Automakers "are making major strides in the right direction," says leading social investment firm Calvert Investments.
Calvert analyzed five of the largest manufacturers – Ford, GM, Volkswagen, BMW, and Toyota – to see how the industry – responsible for 20% of US greenhouse gas (GHG) emissions – is addressing environmental and other sustainability issues.
Out of the sustainability factors they analyze, environment, product safety and workplace/human rights are the most critical for the auto industry.
"Leading manufacturers have made significant progress over the last several years in increasing the fuel efficiency of the vehicles they produce and thereby working to enhance the overall sustainability of the industry," says the report.
"While automakers were pushing for greater flexibility in meeting efficiency and emissions targets," Calvert says of the industry’s negotiations with Obama over new fuel economy standards, "They have nonetheless shown greater willingness to work with regulators, rather than simply (and publicly) lobbying against them."
In August, President Obama, joined by Ford’s chief executive and executives from other automakers, as well as representatives from the UAW, State of California, and environmental organizations, announced new fuel standards that would reach 54.5 mpg in 2025. Ford, specifically, has retooled its entire manufacturing strategy to allow for greater flexibility and innovation (and cost savings), and cleaner, more efficient vehicles are becoming a central component of its global and US fleet, notes the report.
Since 90% of the auto industry’s GHG emissions come from people driving vehicles, reducing their reliance on fossil fuels by offering hybrids and all-electric vehicles (EVs) demonstrates "the emergence of more thoughtful industry leaders who recognize that ESG (environmental, social and corporate governance) considerations are now essential," says Rebecca Henson, a Calvert Sustainability Analyst.
Calvert cites Toyota as an example of industry best practice on environmental issues. Although Toyota is mostly known for its industry leading Prius hybrid, it also "provides extensive public disclosure of its environmental policies and practices." The Carbon Disclosure Project gave it top ranking in the industry for climate-related disclosure. It consistently ranks among the most fuel-efficient automakers in the US market, Calvert says.
But environmental issues are not the only sustainability factors the report examines. It also looks at product safety, where Toyota’s reluctance to disclose safety failures in a timely manner before recalling 8.5 million vehicles last year led to widespread criticism. Volkswagen and BMW gets higher marks on safety policies and practices.
Ford is credited for its leadership in addressing human rights and supply chain impacts. The company adopted a Code of Basic Working Conditions in 2003, and since then has conducted over 600 assessments of working conditions at supplier facilities. It also provides human rights training for managers there.
The company just announced it would more than triple the number of suppliers it surveys on their energy use and carbon emissions. Ford will survey 128 suppliers, representing 60% of its $65 billion in annual purchases.
Here’s Calvert’s Sustainability Performance Review of the Automotive Industry:
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