Vehicle Manufacturers in the Race for Environmental Success

Research Report ABOUT Automotive AUTOMOTIVE Vehicle Manufacturers in the Race for Environmental Success 2008/09 Automotive industry green audit by Susan Brown

Contents ABOUT Publishing Limited 2008 Contents xi The author 1 Chapter 1: Introduction 3 Chapter 2: The problem 3 2.1: Climate change 6 2.2: Peak oil 6 - what is peak oil? 6 - peak oil deniers 6 - not on the agenda of the financial world 7 - peak oil believers 8 2.3: Peak oil and climate change together 9 Chapter 3: The pressure for a solution 9 - Best corporate practice 10 - Automotive industry opportunities 10 - Technology solutions 11 - Growing pressure to act 12 Chapter 4: The competitive issue 13 4.1: Corporate Social Responsibility (CSR) 15 - What do other people think? CSR Ratings 16 - FTSE4Good 16 - Accountability Rating 17 - Sustainable Asset Management (SAM) 18 - Oekom Research 18 - Vigeo 18 - PSI Sector reports 19 4.2: Greenhouse gas (GHG) targets 21 4.3: Product 24 - Sales mix 26 4.4: Future product technologies 27 - Alternative fuels 29 4.5: Lifecycle analysis 30 - What percentage of greenhouse gas emissions come from manufacturing? 31 - Vehicle disposal 33 4.6: Manufacturers and buildings 33 - Natural gas 33 - CHP 34 - Heat recovery 34 - Biomass 34 - Wind 34 - Solar 35 - Geothermal 35 - Other 36 - Green buildings 37 - Waste management i

ABOUT Publishing Limited 2008 Contents 37 4.7: Logistics 38 4.8: Supply chain 40 4.9: Distribution/dealerships 41 4.10: Customer interface 42 - Brands 43 - Advertising 43 - The future 45 Chapter 5: The Ranking 45 - Overall 46 - Toyota ranks top 47 - Honda scores well, but lacks transparency 47 - BMW, GM and Volkswagen rank middle of the table 48 - Renault 9 th, ahead of Daimler 48 - Hyundai and Fiat are bottom of the pile 48 - CSR/Climate change strategy 50 - GHG targets 50 - Product 51 - Business areas 52 Chapter 6: Vehicle manufacturer profiles, SWOT analyses and green audits 52 6.1: Toyota Motor Company 53 6.1.1: Summary and recent developments 53 6.1.2: CSR/climate change strategies 53 - Climate change strategy 54 - Recycling-oriented society 54 - Greenhouse gas targets 55 - Management structures and reporting on environmental issues 55 - CSR/sustainability activities and indices 55 6.1.3: Product 56 6.1.4: Future technology strategies 57 - Conventional engines 58 - Biofuels 58 - Hybrids 58 - Plug-in hybrids 58 - Fuel cells 60 6.1.5: Closing the loop lifecycle analysis 60 - Recycling 61 - Use of recycled/renewable materials 61 6.1.6: Manufacturing 61 - Energy efficiency 62 - Use of renewable energy 62 - Environmental management systems 62 - Zero landfill 62 - Green buildings 63 6.1.7: Logistics 63 6.1.8: Supply chain 63 6.1.9: Distribution/dealerships 64 6.1.10: Consumer influence 65 6.2: Ford Motor Company 66 6.2.1: Summary and recent developments 66 6.2.2: CSR/climate change strategies 66 - Strategy 66 - Blueprint for sustainability ii

Contents ABOUT Publishing Limited 2008 67 - Climate change task force 67 - Management structures and reporting on climate change 68 - Greenhouse gas emissions 69 - Greenhouse gas targets 69 - CSR activities/engagement with outside agencies 70 6.2.3: Product 71 6.2.4: Future technology strategies 71 - Conventional engine technologies 71 - Transmissions 72 - Weight reduction 72 - Biofuels 72 - Hybrids 73 - Plug-in hybrids 73 - Hydrogen 73 6.2.5: Closing the loop lifecycle analysis 74 - Recycling 74 - Using recycled materials 74 - Energy use 74 6.2.6: Manufacturing 75 - Renewable energy 75 - Fumes-to-fuel 76 - Geothermal energy 77 - Waste management 77 - Environmental management 78 6.2.7: Logistics 78 6.2.8: Supply chain 78 6.2.9: Distribution/dealerships 79 6.2.10: Customer interface 79 - Eco-driving 79 - Carbon offsetting 79 - Branding 80 6.3: PSA Peugeot Citroën 80 6.3.1: Summary and recent developments 81 6.3.2: CSR/climate change strategies 81 - PSA downplays the contribution of cars to climate change 82 - Carbon neutral manufacturing? 82 - Greenhouse gas targets 83 - Low CO2 car targets not very aggressive 83 - Management structures and reporting on climate change 84 - CSR/sustainability activities and indices 84 - Partnerships 84 6.3.3: Product 84 - Segmentation/sales figures 85 6.3.4: Future technology strategies 86 - Diesels 86 - Gasoline 86 - Automated gearboxes 86 - CNG 86 - Biofuels 86 - Hybrids 87 - Fuel cells 87 6.3.5: Closing the loop lifecycle analysis 88 6.3.6: Manufacturing 88 - Energy efficiency 88 - Energy descent target 88 - Heat recovery 88 - Energy costs iii

