Gordian KnotsUnited Nations EnvironmentProgramme

SustainAbility

Emerging Economies‘Raising the Bottom’Economic DevelopmentMobility NeedsTechnology TransferLeapfroggingPopulationDemographics

Financial MarketsShareholderValue AddedFinancial LiabilitiesSocially ResponsibleInvestmentSustainability RatingsMarket Trends and OpportunitiesTipping PointsBusiness Case

TechnologyAlternative FuelsHybrid VehiclesHypercarFuel CellsHydrogen EconomyWorld CarsTelematics

EnvironmentAir QualityAcid rainPhotochemical SmogHeat IslandsClimate ChangeNoise and VibrationRun-off from Paved SurfacesLandfillFragmentation ofHabitats

Driving SustainabilityCan the Auto Sectordeliver sustainablemobility?

Life Cycles End-of-life VehiclesDesign forDisassemblyClosed-Loop SystemsFactor 20DematerialisationDetoxification

Climate ChangeGlobal WarmingGreenhouse GasesEmission CeilingsZero EmissionsRenewable Energy

InternetCNN WorldE-specificationE-purchasingReal-time ManufacturingIntelligent VehiclesOn-boardEntertainmentNew Customer StrategiesSocial

Employee RelationsEmployee TrainingHealth and SafetyEqual RightsDiversityCommunity RelationsPlant ClosuresHuman Rights

01 Gordian Knots

Gordian knot: n. 1 An intricate knot tied byGordius, king of Gordium, Phrygia, and cutthrough with a sword by Alexander the Greatin response to the prophecy that whoeveruntied it would become the ruler of Asia; 2 An indissoluble bond; a difficult problem or task. Cut the Gordian knot: solve aproblem with a radical solution, esp. one that eliminates the conditions that causedthe problem in the first place. 03

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Content and Format

1.0 Executive Summary

Forewords

2.0 What’s the Problem?2.1 Who’s at the Wheel?2.2 Towards Total Transparency2.3 Benchmark Survey

3.0 Sustainable Mobility3.1 Climate Change3.2 Life Cycles3.3 Liveable Cities3.4 Emerging Economies

4.0 Conclusions & Recommendations

5.0 SustainAbility Publications

As with other SustainAbility reports,Driving Sustainability is available both as a printed report and as an electronicpdf (portable document format) file. Reports can be ordered in either format (and electronic files can be downloaded)from the SustainAbility website:www.sustainability.com 02

As readers work through the followingpages, they will also find password-protected URLs which will link them to extra resources and ongoing work inthe sustainable mobility field. However,access is only available to purchasers of Driving Sustainability: a password will be issued with each report sold.

Driving SustainAbility Executive Summary

Introduction

Driving Sustainability is the latest report in SustainAbility’s Engaging Stakeholdersseries, and our third sector report.04

Launched in 1994, our joint initiative with the United Nations EnvironmentProgramme (UNEP) adopted the titleEngaging Stakeholders in 1996, with a two-volume study of that name. Each of the thirteen reports published to date hasexplored a different dimension of thecorporate accountability and sustainabilityagendas. The early aims of the joint program were to:

— Promote wider and more honest environ-mental (and now sustainability) reporting;

— Catalogue and analyse sector trends;— Track and evaluate trends in the main

world regions;— Review and respond to the latest

corporate reporting; and— Explore the links between current reports

and sustainable development reporting.

That said, the focus of the EngagingStakeholders program has expanded toembrace such areas as:

— Internet reporting; — The convergence of sustainability

reporting with mainstream corporate annual reporting; and

— Corporate triple bottom line performance.

Driving Sustainability builds on thefoundations laid by The Global Reporters,the first international benchmark survey of corporate sustainability reporting.05

It also draws on internet reporting byautomotive companies, looks at the degreeof convergence between stand-alonesustainability reports and mainstreamcorporate reporting, and raises challengingquestions around performance.

As the complexity of the agenda evolves,and with it the sophistication of businessresponses, we need to tackle some of theseissues in different ways. DrivingSustainability is the first in a planned seriesof reports focusing on sectors where thesustainable development agenda is socomplex — and so recalcitrant — that it isreminiscent of the ‘Gordian Knot’ problem(see Figure 01). According to legend,Alexander the Great was once faced with aknot so intricate that no-one had ever beenable to untangle it. So he sliced through itwith his sword.

The key question: Are the relevantautomotive sector companies aware of thescale of the challenge they face andresponding with the appropriate level ofenergy and — Alexander’s lesson —radicalism? Can they deliver sustainablemobility? The answer, we believe, is thatthey have much to offer, but — on theevidence of their published reports — mostare only just beginning the journey sketchedout in the following pages.

Aims & Methodology

A key aim of the ‘Gordian Knot’ series ofreports will be to help business and its keystakeholders think about complex issues —and understand why, where and how bestpractice is emerging and can best beemulated.

Driving Sustainability is not a benchmark ofcompany performance in the automotivesector. Instead, it focuses on the ways inwhich a number of leading companies in thesector are defining — and responding to —the sustainable mobility agenda.

Definitions of sustainable mobility can befound on page 03, but for present purposeswe can say that the central objective is todevelop and operate access, mobility andtransport systems in ways that satisfy thetriple bottom line of sustainabledevelopment.06 The specific aims of thereport are to:

— Identify a sample of leading automotive sector companies that are — or should be — responding to the 1999—2000 sustainable mobility agenda.

— Explore how these companies understand the agenda — and the actions they are taking, or planning to take, in response.

— Assess how transparent and accountable the sector is in terms of the strategies it is developing and implementing.

— Consider the extent to which there are significant differences between world regions with respect to their understanding of — and responses to — the agenda.

— Provide guidance on how sustainable mobility reporting will evolve.

SustainAbility has worked with a number of auto sector companies, including Volvoand Ford Motor Company; however, themain sources of information used for thisstudy were publicly available corporateinformation and research reports by otherorganisations. We looked at annual reports,environmental and sustainability reports,and company websites. In addition, weinterviewed analysts working for such firmsas Standard & Poors (S&P) and SustainableAsset Management (SAM), and convened an Advisory Panel.07

1.0ExecutiveSummary

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Survey Sample

Ten companies (later referred to as theAutomobility-10) were selected foranalysis. GM Chairman Jack Smith’scomment on the structure of the industryhelps explain why we opted for this sample size. The Big 6 now account for 80% of the global market, according to a recent market survey by analystsNikkoSalomonSmithBarney.08

The Automobility-10 were chosen mainlyfor their stake in the market in terms of size,market share and influence. Wherecompanies were owned, either wholly orsignificantly, the dominant company wasselected for benchmarking. So, for example,the Volvo Car Corporation is now owned by Ford, so in this case we focus on Ford.The final selection is as follows:

Bayerische Motoren Werke (BMW), GermanyDaimlerChrysler (DC), GermanyFiat, ItalyFord Motor Company (Ford), USAGeneral Motors (GM), USAHonda, JapanPSA Peugeot Citroën (PSA), FranceRenault, FranceToyota Motor Corporation (Toyota), JapanVolkswagen (VW), Germany

The selection originally included fourcompanies from emerging economies.However, the amount of publicly availableinformation on these companies turned outto be severely limited and our requests formore information generally fell on deaf ears.The additional companies were:

Daewoo, South KoreaHyundai (including KIA), South KoreaMaruti, IndiaProton, Malaysia

Key Results

On the basis of our assessment, we outlinesome key findings:

— The sustainable mobility agenda richly deserves ‘Gordian Knot’ status: it is horribly complex. To make it more manageable, we carve it into four key issues (climate change, life cycles, liveable cities and emerging economies).

— Most major companies operating in the international automotive sector are increasingly aware of the sustainable mobility agenda, as evidenced by the World Business Council for Sustainable Development work in this area.10

However, the strategic intent of even the lead actors is far from clear.

— The Automobility-10 will be critically important if we are to develop marketable solutions. But we should not count on an industry that has caused many of the problems to develop solutions that cut across its vested interests. The role of governments will become increasingly important.

— As the boundaries of responsibilities of car companies expand, they will need to contribute to solutions for SMtechnology, behaviour and systems. To do this effectively, they will have to be transparent and proactive in their engagement in the public policy debate.

— The overall average score for the automotive industry in SustainAbility’s Issues benchmark, devised specifically for this report, is 34% (Figure 02). DaimlerChrysler has the highest score of 50% (10 out of a possible 20 points).

— There is a good deal of diversity: the language and definitions vary widely, as do the priorities identified and addressed in corporate strategies and initiatives.

— Companies show signs of transformation, although their efforts are so far focused on climate change and life cycles, rather than on liveable cities or the emerging economies (see Figures 20–23 below).

— VW tops our Global Reporters benchmark of the automotive manufacturing companies, based on sustainability reporting only (more detail on page 11).

Driving SustainabilityExecutive Summary

‘The market is really six large groups now,with three very independent companies.Virtually everyone else is affiliated withone of the six major groups.’Jack SmithChairman, General Motors 09

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SustainAbility Foreword

Driving Sustainability is SustainAbility’s firstreport using the metaphor of the ‘GordianKnot’. This latest Engaging Stakeholdersproject focuses on sectors whose triplebottom line impacts are extremely complex.The auto industry, a make-or-break sectorfor sustainable development, seemed a good place to start.

With several auto-makers celebrating theircentenaries, we should be thinking long andhard about the future of a product whichhas become the epitome of western culture.Whatever critics may argue, the automobileis a potent symbol of personal freedom,consumerism and status. As a result, it iscentral to the hopes and dreams of millions— indeed billions — of people. At the sametime, however, the environmental, socialand economic impacts of the automobileare becoming increasingly problematic.

Initially, we planned to focus on theindustry’s accountability for sustainablemobility solutions and strategies. But theweak coverage of such issues in currentcompany reports persuaded us that it would be more effective to strip the agenda down to just four key issues:climate change, life cycles, liveable citiesand emerging economies. We hope ourshort report encourages auto-makers toengage openly in the debate on futuremobility solutions — and to report morecomprehensively on their strategies,progress and inevitable mishaps along the road.

Alex CutlerJohn ElkingtonTell Münzing SustainAbility

UNEP Foreword

The United Nations Environment Programme is pleased to introduce the thirdsector report in the Engaging Stakeholdersseries, which examines the reporting ofenvironmental and social issues in theautomotive sector.

At a time when the findings of the UNInternational Panel on Climate Change aremore and more alarming, the report is atimely reminder that the ever-increasingroad transport sector has significantenvironmental impacts. These impactsinclude 80% of transport-related CO2

emissions, local and regional air pollution,land-use changes and road congestion.

Over the past decade, these impacts havebeen targeted by NGOs and the public atlarge, who demand more and bettertransparency from the automotive industry.Designing innovative environmentally soundtransport policies is now a priority in manynational and local government agendas.

The report recognises the efforts made by the industry to reduce environmentalimpacts of production and use throughimproved vehicle technology. However, new technology needs to go hand in handwith changes in consumer behaviour andalternative mobility concepts. And toachieve the latter, manufacturers need to work closely with their stakeholders.

In line with the Global Compact, launchedin 1999 by the UN Secretary General KofiAnnan, a number of leading automotivecompanies have engaged in public-privatepartnerships and stakeholder dialogues, suchas UNEP’s Mobility Forum. Most automotivemanufacturers have responded to increasedcalls for corporate accountability andtransparency by publishing environmentalreports while some have started to followthe ‘Global Reporting Initiative’ guidelines.

These guidelines set a common frameworkfor environmental and social reporting andare promoted by UNEP together with theCoalition of Environmentally ResponsibleEconomies.

By shedding some light on both “bestreporting practice” and remainingchallenges for the industry, this report will lead to increased understanding oftransport issues. It is our hope that itwill also stimulate more debate with

stakeholders and catalyse corporateengagement in a partnership approach, that will deliver sustainable mobility.

Jacqueline Aloisi de LarderelDirector, United Nations EnvironmentProgramme (UNEP) — Division ofTechnology, Industry and Economics(DTIE)

01Driving Sustainability Forewords

JacquelineAloisi deLarderel

AlexCutler

JohnElkington

TellMünzing

Why Sustainability?

The automotive sector leaves broad, deeptracks. Take all the inputs to, outputs from,and activities involved in the automobilitysector, and you account for a considerableproportion of mankind’s impact onecosystems and the planet. As a result, the problems associated with automobilityrepresent — or link back to — many of themost problematic strands in the overallGordian Knot of sustainable development.

But, before we focus on automobility, why is sustainability itself becoming such anissue? Population growth, coupled withtechnologies and lifestyles that producelarger environmental and social footprintsthan their traditional counterparts, havebeen key concerns driving the sustainabilityagenda. Deeply entrenched problemsresulting from this 20th century lifestyle,such as poor air quality, ozone depletion,climate change, deforestation, fresh waterscarcity and biodiversity loss have helpedfuel public concern. Social concerns such aslabour conditions, human rights and socialexclusion are also global problems.

At the same time, there has been a growinginterest in the roles and responsibilities ofbusiness in both causing and solving suchissues. As a result, sustainable developmenthas been on the political and public policyagendas since the 1980s, but the level ofbusiness interest accelerated considerablythrough the 1990s. In particular, the build-up to the 1992 Earth Summit in Rio deJaneiro gave the agenda new momentum,although the 2002 Earth Summit inJohannesburg will draw attention to justhow many of the 1992 commitments andtargets have been ignored or missed.

