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Investors warned BMW, Daimler and Groupe PSA at risk from tightening EU emissions rules

Daimler, BMW and Groupe PSA “asleep at the wheel” ahead of expected European regulatory moves against combustion engine vehicles, ShareAction tells investors.

(Thursday 18 March, London) Investors have been warned that a number of European automakers risk being caught out by accelerating European regulation on transport emissions.

Volkswagen is already facing a predicted fine of €240 million for failing to meet the EU’s 2020 C02 targets by a small margin. And with the Commission expected to tighten emissions standards in June, sustainable finance NGO ShareAction has warned investors that more car manufacturers risk facing large fines.

Emissions standards

In 2018 the EU set further CO2 targets for 2025 and 2030, which require a 15 per cent and 37.5 per cent reduction from 2021 levels respectively. But as part of the EU Green Deal, the union is raising its climate ambitions, targeting an overall reduction in emission of 55% by 2030 on the way to net zero by 2050. A consequent review of vehicle emissions standards is due in June 2021.

In Europe, transport is the biggest source of emissions at around 28 per cent, and is the only sector where emissions have risen since 1990.

Road vehicles account for up to three quarters of transport emissions and so to achieve the EU’s net zero ambitions, road transport must be fully decarbonised by 2050. ShareAction’s report suggests that the most cost-efficient pathway for vehicle standards to align with this goal would require C02 reduction targets going as far as 25% by 2025 and 65% by 2030.

ICE phase-outs

But even greater trouble lies ahead for Europe’s carmakers. A number of countries have already set target dates to eliminate internal combustion engine (ICE) vehicles from the roads and ShareAction say changing political tides in Germany and France are likely to lead to an EU-wide ban on ICE car sales by 2035 at the latest.

Ahead of German elections in September 2021, Markus Söder, leader of the Bavarian CSU and potential next Chancellor of Germany, has endorsed a 2035 phase-out date for fossil fuel engines, while the green party (Die Grünen) is currently polling at over 19 per cent and is likely to form part of the next governing coalition. If successful, their policy demands will include a 2030 ICE phase out target.

In September 2020 the European Commission announced that it would assess in the coming months what would be required in practice for this sector to contribute to achieving climate neutrality by 2050 and at what point in time internal combustion engines in cars should stop coming to the market.” ShareAction say there is increasing convergence on a 2030 deadline, with the UK and Sweden already targeting that date.

Automakers unprepared for net zero

ShareAction is warning investors that, despite a flurry of climate commitments, Europe’s carmakers are largely unprepared for the expected changes to emissions standards and ICE phase outs.

ShareAction assessed the climate plans of the five largest European automakers – Volkswagen, Renault, BMW, Daimler and Groupe PSA (which includes the Peugeot and Opel brands). Renault performed best, as the only company to have set an ICE phase-out date by 2035 and to have aligned its emissions targets with European climate goals.

The lack of a similar announcement by Volkswagen on the other hand undermines the acclaimed electrification leader’s net zero commitment, according to ShareAction.

Least prepared were Daimler, BMW and Groupe PSA, who ShareAction said “severely lag behind their rivals and appear to be asleep at the wheel on climate change.”

Daimler talks the talk with its 2039 net zero target, but fails to walk the walk, having set no clear short-term emission reduction targets or an ICE phase out commitment.

BMW and Groupe PSA have declared ambitions to reach net-zero by 2050, but their pledges do not include the emissions generated by vehicles in use, rendering them essentially meaningless. BMW has made no clear commitment to an EV sales target as a percentage of their fleet, while Groupe PSA’s one and only EV sales target is completely unaligned with an ICE phase out by 2035.

ShareAction urged investors with holdings in car manufacturers to engage with the companies to ahead of regulatory changes, in order to safeguard their own investments and secure alignment with climate objectives.

Jana Hock, Senior Research Officer at ShareAction, said:

“If these laggards cannot mobilise quickly enough for a climate neutral future, they may find themselves displaced by competitors better positioned for the transition to zero-emissions mobility - just as Nokia and Blackberry lost out in the telecoms transition to smartphones.”

Notes to editors

For all enquiries and interview requests, please contact:

Conor Quinn, Media Communications Manager, ShareAction +44 (0)7444 696 214

Read the report: European Auto Makers: Still in the slow lane?

About ShareAction

ShareAction is a research and campaigning organisation pushing the global investment system to take responsibility for its impacts on people and planet, and to use its power to create a green, fair, and healthy society.

We want a future where all finance powers social progress. For 15 years ShareAction has driven responsibility into the heart of mainstream investment through research, campaigning, policy advocacy and public mobilisation. Using our tools and expertise, we influence major investors and the companies they invest in to improve labour standards, tackle the climate crisis and address inequality and public health issues.

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