The Assessing low-Carbon Transition (ACT) automotive manufacturing sector methodology is a product of the ACT initiative, which assesses an organisation’s readiness to transition to a future low-carbon world and aims to drive action by companies to move to a well below 2-degree pathway in terms of their climate strategy, business model, investments, operations, and greenhouse gas emissions management. The ACT initiative, a joint project between ADEME and CDP, has created an overarching framework and sector-specific methodologies, of which the automotive manufacturing methodology is one.
The ACT automotive manufacturing methodology includes principles, scope, boundaries and performance indicators, as well as performance, narrative and trend scoring explanations. The methodology was developed through research and multi-stakeholder dialogue. ACT builds on the Sectoral Decarbonization Approach (SDA), developed by the Science-Based Targets Initiative (SBTi), to compare a company’s alignment to the low-carbon pathway. (See explanatory note below.)
Together with ACT and CDP, the World Benchmarking Alliance (WBA) has translated this methodology into the Automotive Benchmark 2019 and this latest Automotive 2020 Performance Update. A summary and explanation of how the ACT automotive manufacturing methodology was applied in 2019 is contained here. For this 2020 Automotive Performance Update, only the performance assessment has been undertaken for the 25 companies assessed in the 2019 Benchmark. Five new companies have been added in 2020 and these five companies received a full ACT assessment. The full list of 30 companies is available here.
This Automotive Performance Update 2020 forms the third of a series of rankings and updates within the Climate and Energy Benchmark of the WBA. As well as the Automotive Benchmark 2019, this ranking series measured and ranked the climate action performance of 50 keystone electric utilities in 2020. It will continue to measure and rank the climate action performance of companies in other high carbon emitting industries within the decarbonisation and energy system, including oil and gas, transport, and real estate and construction.
Also in November 2020, WBA’s Corporate Human Rights Benchmark published its assessment results of the 30 keystone automotive companies, which enabled some joint analysis across companies’ climate and energy and human rights performance. Key finding 3 highlights some of this analysis and the full Corporate Human Rights Benchmark key findings report is available here.
The WBA Automotive Performance Update 2020 is a sector-specific assessment update within the WBA Climate and Energy Benchmark. The Climate and Energy Benchmark will clarify where and how companies can contribute to SDG 13, SDG 7, and the Paris Agreement, and incentivise them to align their strategies and operations with a well below 2-degree pathway. It is part of the decarbonisation and energy transformation identified by the WBA as one of the seven system transformations required to achieve the Sustainable Development Goals (SDGs).
An assessment of the SDGs and corresponding targets demonstrated that the decarbonisation and energy transition will have an evident impact on SDG 1 (no poverty), SDG 3 (good health and wellbeing), SDG 7 (affordable and clean energy), SDG 9 (industry, innovation and infrastructure), SDG 12 (responsible consumption and production), SDG 13 (climate action) and SDG 17 (partnerships for the goals), amongst others.
All WBA benchmarks build on existing standards and norms and seek to draw on existing frameworks and initiatives. For this reason, the ACT methodologies have been adopted as suitable existing methodologies. The ACT methodologies, used to create the Climate and Energy Benchmark, can act as roadmaps, setting out how high-emitting companies can contribute to the decarbonisation and energy transformation and achieving SDGs 1, 3, 7, 9, 12, 13 and 17 – amongst others – and the Paris Agreement.
Before the Climate and Energy Benchmark began, a mapping exercise identified that the Taskforce on Climate-related Financial Disclosures (TCFD) was strongly aligned with the benchmark (although their objectives and audiences differ slightly). The Climate and Energy Benchmark uses data that the TCFD promotes the publication of, while the benchmark can allow financial actors to better understand transition risk. Both initiatives focus on companies’ governance, metrics and targets, and aspects of risk management practices (such as low-carbon transition plan and climate change scenario analysis). You can read more about the relationship between the WBA Climate and Energy Benchmark, ACT and the TCFD by clicking here.
Within the automotive sector, the WBA Automotive Benchmark and Update include companies with activities in automobile manufacturing. These activities include the design of ‘light duty’ vehicles (cars) and their final assembly. They do not include the manufacturing of vehicle parts.