A central problem is this: The sustainabilityagenda is not difficult to sign up to, but in many countries and sectors it is provingvery difficult to implement. One early stepfor many leading companies has been toembark upon environmental, social and/orsustainability reporting. The EngagingStakeholders program has been among anumber of initiatives promoting the closelylinked concepts of corporate transparency,responsibility, accountability and, ultimately— if by no means automatically —sustainability.

Our series of sector studies is designed toexplore how the triple bottom line agendaof sustainable development cuts across —actually or potentially — the interests,strategies and operations of key companies,industries, sectors and value webs.

Why Automobility?

Twentieth century industrialism wasmassively shaped by what has been dubbed‘Fordism’. There had been a number of‘horseless carriage’ manufacturers beforeHenry Ford founded his company in 1903,but Ford’s early embrace of mass productionhelped shape the industry for decades tocome. Now, roughly 100 years into theautomobile era, most people accept thatautomobility has brought radically improvedlevels of access to goods and services to agrowing proportion of those living in theOECD world, and to a lesser degree, to thosein the less developed regions of the world.

But most people, including the CEOs ofsome major automotive manufacturers,would also now acknowledge that theaccelerating use of the private motor carhas brought with it a mind-numbing rangeof challenging problems.

Automotive manufacturing companies haveso far avoided a great deal of responsibilityfor the widespread impacts of their product.The following collection of statistics revealsa huge, global problem. It is no co-incidencethat the growing transparency expected ofthe corporate sector generally will raisesome hefty questions that the automotiveindustry particularly may be ill-prepared to address:

Global Car MarketsThe world’s car fleet exceeded 520 millionvehicles by 1999.11 Figure 03 illustrates theunderlying growth trend. Forecasts suggestthat car numbers will double to 1 billion by2010 and treble to 1.5 billion by 2035.

Fatal AccidentsThe car’s most extraordinary impact hasbeen via accidents, 25 million people havedied in car accidents in the 20th century —and many more have been injured.

02 Driving Sustainability What’s the Problem?

2.0What’s theProblem?

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According to the World Bank, 1.17 millionpeople die each year in road crashes, with70% of the deaths occurring in lessdeveloped countries. Of all pedestriandeaths, 35% are children. A WHO studyforecast that road crashes, which were theninth most important health problem in1990, will move to third place by 2020.13

Environmental ImpactsWe tend to focus on the vehicles and ignorethe infrastructure. But, to take just oneexample, think of the impacts associatedwith the 10,000 tonnes of aggregate neededfor each kilometre of a two-lane highway.14

Greenhouse Effect and Air QualityCars collectively represent the largest singlesource of global air pollution, accounting for around 30% of industrialised countryemissions and 17% of the emissions ofcarbon dioxide (CO2), the main greenhousegas. Focus down on the typical urban area,however, and road vehicles account foranywhere between 40% and 80% of totalemissions. 15

Cars Deter Other ModesAs automobility accelerates, so moresustainable modes — like walking andcycling — are actively and increasinglydiscouraged.

Price TagsOn the economic front, the costs of road

congestion are huge: London alone isestimated to lose £19 billion a year as a result. A study by A&M University’s Texas Transportation Institute of 68 USmetropolitan areas found that trafficcongestion is worsening everywhere.16

The average person spent 11 hours in trafficjams in 1982, 34 hours in 1997, and 36hours in 1999. In Los Angeles the figure is56 hours. In the US, congestion is annuallyestimated to waste 6.8 billion gallons offuel, add 4.5 billion hours of travel time and cost $78 billion.

Whose Definition?

The impacts and implications ofautomobility must be seen in the context of the wider ‘sustainable mobility’ challenge. So what do we mean by theterm? The OECD has been working onenvironmentally sustainable transportation(EST) for a number of years, offering thefollowing definition:

— ‘An environmentally sustainable transport system is one that does not endanger public health or ecosystems and meets needs for access consistent with use of renewable resources below their rates of regeneration, and, use of non-renewable resources below the rates of development of renewable substitutes.’ 18

Meanwhile, Canada’s Center for Sustainable Transportation has also beenworking on a definition, but for sustainabletransportation, so it is slightly wider:

— ‘Allows the basic needs of individuals and societies to be met safely and in a manner consistent with human and ecosystem health, and with equity within and between generations.

— Is affordable, operates efficiently, offers a choice of transport mode, and supports a vibrant economy.

— Limits emissions and waste within the planet’s ability to absorb them, minimises consumption of non-renewable resources, reuses and recycles its components, and minimises the use of land and the production of noise.’ 19

For the purposes of Driving Sustainability,we are not offering a new definition.Instead, like Alexander the Great, we havetaken four great transects through thewhole ball of wool. These are:

1 Climate Change (pages 13–16); 2 Life Cycles (pages 17–20); 3 Liveable Cities (pages 21–24); and 4 Emerging Economies (pages 25–28).

Whilst looking at company triple bottomline reporting on these issues, we alsodistinguish between three different levels of strategic response: technology-focused,behaviour-focused and system-focused (see Figure 04 on page 04).

For further discussion on sustainablemobility, including a number of projectsexploring issues, trends and scenarios fromthe public sector and business andgovernment perspectives, please refer towww.sustainability.com/mobility

‘It could be said that by giving people the freedom to go wherever they want,the automobile has been one of thegreatest assets created by 20th centurycivilisation. However, it has also had itsdrawbacks — running on limited fossilfuel resources and having an impact onthe environment with its carbon dioxideand other emissions.’Toyota Motor Corporation 17

‘Like the tobacco companies before them, car companies have had their heads inthe sand. They are about to get a rudeawakening.’Clarence DitlowCenter for Auto Safety 20

18 Environmentally sustainable transport, www.oecd.org/env/trans

19 The Center for Sustainable Transportation, Definition and Vision of Sustainable Transportation, Canada, September 1997.

20 ‘Consumers brace for car trouble’, The Guardian, 31 August 2000.

11 Society of Motor Manufacturers and Traders, 2001, from various sources.

12 UBS Warburg, Global Equity Research, Environmentally Friendly Autos?,November 2000.

13 www.worldbank.org/html/fpd/transport/roads/safety.htm

14 Michael Carley and Philippe Spapens, Sharing the World, Earthscan, 1998.

15 Michael Carley and Philippe Spapens, op. cit.

16 Scott Bowles, ‘Traffic in more of a jam than ever’, USA Today, 8 May 2001.

17 Fujio Cho and Kousuke Shiramizu, Toyota, Environmental Report, 2000.

03Driving Sustainability What’s the Problem?

2.1Who’s at the Wheel?

04 Driving Sustainability Who’s at the Wheel?

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Roles and Responsibilities

Once sustainable mobility problems andopportunities have been defined and thenature of the challenge understood, theobvious question arises: Who is responsiblefor developing solutions and implementingthem? Reading the Automobility-10 21

reports, it comes across that companies arebeginning to realise their responsibility:

— ‘We aim to implement our vision of sustainable mobility via a systematic step-by-step approach. To this end, we are continually improving our products and seeking innovative solutions for intelligent drive and traffic concepts while maintaining a constructive dialogue with our partners, the political community and society as a whole. The automobile is only one element of our overall mobility strategy, which has been evolved to take due account of people’s needs for mobility.’BMW Group 22

— ‘The notion of sustainable development forms a fundamental principle of our corporate culture. A company can only practise sustainable development if it is permanently aware of its social, economic and ecological dimensions and consequences of its corporate activities.’ Volkswagen 23

In evaluating the ten companies, we used a simple framework based on work by theDutch electronics group, Philips (Figure 04).The point made here is that early stageadaptation by an industry, in this case theautomotive sector, tends to focus onstretching existing technologies — and ondeveloping new ones. This is the domain of what the World Business Council forSustainable Development has dubbed ‘eco-efficiency’.

Over time, however, the role and behaviourof key actors becomes increasinglyimportant. This is where the function of a product or service is key. So instead ofsimply providing road transport, we mightstart to consider mobility solutions, followedby solutions designed to provide access togoods and services, without necessarilyrequiring high levels of transport or evenmobility. This sort of thinking, which tendsto emerge as it becomes clear that aparadigm shift is needed, focuses onsystem-level changes.

Views from the Bridge

Like ships’ captains standing proudly on thebridges of their great vessels, the chiefexecutive officers of major automotivecompanies should have an excellent view ofthe emerging agenda — and a good feel fortheir industry’s likely responses. Within theEngaging Stakeholders program we havealready taken a brief look at the CEOs’ ‘take’on the sustainability agenda, 25 but to whatextent are they now taking a clear lead inaddressing the sustainable mobilitychallenge? To what extent are they talkingabout the technological, behavioural and/orsystem-level challenges? And what sort oflanguage are they using in doing so?

Of the ten reporting companies studied,DaimlerChrysler’s was the onlyenvironmental report that did not have a statement by the CEO or Chairman of the company. Ambitions for the future dofeature in CEO statements. However on the basis of our simple litmus test, theminds of Automobility-10 CEOs are still very much focused on incrementallyimproving technology:

— ‘The day when breakthrough technologies such as the fuel cell might power most automobiles in developed countries, let alone in the developing world, is getting closer. Our advancements and partnerships with business, government and non-governmental agencies will one day establish commercial viability for these technologies.’GM 26

— ‘Toyota will be able to provide technology to be widely used throughout society, and will be able to make substantial social contributions to the entire world through manufacturing automobiles.’Toyota 27

PSA Peugeot Citroën

Who are the Visionaries?

There are radically different perspectives on who leads in the automotive sector, atleast in terms of sustainable mobility. But,however the sector rankings are constructedand whoever ends up topping particularsurveys, there is a growing appetite forvisionary leadership and strategic innovationin the area of sustainable mobility.Addressing a sustainability session of the US Society of Automotive Engineers in2000, Professor Tom Gladwin noted that:‘We need heroes who can really create the stretch visions, who can shapeorganizational purpose in harmony withsustainability.’ 28

When it comes to the rest of the world’sviews on who leads in automotive sectorthinking on corporate citizenship andsustainable mobility, the name of Fordchairman Bill Ford routinely surfaces. So how does he see the sustainable mobilitychallenge? His family background gives himan unusual perspective, at least in terms ofthe time dimension.

When it comes to sustainability issues, henotes that ‘the payoffs [are] 10, 20, 50 yearsdown the line. I do believe that I’m buildinga stronger Ford Motor Company for mychildren and grandchildren.’ But, he accepts,‘that’s not a theme that resonates very wellwith most [financial] analysts.’ 29

But Ford — like other automotive companies — still churns out Sport UtilityVehicles (SUVs) as if its life depended onthem (and, to a considerable degree, itdoes). Meanwhile, it has been dogged by the controversy surrounding the failure ofFirestone tyres fitted to Ford Explorer SUVs.

Bill Ford isn’t going to be a hero for GMor VW, so are there potential generic heroesfor the industry? The answer is yes.Examples of ‘out-of-the-box’ thinkers wouldinclude Amory Lovins of the US RockyMountain Institute (RMI), champion of the‘hypercar’, and Firoz Rasul, a veteran of fuelcell development at Ballard Power Systemsin Canada. But little — or nothing — ofthese people’s work pulls through into thereporting of the Automobility-10. The ‘not-invented-here’ syndrome at work?

Roles of Government

Governments tend to be highly protective of national automotive producers. Indeed,the automotive sector has been seen as a bellweather sector for the health of amodern industrial economy as a whole. A recent study by financial analysts MorganStanley Dean Witter found that the USautomotive sector employs some five millionpeople and accounts for 5-6% of thecountry’s gross domestic product. In someUS states, this proportion reaches as muchas 20%. 31

Not surprisingly, governments tend to viewthe automotive sector as the goose that laysthe golden egg, with the result that theirinclination to push for changes not seen tobe in the direct interest of the industry islimited.

At the same time, the gradual weakening of government and the growing influence of business, and of global corporations inparticular, is fuelling a shift in powerrelations. We often hear statistics such as: the total sales of the three largest auto-makers now exceed the gross nationalproduct (GNP) of the entire Africancontinent. 32

These may be real trends, but the evidencesuggests that the Gordian Knot challenge of sustainable mobility will not besuccessfully addressed without an extremelyenergetic, strategic set of interventions and long-term vision from all levels ofgovernment. So what are these companiessaying about the role of governments inshaping the transition to sustainablemobility systems? The answer, as yet, is very little. This is a subject we will return to later in this report.

‘In more and more countries, ecologically-oriented parties andpoliticians are coming to share ingovernment. The Agenda 21 debate isbringing ordinary people, representativesof NGOs and companies together at locallevel to look for a mutually acceptableroute into the coming century.’Volkswagen 30

‘In the future, companies will need to take an open and active role to createnetworks between markets, politics andsociety . . . with the scientific community,with innovators and with partners in thespheres of politics and society.’BMW Group 33

05Driving Sustainability Who’s at the Wheel?

27 Fujio Cho and Kousuke Shiramizu, Toyota, Environmental Report, 2000.

28 www.sae.org29 Ford Motor Company, ‘An Interview with

the Chairman’, Connecting With Society,2000.

