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Changing Drivers

The impact of climate change on competitiveness and value creation in the automotive industry

Emerging carbon constraints constitute a new influence on competitiveness in the automotive industry, creating both risks and opportunities for companies that could materially affect their earnings and ability to compete in global markets.

Executive Summary

See New York Times article, "Catching Up to the Cost of Global Warming" (July 25, 2004)

The purpose of the report is to help investors make better informed decisions regarding automotive company stocks in light of emerging "carbon constraints" -- policy measures designed to mitigate climate change by limiting emissions of carbon dioxide (CO2) and other greenhouse gases.

The report explores how carbon constraints in global automotive markets may affect value creation in 10 leading automotive companies between now and 2015, a timeframe in which major technological and policy changes are possible. The Original Equipment Manufacturers (OEMs) assessed are BMW, DaimlerChrysler (DC), Ford, GM, Honda, Nissan, PSA, Renault, Toyota and 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.

The report is the result of collaboration between SAM Sustainable Asset Management (SAM) -- a Zurich-based independent asset management company specializing in sustainability-driven investments -- and the World Resources Institute (WRI) -- an environmental research and policy organization based in Washington D.C.

Drawing on the respective strengths and expertise of the two organizations, the report analyzes both the risks and opportunities of carbon constraints, and then estimates the combined implications for OEMs' future earnings. The report is explicitly forward-looking, focusing on the main factors affecting OEMs' exposure to carbon constraints, and drawing on the latest publicly available information about the 10 assessed OEMs.

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