Refinitiv report unearths automotive industry sustainability trends; highlights climate risk analytics in the investment process

• Tesla, VW, Daimler, Renault, and Hyundai lead automakers in transition readiness.
• Subaru, FCA, and Ford have among the lowest transition readiness scores.
• A sustainability premium in total shareholder return over the 2015-2019 period is demonstrated by market disruptors (led by Tesla) as well as the sustainable value ratio/transition readiness leaders. 
• 2020/2021 represents an important test period for incumbent automakers to solve the price-performance challenges that have helped fuel Tesla’s strong lead in the early stages of the adoption curve. 
• Integrating climate risk factors into risk management models requires companies and investors to understand how climate change can affect their business or portfolio.

NEW YORK/LONDON, September 24, 2020 – Building on its commitment to connect and advance the global financial community through data and analytics, Refinitiv today announced the findings of its ‘Sustainability Trends and the Automotive Industry: Truckification and Electrification’ report in collaboration with Constellation Research and Technology (Constellation).  

The report examines how the automobile industry transformed over the last decade, why that transformation matters, and whether automakers are ready once again to transform their products to meet the challenge of decarbonizing transportation. The report also addresses the issue of integrating climate risks factors into risk management models and shows that in order to integrate these risks into the risk management process, companies and investors need a thorough and objective understanding of how climate change can affect them/their business or portfolio. 

The report provides 14 new transition readiness metrics combining Refinitiv’s traceable, fact-based ESG and financial data with granular sales, production, and operational benchmarking data for the 27 largest auto majors. The metrics support a high-resolution ESG analysis of transition readiness, provide a data-based, rule-driven model for assessing the past decarbonization progress and future momentum of each automaker.

Leon Saunders Calvert, Head of Sustainable Finance, Lipper & I&A Insights, Refinitiv, said: “Incoming regulation, consumer demand and investor expectations, have created demands on companies in highly carbon intensive sectors to align themselves with the decarbonization goals of the Paris Agreement. Identifying who will survive and thrive and who will not, is not only an ethical issue of who is supporting positive climate outcomes but is also a fiduciary issue of recognising exposures to risk in this transition. Which companies are economically viable in the low carbon economy of the near future? Our data and our partnership with Constellation has enabled us to take stock of the current dynamics of the automobile sector and help make sense of how to integrate climate and carbon analytics into the investment process.”   

The ‘Sustainability Trends and the Automotive Industry: Truckification and Electrification’ report in collaboration with Constellation Research and Technology is divided into three sections:

• How have recent trends in market demand complicate decarbonization for automakers?
• How did the world’s major automakers compare on climate impact management over the past decade?
• How are the automakers positioned to manage the sustainability imperative and associated transition risk and opportunity in the coming decade

Key findings of the report include: 

• Integrating climate risk factors into risk management models requires companies and investors to understand how climate change can affect their business or portfolio.
• Tesla, VW, Daimler, Renault, and Hyundai lead the majors in transition readiness.
• Despite the strongest sales history of hybrid vehicles, Toyota, with less ambitious publicly disclosed zero-emissions vehicle forecasts, and significant SUV dependence scores less well on transition readiness.
• Subaru, FCA, and Ford, given the combination of higher emissions trends, SUV intensity, and fossil-fuel vehicle forecasts, have among the lowest transition readiness scores.
• A Sustainability premium, i.e. an outperformance in total shareholder return over the 2015-2019 period is demonstrated by both the market disruptors (led by Tesla) as well as the Sustainable Value Ratio/transition readiness Leaders. 
• 2020/2021 is an important test period for the incumbent automakers to solve the price-performance challenges that have helped fuel Tesla’s strong lead in the early stages of the adoption curve. 

Timothy E Nixon, Co-Founder, SVP Business Development and Partnerships at Constellation, said: “Partnering with Refinitiv on this report has produced a granular, forward-looking, product level analysis built on the foundation of Refinitiv’s fact-based, traceable ESG data, to offer what we believe is a revealing look at transition opportunity and risk in the auto sector.” 

The report concludes that the potential costs and risks of climate change are of rising concern to stakeholders around the globe. People in almost every country cite the need to take action and, in many countries, even drastic action, to limit future harm. Yet in 2020, the automobile sector, auto buyers, and regulators are on track (at best) for a gradual evolution that has yet to reduce the sector’s global emissions curve.

To download the report, please visit: https://www.refinitiv.com/en/resources/special-report/climate-risk-analytics-auto-industry

Refinitiv ESG data is designed to help investors make sound, sustainable investment decisions, our ESG data covers nearly 80%+ of global market cap and over 450+ ESG data points, and provide clients with critical and differentiated insight.  For more information about Refinitiv ESG data, visit: https://www.refinitiv.com/en/financial-data/company-data/esg-data

About Constellation Research and Technology
Constellation Research is a technology research and advisory firm based in Silicon Valley. We deliver strategic guidance to companies seeking to transform their businesses through the early adoption of exponential technologies. Our analysts draw on their experience as practitioners to deliver pragmatic advice to CXOs leading business transformation within their organizations.

Our mission is to conduct research on exponential technologies, identify and validate trends, and empower our clients to succeed in the digital economy.

Clients include boards of directors, C-suite executives, line-of-business leaders, and IT visionaries who are not afraid to challenge the status quo.  For more information, visit: https://www.constellationr.com/