30 Horst Minte, Volkswagen Environmental Report, 1999/2000.

31 ‘2001 car sales may drop 10%’, Financial Times, 15 March 2001.

32 Sustainable Mobility, Industry and Environment, UNEP, Paris, October–December 2000.

33 Joachim Milberg, BMW Group Environmental Report, 1999/2000.

21 BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, PSA, Renault, Toyota and VW.

22 Joachim Milberg, BMW Group Environmental Report, 1999/2000.

23 Ferdinand Piëch, VolkswagenEnvironmental Report, 1999/2000.

24 Adapted from diagram by Professor AbStevels of Philips Consumer Electronics, first published by Rathenau Institute, May 1996.

25 The CEO Agenda: Can business leaders satisfy the triple bottom line?,SustainAbility for UNEP, 1998.

26 Jack Smith, Chairman, Rick Wagoner, President and CEO, and Harry Pearce, Vice-Chairman, General Motors, StepsTowards Sustainability, 2000.

Corporate Transparency

Whoever ends up shouldering the majorresponsibilities for delivering sustainablemobility solutions, growing levels oftransparency will be required of all actors inthe field. The problem is that, very often,surveys or policy projects on this subjectend up mapping the various components ofthe Gordian Knot, but make little progress interms of cutting through the complexity. So,for example, sustainable mobility has beeninvestigated by a number of national andregional sustainable development initiatives:

— In the European Union, the European Commission and its EU Consultative Forum on Sustainable Development have both investigated the sustainable transport agenda, covering such issues as greenhouse gas emissions, end-of-life vehicles, car-free days and non-motorised transport. 34

— On a global scale, UNEP's Mobility Forum provides a platform for 12 major automotive manufacturers to share and promulgate best practices and new strategies for both mobility and environment. Also, to strengthen dialogue with various stakeholders, including on the development of sector-specific indicators for sustainability reporting. 35

— In the USA, the now-defunct President’s Council on Sustainable Development (PCSD) was set up to advise President Clinton on sustainable development issues, and also took a look at this area. 36

— In the UK, the Sustainable Development Commission, which superseded the UK Roundtable on Sustainable Development, has attempted a definition of the sustainable transport sector. 37

Also in the UK, the first automotive sectortrade association to introduce a series ofsustainable development reports, the Society of Motor Manufacturers and Traders(SMMT) announced a sustainability strategyfor the UK automotive sector in 2000. 38

Unfortunately, the first report largelyfocused on environmental and socialsustainability, perhaps taking economicsustainability for granted. Its publicationalmost coincided with the announcement of massive shutdowns of manufacturingoperations by both BMW (as the thenowner of Rover) and Ford.

Transparency and improved communicationare not going to solve all this industry’sproblems. But, increasingly, transparencywill become a necessary condition ofbusiness success:

— ‘. . . We must keep these partners informed about what we do on a regular basis, with open and transparent communications, maintaining an open dialogue at all times.’BMW Group 39

Why Come Clean?

Each of the Automobility-10 companieshas clearly decided to take the step ofpublicly reporting — at least to some degree— its corporate citizenship, environmentaland/or sustainability commitments, targetsand performance. In analysing thesecompanies, we used a combination ofreports (annual, corporate citizenship,environmental, sustainability) and websites.We also talked to a number of financialanalysts tracking the sector. In terms ofleadership, our analysis suggests that thefollowing companies are pushing theenvelope:

Annual ReportsUnusually, the DaimlerChrysler 1999 AnnualReport provided substantial amounts ofinformation about sustainable development,with sustainable mobility announced as the ‘megatrend’ for the new century.Unfortunately, their 2000 Annual Reportthen reverted to manufacturing — andsignificantly throttled back on sustainablemobility.

Stand-alone Triple Bottom Line ReportsThe strongest example of a stand-alonereport was VW, which achieved the highestautomotive sector score among automotivesector companies in The Global Reporters.First-time reporter PSA also showedremarkable clarity on the issues facing thesector, focusing its report on four keyproblems — limiting the greenhouse effect,reconciling the car with city life, bringingindustry and the environment into harmony,and recycling vehicles at the end of theiruseful life.

WebsitesOf the Automobility-10 websites, the most notable were BMW, Ford and GM.Both Ford and GM make their sustainabilityinformation accessible to users via theInternet. Specific features included Ford’sEnvirodrive where customers can rate theirvehicles in order to make informed decisionsabout the vehicles they drive, while BMWmentions its Institute for Mobility Research— where work in progress focuses, amongother things, on intermodal trafficoptimisation and mobility behaviour.

To help automotive sector companies workout how to report in future, we provideoverall benchmark results on their currentreporting on pages 10—11. We also outlinepossible areas of reporting in each section,aimed at improving the level of discussionof dilemmas and resulting performance.

06 Driving SustainabilityTowards Total Transparency

2.2Towards TotalTransparency

‘BMW aims to establish a future-oriented correlation between economy, ecologyand society, to reduce environmentalimpact, to enhance the quality of life and to preserve individual mobility.’BMW Group 40

07Driving Sustainability Towards Total Transparency

Spotlightingsustainable mobility

BMW Group Environmental Report1999/2000

SM Report uses the termSustainable Mobility

Saying relatively little about sustainable mobility

Saying almost nothing about sustainable mobility

PSA Peugeot CitroënEnvironment & Automobiles1999 Report

VolkswagenEnvironmental Report1999/2000

DaimlerChryslerEnvironmental Report 2000

Ford Motor CompanyConnecting with Society 1999 Corporate CitizenshipReport

General MotorsSteps Towards Sustainability1999/ 2000 Report onEconomic, Environmental and Social Performance

RenaultEnvironmental Report 1999

Fiat2000 Environmental Report

HondaEnvironmental Report 1999

Toyota Motor Corporation Environmental Report 2000

Coverage

05 Automobility-10 Coverage of Sustainable Mobility (SM) in 1999—2000 Reports

Manufacturer and Report Understanding

In both BMW’s environmental report and sustainability brochure, SM is described as the triple bottom line of sustainabledevelopment and mobility: guaranteeing individual mobility,minimisation of environmental pollution and increasing quality oflife. BMW’s report encompasses integration of transport modes.

Although PSA Peugeot Citroën does not mention SM specifically,most of the mobility issues that other companies discuss under this heading are dealt with in both its environmental and annual reports.

Although VW only briefly mentions SM, the company has a clearcommitment to the triple bottom line. In their environmentalreport, they analyse the role of the car as an ‘instrument ofindividual mobility’ by means of the scenario approach.

Although not further explained, SM is used in the R&D andtechnological context, especially in relation to fuel celltechnology leadership.

SM is mentioned in Ford‘s corporate citizenship report as an‘opportunity space for products and services that are not auto-based’. Generally, however, Ford uses the term ‘corporatecitizenship’ to describe issues of sustainable development.

GM’s report does not define SM, but lays out GM’s understandingof SM as an overarching notion capturing the environmental and social impacts of mobility. GM mentions the WBCSD SMproject, which aims to produce visions of future landtransportation systems.

Renault’s environmental report deals with the role of the car in the SM context, including a global mobility system based on intermodality.

The environmental report presents commitment to thedevelopment of SM options, reflected in a series of projects and co-operations.

Does not mention SM.

Does not mention SM.

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To test how far the sustainable mobility(SM) debate has penetrated the automotivesector, we carried out a content analysis ofthe Automobility-10 reports. The resultssuggest a widely varying set of approachesand levels of understanding. Figure 05summarises the coverage of sustainablemobility issues by these companies.On the basis of their reporting, automotivecompanies that are strongly spotlighting the sustainable mobility debate, or at leastthe key issues, are the European companiesBMW, PSA and VW. Companies that aresaying relatively little are the US-based (or partly US-based) companiesDaimlerChrysler, Ford and GM.And companies that say little or nothing can be found in Europe, i.e. Renault, Fiat,and Japan, i.e. Honda and Toyota.

The only company to actually define itsinterpretation of sustainable mobility isBMW. However, BMW’s definition focuseson preserving individual mobility, and istherefore fundamentally different to theOECD and the Center for SustainableTransportation’s version which places theemphasis on equity within and betweengenerations (page 03).

Levels 1, 2 or 3?

Stepping back a bit, we tested the extent towhich the Automobility-10 were viewingthe challenges through Level 1 (Technology),Level 2 (Behaviour) or Level 3 (System)lenses. Not surprisingly, perhaps, it istechnology dominated. Level 2 strategies or initiatives designed to change behaviourtrailed a long way behind, and Level 3system-focused thinking was weak to non-existent in most reporting and websites.Figure 06 maps the typical area of coverage.

Level 1: TechnologyThis is the area of highest excitement. Some companies may be betting the houseon a narrow range of technologies, but mostare spreading their bets. On the basis of thecurrent crop of automotive sector reports,hybrid vehicles and fuel-cells are the hottestgames in town. Honda and Toyota reporttheir progress in bringing hybrid vehicles tomarket, for example, while BMW speaks ofits 7-series car with a hydrogen-fuelledinternal combustion engine.

Level 2: BehaviourAutomotive companies seem to findbehavioural change something of an uphillstruggle. Little or nothing is said about their role in influencing change, or aboutthe psychological or sociological work that they do to understand — and capture —consumer priorities and motivations. That said, PSA, Renault and VW do havesomething to say in their reports on howconsumers see the environmental challengesand issues, the first step to engaging andinfluencing choice.

Level 3: SystemIf coverage of the behavioural dimensions is weak, coverage of the necessary system-level changes for sustainable mobility isweaker still. That said, there are rare ex-ceptions to the rule. DaimlerChrysler, forexample, is beginning to move from themanufacturing perspective to a mobilityperspective, as illustrated by its partici-pation in a cross-sectoral project on theprovision of inter-modal services in Berlin.

Emerging Strategies

Experience suggests that reports are rarelythe best source of useful information onemergent corporate strategies. To get a realgrip on this area of company thinking, it isnecessary to interview key executives,something that financial analysts know well.

That said, the language used in reportingoften — intentionally or not — pointstowards the strategic intention of theAutomobility-10. 42

— ‘Ford Motor Company’s vision is to become the world’s leading consumer company that provides automotive products and services . . .’Ford Motor Company

— ‘GM’s vision is to be the world leader in transportation products and related services.’General Motors

The shift in thinking from transport tomobility has started in terms of language:

— ‘Providing and maintaining worldwide mobility for increasing numbers of people in an environmentally compatible manner is one of the major challenges facing the BMW Group . . .’BMW Group

— ‘DaimlerChrysler is active in all modes of transportation and can therefore be truly described as a Mobility Group. With such diverse and yet related expertise united under one roof, thinking outside the box becomes second nature and opens up new possibilities for future mobility solutions . . .’DaimlerChrysler

However, to date companies tend to focuson technology, rather than on behavioural or system-level changes:

— ‘For the automotive industry, global-isation means above all technologicalcompetition . . . Beyond this, we are also confident that we will be able to assert our future-oriented concept ofenvironmentally compatible mobility.’ BMW Group

08 Driving Sustainability Towards Total Transparency

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— ‘A very high level of technical expertise and a passion for creating exceptional products mean that DaimlerChrysler will remain a driving force for innovative solutions which meet the mobility needs of the future.’DaimlerChrysler

— ‘Being in the automotive business, GM’s future success is dependent on innovation in technology which will allow GM to achieve aggressive goals.’General Motors

— ‘Our objective is to develop cars whose appeal lies not only in their style, performance, safety and driving pleasure, but also in their environmental qualities.’ PSA Peugeot Citroën

— ‘Forward thinking and technological innovation are central to our goal of ensuring that our customers enjoy the benefits of products which are not only safer and more economical, but will remain environmentally compatible throughout their lives.’Renault

There are a number of early signals thatnew thinking is emerging:

— ‘For a technology oriented group such as BMW, the term ‘globalisation’ first and foremost means the emergence of new markets and the intensification of worldwide, supra-regional trading relationships — on an economic, cultural and political level. At the same time however, globalisation of the world economy also entails the globalisation of social and ecological matters.’BMW Group

— ‘This transition from a traditional manufacturer to a 21st century consumer company is critical for our long-term financial success. It requires a new mindset — one focused on connecting notonly with our customers, but with all our stakeholders — and new strategies to make it work.’Ford Motor Company

— ‘. . . the company is working on the development of passenger and goods transport in its totality. This includes the design of new transport as a contribution to the development of more rational and more ecological solutions, since all transport media must be capable of co-existence and even interconnection . . . We are committed to the development of multimodality and complementarity between the car and public transport.’ Renault

The need for stakeholder engagementfeatures strongly in many of these reports:

— ‘An open and constructive dialogue with all the different environmental stakeholders will be of crucial importance in the timely development of shared solutions for these issues.’Fiat

— ‘We will invite stakeholders in to offer us their best thinking about the future of our markets, and how we could meet the needs of our customers and add value to society and the environment.’Ford Motor Company

— ‘GM enters into strategic alliances with various stakeholders for the purpose of developing or advocating positions and developing partnerships, which reflect its business and broader perspectives. GM supports these alliances through financial and in-kind resources.’General Motors

Explicitly or implicitly, a small number of companies acknowledge the need forbehavioural and cultural changes in pursuitof sustainable mobility:

— ‘In our effort to achieve the continuous improvement of our environmental performance, we involved not only our manufacturing partners, but also local institutions — through special projects on mobility and safety, and the educational system — through programs designed to encourage a responsible utilisation of means of transport.’Fiat

— ‘Our shared vision — and my sincere hope — is that Ford can become a company whose decisions and choices restore the environment and contribute to the creation of social and economic equity in communities around the world.’Ford Motor Company

Another area of growing activity is theformation of strategic alliances. BMW hasthis to say about its strategy, focusing on:

— ‘New alliances for global activity. Co-operation between companies,governments and non-governmentalorganisations. Companies need visions ifthey want to play a part in shaping thefuture. International political andfinancial institutions such as the UnitedNations, the World Bank and theInternational Monetary Fund are all inagreement that, in an era of globalisation,no participant can be expected to realisevisions by themselves. Business, societyand politics are facing communalchallenges.’BMW Group 43

Those were the words, but how is all of this translating into actions?

