australiaen
Exhaust-ive engagement: persuading carmakers to decarbonize

Exhaust-ive engagement: persuading carmakers to decarbonize

05-12-2019 | Insight

Decarbonizing the auto industry can significantly lower greenhouse gas emissions. Robeco belongs to an engagement program that encourages carmakers to switch to zero-carbon models such as electric vehicles.

  • Cristina Cedillo Torres
    Cristina
    Cedillo Torres
    Engagement Specialist
  • Carola van Lamoen
    Carola
    van Lamoen
    Head SI Center of Expertise

Speed read

  • Robeco funds research by the Transition Pathway Initiative
  • Engagement assesses preparedness of high-carbon firms
  • Only 9% of companies have targets in line with 2 degree scenario

The Transition Pathway Initiative (TPI) was launched by the UK Environment Agency and the Church of England in 2017 to assess the preparedness of high-carbon producers – including the automakers – for moving to a low-carbon economy. It is backed by asset owners and asset managers, including Robeco, which helps to fund its research.

“There is still a lot that carmakers need to figure out in the short term, but overall the direction of travel is certainly towards a low-carbon world, to which carmakers have to adapt,” says Engagement Specialist Cristina Cedillo Torres, who is working with TPI on this project.

“According to the latest TPI report, ‘Management quality and carbon performance of transport companies’, the quality of governance around climate-related issues among carmakers is improving. This signals an increased level of awareness and responsiveness to climate-related issues in corporate boards. However, the research also finds that only two out of 22 (9%) companies assessed have set emissions reduction targets that are aligned with low-carbon scenarios by 2030.”

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

A major contributor to warming

“They are one of the sectors that are most under the eye of the regulator; the transition to building lower-emissions vehicles is mostly regulatory driven. The transportation sector is a major contributor to global warming – passenger vehicles account for about 7% of global CO2 emissions (12% in the EU), and about 45% of world oil demand.”

“For regulators who want to tackle climate change – plus other issues such as air pollution, traffic and road safety – this is therefore one of the key sectors that needs to be addressed. This is not only from the emissions perspective, but also from an overall mobility perspective on how people can go from A to B in a way that is less impactful to the environment and to society.”

“Carmakers have to take that into account in their business models, where they need to not only work on cars that are lower in emissions, but also on other trends in the industry and wider society.”

Some successes already

The engagement work is already seeing some successes. “We had a few breakthroughs earlier this year,” says Cedillo Torres. “Two major carmakers have set a long-term ambition of achieving net zero emissions by 2039 and 2040 respectively.”

“One of them went as far as to bet on a single drivetrain technology – the only carmaker so far to have done that. There are many different technologies, such as hybrid, plug-in, fuel cell and battery electric, but in order to be successful, you need to be able to focus your capital. This company has chosen to focus on battery electric vehicles and has committed substantial capital expenditure to this technology over the next few years.”

In a question and answer session, Cedillo Torres updates investors on the work that Robeco is doing in this arena, as part of a wider commitment to combating climate change and meeting the goals of the Paris Agreement.

Logo

Disclaimer

BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.

What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:

  • who holds an Australian Financial Services License
  • who has or controls at least $10 million (and may include funds held by an associate or under a trust that the person manages)
  • that is a body regulated by APRA other than a trustee of:
    (i) a superannuation fund;
    (ii) an approved deposit fund;
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme.
    within the meaning of the Superannuation Industry (Supervision) Act 1993
  • that is a body registered under the Financial Corporations Act 1974.
  • that is a trustee of:
    (i) a superannuation fund; or
    (ii) an approved deposit fund; or
    (iii) a pooled superannuation trust; or
    (iv) a public sector superannuation scheme
    within the meaning of the Superannuation Industry (Supervision) Act 1993 and the fund, trust or scheme has net assets of at least $10 million.
  • that is a listed entity or a related body corporate of a listed entity
  • that is an exempt public authority
  • that is a body corporate, or an unincorporated body, that:
    (i) carries on a business of investment in financial products, interests in land or other investments; and
    (ii) for those purposes, invests funds received (directly or indirectly) following an offer or invitation to the public, within the meaning of section 82 of the Corporations Act 2001, the terms of which provided for the funds subscribed to be invested for those purposes.
  • that is a foreign entity which, if established or incorporated in Australia, would be covered by one of the preceding paragraphs.
I Disagree