The automotive sector’s keystone companies are included in the Automotive Update 2020. The ‘keystone company’ is based on the concept and characteristics of keystone actors as defined by Österblom et al in 2015, as those that play a vital role in the industry and have a disproportionate effect on the structure and function of the system in which they operate. Of the potential global automotive manufacturers, 30 keystone companies were included in the Benchmark and Update based on the following criteria:
- Companies that dominate global production or service revenues and volumes within the automotive manufacturing sector.
- Companies that control globally relevant segments of production and/or service provision, based on an assessment of vehicles sold.
- Companies that connect (eco)systems globally through subsidiaries and supply chains.
- Companies that influence global governance processes and institutions.
- Companies that have a global footprint, particularly significant in developing countries.
Like every ACT methodology, the full ACT automotive manufacturing methodology assessment generates a rating comprising:
A performance score – represented as a number from 1 (lowest) to 20 (highest) – presents a broad and modulated view of company performance across key levers for low-carbon transition.
A narrative score – represented as a letter from A (highest) to E (lowest) – provides a holistic view of a company’s state of alignment with the goals of the Paris Agreement.
A trend score – represented as “+” for improving, “=” for remaining the same, or “-“ for worsening – signals the near-term movement of company alignment with the low-carbon economy.
For the performance assessment, company data is analysed across nine modules: targets, material investment, intangible investment, sold product performance, management, supplier engagement, client engagement, policy engagement, and business model. Each of these modules contains indicators, and each module and indicator has a weight (see figure below). The weights are guided by the principles of value of information, impact of variation, future orientation and data quality sensitivity identified in the ACT framework.
Figure: Performance indicator weighting
A company’s module-level scores, and the overall performance score, are presented in each full WBA company scorecard. The text in the “Leading practices” and “Risks and opportunities” section give an additional commentary on a selection of performance assessment modules.
The narrative assessment is an overall analysis of all available data sources (including sources additional to those used for the performance assessment) to establish a company’s state of alignment with the goals of the Paris Agreement. The narrative assessment considers the performance assessment, as well as further analysis of the company’s reporting based on four criteria: business model and strategy; consistency and credibility; reputation; and risks. The overall narrative score is presented in each WBA company scorecard. The section “Progress towards the Paris Agreement” provides additional commentary on each detailed element of the narrative assessment: commitments, transition planning, present activities, legacy, and consistency.
For the trend assessment, the company is assigned a “+”, “=”, or “-”, depending on whether the analyst deems that the future company will be less, equally or more able to meet the requirements of the low-carbon transition in a re-assessment in the near-term. This is presented in each WBA company scorecard. The section “Trend” provides additional commentary on the trend assessment.
Approach to scoring and ranking – 2019
The analyst applying the ACT methodology assesses the data. A score is given per indicator which is used to calculate the performance element of the ACT score. The narrative assessment is then produced according to the narrative score principles by referring to both the information considered for the performance assessment; plus, other verifiable public data on the company such as annual and sustainability reports and news from reliable sources. Finally, the trend score is produced synthesising the forward-looking aspects of the assessment to give a view of the future likely trend in company performance.
To create the overall Automotive ranking, a weighting was applied to each of the performance, narrative, and trend scores as follows:
- The performance score has a 1:1 weighting, i.e., a score of 12 is 12;
- The narrative score is weighted: A=25, B=20, C=15, D=10, E=5; and
- The trend score is weighed: “+”=1, “=”=0, “-“= -1.
This overall weighted score resulted in the Automotive 2019 ranking.
In this 2020 Update, only the performance assessment has been undertaken for the 25 companies in the 2019 Benchmark. The five companies added to the assessment in 2020 received a full ACT assessment.
For the 25 companies assessed in both 2019 and 2020:
Each company’s module-level scores, and its overall performance score, are presented in each WBA company scorecard. Each scorecard also contains a score summary, providing information about the company’s 2020 assessment.
For the five companies assessed in 2020 for the first time:
The five companies added to the assessment in 2020 received a full ACT assessment, comprising a performance, narrative and trend score, as explained above.
Approach to scoring and ranking – 2020
A key difference between the Automotive Benchmark 2019 and the Automotive Performance Update 2020 is that in 2020, no overall ranking has been produced, because only the performance assessment part of the ACT assessment has been undertaken for 25 of the companies.