09Driving Sustainability Towards Total Transparency

‘As we at VW move beyond the mereproduction of motor vehicles to tacklemobility issues, there is an increasingneed for co-operation on a global, cross-sectoral basis — and this requires aquantum leap in terms of vision andinnovation.’ Volkswagen

42 Comments taken from the range of environmental and sustainability reports of each company, outlined on page 07.

43 BMW Group, Taking Responsibility, 2000.

34 www.europa.eu.int/comm/environment/forum

35 www.unepie.org36 http://clinton2.nara.gov/PCSD37 www.sd-commission.gov.uk38 www.smmt.co.uk39 Joachim Milberg, BMW Group

Environmental Report, 1999/2000.40 BMW Group Environmental Report,

1999/2000.41 Adapted from a diagram by Professor ALN

Stevels of Philips Consumer Electronics, first published by the Rathenau Institute,May 1996.

Auto Sector Benchmarks

So how do the Automobility-10 stack up?It’s not easy to say. When they score well,automotive companies — like othercompanies — are happy to report the resultsof external benchmark surveys. To illustratethe point, both BMW and VW referencetheir leading positions in ratings publishedby SAM, part of the Dow Jones Sustain-ability Group (DJSGI) — and even reproducethe relevant diagram (Figure 08). Others — some covered by SAM, some not —remain silent on the subject of externalbenchmarking. But nowhere is the GordianKnot nature of the sustainable mobilityagenda clearer than in the results of thedifferent automotive sector studies. Forexample:

— BMW is identified as a sector leader by the SAM and Ökom surveys. 44

— DaimlerChrysler leads in the DrivingSustainability survey (see Executive Summary) and the SAM survey.

— Toyota has been identified as a leader in Innovest’s EcoValue rating. 45

— VW emerged as the automotive sector leader in SustainAbility’s GlobalReporters survey, EnvironmentalFinance magazine’s 2000–01 survey and the SAM survey. 46

Part of this variation in benchmarking scores presumably results from the fact thatdifferent aspects of company reputation,commitment and performance are beingmeasured. Part of the variation must alsoreflect the sheer variety of assessmentmethodologies used and different definitionsof sustainable mobility. And part of thedivergence, too, could flow from differenttimings of the analyses. To be clear,SustainAbility’s benchmarking focuses noton performance but on different dimensionsof corporate reporting and communication.

Global Reporters, Automobility-10 Scores

Before looking at the Automobility-10reports in more detail in Section 3, it isworth noting how the automotive sectorfared in the 2000 Global Reportersbenchmark survey of corporate sustain-ability reporting. Five companies wereoriginally benchmarked (BMW, Ford, GM,Toyota, VW) and Figure 07 shows how theautomotive sector ranked against the sevenother sectors covered in Global Reporters,while Figure 10 provides a breakdown of the Automobility-10 scores.

The original score for the automotive sector(77 points out of a potential total of 196, or 39%) positioned it towards the bottomend of the spectrum, with the lead beingprovided by the pharmaceuticals (98 points)and oil & gas (95 points) sectors.When the five companies included in theAutomobility-10 sample (Figure 09) wereadded, the average sector score fell from 77 to 63 points, representing just 32% ofthe potential maximum score.

VW (95 points) emerged in the lead in theAutomobility-10 benchmarking, followedby Ford (82 points) and GM (81 points). The lowest scores went to Renault (36points) and Fiat (35 points). These results,however, only tell us part of the story. They reflect quality of sustainabilityreporting, and whilst a proxy for perform-ance, may not always reflect true intentionto move towards sustainable mobility. To get a different perspective, and a bettersense of the relative interest and value ofthe different styles of reporting, we need tofocus on specific issues. This we do inSection 3 with an additional benchmark ofeach key sustainable mobility issue.

As automotive companies release newreports, the latest benchmarking scores willbe featured on the SustainAbility website:www.sustainability.com/mobility

10 Driving Sustainability Benchmark Survey

44 www.sam-group.com www.sustainability-index.comwww.oekom.de

45 www.innovestgroup.com46 http://environmental-finance.

webserver.org/envfin/featdec2_2.htm

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11Driving Sustainability Benchmark Survey

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10.1 Automobility-10 Breakdowns 10.2 Automobility-10 Breakdowns

10.3 Automobility-10 Breakdowns 10.4 Automobility-10 Breakdowns 10.5 Automobility-10 Breakdowns

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Key Issues

To manage the Gordian Knot of sustainablemobility, we have tried to slice it intomanageable pieces. For the presentpurposes, we will look at the challenge in four dimensions:

Climate Change This is probably the biggest single factorpotentially influencing the future ofautomotive manufacturers. We touch on the global energy debate, the need for theradical decarbonisation of the sector’senergy sources and the question of vehiclenumbers.

Life Cycles Life cycle management is perceived as a major headache, with ‘take-back’regulations raising the temperature of thedebate in the EU. The need for significantreductions in material throughputs in theglobal automotive manufacturing system isincreasingly evident, as is the need for theestablishment of closed loop systems. Thisissue is linked to vehicle ownership and toliabilities, up and down the value chain.

Liveable Cities The liveable cities nexus is perhaps the most difficult aspect of the Gordian Knot to define, not least because it has a great deal to do with behaviour. This cluster of issues links to direct social and environmental impacts, as well as to indirect impacts such as congestion, the severance of communities, thefragmentation of habitats, and urbansprawl.

Emerging Economies The final issue relates to the development of sustainable mobility patterns in theemerging economies. Questions here link to how companies approach new markets,adapting their current business models ordevising new models to deal with the verydifferent needs and problems in the relevantmarkets. Their role in aiding the sustainabledevelopment of these economies is key,bringing in wider responsibilities incurred in operating in countries where standards,regulations and cultural expectations aredifferent.

What’s their Big Idea?

For each sustainable mobility issue, we use the three levels of strategic response(Figure 11) as a framework for analysis.The most interesting of the temporalperspectives is the future, hence weconcentrate on what ‘Big Ideas’ theAutomobility-10 convey in their reports,related to each issue.

The Issues Benchmark

As part of the analysis, the Automobility-10 companies have been benchmarked on their publicly available information relevant to each of the four main issues.This information was collected from acombination of environmental, socialand/or corporate citizenship reports (seeFigure 05, page 07 for list of reports), andfrom company websites (specifically, dataaccessible in 20 minutes from the start of the search).

The benchmarks were devised using ourUNEP/SustainAbility The Global Reportersbenchmark methodology as a starting point.47 Each issue was rated in terms of a 1—5 score, with a score of 0 representingno mention of the particular issue and ascore of 5 representing state-of-the-artcoverage. The scores have been tabulatedand the results compared for each issue.Current practice from companies isdiscussed in the text of the relevantsections.

12 Driving Sustainability Sustainable Mobility

47 The Global Reporters: The first international benchmark survey of corporate sustainability reporting,SustainAbility for UNEP, 2000.

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11 What’s their Big Idea?

What’s the Problem?

Automobile production is now one of thelargest manufacturing activities on earth.Motor vehicles consume half the world’soil — and car tailpipe fumes represent thebiggest source — by far — of air pollutionin half the world’s cities. 48 Although in thepast the focus has been on pollutants likenitrogen oxides and lead, attention isincreasingly focusing on the carbondioxide component of these emissions.

The reason why is not hard to find. A recent report from the Intergovern-mental Panel on Climate Change (IPCC), an eminent body of scientists advisinggovernments on global warming, spotlightsthe potential losers from climate changeover the next century. The impacts will notbe equitably distributed. For example, theworld’s poorest are expected to sufferheavier floods, worse droughts, failingagriculture and increased incidence ofdisease. 49

Following years of industry denial of the mounting evidence, as illustrated by the activities of the Global ClimateCoalition (GCC), an alliance of majorenergy users, there seems to be anemerging commonality of vision between a number of energy and automotivecompanies. Whilst vast reserves of oil arestill in existence, they are beginning toaccept that scarcity of the resource is notthe real worry. Climate change is. EvenExxonMobil, whilst publicly scoffing aboutglobal warming, ‘are quietly investing hugesums in carbon-related technology.’ 50

Despite the early anti-Kyoto announce-ments by US President, George W Bush, itis clear that climate change is now firmlyon the global governance agenda.51 Futuretalks are likely to lead to energy taxes, theremoval of subsidies, and the introductionof economic instruments to ensure thatprices reflect environmental and socialimpacts.

There is even some evidence thatimplementing the Kyoto treaty could beachieved with net benefits in economicterms, to the extent that the US economymight be $200 billion better off if itfollowed a strategy of investment-ledproductivity growth for mitigating climate change.’ 52

When faced with the possible replicationof current rich-world energy and transportsystems and infrastructure in emergingand developing economies, the likelysignificance of climate change growsexponentially.

The range of impacts caused is indicatedby the following statistics. North Americahas the highest levels per capita of CO2

emissions in the world, a direct contributorto global warming, with 19.8 tons in 1995— compared to emissions of 12 tons inGermany, 9 tons in Japan and 2.6 tons inChina.’ 53 If the world follows the USA andtakes to the roads in SUVs, we will riskleaving any hopes of sustainable mobilitybehind in our dust-clouds.

13Driving Sustainability Climate Change

3.1ClimateChange

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Is it on Corporate Radar Screens?

Since the US automotive manufacturersFord and GM pulled out of the GlobalClimate Coalition in 1999 and 2000respectively, climate change has firmly takencentre stage for many companies. ‘Askedabout their biggest worry for the future,most industry bosses will say greenery,’ TheEconomist has noted. ‘At the global level,their main headache is climate change.’ 54

How multinational companies will nowreact to the evolving climate change talks is still unclear, but — on the evidence of theAutomobility-10 reports — there is littledoubt in the minds of at least the Europeanand Japanese automotive manufacturersthat the issue needs to be addressed.

What’s their Big Idea?

Reading the Automobility-10 reports, it is clear that there is at least one basicassumption common to all — the future of mobility will involve an extension ofbusiness as usual, with road transport andprivately owned cars and other vehicles as the main way forward. Once thisassumption is made, and assuming that theclimate change challenge becomes moreurgent, then the main technology response— the ‘Big Idea’ — is seen to be the fuel cell.The main system-level change, in turn, isseen to be a shift to the hydrogen economy.Very little is said, however, about how thenecessary infrastructure will be providedand paid for, or about the sound productionof hydrogen.

On the basis of these automotive sectorreports, it is becoming accepted industrywisdom that the fuel cell is the keytechnology of the future. The evidence ismost striking in the growing number ofpartnerships between companies, designedto share innovation and technology. Suchpartnerships include those formed by:

— DaimlerChrysler, Ford and Ballard Power; — ExxonMobil, Toyota and GM, where the

focus is on fuel cells for vehicles; and,— DaimlerChrysler which has joined forces

with Shell Hydrogen, Norsk Hydro and Vistorka HF (an Icelandic consortium) to investigate the possibility of creating the world’s first ‘hydrogen economy’ in Iceland. 55

Interestingly, fuel cell technology is not new.Indeed, it has been in existence for morethan 150 years. The main barrier to its widerdeployment has been — and continues to be— cost. Today, fuel cells cost around $140per kilowatt. They would only become cost-competitive with conventional engines if thecosts fell to less than $50 per kilowatt. 56

Ferdinand Panik of DaimlerChrysler’s fuel cell project group explains: ‘We haveovercome the main technological obstaclesfacing the development of the fuel cell drivesystem. The task now is to reduce its costsand pave the way (e.g. infrastructure) forrapid introduction of these automobiles by 2004.’ 57

For most companies, the time-scales areseen as likely to be significantly longer. An interim solution has been to develophybrid vehicles, with Honda and Toyotaplacing their early models on the marketover the last year or two.

The US automakers Ford and GM alsoplan to launch electrically assisted gasolineengine vehicles, offering hybrid options onmost models, although on current evidencethis may take a decade or more. 58

Working on the assumption that thehydrogen economy will take many years toevolve, VW recently announced its plans toproduce a 20 horsepower, 400 kilogram carwhich uses only one litre of fuel per 100kilometres, representing a majorbreakthrough in eco-efficiency. 59

Most companies, meanwhile, continue to spread their bets. Toyota, for example, is among those focusing on fuel cells,announcing its latest innovation at theInternational Symposium on Fuel CellVehicles in March 2001: the FCHV-3, a fuel cell hybrid. This is part of theirresearch into an array of fuel sources,although they still believe hydrogen will be mainstay fuel of the future. Hondaremains the most ambitious with its launchdate of 2003 for the fuel cell car.