ABOUT Publishing Limited 2008 Contents 89 6.3.7: Logistics 89 6.3.8: Suppliers 90 6.3.9: Consumer influence 90 - Branding 90 - Image/awards 91 6.4: Honda 91 6.4.1: Summary and recent developments 92 6.4.2: CSR/climate change strategies 92 - Management structures and reporting on climate change 93 - Greenhouse gas targets 93 - Products 94 6.4.3: Future technology strategies 94 - Gasoline engines 94 - Diesel engines 94 - Transmissions 95 - Hybrids 95 - Electric 95 - Natural gas 95 - Biofuels 96 - Fuel cells 96 - Solar power 97 6.4.4: Closing the loop lifecycle analysis 97 - Recycling 97 - Using recycled materials 98 6.4.5: Manufacturing 98 - Energy use 99 - Waste management 100 6.4.6: Logistics 100 6.4.7: Supply chain 100 6.4.8: Distribution/dealerships 101 6.4.9: Customer influence 101 - Car sharing 101 - Eco-driving 101 - Awards 102 6.5: Nissan 102 6.5.1: Summary and recent developments 104 6.5.2: CSR/climate change strategies 104 - Ghosn welcomes greening of consumer demand 104 - Management structure and reporting on climate change 105 - CO2 emissions targets 106 6.5.3 Product 106 6.5.4 Future technology strategies 106 - Diesels 107 - Continuously Variable Transmission (CVT) 107 - Natural gas 107 - Hybrids 107 - Biofuels 107 - Fuel cells 107 - Electric vehicles 108 6.5.5: Closing the loop lifecycle analysis 108 - Eco pedal 108 - Recycling 109 6.5.6: Manufacturing 109 - Environmental management 109 - Energy use 110 - Waste management iv

Contents ABOUT Publishing Limited 2008 111 6.5.7: Logistics 112 - Modal shift 112 6.5.8: Supply chain 112 6.5.9: Distribution/dealerships 113 6.6: BMW 114 6.6.1: Summary and recent developments 114 6.6.2: CSR/climate change strategies 114 - Management structures and reporting on climate change 115 - Strategy 115 - CO2 targets 116 - CSR/sustainability rating indices 116 - Commitments/partnerships 116 - Negative press 116 6.6.3: Products 117 6.6.4: Future technology strategies 117 - Efficient dynamics 118 - Dieselisation 118 - Hybrids 119 - Electric 119 - Thermo-electric generation 119 - Hydrogen 120 6.6.5: Closing the loop lifecycle analysis 120 - Use of raw materials 120 - Recycling 121 6.6.6: Manufacturing 121 - Energy use 121 - Renewable energy use 122 6.6.7: Logistics 122 6.6.8: Supply chain 123 6.6.9: Distribution/dealerships 123 6.6.10: Customer interface 123 - Eco-driving 123 - Awards 123 - Brands 124 6.7: GM 125 6.7.1: Summary and recent developments 125 6.7.2: CSR/climate change strategies 125 - Strategy 126 - Climate strategy 126 - Management structures and reporting on climate change 127 - Reporting 127 - Greenhouse gas emissions reduction 128 - CSR/sustainability indices and partnerships 128 6.7.3: Products 129 6.7.4: Future technology strategies 130 - Conventional engines 130 - Diesels 130 - Thermo-electrics 130 - CNG and LPG 131 - Biofuels 131 - Second generation biofuels 131 - Hybrids 132 - Electric/plug-in hybrids 132 - New engineering organisation 132 - Fuel cells v

