The risks and opportunities for carbon reduction strategies for the automobile industry are
considerable and warrant particular attention from investors.
On January 26, President Obama issued two orders that would require more stringent fuel efficiency
standards for new cars and light trucks. In one, the Environmental Protection Agency (EPA) was
directed to consider granting states waivers to set their own emissions standards, which are in
several cases stricter than proposed federal standards. California, for example, has passed a
mandate that requires a 30% decrease in tailpipe emissions.
In the other order, Obama instructed the
Transportation Department to provide interim targets for mileage standards starting in 2012 to
ensure that new vehicles reach a goal of 35 miles per gallon by 2020.
Citing these and
other new regulatory pressures, institutional investors released new climate disclosure guidelines for the auto
industry that call on car manufacturers to strengthen their reporting on the risks and
opportunities presented by climate change.
The report finds that companies in the auto
industry have provided inadequate data on climate change, making it difficult for investors to
assess the risks and opportunities posed by climate change policy to individual auto companies.
According to the report, investors require strategic overviews of long-term strategies for
increasing fuel economy and reducing emissions, and quantitative data on emissions and development
of clean technologies.
The transport sector is one of the greatest emitters of greenhouse
gas (GHG) emissions, accounting for 18% of all carbon emissions worldwide. Noting that new climate
regulations and customer demand will increasingly have an impact on companies in the auto sector,
the report encourages companies to disclose information on emissions using existing communication
These channels include Global Reporting Initiative (GRI) reporting, Carbon Disclosure Project (CDP) responses,
financial reports, sustainability reports, analyst briefings, and mandatory reports to securities
regulators such as the US Securities and Exchange Commission (SEC).
The new reporting
framework was developed by the Institutional
Investors Group on Climate Change (IIGCC) in Europe, the Investor Group on Climate Change Australia/New Zealand (IGCC), and Ceres in the US.
Ceres, a national
network of investors, environmental organizations and other public interest groups, manages the Investor Network on Climate Risk (INCR), a $7
trillion network of investors that promotes better understanding of the financial risks and
opportunities posed by climate change.