Given automotive companies’ love oftechnology and their engineering skills, it is hardly surprising that this is their focus in developing responses to climate change. But very few of the Automobility-10currently make any mention of the Level 2(Behaviour) and Level 3 (System) changesthat will be needed in future. Instead, theyall assume an upward trajectory in private,road-based mobility.

One small example of a company that istrying to deal with the implicit climatechange challenge is PSA — throughspotlighting potential carbon offset schemes that might conceivably help tosponge up some of the emissions. 60

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12 Climate Change: What’s their Big Idea?

What’s Missing?

Whilst the manufacturers and theirrespective alliances are racing to promotestandardisation of their technology, thefocus on affecting consumer behaviourand system-level change is lacking.

The biggest piece of the puzzle is missing— the growing number of vehicles on theroad means that incrementally improvingfuel efficiency, or in fact changing fueltechnology, is unlikely to address climatechange. Until consumer behaviour isinfluenced, and companies think abouttheir climate change impact holistically,the necessary levels of improvement willnot be achieved.

In addition, a need to build infrastructureto support the change in fuels is anothercase in point for alternatives and theirtake-up. ‘Over the near and medium term,hybrids may be the most feasibletechnology, as it uses current gas stationinfrastructure. Alternative fuels will requirenew infrastructure, which may be one ofthe larger obstacles to replacing fossilfueled propulsion.’ 61

15Driving Sustainability Climate Change

Our 2001 climate change reportingbenchmark survey has assessed the waysin which an automotive company tries to define the climate change challenge —and then communicates its climate changevision, strategies, plans and performance.The information was scored on the basis of how well each company demonstratesthe link between climate change and itsactivities, together with the way itdescribes its relevant portfolio ofstrategies, products and initiatives.

The climate change issue is where we have seen most progress so far. In terms of technological achievement, theJapanese have been pushing hard withtheir hybrid and fuel cells. However, theEuropeans are leading overall in the areaof climate change through their opendiscussion of the issue, their integrationinto strategy and their visionary level ofunderstanding.

The scores suggest that no single company currently leads in this area. In fact, our benchmarking suggests that a cluster of companies share the lead:BMW, DaimlerChrysler, Ford, PSA andVW. They are open about the dilemmas,they show first signs of trying to improveperformance in this area and are aware of their impacts.

That said, the companies managing a score of 3 (out of 5) are all at an earlystage in the game. None of them, forexample, is yet reporting along the linesproposed in ongoing work between theWorld Resources Institute (WRI) and theWorld Business Council for SustainableDevelopment, although Ford and VWhave been involved in the piloting of thegreenhouse gas (GHG) reporting protocol. 63

Climate Change: Issues Benchmark

BMW

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up

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lerC

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Fiat

Ford

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pts Average Score 2.0 (40%)

5.0

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3 3 3 33

2 2

1

13 Climate Change: Issues Scores

Honda 62

Where will Reporting be in 2003-5?

Companies are beginning to realise thatperformance in relation to climate changewill be pivotal to their long-term futures.Reporting on the issue is still mostlylimited to technology, hence the followingsuggestions which give a flavour of thetype of information companies will beexpected to report on in future.

16 Driving Sustainability Climate Change

48 J Motavilli and A Spencer-Cooke, ‘The Road Ahead’, Tomorrow, Sept/Oct 2000.

49 M McCarthy, ‘UN delivers apocalyptic warning on climate’, The Independent,20 February 2001.

50 ‘Will the Oil Run Out?’, The Economist,10 February 2001.

51 www.unfccc.de52 F Krause, Solving the Kyoto Quandary:

Flexibility with No Regrets, InternationalProject for Sustainable Energy Paths, 2000, www.ipsep.org

53 Rachel’s Environment and Health Weekly, No.522, 28 November 1996.

54 ‘Will the Oil Run Out?’, The Economist,10 February 2001.

55 www.shell.com March 2001.56 ‘Ulterior Motors: Economics of Fuel-Cell

Cars’, The New York Times Magazine,10 December 2000.

57 www.sustainablebusiness.com58 ‘Detroit’s Answer to ‘Hybrid’ Cars’,

The New York Times, 20 February 2001.59 www.autohaus-online.de October 2000.60 Peugeot, Environment and Automobiles,

1999.61 Japan Auto Inc — The world that is

changing the machine, Lehman Brothers, February 2000.

62 Honda Ecology, Honda Environmental Conservation Activities, 1999.

63 www.ghgprotocol.org

For the reporting auto companies,technology is generally the starting point.This is what they do best. One problemwith cleaning up the world’s car fleet,however, has been that they can bringenergy penalties, denting energy efficiencyand boosting climate impacts. Over time,however, auto sector innovation willembrace and achieve multiple objectives.Among the areas we would like to seereporting cover by 2003—5 are:

— Percentage of zero and low emission vehicles sold per fleet;

— Manufacturing and fleet emissions and impacts relative to national and global greenhouse gas emissions;

— Degree of decarbonisation achieved across the company’s portfolio, together with performance against industry benchmarks and future targets;

— Barriers to change.

The surveyed companies generally haveless to say on the behavioural front, eitherin respect of their own behaviour or theirefforts to influence consumer behaviourtowards sustainability objectives. Amongthe areas we would like to see reportingcover by 2003—5 are:

— Public and customer poll data on climate change priorities;

— Development of carbon offsets to reduce climate impacts both of company activities and of fleet as a whole;

— Efforts to make carbon neutrality a competitive issue;

— Advice to customers and motorists on climate-friendly options and behaviour;

— Use of advertising and marketing;

— Response of customers and media to climate-friendly offers;

— Barriers to change.

The toughest challenge of all will be tochange transport, mobility and accesssystems. Among the areas we would liketo see reporting cover by 2003—5 are:

— Lobbying by individual company – and by wider coalitions – in support of climate-friendly transport and mobility systems;

— Involvement in (and experience of) carbon emissions trading;

— Progress in creating markets for renewable energy in auto sector;

— Benchmarking of performance not only against best of class in the auto sector, but best of class in the mobility sector;

— Barriers to change

Climate Change: Technology

Climate Change: System

Climate Change: Behaviour

What’s the Problem?

The old industrial model was thatautomotive companies bought materialson commodity markets, formed them intovehicles, sold them to customers and then,apart from service and componentsactivities, waved goodbye both to thevehicles and (to a considerable degree) any linked liabilities. No longer. Over time,a range of liabilities have reshaped theway the automotive sector thinks aboutproduct life cycles and the relatedresponsibilities. Now the growing focus on ‘end-of-life’ vehicles (ELV) is helpingto force an even more radical rethink.

The key to future success, leadingcompanies are concluding, will be lifecycle management. ‘Extended producerresponsibility’ is not a new concept, withrecent years having seen growing efforts in such areas as health and safety andtotal quality, but the linked concept of‘extended product responsibility’powerfully reframes the value chaindiscussion. The value chain extendsthrough from the mining and processing of raw materials to the disposal of vehiclesat the end of their useful lives. The scale of the resulting disposal problems isindicated by the fact that in the EuropeanUnion alone, somewhere between 9 and 13million vehicles are discarded each year. 64

There have been long-standing debatesabout how to deal with the resultingscrap. Metals can be fairly readily recycled, but the growing use of polymersand other materials in vehicles has causedcomplications. For example, it might makesense to burn some of the combustiblewastes, but they are often contaminatedby toxins, and there is widespreadresistance to new incineration facilities.

Considerable progress has been made inmaterial recovery, re-use and recycling,although much of that activity is in thehands of the commercial ‘shredders’, ratherthan falling to the automotive companiesdirectly. Increasingly, however, thesecompanies are being pulled into thedebate — and asked to take a muchgreater degree of responsibility for ELVvehicles.

More ELV recycling happens than manypeople might assume. Currently, some 75—85% of the weight of EU cars isrecycled. But this is far from the wholepicture: up to 25% of each discardedvehicle’s weight is considered hazardous,potentially contaminating landfill soil and groundwater.

Even so, the automotive industry has had real problems with this first step onthe path to embracing a life cyclemanagement approach. One obviousreason: the financial implications of theEU’s recent ELV directive, due to come intoforce in 2007, are considerable. At thesame time, this is an early warning signalof similar pressures that the industry inother world regions will need to take onboard in future.

German auto-makers led a campaignagainst the new provisions, but areincreasingly accepting this as the way ofthe future. VW, for example, is planning toset aside about DM1 billion (£330 million)to ensure it complies with the directive, tobe taken against VW’s 2000 results. 65

Industry analysts estimate the cost pervehicle at some € 180 (£115), which withsome 12 million cars being scrapped eachyear in Europe would suggest an overallannual cost to the industry of more than€ 2.1 billion.

Is it on Corporate Radar Screens?

Yes, for most of these companies the lifecycle challenge is both real and beingworked on, often to some considerabledegree. This is an area where there havebeen a growing number of inter-sectoralalliances, linking auto-makers andmaterials suppliers. The end-of-lifepressures are helping drive the process.

That said, the ways in which differentcompanies handle the issue in theirreporting vary considerably. Some, likeToyota, give a fair amount of space to life-cycle analysis or assessment (LCA) early on in their report, while others give it amuch lower profile. To date, reportingcompanies are much more likely to useLCA tools to manage materials, energy andmanufacturing processes than they are toreview and remould their business models. The best explanation of the life cyclemanagement (LCM) challenge we cameacross is from VW:

— ‘Some of the key areas we all need to rethink include designing cars thatare easier to dismantle, selectingappropriate materials and usingsecondary raw materials. Anyone who,like our suppliers, is involved in thecreation of more than 60 percent of a car’s added value must join forceswith the manufacturer to share in theresponsibility for responding to new ELV recycling issues and obtaining type approval for new models. This is a major new challenge that can only be compared to the introduction ofcatalytic converters in response toemissions limits.’Volkswagen 66

17Driving Sustainability Life Cycles

3.2Life Cycles

ToyotaHonda

What’s their Big Idea?

If the automotive industry sees fuel cellsand the hydrogen economy as the ‘HolyGrail’ in the area of pollution clean-up andclimate change, what is the equivalent interms of life cycle management?

As Figure 14 suggests, and despite thelobbying efforts of the industry to slow orreverse the ELV directive in Europe, long-term thinkers in the industry see theemerging ‘Big Idea’ as focusing on closingthe loop. This will likely involve an inevitabletrend (albeit at different speeds in differentcountries and world regions) towardsregulated take-back requirements, closedloop systems, design-for-recycling, and theviewing of automotive materials andcomponents as ‘technical nutrients’. 67

On the basis of the reports under review,some of the priority areas for future actioninclude:

Growing Use of LCA TechniquesLCA has become something of a universallanguage in the industry when it comes todescribing its environmental initiatives, butsome companies are more fluent thanothers. Most companies still introduce LCAin a largely anecdotal way, rather than usingit as a framework for their reporting.Toyota, to take just one example, reports onthe results of a comparative LCA betweenthe emissions from an electric vehicle RAV4 EV and its new hybrid vehicle, thePrius. The focus, in short, is still onindividual materials, products or processes,rather than on mobility options and systems.

Recyclability, Dematerialisation andDetoxificationLCA can help inform recycling andrenewable materials initiatives.DaimlerChrysler has been conductingresearch into the use of alternative,renewable materials for car components,investing in sisal farms in South Africa. But increasingly the focus will not simply be on making individual vehicles lighter,more fuel-efficient or even ‘renewable’. It will also be on the dematerialisation and detoxification of entire transport andmobility systems.

Zero Emissions and Waste TargetsThese take the challenge a stage further.Honda was recently the first automotivecompany to achieve zero landfill waste at all its Japanese plants, a significantachievement in efficiency. DaimlerChrysler’sconstruction of its Toluca wastewatertreatment facility in Mexico, where the aimis to recycle all water, resulting in nodischarge outside the complex, is anotherexample of this push towards zero.

Integrated Supply ChainsThere are many reasons for integratingsupply chains, including cost reduction andtotal quality management. GM’s new plantin Brazil, where component suppliers sitnext to paint manufacturers and vehicleassemblers, represents an innovation insupply chain relationships. 68 A number ofreporting companies mention initiativesdesigned to develop and use LCAframeworks to ensure that environmentalperformance improvements cascade through the chain.

