When you buy your next car, are you actually supporting an auto company with a transparent and effective climate change strategy? Enablesus analysed the climate targets and reporting of 13 big industry players to determine what action — if any — they are taking to hasten this shift. Our analysis yielded four key recommendations on what you should look for to make a more climate-friendly choice.
Is the industry showing us its real impact?
All 13 companies reviewed published information on their current Scope 1 and 2 greenhouse gas (GHG) emissions, which are the emissions from in-house activities they directly control. While all report on their Scope 3 emissions too, not all give an actual full accounting. Noting that Scope 3 includes upstream emissions of everything that goes into making a vehicle, plus downstream emissions that includes the use of the vehicle (include electricity or fuels) and its later disposal.
What is the industry’s climate ambition?
We observed that the industry companies are responding to the pressure to reduce their climate impact. We found that 12 out of 13 companies have set themselves goals of reaching ‘net-zero’ and ‘carbon neutrality‘. Stellantis has the ambitious goal to reach net-zero by 2038. While most other companies including Ford, Honda, Nissan, BMW, and Renault are working towards achieving full carbon neutrality by 2050.
But ‘net-zero’ and ‘carbon neutrality‘ are actually different goals! Carbon neutrality means a company has reduced its GHG emissions from all its activities (e.g. Scopes 1, 2, and 3), and then offsets what it cannot remove through investments via verified carbon offsets generated from climate-friendly projects around the world. While net-zero means that all, or nearly all, of a company’s emissions are reduced to zero and if any is left over it is directly removed from the atmosphere and stored long-term via new technology or other practices.
What is the industry doing now?
In addition to net-zero and carbon neutrality goals, some companies have also set short- and medium-term emission reduction targets they will work to achieve by 2025 or 2030. Ford, for example, has committed to a 76% reduction in Scope 1 and 2 emissions by 2035 (compared to 2017). Volkswagen’s target comprises a 30% reduction of their Scope 1 and 2 emissions by 2030 (compared to 2018). But not all automotive companies are following the same road.
Looking more closely at the emission reduction targets set by other companies can be insightful. For example, while most targets are absolute (e.g. total GHG emissions), BMW is one of the companies that only sets an emission reduction target per vehicle. This means that BMW does not necessarily intend to cut their absolute emissions, but merely to reduce the average emissions associated with producing each car. If BMW increases their production a lot, overall emissions may still climb, although BMW meets its climate goal per car.
Still, BMW does lead the way for Scope 3 targets by setting individual reduction goals for the upstream purchased goods and products, as well as for the downstream use of sold products. We did not see full up- and down-stream targets with any other company in our analysis.
Looking closer: What do companies (not) say in their reports?
While the industry is making progress in terms of climate change and wider environmental reporting as well as related target setting, their sustainability reports often lack full transparency.
Hyundai’s 2022 Sustainability Report reveals a clear carbon neutrality goal for 2045, highlighting the strategic areas the company will address. However, besides purchasing 100% renewable energy, there is little information on concrete actions the company will take to reach this neutrality goal. This lack of detailed on actions is unfortunately the same for many other companies as well.
Tesla on the other hand – despite being a leader in EV production – only reported their corporate-wide emissions for the first time in 2021. Scope 1 and 2 emissions are reported as normal. However, for Scope 3 emissions Tesla only reports on downstream emissions (e.g. use of vehicles) and not the upstream (e.g. the emissions from suppliers to Tesla). This means their reported overall impact will be smaller than their actual impact, as emissions from purchased goods and services, and business travel are not included.
What can you do to check on an auto company’s climate impact?
With a very little bit of effort, you can easily find out if an auto company, and its car brands, actually meet your climate values. Here are four great tips.
Does the auto company set absolute emissions reduction targets that cover the entire company and value chain, or is the target only per-vehicle? The first shows real ambition and impact, while the latter means that overall emissions could still increase if their production volume increases.
Does the auto company have short-, medium-, and long-term emissions targets, as well as what is the overall goal? If a company is not acting on short-term targets (until 2025) then that really brings into question their true climate commitment, while only having only medium- (until 2030) and/or long-term (2035 and beyond) targets mean they may be kicking the can down the road.
Does the auto company have a focus on measuring all Scope 3 emissions. To make genuine progress, it’s important that companies set concrete emissions reduction targets, measures these annually, and take real actions in all Scope 3 categories – both upstream and downstream.
Does the auto company ensure transparent reporting and include details on its planned climate actions. This includes developing and using more sustainable manufacturing materials and processes, strengthening biodiversity, and reducing energy, waste and water use. This is key to holding industry peers accountable and for maintaining public trust.
To answer these questions you can review the auto company’s sustainability website or its annual sustainability reports. Both simple and comprehensive information on auto companies sustainability are freely and easily available at one location with enablesus (search on https://enablesus.com).
Interesting to learn that Tesla is falling behind on scope 3 emissions reporting. Hope they shape up soon.
@markus_lutteman_141 Tesla has actually been behind for many years in climate reporting. Up until last year they only reported on emissions per vehicle (and only model 3) not corporate emissions. It is clear that they are shooting for growth, and thus can not set absolute emissions targets. They are probably 3-5 years behind other car companies.
@douglas_marett, thanks for enlightening me on this. Your analysis is a very interesting read.