The Impact of Carbon Constraints on Competitiveness and Value Creation in the Automotive Industry

Abstract

The purpose of this article is to quantify the financial risks and opportunities faced by the automotive industry from “carbon constraints”—policy measures designed to mitigate climate change by limiting emissions of carbon dioxide (CO2) and other greenhouse gases. This article is derived from Austin D, Rosinski N, Sauer A and Le Duc C (2003) Changing Drivers, a report which explores how carbon constraints in global automotive markets may affect value creation in 10 leading automotive companies between now and 2015. The full report and other relevant materials can be downloaded free of charge from Internet URL or The Original Equipment Manufacturers (OEMs) assessed are BMW, DaimlerChrysler (DC), Ford, GM, Honda, Nissan, PSA, Renault, Toyota and Volkswagen (VW)—the world’s largest independent automotive companies. The geographical scope of the assessment is the United States, European Union and Japanese markets, which together account for nearly 70 percent of current global sales. Changing Drivers is the result of collaboration between SAM Sustainable Asset Management (SAM)—a Zurich-based independent asset management company specialising in sustainability-driven investments—and the World Resources Institute (WRI)—an environmental research and policy organisation based in Washington D.C. Drawing on the respective strengths and expertise of the two organisations, the report analyses both the risks and opportunities of carbon constraints, and then estimates the combined implications for the OEMs’ future earnings. The analysis is explicitly forward-looking, focusing on the main factors affecting the OEMs’ exposure to carbon constraints, and drawing on the latest publicly available information about the 10 assessed OEMs.