Life Cycle Management StrategiesAs the regulatory and market pressuresintensify, companies are beginning tointegrate life cycle thinking into theirstrategies. PSA talks of its 3-part strategy:

1 To design and manufacture vehicles that will be 90% recyclable from 2002 onwards, by integrating recyclability requirements from the design stage;

2 To work with the Relais Vert Auto network of ‘clean garages’ across Europe to accept and recycle automotive waste received from the public; and

3 To build its Secoia programme, designed to promote the re-use of parts.

Infrastructure InvestmentsTo accompany the launch of the Prius inEurope, Toyota announced plans to open adedicated network of dealers and recyclingcentres to handle the requirements of theEU ELV directive. This will include 80 ‘hybridtechnical centres’ in the UK that will alsotake responsibility for the process and costof recycling the vehicle’s batteries. 69

AcquisitionsAs life-cycle and ELV issues become moreimportant, expect to see cross-industrymergers and acquisitions. So, for example,Ford began to move into vehicledismantling in the US during 2000, with its first site in Tampa disassembling cars and commercial vehicles for parts, as well as collecting from other Ford plants forrecycling. Ford’s purchase of Kwik-Fit, thelargest independent fast fit repair chain in Europe, was seen as supporting itsstrategy to sell the re-conditioned parts to body shops, insurance companies anddirectly to the public via the internet. ‘We see this as potentially a billion dollar or more business,’ explained Ford CEOJacques Nasser.

18 Driving Sustainability Life Cycles

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BehaviourFocus on take-backincentives andlogistics, automotiveownership and leasing packages

SystemClosed loopsystems

TechnologyTechnical nutrients

14 Life Cycles: What’s their Big Idea?

What’s Missing?

Manufacturers still think in terms of how toimprove the technology at each incrementalstage of product design. End-of-life is onlythe end piece of a complex puzzle. Untilcompanies begin to think about the fulllength and breadth of their value chain —including how to connect the strandstogether and understand their productwithin the system — they are unlikely toachieve more than incremental change.Once teams with perspectives over thewhole life cycle come together, creativityaround function, design, materials sourcingand use can provide new angles on theproduct. This connectedness is what stillfails to appear in discussions aroundcompany performance and impact in thewider community.

19Driving Sustainability Life Cycles

Our 2001 benchmark survey assesses the ways in which automotive companiesdefine the LCM challenge and thencommunicate their visions, strategies,plans and performance. This includesaddressing issues of dematerialisation anddetoxification, recognising the importanceof value chain partnerships. The scoresshow BMW, DaimlerChrysler, Ford, PSA,Toyota and VW taking the lead, at leastwhen it comes to reporting.

VW’s reporting in this area covers itscommitment and actions to influence the industry, and its programs andworkshops in the area of design, life cycle analysis and recycling. Toyotaextensively outlines its actions arounddevelopment and design, procurement and recycling. However, none of thecompanies mention the possible route of monomaterial parts, such as that used by the Rocky Mountain Institute in its design of the Hypercar.

With this methodology, VW scorehighest, but we are sensitive to twoqualifiers: the VW approach is far fromperfect; and VW lobbied extensivelyagainst EU aspects of ‘take-back’ rules.

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Life Cycles: Issues Benchmark

‘We are increasingly defining end-of-life cars as ‘technical nutrients’. So the carwill be built, then it will be disassembled— and the materials will rebuilt into a car again.’Ford Motor Company 70

Ford Motor Company

pts Average Score 2.7 (54%)

4

3 3 3 3 3

2 2 2 2

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1.0

15 Life Cycles: Issues Scores

Where will Reporting be in 2003-5?

To reflect a growing cohesiveness ofthought, reporting on life cycles shouldinclude discussion of the difficultiesaround changes in decision-making inmanufacturing-focused companies. Where the focus has so far been ontechnology, influencing the way people in organisations think about the tools andprocesses they use is critical. We wouldsuggest that in the new crop of reports, a more innovative way of thinking andreporting about life cycle impacts shouldbe adopted.

20 Driving Sustainability Life Cycles

64 ‘Vehicle recycling and the ELV directive: an opportunity for the European industry to combat pattern parts’, just-auto.com 18 July 2000.

65 Tim Burt, ‘VW is set for £330 million recycling provision’, Financial Times,12 February 2001.

66 Volkswagen, Environmental Report,1999/2000.

67 Concept developed by Michael Braungartand Bill McDonough of McDonoughBraungart Design Chemistry, www.mbdc.com

68 ‘Components of an output revolution’ Financial Times, 10 April 2001.

69 ‘Recycling centres for Toyota’s ‘green’ cars’, Financial Times,11 September 2000.

70 Bill Ford, Ford, Connecting with Society,1999.

Life cycle thinking and managementapproaches are equally relevant totechnology, behaviour and systems.But current reporting focuses on thetechnical aspects of auto life cycles.Among the areas we would like to seereporting cover by 2003—5 are:

— Trends in the mix of materials used in vehicles and other products, in terms of e.g. toxics, recyclability and recycled content;

— Proportion of renewable materials used, plus initiatives to boost renewable content;

— Benchmarking of progress in moving towards closed loop methods against best practice in auto and other sectors;

— Use of the ‘Hypercar’ concept as a benchmark to stretch against;

— Barriers to change.

The reports surveyed have considerablyless to say on the behavioural dimensionsof the life cycle and take-back agendas.Among the areas we would like to seereporting cover by 2003—5 are:

— Frank discussion of trade-offs incurred during life-cycle projects;

— Use of stakeholder engagement processes in defining priorities and making tough choices;

— Remaining dilemmas;— Use of full cost accounting and other

methods to track and manage externalities;

— Progress in educating and informing customers and other stakeholders on life-cycle issues;

— Barriers to change.

EU take-back requirements represent adetermined effort to effect system-levelchange. Among the areas we would like tosee reporting cover by 2003—5 are:

— Work on national, regional and global end-of-life standards for vehicles;

— Current baseline standards and future targets;

— Progress in creating markets for waste materials and ‘technical nutrients’;

— Thinking (and public policy positioning) on market shaping by means of pricing and taxes;

— Progress in developing ‘business ecosystems’, with technical nutrients exchanged between different plant, companies and sectors;

— Barriers to change.

Life Cycles: Technology

Life Cycles: System

Life Cycles: Behaviour

What’s the Problem?

Many of the world’s cities are infinitelybetter places to live than they were acentury or two ago. Indeed, statisticianstell us that the first great demographicbenchmark of the 21st century will occurin 2005, when for the first time in humanhistory most of the world’s people will livein cities. Urban populations are growingthree times as fast as rural populations,with most of the growth taking place indeveloping countries — where alreadysome 40% of the population is opting forcity life. 71 In the process, modernisationand rising incomes create a growingdependence on road transport in general,and on the private motor car in particular.

‘No problem there’, automotive sectorcompanies will say. People choose to usecars because they provide levels of serviceand convenience which public sectorsolutions cannot, or at least do not, offer.For most individual motorists, access to a car is a key metric in terms of theirperceived quality of life. Mobility, flexibilityand status are just some of the benefits acar can bring. However, even the most avidmotorist is sometimes forced to admit thattoo much of a good thing can causeunexpected problems.

Increased mobility is liberating and sociallyprogressive up to a point. Beyond thispoint it can become socially destructive —especially when accompanied byincreasing disparities in levels of mobility.The emerging trend dubbed hypermobilityaccelerates the time-scales and sharpensthe impacts. The results can add up to a vicious cycle: 72

— Greater disparities between rich and poor (with the rich increasingly insulated from the problems of the less well-off);

— More suburban sprawl;— The growing dependence on cars spurs

decentralisation, further disadvantaging public transport options;

— Neighbourhoods are increasingly anonymous and less convivial, as dangerous streets and falling air quality keep families and children indoors;

— The dangers grow for those not in cars;— Falling social cohesion can drive up

crime levels;— Less exercise leads to obesity and

ill-health;— As self-policing of cities falls, there is a

growing demand for Orwellian styles of policing, with CCTV surveillance.

Among the issues that have become morechallenging as the use of the car hasspread are urban congestion and urbansprawl, air quality, the disruption andseverance of communities along majorroads, the disenfranchisement of thosewho do not have easy access to cars, theerosion of urban quality of life, a range ofsafety issues, and a spectrum of local,regional and global environmental impacts.

Automotive sector companies assure usthat they are deeply involved in theresolution of such problems, but you wouldhardly guess that there were suchproblems from reading the reports of thosemost involved in shaping our commonfuture around road transport and cars.These include infrastructure andequipment companies: road builders,automotive manufacturers, fuel companies,and all those who sell and service theirproducts.

But even if you cannot find the full storyin their reports, the technicalachievements of the automotive sector inrecent decades have been extraordinary.Safety was a critical issue for the sector inthe 1950s and 1960s, and remains a majorconcern, although cars these days aregenerally much safer than they used to be.

Then environmental pollution began tobecome more of a headache, particularlyas static pollution sources like factoriesand power stations were cleaned up. The photochemical smog problems thatplagued major cities like Los Angeles andTokyo helped drive new forms of air qualityregulation, leading to major changes inengine design and fuel formulation, andpromoting the widespread adoption of new technologies, particularly catalyticconverters.

Unfortunately, such technicalachievements have often been neutralisedby behavioural or system-level trends. Cars may be cleaner, for example, butthere are many more of them now, oftenidling in traffic jams. And the evidencesuggests that things will get a lot worsebefore they have any chance of gettingbetter.

Predicted levels of car ownership inemerging and developing economies areworryingly high. In Asia, people in newlyindustrialised countries could purchase as many as 500 million new vehicles by2020.73 Having already witnessed thedecline in social and environmental qualityof life in many western (sub)urban areas, there are huge ramifications for thedeveloping countries if they opt forautomobility.

21Driving Sustainability Liveable Cities

3.3Liveable Cities

‘All over the world, wherever our activities take us, we demonstrate a commitment to conserving naturalresources and enhancing the quality of the environment — and the quality of life.’DaimlerChrysler 74

DaimlerChrysler

BehaviourGuilt-free motoring

SystemDeafening silence

TechnologyIntelligent mobilitysystems

Time

Is it on Corporate Radar Screens?

The Holy Grail for automotive companiesseems to be guilt-free motoring. At least in the rich world, the technological answeris perceived to be the fuel cell. However,when we bring the global demographics of population growth, increasing affluenceand the rapid growth of megacities into the equation, we rapidly need more thantechnological fixes to solve the resultingproblems.

— ‘Mass car ownership and individualmobility clearly have drawbacks in terms of their impact on our naturalsurroundings — the car ranks alongsidedomestic heating, industrial processes,heat and power stations, and agriculturalenterprises as one of the main sources ofemissions of nitrogen oxides, sulphurdioxides, particulates, carbon monoxideand hydrogen sulphides. It also emitsgases implicated in climate change, inparticular carbon dioxide.’Volkswagen 75

To be fair to the industry, there is evidencethat new thinking is emerging on theseissues. As discussed in Section 3.2, a keyfactor helping to turn the tide is that carcompanies — whether or not they like it —are becoming increasingly responsible fortheir impacts up and down the value chain.This includes the use phase of the vehicle,previously perceived as beyond a company’sremit. Partly as a result, some majorcompanies are beginning to think aboutproviding lifetime services to consumers,which would also involve a capacity tomanage the entire life-cycles of vehicles.

The focus, though, is still very much onseducing and serving the motorist. Take thebooming area of in-car navigation systems.Automotive companies are investing heavilyin telematics. Deutsche Bank analystspredict that the telematics market will growfrom $1 billion in 1998 to $42 billion in2010. 76 Here the focus is often on helpingbetter-off drivers get around congestionproblems.

Meanwhile, a small number of companies —including some in the IT sector — areconducting mobility experiments, looking at different mobility options based on acombination of transport modes. Fewcompanies, however, address thebehavioural or system-level changes thatare going to be needed. A rare reference to emerging consumer concerns — and,potentially, to new needs and services —came from Renault:

— ‘We are witnessing a not insignificant change in attitudes to vehicle use. Some of our customers are prepared, to a certain extent, to modify the manner in which they use their vehicles, accepting that there are situations in which it is not absolutely necessary to drive. This is a very recent trend.’Renault 77

But it would be foolhardy to draw too manyconclusions from such early trends. VW, forexample, reports that whilst customers maybe starting to demand eco-friendly vehicles,a high percentage (45%) are not inclined topay more for them. The obvious questions:can auto-makers work with some of themuch smaller groups that are prepared topay more to incubate new sustainablemobility products and services? And whatcan governments and NGOs do to acceleratethe process?

What’s their Big Idea?

Overuse of what is essentially a luxury itemhas often devalued the car to the pointwhere there is a loss of its core functions,mobility and access. In response, carcompanies have concentrated on improvingthe product (as with on-board navigationsystems), and compensated by creatingother functions such as in-carentertainment.

So the current ‘Big Idea’, insofar as there is one, is generally based on technologieswhich enable motorists to avoid theproblems they are helping to create, toensure — as far as is possible — guilt-freemotoring. When it comes to behavioural and system-level changes, Automobility-10reports have strikingly little to say.

Telematics will help drivers find waysaround the traffic jams, or failing that,connect them to the wired world so that,while stuck in traffic, they can communicateas efficiently as if they were at home or inthe office.78 GM’s OnStar system has beendeveloped from a navigation and emergencyresponse system to embrace othermultimedia functions, such as video and e-mail. Automotive manufacturers supplythe products consumers demand, feeling itis not their responsibility what consumersthen do with the products. However, as themajor tobacco companies have found, thiscan be a risky assumption.

On the basis of their reporting, Europeanand Japanese auto-makers often seem to belight years ahead of their US counterparts.This may have a great deal to do with thefact that in both the EU and Japan thepopulation is more concentrated, sharplyhighlighting the need for solutions. PSAin France, for example, dedicates a quarterof its environmental report to asking the question ‘Why reconcile the car withurban life?’

