Investment Board
The EAM Investment Board gives a structured form to the ongoing and responsive
dialogue with and among sustainability research agencies. The Board provides the
opportunity for the consultation process between own research and external research
to take place. It also discusses rating details, the ESG‘s assessment of the IPOs of new
issuers and sustainability issues in general.
Footprint of the automotive sector
The first insight of our Investment Board is also the most sobering one: the carbon footprint is an interesting,
but not exactly well-defined concept. There is no standardised and generally accepted method of calculation in
place. The reasons are manifold.
Sources: WWF Living Planet Report 2012, Global Footprint Network, Internationale Organisation für Normung (ISO)
What is the carbon footprint?
Our co-operation partner WWF Austria explains: When defining
the carbon footprint, EAM‘S co-operation partner World Wide Fund
For Nature (WWF) Austria refers to WWF International‘s annual publi-
cation „Living Planet Report“: The carbon footprint is the surface area
of forest required of to absorb all carbon dioxide emissions, net of those
absorbed by the oceans. It is part of the ecological footprint, which was
developed by the scientists Mathis Wackernagel and William Rees in
1994. This concept illustrates the usage of the biosphere by man.
The carbon footprint can be calculated for countries, companies,
products, and individuals. Carbon dioxide emissions make up the
largest part of greenhouse gas emissions, which contribute to global
warming. WWF Austria welcomes the integration of carbon dioxide
and greenhouse gas balances in the accounting of organisations,
companies, as well as products and their life cycles in order to make
emissions quantifiable and facilitate an approach towards their reduc-
tion. To this day, no clear, internationally accepted definition of the
carbon footprint has been found. Thus, in order to ensure a certain
level of consistency, a straightforward, well-documented methodology
in the collection of CO2 emission data is crucial. For 2014, the Inter-
national Organisation for Standardisation (ISO) has set itself the goal
of developing an international carbon footprint standard for products
(ISO/TS 14067).
Status:
Even though the CO2 footprint does not figure as such, it still plays an important role within the EAM sustainability
rating. In the sector of automobile manufacturers it corresponds to “fuel consumption & emissions”, thus amounting
to 22% of the overall calculation.
No statutory regulations
So far no country has laid down carbon footprint specifications or boundaries in law. However, some countries
like the UK, France, and Japan have already specified consumption standards and reporting duties (in the UK,
approx. 1,600 companies listed on the London Stock Exchange have to show their emissions in their annual reports).
But other than in other fields like for example in accounting, there are no standardised or transparent regulations
in sight.
Weak stakeholders
Stakeholders like the retail sector or NGOs lack the clout to pin down producers and hold them to one standard.
Tesco, a pioneer when it comes to carbon footprints, has drastically watered down its intention to label all
products, and will label only some product groups instead.
Rigid concept – flexible production
The large degree of flexibility of many modern production processes is also detrimental to the concept of the
carbon footprint. If the processes are modified, the calculation of the carbon footprint has to be adjusted as well.
Alternative concepts
On top of that, the carbon footprint is in keen competition with alternative concepts, and companies often do
not know what model covers their requirements. The bandwidth of options ranges from the emissions generated
by the production process to the ecological footprint, which tries to include all environmental and resource issues.
This concept is therefore much wider seeing as it also takes trade-offs such as lower CO2 emissions at the expense
of higher water consumption into account.
Merits for companies
In spite of the aforementioned problems, the carbon footprint does have its merits for companies as marketing
and management tool, as we suggested in the Editorial. This does not at least apply to the automotive industry:
on the one hand a decreased carbon footprint is good PR – especially when it comes to arguing the ecological
efficiency of the fleet. On the other hand the footprint also has financial ramifications, such as the purchase and
sale of emission rights.
The hybrid car is still a niche product
It is a fact that global car manufacturers are under regulatory pressure to reduce the fuel consumption of their
fleet. Strategies employed in the implementation of these specifications range from lighter and thus more energy-
efficient materials to the hybrid and electric engine. One insight stands out in this context: in spite of the current
hype, neither the hybrid nor the electric car will solve the carbon dioxide problem of the automotive industry, given
that the market share of those products is too insignificant. In the USA, hybrid models currently account for 3% of
total vehicles manufactured (Baum & Associates, 2012).
