company’s climate performance. Parent companies should not rely on subsidiaries to drive the low-carbon transition – transformative change must be embedded across the whole group.

A further two companies, Mazda and Subaru, have set targets to reduce vehicle in-use emissions by 90 percent by 2050. However, these could not be assessed as the companies did not provide base year emissions (the starting amount against which emissions reductions will be assessed). This undermines the credibility of these targets, as it is not possible for stakeholders to monitor progress towards them.

16 out of 30 companies have medium to long-term scope 1 and 2 emissions targets, i.e., with a target year beyond 2024, as assessed in indicator 1.1. More companies have set scope 1 and 2 targets than vehicle in-use emissions targets. Scope 1 and 2 emissions are from companies’ direct operations and purchased electricity, so companies have more control over these emissions sources. However, only five companies’ scope 1 and 2 targets are considered fully aligned with their well below 2-degree pathways*: Ford, Mahindra & Mahindra, Renault, Toyota and Volkswagen. In the 2019 Automotive Benchmark, nine out of the 25 companies had scope 1 and 2 targets aligned with a 2-degree pathway. This shows that auto manufacturers need to set more ambitious scope 1 and 2 targets to align with the full urgency of climate efforts.

Companies are also assessed on the time horizon of their targets in indicator 1.3. Ideal targets have a long-term goal to guide strategic planning, with short-term targets of five year (or shorter) intervals to incentivise action and track progress towards the long term. The average score on this indicator increased from 37.4 percent in the previous assessment to 40.8 percent in this assessment.

However, the results from measuring progress towards existing targets by 2019 and the achievement of any past emissions targets are less positive (indicator 1.4). On this, the average score fell from 61.2 percent in the 2019 Benchmark to 40.2 percent in this assessment. This indicates that companies are falling behind on delivering their targeted emission reductions and should take greater action to keep up with their commitments.

The absence of emissions targets amongst the Chinese headquartered companies is notable. Of the ten companies, nine have set no emissions targets either for their scope 1 and 2 emissions or for their vehicle in-use emissions. The one exception, Geely, only has targets for its Swedish-based subsidiary Volvo. These ten companies should set ambitious emissions targets. This will help show how they as companies will contribute to the Chinese government’s recently announced goal of net zero emissions by 2060.

Technical notes:

*This 2020 assessment uses the sectoral decarbonisation approach developed by the Science Based Targets Initiative (SBTi) to assess the alignment of a company’s targets with a company-specific well below 2-degree decarbonisation pathway. The well below 2-degree scenario aims to limit temperature rise to 1.75 degrees and is more ambitious than the 2-degree scenario used in the 2019 Automotive Benchmark. Future assessments will use the most ambitious scenario available and will therefore apply a 1.5-degree scenario when this becomes available.

Only four-wheeler light-duty vehicles were considered in the assessment of companies’ targets, with two and three-wheeler vehicles such as motorbikes and rickshaws excluded.

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