22 Driving Sustainability Liveable Cities

‘The satisfaction of these needs has led to growing concerns about the impacts of current modes of transportation on the world’s environment, public healthand safety, and the quality and patternsof life.’General Motors 79

16 Liveable Cities: What’s their Big Idea?

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The company sees it as a major issue theyneed to tackle — and plans to take a centralrole in improving quality of life in urbanareas. They have invested in new conceptsof urban mobility: Liselec, for example, is a self-hire electric vehicle service, accessiblethrough subscription only, working in citycentres (initially La Rochelle in France). It is a partnership experiment between PSA, la Générale de Transport et d’Industrie(VIA GTI) and Alcatel CGA Transport.

Meanwhile, DaimlerChrysler has beenworking in partnership with otherorganisations (specifically Siemens AG andthe Berlin Transportation Authority) to formthe Centre for Traffic Management (VMZ) in Berlin. Aimed at implementing intelligenttraffic control systems and ensuringcomprehensive traffic management, theservice focuses on data quality, and offersadvice on the best use of public transport.80

What’s Missing?

Companies have focused intensely onimproving technology as far as possible —the result being better tailpipe emissionsand safety statistics. What companies fail to address is the growing breakdown of thecurrent transport system and the role oftheir product — the car — within thatsystem. This relates to a wider definition ofimpacts, and the responsibilities associatedwith those impacts. In urban areas, thecollective impact of a growing dependenceon cars has meant that urban planning isbiased towards car-focused activities,alienating the infirm, the poor, the youngand the old. It has also meant that overuseof the car has lead to severe congestion inurban areas, cancelling out its function —that of mobility. The response of automotivemanufacturers — technological improvementrather than behaviour or system-levelchange — is currently inadequate and willneed to shift up a gear.

23Driving Sustainability Liveable Cities

Our 2001 liveable cities reportingbenchmark survey assesses the ways inwhich a given automotive company triesto define the challenge — and thencommunicates its vision, strategies, plansand performance. The information wasscored on the basis of how well eachcompany demonstrates the link betweenthe liveable cities challenge and itsactivities, together with the way itdescribes its relevant portfolio ofstrategies, products and initiatives.

The graph shows that, even on fairlygenerous scoring, the industry still has a long way to travel in relation toaddressing the closely linked liveable cities and quality of life issues. Overall, the Automobility-10 score 1.6 out of 5(32%) in terms of reporting on the liveable cities agenda.

5.0

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‘. . . And the more cars there are, the more countryside is asphalted over anddissected by roads and motorways. As we at VW move beyond the mereproduction of motor vehicles to tacklemobility issues, there is an increasingneed for cooperation on a global, cross-sectoral basis — and this requires aquantum leap in terms of vision andinnovation.’Volkswagen 81

18 Liveable Cities: Issues Survey

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pts Average Score 1.6 (32%)

17 Liveable Cities: Issues Scores

Where will Reporting be in 2003-5?

Reporting on liveable cities is currentlyvery poor. Innovation in terms of theproduct is restricted to technology, and rarely addresses the behaviour ofcustomers with respect to the choice of mobility for their journey. Companiescontinue to play their part in perpetuatingthe system of car-based transport. How they address the challenges anddilemmas represented by participating in such a system will be crucial as theybegin to redefine their role.

24 Driving Sustainability Liveable Cities

71 www.prb.org/wf/quickfacts_urbanisation.html

72 John Adams, The Social Implications of Hypermobility: Speculations about the social consequences of the OECD Scenarios for Environmentally Sustainable Transport and Business-as-Usual Trend Projections, OECD January 2000.

73 M Carley and P Spapens, Sharing the World — Sustainable Living and Global Equity in the 21st Century, Earthscan, 1998.

74 DaimlerChrysler, Environmental Report,1999/2000.

75 Volkswagen, Environmental Report,1999/2000.

76 ‘Driving in my (telematic) car’, The Observer, 1 October 2000.

77 Renault, Environmental Report, 1999.78 ‘Driving in my (telematic) car’,

The Observer, 1 October 2000.79 General Motors, Steps Towards

Sustainability, 2000.80 DaimlerChrysler, Environmental Report,

2000.81 Volkswagen, Environmental Report,

1999/2000.

Urban areas are where we come mostimmediately into contact with the upsides and downsides of our mobilitytechnologies. The technology-focusedchanges covered under earlier ‘ClimateChange’ and ‘Life Cycles’ sections will help change behaviour and shape urbanmobility systems. Among the areas wewould like to see reporting cover by 2003—5 are:

— Road accidents, injuries and deaths (including e.g. passenger, pedestrian and cyclist statistics) by vehicle type and model;

— Safety and quality aspects of fleet performance, for example number and type of product recalls;

— Significant urban pollutants produced per vehicle mile per vehicle type and model;

— Emerging technologies as potential elements in future sustainable mobility packages;

— Barriers to change.

The surveyed reports have surprisinglylittle to say on the subject of how wemight adapt the behaviour of urbanpopulations to ensure more sustainablepatterns of mobility and access. Amongthe areas we would like to see reportingcover by 2003—5 are:

— Use of wider stakeholder engagement tools and processes;

— Response of different stakeholder groups to transport, mobility and access issues;

— Comparison of trends in different countries and world regions;

— Development of key performance indicators (KPIs), and extent of stakeholder involvement in process;

— Participation in (and results of) urban mobility and access experiments;

— Barriers to change.

Urban planning may not be the autocompanies’ business, but their productscertainly have massive implications forurban planning. Issues like sprawl arerarely discussed in today’s companyreporting. Among the areas we would liketo see reporting cover by 2003-5 are:

— Trends in urban structure (including urban sprawl and its wider implications);

— Social, equity and environmental implications;

— Company activities designed to spur system-level changes in mobility and access;

— Progress with efforts to integrate different transport modes;

— Involvement in efforts to evolve sustainable mobility systems in major urban areas;

— Barriers to change.

Liveable Cities: Technology

Liveable Cities: System

Liveable Cities: Behaviour

‘In the context of rapid growth in urban development taking place in thedeveloping nations, we consider the roleof transport in the city and that whichthe car can play in the mobility scenario.However, this is not a matter of imposingour models of urbanisation and carownership on these countries in which,unlike Europe, the city is not built forgrowing numbers of cars.’Renault 86

What’s the Problem?

Renault is unusual in even raising the issueof whether rich world mobility solutions aresuitable for poor world countries. Reports by the Automobility-10 companies aregenerally weak in terms of their coverage of developing and emerging economy issues.This is worrying, since the evidence suggeststhat the majority of the Automobility-10have global ambitions. And there is noshortage of emerging economy issues andsignificant impacts.

It is forecast that by 2010, more than athird of all vehicle sales will be in less-developed countries. Already, cities such as São Paulo, Cairo, Lagos, Mexico, Bombay and Jakarta are overwhelmed by automobility, air pollution and sprawl. In São Paulo, for example, a fleet of fivemillion vehicles is growing by 250,000 peryear and contributes an estimated 90% of polluting gases and particulates emittedevery year. 82

According to India’s Centre for Science andEnvironment (CSE), there is one car in theUSA for every 1.6 people. If Indians were tostrive for this same level of car ownership,the number of cars in the country wouldincrease from 4 million to a staggering 625 million. 83

With over a billion people in the worldliving on a dollar or less per day, automotiveindustry critics protest that valuablecropland, urgently needed to feed hungrypopulations, is being paved over to provideroads for the car-owning minority. In ruralAsia, according to Eviction Watch Asia,some 100,000 to 150,000 families areevicted every year, nearly half of them tomake way for new highways. 84

Whilst there is no question that roadtransport and other mobility optionsfacilitate access to economic opportunities,focusing on the automobile and roadtransport to the detriment of other modescan hit those most in need — and they arethe majority in developing and emergingeconomies.

When challenged, automotive sectorcompanies tend to say that their mainresponsibility is to make available safe,functional and affordable vehicles, not toshape emerging economy transport andmobility systems. The problem is that by the simple act of making available safe,functional and affordable vehicles they arehaving a dramatic impact on the ways inwhich poorer countries think about theirfuture. This fact implies new responsibilities— and, potentially, new forms ofaccountability — for the automotive sector.

Is it on Corporate Radar Screens?

The crop of reports under review have littleto say about emerging economies andmarkets, either as opportunities or as newareas of challenge. But, whether or not theirreports make this clear, rich world auto-makers are acutely aware of the potentialmarkets created by demographic andeconomic trends in the emerging economies.Faced with market saturation in theirestablished markets, they are increasinglylooking around for opportunities that willhelp fuel their own future growth.

Selling smaller and cheaper vehicles, majormanufacturers have flooded into EasternEurope, South East Asia and South Americawith varying degrees of success. This resultsin a worrying trend in some cities.

Reorientating their mobility strategy aroundthe relatively small number of people drivingsqueezes out the majority of other roadusers (on bicycles or using rickshaws, forexample) to make way for cars. This hashappened in south Bombay, New Delhi andBeijing where such users may even havebeen banned.

The ‘CNN World’, with rapidly increasinglevels of transparency imposed on businessand governments alike, has meant that thesocial, environmental and economic impactsof automobility are coming under scrutinythe world over. As a consequence, we areseeing a small number of companies at leastraising interesting questions. One case inpoint is the Ford Motor Company:

— Another opportunity lies in meeting the mobility needs of the vast majority of theworld’s population for whom automobileownership is a distant dream. Actively orpassively, most global companies haveaimed their products or services at themost affluent regions of the world andthe elites within emerging economies. A consumer-driven company cannotafford to overlook the wants and needs of billions of potential customers, butserving these customers will requirevastly different approaches, new businessmodels for delivering products andservices and considerable culturalsensitivity. It also requires explicitconsideration of the company’s role increating — not just tapping — wealth.Ford Motor Company 85

Generally, however, such perspectives arethe exception rather than the rule.

25Driving Sustainability Emerging Economies

3.4EmergingEconomies

DaimlerChrysler

BehaviourNothing to say

SystemNothing to say

TechnologyNothing to say

Time

What’s their Big Idea?

Despite a few well-chosen quotes, none of the companies reporting shows any realevidence of having thought through the‘elephant in the bedroom’ issues when itcomes to emerging markets. 87 This is a ‘Big Idea’-free zone, at least as far as thereports under review are concerned.

Reading between the lines, however, it isclear that most of these companies are keento capitalise on such new markets. In fact,the emerging economies, once regarded astoo poor to provide a reasonable return, areincreasingly seen as key to the future of theautomotive industry.

Given this fact, it is striking that thesecompanies seem unsure of the besttechnology bets for emerging markets,instead opting for business models,technologies and products that seemincreasingly obsolete in the developedworld. Here, too, these reports wouldsuggest that there are exceptions, amongthem Renault:

— ‘Renault’s philosophy is to place ecological vehicles offering top-class performance in terms of fuel economy and low emissions, and built at the lowest possible cost, at the disposal of growing numbers of people.’ Renault 88

In terms of behaviour, auto-maker strategyhas been to maintain a foothold inemerging markets, garnering market share,building reputation and attaining brandawareness in anticipation of economicdevelopment. Japanese manufacturers havehistorically been strong in Asia, butglobalisation now means that all manu-facturers are interested in new markets.

Partnerships with local companies areimportant for DaimlerChrysler, which hasbought a stake in Mitsubishi and Hyundai todevelop small cars for key markets. GMrecently entered into a joint venture withAvtovaz, a Russian auto-maker, and doubledtheir position in Suzuki Motor, the apparentstrategy being to exploit emerging marketsand develop small vehicles for Europe andNorth America.89 Meanwhile, Renault hasacquired Dacia in Romania, and SamsungMotors in South Korea, the second biggestAsian market. 90

Honda’s declared strategy is ‘glocalisation’,a combination of a global strategy withhighly local implementation. Designed toplace cost-effective plants in areas that bestmeet the needs of local customers, thisstrategy gives them small local plants thattake root locally and grow as demandgrows, ‘an approach that allows them toachieve efficiency and profitability, even atlow production volumes’. 91 The concept oflocal customisation in smaller factoriespotentially represents a powerful boost tolocal markets.

On another tack, DaimlerChrysler’sexperiment in South Africa marries a quest for renewable materials with localwealth creation. Considerable investment in know-how and new technology informerly government-owned sisal farms has provided the company with material for car components. Built into their vehiclesproduced in South Africa, this renewablematerial is being tested for global roll-out. 92

The behind the scenes thinking runs asfollows:

— ‘For DaimlerChrysler, the principle ofmanaging for sustainability applies also to emerging economies and thirdworld nations. Through its activities, the company not only boosts local value added but also supports theestablishment of an industrialinfrastructure aligned with the criteria of sustainability.’ DaimlerChrysler 93

In a bid to build local research capacity,Ford also now sponsors two new Henry Ford chairs of research in India. One, at the Indian Institute of Technology, inMadras, is for research into vehicleemissions and environment; the other, atthe Indian Institute of Technology in Delhi,focuses on research into biomechanics andtransportation safety.