ABOUT Publishing Limited 2008 Contents 133 6.7.5: Closing the loop lifecycle analysis 133 - Recycling 134 - Using recycled materials 134 6.7.6: Manufacturing 134 - Energy efficiency 135 - Energy efficient buildings 135 - Renewable energy use 136 - Waste management 136 - Green buildings 136 6.7.7: Logistics 136 6.7.8: Supply chain 138 6.7.9: Consumer influence 139 6.8: VW 140 6.8.1: Summary and recent developments 141 6.8.2: CSR/climate change strategies 141 - Lack of environment-related reporting 142 - Lack of reporting due to lack of good news 142 - Greenhouse gas reduction goals 143 - High level commitments 143 - CSR/sustainable activities and indices 144 - Other activities 144 6.8.3: Products 145 6.8.4: Future technology strategies 145 - Hybrids 145 - Biofuels 146 - Electric 146 - Fuel cells 146 6.8.5: Closing the loop lifecycle analysis 146 - End-of-life vehicle recycling 147 - Material use 147 6.8.6: Manufacturing 147 - Energy sources 147 - Seat invests in solar 148 - Energy use 148 6.8.7: Logistics 149 6.8.8: Supply chain 149 6.8.9: Consumer influence 149 - Eco-driving 149 - Eco-brands 150 - Offset programme 150 - Consumer awards 151 6.9: Renault 151 6.9.1: Summary and recent developments 152 6.9.2: CSR/climate change strategies 152 - Strategy 152 - Management structures and reporting on climate change 153 - CSR/sustainability rating indices 153 - Commitments/partnerships 154 6.9.3: Products 154 6.9.4: Future technologies 154 - Optimising conventional engines 155 - CNG 155 - Biofuels 155 - Hybrids 155 - Electric vehicles vi

Contents ABOUT Publishing Limited 2008 155 - Fuel cells 156 6.9.5: Closing the loop lifecycle analysis 156 - End-of-life recycling 156 - Using recycled materials 157 6.9.6: Manufacturing 157 - Energy use 157 - Cogeneration 157 - Waste management 158 - Water treatment 158 6.9.7: Logistics 159 6.9.8: Supply chain 159 6.9.9: Distribution/dealerships 159 6.9.10: Consumer influence 161 6.10: Daimler 161 6.10.1: Summary and recent developments 161 6.10.2: CSR/climate change strategies 161 - Management structures and reporting on climate change 162 - Strategy 163 - Future goals 163 - CSR/sustainability rating indices 163 - Partnerships/commitments 163 6.10.3: Products 164 6.10.4: Future technology strategies 164 - IC engines with gasoline and diesel 164 - Natural gas 165 - Biofuels 165 - Hybrids 166 - Fuel cells 167 6.10.5: Closing the loop lifecycle analysis 167 - Using recycled materials 168 - Recycling 168 6.10.6: Manufacturing 168 - Energy use and efficiency 169 - Employee training 169 6.10.7: Logistics 169 6.10.8: Supply chain 170 6.10.9: Distribution/dealerships 170 6.10.10: Customer interface 170 - Eco-driving 170 - Brands 171 6.11: Hyundai-Kia 171 6.11.1: Summary and recent developments 172 6.11.2: CSR/climate change strategies 172 - Management structures 173 - Reporting on climate change 174 - CSR 174 - Products 174 6.11.3: Product: future technology strategies 174 - Conventional engines 174 - Natural gas 174 - Biofuels 175 - Hybrid vehicles 175 - Fuel cells 175 6.11.4: Closing the loop lifecycle analysis 175 6.11.5: Manufacturing vii

ABOUT Publishing Limited 2008 Contents 176 6.11.6: Supply chain 177 6.12: Fiat 178 6.12.1: Summary and recent developments 178 6.12.2: CSR/climate change strategies 178 - Management structures and reporting on climate change 179 - CSR ratings 179 6.12.3: Products 180 6.12.4: Future technology strategies 180 - Gasoline and diesel engines 180 - Natural gas 180 - Biofuels 181 - Hybrids 181 - Fuel cells and hydrogen 181 6.12.5: Closing the loop lifecycle analysis 181 6.12.6: Manufacturing 181 - Environmental management 181 - Energy efficiency 181 - Waste management 182 6.12.7: Supply chain 182 6.12.8: Customer interface 182 - Public transport 182 - EcoDrive Bibliography List of figures: Figure 1: Greenhouse gas emissions in 2000, by source Figure 2: CO2 emission sources in the EU-15 nations (2004) Figure 3: Annual greenhouse gas emissions by sector (2000) Figure 4: Company PSI rankings Figure 5: Toyota: Toward the ultimate eco-car Figure 6: Toyota: New engine technologies Figure 7: Toyota: Technologies incorporated into new engine series Figure 8: Toyota: Well-to-wheel CO2 output Figure 9: Overall (well-to-wheel) efficiency of the Toyota FCHV Figure 10: Estimate of Ford s climate change emissions Figure 11: PSA s European sales mix by segment, 2006 Figure 12: Relationship between fuel consumption and cost of vehicle technologies Figure 13: Consumption of energy during manufacture of PSA vehicles Figure 14: Honda: Organization for worldwide environmental activities Figure 15: Nissan s long-term goal for reducing CO2 Figure 16: Nissan s roadmap for reducing the CO2 from its vehicles Figure 17: Nissan s global environment management organization Figure 18: Major steps taken by Nissan to improve vehicle fuel economy Figure 19: Nissan s overview of recycling performance (Apr 2006 Mar 2007) Figure 20: Nissan s waste disposal (directly to landfill) Figure 21: Nissan s in-house incineration volume Figure 22: Nissan s CO2 emissions from logistics (1,000t CO2) Figure 23: BMW s CO2 emissions per unit produced Figure 24: BMW s European sales mix by segment, 2006 Figure 25: The BMW EfficientDynamics measures an overview Figure 26: Roadmap of the BMW Group for sustainable mobility Figure 27: BMW s waste per unit produced Figure 28: GM s Advanced Propulsion Technology Strategy Figure 29: GMNA Renewable Energy Portfolio Figure 30: VW s European sales mix by segment, 2006 Figure 31: Renault s European sales mix by segment, 2006 viii

