Assessing the effectiveness of
Science-based targets in major automotive
companies in reducing carbon emissions in
alignment with the Paris Agreement
Author: Lukman Maleh
Tutor: Helena Forslund
Examiner: Åsa Gustafsson
Term: Autumn 2024
Subject: Logistics Management in
Supply Chains
Course Code: 4FE170
Date: 2024-10-13
Table of contents
1. Introduction
1.1 Background
1.2 Problem discussion
1.4 Research question
1.5 Purpose
2. Literature review
2.1 Science Based Targets Initiative
2.2 Different types of emissions - Scope 1, Scope 2 and Scope 3
2.3 The challenges of reducing Scope 3 emission
2.4 How to measure effectiveness of science based target
2.5 Science based targets in the automotive industry
3. Empiry
3.1 Volkswagen Sustainability Report 2020 vs 2023
3.2 Volvo group Sustainability Report 2020 vs 2024
3.3 Nissan Sustainability Report 2019 vs 2024
3.4 Tesla Sustainability Report 2021 vs 2023
3.5 Ferrari Sustainability Report 2022 vs 2023
4. Analysis
4.1 Volkswagen: Striving for progress amid Scope 3 emissions challenges
4.2 Volvo: Exemplary in Scope 1, 2, and 3 reductions
4.3 Nissan Driving change through technological innovation
4.4 Tesla expansion vs emission reduction
4.5 Ferrari: Challenges in Scope 2 and lack of Scope 3 data
5. Conclusion
6. Reference list
3
3
3
4
4
5
5
5
6
7
8
10
10
10
11
12
13
14
14
14
15
15
16
17
18
2
1. Introduction
1.1 Background
The climate crisis is a nightmare turned into reality and we are living in it. We can no longer
diminish the magnitude of this crisis. We as humans need to take the responsibility to reduce the
impact of greenhouse emissions in order to save the plant from self-destruction. It is reported that
by 2030, the global temperature will rise to 1.5 degrees celsius and reach its tipping point
(IPCC, 2023). This means it will no longer be possible to reverse the climate crisis. The
responsibility to take action ultimately falls on the worldwide industry corporations, which
currently contributes negatively to the climate crisis in the form of greenhouse gas emission, to
become an active and encouraging partner in the fight for a more sustainable industry and far
more important, a more sustainable way of living. .
A significant contributor to the global crisis is the automotive industry, due to its high amount of
greenhouse emission (Dziwinski, 2024). According to the European parliament it is reported that
passenger cars produced by automotive companies are responsible for around 16 percent of the
carbon emission in the EU (European Commission, 2024). In order to take action regarding the
crises, many major automakers have committed to Science-based Targets (SBTI) in order to
reduce their overall carbon footprint in alignment with the Paris Agreement (Gupta & Patel,
2022).
1.2 Problem discussion
Through the Science-based Target initiative a lot of major automotive manufacturers introduce
targets in agreement to achieve the objectives of the Paris Agreement. But the question remains
if the targets are actually effective or rather ineffective (Ben-Amar, Comyns & Martinez, 2024).
One of the problems with the targets is to determine on a wider scale if the tagerst alone are
enough of a driving force for the companies to eliminate carbon emission and instead adapt for a
more sustainable source and solution. Even though a lot of the major automotive companies have
introduced SBTi in their respective business, a lot of uncertainty still remains regarding if the
targets cover the whole supply chain including suppliers and production. (Gupta & Patel, 2022)
3
1.3 Research Gap
There is a gap in understanding if the current science-based targets are actually effective for
companies in the automotive industry in reaching the terms of the Paris Agreement or rather
ineffective (Ben-Amar, Comyns & Martinez, 2024). Is it because of the implementation of
science-based targets that the companies have shown a reduction in emission or is it because of
other factors? The effectiveness of these targets will determine whether the industry can help
prevent the catastrophic environmental consequences. This research seeks to explore whether the
SBTi is more than just a promise, but a measurable step into transforming one of the world’s
most carbon-intensive industries into a leader in global decarbonization efforts. This research
will analyze the sustainability reports from 5 different automotive industries in order to fill the
research gap.
1.4 Research question
How effective are the Science-based targets set by major automotive companies in reducing
industry-wide carbon emissions in line with the Paris Agreement?
1.5 Purpose
The purpose of this research is to evaluate the effectiveness of Science-Based targets (SBTi) set by the
major automotive companies in reducing carbon emission across the industry. By assessing how well
these targets align with the goals of the Paris Agreement, the research aims to determine whether these
targets are driving meaningful reduction in greenhouse gas emissions and contributing to the industry's
overall decarbonization efforts.
4
2. Literature review
2.1 Science Based Targets Initiative
Due to the climate crises the Science-Based Targets initiative was created and founded. The
organization enables companies to play an active part in fighting the worldwide climate crises.
By 2050, the goal is to keep global heating below catastrophic levels. In order to achieve this
goal, the SBTI organization has developed standards, tools and guidance for companies to
follow. The SBTI organization has several partners such as World wide Fund for Nature (WWF),
the World Resources Institute (WRI), the We mean Business Coalition, the United Nations
Global Compact and CDP (SBTI, 2024). The science-based targets must be established in order
to eliminate further impact on climate change (Gupta & Patel, 2022).