Renault, too, has established a mobilityresearch platform with COPPE (the FederalUniversity of Rio de Janeiro) to promotemobility solutions compatible withsustainable development in Brazil. BMWspeaks of the way its Amata plant is helpingdrive improved social standards locally:

— ‘The idea of local responsibility is simply indispensable . . . The Amata plant in Thailand . . . is setting new social standards in a number of ways, including the introduction of health insurance, a pension fund and a medical station.’ BMW Group 94

Despite this discussion of initiatives, theyrepresent a tiny minority of reporting.Overall, coverage in this area is rare,fragmented and anecdotal.

26 Driving Sustainability Emerging Economies

18 Emerging Economies: What’s their Big Idea?

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What’s Missing?

The first major omission is that companiesrarely report on their emerging economyperformance. Secondly, companies purelyregard emerging economies as growthopportunities. They rarely recognise therepercussions that will occur if theenvironmental and social damage that has occurred in the developed world isreplicated globally. Responsibility isavoided by suggesting that automotivecompanies have no right to influence theaspirations of emerging and developedeconomies. However, global transparencyand accountability mean that corporateresponsibility has become a necessity foremerging economies as much as thedeveloped world.

27Driving Sustainability Emerging Economies

Our 2001 benchmark survey assesses the ways in which automotive companiesdefine the emerging economies challengeand then communicate their visions,strategies, plans and performance. For a high score in this area, a companywould need to demonstrate not just anawareness of the nature and scale of anymarket opportunities for vehicle sales, but also a degree of self-awareness withrespect to the first, second and third orderimplications of its involvement in aparticular market.

Coverage of emerging economy issues is conspicuously rare in automotive sector reporting. When there is somemention of such issues, it is usually with respect to growth opportunities and the linked ‘need’ to provide rapid and affordable access to cars, along with the related infrastructure.

Emerging Economies: Issues Benchmark

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19 Emerging Economies: Issues Scores

Where will Reporting be in 2003—5?

The development of clean and equitablesolutions to mobility, the use of integratedmodes of transport and the potential toprovide the vast majority, not just thewealthy, with access to goods, services andwork and therefore opportunities to improvetheir quality of life, will be key factors forautomotive companies of the world. Thespread of reporting must expand to includeglobal information. Companies will need to include discussion of dilemmas andperformance globally, not just the well-established (but saturated) western markets.

28 Driving Sustainability Emerging Economies

The assumption often made is that richworld auto technology will cascade to thepoorer world regions, with some degree of time lag. But what about the prospectsfor helping the poorer countries toleapfrog rich world problems? Among theareas we would like to see reporting coverby 2003—5 are:

— How are companies helping to meet the basic mobility needs of poorer markets?

— Leapfrogging strategy;— Thinking on ‘appropriate’ technologies;— Technology transfer trends and

initiatives;— Local progress in e.g. retrofitting older

vehicles;— Barriers to change.

Out of the media spotlight, rich world auto companies may feel less pressured inless developed and transition economies.On the other hand, some see thesecountries’ exploding populations as a hugepotential market opportunity. Among theareas we would like to see reporting coverby 2003—5 are:

— Company’s role in local wealth creation— Numbers of skilled and unskilled jobs

created;— Levels of technology and materials

sourced locally;— Multiplier effects in local economies;— Social and environmental issues and

priorities;— Variance of local from global standards

and performance;

— Emerging business models, e.g. B24B (business to 4 billion poorer customers worldwide);

— Barriers to change.

If system-level change is tough to achievein the OECD world, it is going to be evenharder in the emerging economies andpoorer world regions. But this is where the threat of ‘lock-in’ of unsustainabletransport systems is perhaps greatest.Among the areas we would like to seereporting cover by 2003—5 are:

— Development of system-focused initiatives and partnerships;

— Lobbying for infrastructure development of different types;

— Challenges of developing and marketing different mobility systems for different markets;

— Strategies for spurring and assisting transition to more sustainable systems;

— Barriers to change.

Emerging Economies: Technology

Emerging Economies: System

Emerging Economies: Behaviour

82 M Carley and P Spapens, Sharing the World — Sustainable Living and Global Equity in the 21st Century, Earthscan, 1998.

83 Adapted from A Agarwal, S Narain and A Sharma (eds), Green Politics, CSE, New Delhi, 1999.

84 Walter Hook, ‘Making Urban Transport Sustainable, How the majority travels and their mobility needs are addressed’, Gate Magazine, 98/3, GTZ.

85 Ford, Connecting with Society, 2000.86 Renault, Environmental Report, 1999.

87 Mentioned in The Global Reporters, ‘the elephant in the bedroom’ commonly refers to the obvious fundamental facts ofsustainability impact either not recognised — or actively airbrushed out of — the picture a company paints. The term wascoined by Alcoholics Anonymous.

88 Renault, Environmental Report, 1999.89 ‘GM Tries to Show Who’s Boss’,

Business Week, 12 March 2001.90 Strategy section at www.renault.com91 www.hondacorporate.com/worldwide/index92 DaimlerChrysler, Environment Report, 2000.93 DaimlerChrysler, op. cit.94 BMW Group, Taking Responsibility, 2000.95 General Motors, Annual Report, 1999.

Three Conclusions

These are the main conclusions emergingfrom the third sector study carried out for the SustainAbility/UNEP EngagingStakeholders program. They are based not on an in-depth survey of corporatestrategies in the sector, but on an in-depthbenchmarking of information provided inthe reports and websites of ten of theworld’s largest auto-makers (theAutomobility-10).

The sustainable mobility agenda, whichwill take decades to resolve, will bringmany major companies to their knees, and will often depend for its resolution on governments prepared to take a standagainst their own voters (operating as car owners, motorists and car-users),something which they have foundsingularly difficult to do during recentcampaigns to force governments to cutfuel prices.

29Driving Sustainability Conclusions and Recommendations

1 A critical public policy issue of the late 20th century, road transport will remain a centralproblem. There will be economic, social andenvironmental concerns, often fiercely contestedand cross-linked, which the automotive sectorwill find increasingly difficult to address on its own.

4.0Conclusions andRecommendations

2 To date, automotive sector companies are mainly working from an eco-efficiency mental (and business) model, stressing the role oftechnology rather than focusing on the bigger levers of behavioural or system-level changes.

3 On the basis of the thinking and experimentationreported in these companies’ 1999-2000 reportsand linked websites, the major auto-makerscannot currently — and very likely will not infuture — deliver sustainable mobility solutionson the scale likely to be demanded.

‘The race to acquire environmental protection technology is one of thedriving forces behind auto industryrealignment.’NikkoSalomonSmithBarney 96

Four Challenges

The nature and scale of the sustainablemobility agenda is slowly becoming clear to leading automotive sector companies.That said, they often struggle to put it intowords. One of the best encapsulations ofthe challenge was this statement from theworld’s largest auto-maker:

— ‘Sustainable mobility . . . is much more than our products. It is much more thanour stated vision of a hydrogen-basedinfrastructure for the transportationsector. What it is about, is weighing thetechnology improvements, with publicpolicy approaches and concepts of socialorganization on one axis of a verycomplex matrix, against very challengingenvironmental, energy, economic andsocial issues on the other axis.’ General Motors 97

For ‘very complex matrix,’ read Gordian Knot. The ever-shifting complexity of thesustainable mobility agenda is captured in Driving Sustainability’s central motif(Figure 04, page 04).

Critics will no doubt say there are manyother issues than those we have chosen tofocus on in our four issues sections. But weconclude that the automotive sector’s abilityto deal with climate change (page 13), lifecycle management (page 17), quality of lifeissues in liveable cities (page 21) and thesustainable mobility needs of emergingeconomies (page 25) will be make or breaktests of its economic sustainability over thecoming decades.

Without wishing to under-value theprogress some companies have made inrecent years, including the growing levels of corporate transparency, a close analysisof their reporting to date suggests that they are still a long way from working outwhat to do with the sustainable mobilitychallenge. In each of the Big Issue sections,we ask the question: ‘What’s their Big Idea?’Basically, this attempts to dig down to thesingle most important element in currentindustry thinking about how to tackle theparticular issue. Figures 20—23 indicate ourassessment of the current state of play.

Climate ChangeTo achieve their ambition of ‘guilt-freemotoring’, auto-makers know they are going to have to pull a rabbit out of themagician’s hat. Their best hopes of doingthat, on current information, seem to behybrid vehicles, and vehicles powered byfuel cells, with a growing consensus thathydrogen could be the fuel of choice. The 1999—2000 reports are generally weakon climate change solutions, although thereis evidence that the sector is waking up to the nature and scale of the challenge. And most companies cling to their highlyprofitable sport utility vehicles (SUVs), eventhough these are pretty much designed tofuel climate change.

30 Driving Sustainability Conclusions and Recommendations

BMW 98

20 Climate Change

Life CyclesTo radically reduce their ecologicalfootprints, auto-makers know that theywill have to ‘close the loop’. Newlegislation in the EU is already pushingthem in this direction. But it is strikinghow little they have to say on this subjectin their 1999—2000 reports, possiblybecause they have been lobbying so hardto stall or overturn the new rules. Is itpossible that they fail to recognise suchapproaches as a necessary condition of the sustainable mobility they increasinglycall for in their reports? Or is this simply a case of companies trying to put off theinevitable until the last possible moment?Whatever the answer, novel approacheslike vehicle or component leasing aregenerally conspicuous by their absence.

Liveable Cities In the right circumstances, a car can be a major contributor to our quality of life.Over time, the auto-makers haveintroduced cleaner engines and fuels,although rarely without a fight along the way. Essentially this has often involvedtinkering with the technological problem.Meanwhile, quality of life in urban areas is falling, health is deteriorating andcongestion increasing. Don’t waste timelooking for in-depth coverage of suchissues in these reports, let alone proposedsolutions.

Emerging Economies Billions of extra people in the emergingeconomies translates into huge marketopportunities for the right sort of cars, atleast if you are an auto-maker. Companiesneglect to cover their emerging economyimpacts, rarely include their influence oneconomic development, and avoid therepercussions associated with replicatingthe environmental and social damageinherent in excessive car use, graduallybeing realised in developed economies.

31Driving Sustainability Conclusions and Recommendations

FiatRenault

96 NikkoSalomonSmithBarney, GlobalEquity Research, Auto Industry 2000,27 June 2000.

97 Dennis R. Minano, GM, Welcoming Remarks from Dennis Minano at WBCSD Sustainable Mobility Project Dialogue, 2001. www.gm.com

98 BMW Group, Environmental Report1999/2000.

21 Life Cycles 22 Liveable Cities 23 Emerging Economies

Sustainable Mobility Reporting 2003—5

Boiled down to their essence, the sector’s1999—2000 reports focus almost exclusivelyon what might unkindly be described as‘technological fixes’. Just as the switch fromhorses to horseless carriages left the basicmodel of privately owned transport largelyunaffected, and average urban speedslargely unaffected too, so the auto-makersappear to be hoping that by switching tocleaner fuels, like hydrogen, this profitablebusiness model can be given a new lease oflife well into the 21st century.

Anyone reading the reports, even those witha reasonable knowledge of ways in whichthe different automotive manufacturersview the sustainable mobility challenge, will find little information on the strategicintent of particular companies. There is littleor no information on consumer trends, or onwhat companies are doing (or might do) toincrease the public appetite for sustainablemobility. And there is nothing, or almostnothing, on what the companies, and theirindustry federations, are doing to brake (inrare cases, accelerate) public policy changesdesigned to make transport, mobility andaccess systems more sustainable.

To be fair, many of these reports do makeinteresting reading. A great deal of efforthas gone into collecting the data — which is often their biggest contribution, in thatthe very task of reporting spurs the internaldemand for management systems. It is astep-by-step learning process. But if 2003—5 reporting by auto-makers, and by otherservice providers eyeing opportunities in thesustainable mobility area, are to be reallyuseful, they will need to address all levels ofthe strategic challenge. In assessing futurestrategy and reporting in the automotivesector, we will be looking for answers to the questions spotlighted below:

32 SustainAbility Automotive Sector ReportConclusions and Recommendations

How does the company’s currenttechnology — and ongoing R&D efforts —relate to the four Big Issues spotlighted inDriving Sustainability?

How does the company’s current productoffering compare with those of itscompetitors in relation to key sustainablemobility performance indicators?

How do company strategies and activitiesmeasure up against known sustainablemobility options? So, for example, howdoes the fuel efficiency or overallecological footprint of the latest year’svehicles compare with the performance of the ‘Hypercar’ offered by the RockyMountain Institute?

What research has the company done onthe psychological and sociological aspectsof consumer behaviour in this area?

What are the implications for the four Big Issues — and for sustainable mobilitymore generally?

What is the company doing to address the relevant barriers? What more might be done?

Where are existing or emergingtransportation, mobility and accesssystems helping or hindering progress in relation to the Big Issues?

Where governments, at the urban, national or regional levels, are trying todrive change, what is the company doingin response? What is its public policypositioning? What lobbying groups is itpart of — and what position does it take in shaping the relevant agendas and policy lines?

What is the company doing in each of the areas highlighted in BMW’s diagram(page 30), showing how networking,partnerships and new players canpotentially shape the sustainable mobilityagenda — and the solutions on offer?

Technology

Systems

Behaviour