WRI’s 2003 study on the environmental risks facing the automobile industry—Changing Drivers: The Impact of Climate Change on Competitiveness and Value Creation in the Automotive Industry—has continued to have a significant impact on the industry and capital markets.
The report, which WRI published in partnership with Sustainable Asset Management of Zurich, quantified the risks and opportunities facing ten auto companies from the introduction of carbon constraints in global auto markets. It found great differences in the ability of car companies to meet increased fuel economy standards and to develop and commercialize lower-carbon emitting technologies such as hybrids, clean diesel, and fuel cells. For the various car companies, the study also estimated how their competitive positions might impact future earnings and stock price. Toyota, Renault, and Nissan emerged as the companies best positioned to benefit financially from carbon constraints.
The analysis from Changing Drivers has resulted in two follow-up reports, one on the new Chinese fuel economy standards and another on the lack of transparency in the auto industry’s agreement to reduce CO2 emissions in Europe. These reports have continued to generate interest on the competitive implications of environmental regulations in the auto sector.
In 2004:
- Changing Drivers was a factor in contributing to significant changes in two major auto companies’ long-term strategies on improving fuel economy and advancing low carbon technologies.
- Deutsche Bank included a chapter on climate risks and opportunities in its August 2004 annual report on the auto industry. This report, which included large sections of text and graphs from Changing Drivers, is widely distributed among the Bank’s analysts and investors.
- Top-ranking auto analysts on Wall Street responded with great interest to WRI’s research and have requested further information from companies on their ability to meet fuel economy standards in major auto markets.