Contents ABOUT Publishing Limited 2008 Figure 32: Renault s recycled plastics, by model Figure 33: Changes in the weight of packaging per vehicle (1996 2006) Figure 34: Drive technologies from Daimler Figure 35: The DaimlerChrysler fuel road map Figure 36: Material composition of the Mercedes-Benz C-Class Figure 37: Hyundai s environmental management strategy Figure 38: Fiat s European sales mix by segment, 2006 List of tables: Table 1: Comparison of environmental/sustainability reports and responses to Carbon Disclosure Project Table 2: Management structures: Board level representation? Table 3: Vehicle manufacturer attitudes in a nutshell Table 4: CSR/Sustainability Rankings Table 5: Vehicle manufacturer greenhouse gas emissions (CO2 eq) 2005 and 2006, actual and per vehicle Table 6: Sales-weighted average CO2 emissions (g/km) Table 7: Western Europe: Top Ten Brands volume-weighted average CO2 emissions, g/km, 2007 Table 8: UK fleet average CO2 by brand, 2007 compared to 2006 Table 9: US: Fleet average CO2 emissions by vehicle manufacturer, MY 2005 Table 10: Vehicle manufacturers downsizing in Europe Table 11: Percent range of MPG improvement estimates per improved automobile technology Table 12: Comparison of vehicle manufacturers activities in the main technology areas Table 13: Vehicle manufacturer life cycle analysis and notable achievements Table 14: How the manufacturers compare on what they say about recycling Table 15: Investing in renewables who s using what Table 16: Which vehicle manufacturers report CO2 emissions from logistics operations? Table 17: Vehicle manufacturers green supplier programmes Table 18: Vehicle manufacturers green dealer programmes Table 19: Vehicle manufacturers green badges Table 20: The Ranking: Vehicle manufacturers in the race for environmental success Table 21: Detailed chart of vehicle manufacturers and their scores Table 22: SWOT of Toyota in the race for environmental success Table 23: 2010 CO2 reduction goals: Toyota Motor Company Table 24: SWOT of Ford in the race for environmental success Table 25: Life cycle CO2 impact for typical vehicles: Ford Motor Company Table 26: SWOT of PSA in the race for environmental success Table 27: PSA greenhouse gas emissions, 1995 and 2002 2006 Table 28: PSA CO2 emissions (per vehicle) 1995 2006 Table 29: Most fuel efficient diesel/gasoline vehicles on sale in France, 2006 Table 30: SWOT of Honda in the race for environmental success Table 31: Honda s environment statement Table 32: SWOT of Nissan in the race for environmental success Table 33: CO2 emissions of Nissan s major global production sites Table 34: SWOT of BMW in the race for environmental success Table 35: SWOT of GM in the race for environmental success Table 36: GM s Environmental Principles Table 37: Greening of the Supply Chain Project in China Table 38: SWOT of VW in the race for environmental success Table 39: SWOT of Renault in the race for environmental success Table 40: SWOT of Daimler in the race for environmental success Table 41: The environmental protection guidelines of the DaimlerChrysler Group ix

ABOUT Publishing Limited 2008 Contents Table 42: SWOT of Hyundai-Kia in the race for environmental success Table 43: Hyundai s global environmental policy Table 44: SWOT of Fiat in the race for environmental success x