Module-level rankings are available however across: targets, material investment, intangible investment, sold product performance, management, supplier engagement, client engagement, policy engagement, and business model.
Total figures for performance assessments can be subject to rounding differences, but this has not had any overall effect on the ranking.
Data collection process
The Automotive Update 2020 assesses the most reliable, latest available, public and verifiable data. Where possible, data points are 5 years historic up to the present – so for some data points, as far back as 2014 – and with future orientated analysis. 2019 was the most recent year for which complete regulatory data was available.
Data was collected in the first instance from CDP’s disclosure platform where possible, as well as other sources such as specialist databases and public materials from company websites including sustainability and corporate responsibility reports.
Companies were also invited to directly participate in the data validation process by submitting information during a two–week period, at some point between 21 September and 12 October 2020.
All 30 companies were welcome to provide additional information; seven of 30 provided additional data either through the data validation process or by other means within the time period.
Disclosing company scores
Scores for each company are available publicly, for all stakeholders:
For the 25 companies assessed in both 2019 and 2020:
For the performance assessment, at indicator, module and overall performance score level.
For the five companies assessed in 2020 for the first time:
- For the performance assessment, at indicator, module and overall score level;
- For the narrative assessment, at the overall score level;
- For the trend score, at the overall score level.
Individual company results are presented in the company scorecards. Module-levels rankings are presented in the ‘Ranking’ section of the website.
For all 30 companies:
The ACT automotive manufacturing methodology was developed according to a robust, credible, and replicable process. It was built based on extensive research and outcomes resulting from multi-stakeholder dialogues.
The ACT automotive manufacturing methodology was first developed by CDP and ADEME in 2016. ACT methodologies are based on the principles and guidelines of the publicly available ACT Framework. It was then revised and updated during 2018 to reflect the updated SBT Transport Tool and updated underlying scenarios. ACT methodologies are based on the principles and guidelines of the publicly available ACT Framework.
The ACT automotive manufacturing methodology was developed in consultation with companies and experts in the sector, and pilot companies reported against the methodology and received an ACT pilot assessment and rating privately. Groupe PSA, Renault and IAN Motion participated in this pilot company road test.
The methodology had input from a Technical Working Group (TWG), Advisory Group, and public consultation from February 2016 to January 2017. You can find out more via the ACT initiative website: https://actinitiative.org/ and about participating companies here: https://actinitiative.org/about-us/.
Feedback from the TWG, Advisory Group, and public consultation informed the direction of the methodology and consultation feedback was considered in the final published version of the ACT automotive manufacturing sector methodology.
Publication of WBA Automotive Update 2020
In November 2020, the key findings and company scorecards were published online, with the Performance Update officially launched across various events. The WBA company scorecard had previously been made available to each company to inform them of their scores.
In both the WBA key findings and company scorecards, the terms “low-carbon pathway” and “decarbonisation pathway” are used to refer to the “company benchmark” pathway. The company benchmark pathway is the pathway allocated to an individual company from the sector decarbonisation pathway, built on the Sectoral Decarbonisation Approach (SDA) of the Science-Based Targets Initiative (SBTi). For the 2020 assessments, this was built using the 2017 IEA ETP B2DS (Beyond 2°C) scenario, which limits future temperature increases to 1.75°C by 2100. For the 2019 assessments, the 2017 IEA ETP 2DS (2°C Scenario) was used. Therefore the 2020 assessment scenario has a higher ambition than the 2019 assessment scenario.
The term “the [automotive] industry’s low-carbon pathway” is used to refer to the sector decarbonisation pathway as a whole.
Reference data to inform the company well below 2–degree decarbonisation pathways came from the IEA ETP 2017, the ICCT Transport Roadmap, and WWF and Ecofys. Data for the companies’ vehicle in-use emissions is only available on a tank-to-wheel rather than a well-to-wheel basis. Consequently, the company decarbonisation pathways applied for these assessments were established on a tank-to-wheel basis.
You can read more about the application of the sector and company benchmarks and other quantitative benchmarks in the ACT automotive manufacturing methodology: https://actinitiative.org/