By implementing science-based targets regarding greenhouse gas emissions, the companies can
comply with the objectives of the Paris Agreement to limit global warming below 2 degrees
celsius and ideally below 1,5 degrees celsius. The science-based targets ensure that both
countries and companies reduce their carbon emissions to prevent further climate change
impacts. In order to reach the objective of the Paris Agreement, the transportation factor is set to
be carbon neutral by 2050. (Gupta & Patel, 2022). SBTi is considered to be the gold standard for
setting corporate climate goals according to Poligkeit, Fugger and Herrmann (2023). SBTi
targets help companies to be in alignment with the global climate goals, specifically the Paris
Agreement. For instance, SBTi targets cover not only direct emissions (Scope 1 and 2) but also
the often more challenging Scope 3 emissions, including those from the use of sold products
such as vehicle emissions (Poligkeit, Fugger & Herrmann, 2023).
2.2 Different types of emissions - Scope 1, Scope 2 and Scope 3
Greenhouse Gas can be divided into three different categories. Scope 1 emissions apply to direct
emission from the company's own sources such as emission from production machines and
vehicles used in production. Scope 2 emissions apply to emission regarding energy sources used
in production. Finally, Scope 3 emissions apply to emission regarding raw materials used in the
production, emissions from transport of the end products and in this case, emission from the use
5
of sold goods (SBTi Land Transport Guidance, 2024). This is because the majority of the
emissions in the automotive industry originate from end-consumers using the vehicles produced
by the automotive companies. Therefore it is crucial for the companies in the automotive
industry to take responsibility for emission throughout the whole life-cycle especially for Scope
3 emissions. (SBTi Land Transport Guidance, 2024). The difficulties with Scope 3 emission is
that they are hard to quantify compared to Scope 1 and 2, due to complexity of global supply
chains. While scope 1 and 2 can be monitored by the companies, because the emissions are
directly related to the companies production, it is a lot harder to monitor Scope 3 emissions
because of the difficulties to access data from suppliers and consumers (Wang, Hao, Hou, Quan
& Li, 2024).
2.3 The challenges of reducing Scope 3 emission
Even though there are several challenges with determining and quantifying scope 3 emission,
there is a lot of potential to reduce Scope 3 emission. A study conducted by Wang et al. (2024)
highlights the importance of new technology such as cloud computing, text analysis and machine
learning. Cloud computing contains a SaaS-platform designed to collect, store and analyze data
regarding emission from different operators and suppliers in the supply chain. The Saas-platform
would make it possible to quantify a more precise calculation of Scope 3 emissions. Text
analysis can be used to identify important themes and trends in reducing emission from multiple
sources like scientific articles, industry reports and policies documents. By using these strategies,
the companies can measure their emissions more accurately and discover new ways to reduce
emissions. The study also mentions how the Absolute Contradiction Approach can be used to cut
emission in absolute terms. By using absolute terms, the companies have to reduce the total
volume of greenhouse emission, regardless of growth in revenue or production. In the
automotive industry, ACA can be used to help the companies commit to reduce their overall
carbon footprint and not only focus on improving efficiency by emitting less per product (Wang
et.al, 2024).
6
2.4 How to measure effectiveness of science based target
In order to successfully slow down the climate crisis, everyone needs to reduce their emission in
a way that matches the global temperature goals. It can either be by following the targets set by
the SBTi or reducing enough emission to make about for the people which do not follow the
SBTi target (Tilsted, Palm & Bjørn, 2023). However, there is no concrete measurement
mentioned by the SBT that can be used as a measurement tool to measure the effectiveness of the
science based targets. When the SBTI evaluates a company's performance in greenhouse gas
emissions, they focus on several key components (SBTI Criteria, 2021). The targets should align
with the Paris Agreement goals in limiting global warming to below 2 degrees celsius, with
aspiration to reach 1.5 percent. The targets should also cover all three scopes to ensure a full
assessment of a company emission profile. Companies are also required to submit targets for
validation of the SBTi, ensuring they are robust, achievable and transparent. Companies are
required to report annually on their emission reductions and progress towards achieving their
targets. This regular reporting promotes transparency, enabling stakeholders to evaluate the
company’s commitment and effectiveness in meeting its goals. The SBTi stresses the importance
of setting both near-term targets within 5-10 years to drive immediate action and long-term
goals, typically aiming for net-zero emission by 2050 or sooner to ensure sustained progress
(SBTI Criteria, 2021).
A study conducted by Giesekam, Norman, Garvey and Betts-Davies (2021) analyzed 81
companies which had incorporated SBTi targets and studied if the companies reached their
respective targets. 21 percent had already achieved their targets, while 44 percent were on track
and 35 percent were behind. But questions can be asked about the companies that achieved their
targets soon after they implemented the SBTi targets. The study implies that the targets might be
too easy to achieve and therefore might reward companies for their past action. Some companies
might be close to achieving the targets before actually and officially setting them. The study also
concluded that companies setting scope 3 targets were less likely to achieve them as they have
less control over Scope 3 emissions (Giesekam et al. 2020).
It is important to follow the targets set by the SBTi (Tilsted, Palm & Bjørn, 2023). Even though
the SBTI helps companies with setting the targets, the organization does not control how the
7
companies meet them. The companies are free to choose how to achieve the targets set by the
SBTi with the exception of following mandatory basic rules. This can lead to companies
choosing unorthodox methods to reach their targets. Even if they fail to reach the targets, they
will still be rewarded for setting the targets in the begininng (Tilsted, Palm & Bjørn, 2023).
During Covid-19, a study was conducted by Ben-Amar et al. (2024) to analyze 336 US Us
companies and assess their emission reduction strategies alongside with the company's stock
performance between February 20202 to April 2020. Companies with verified SBTi targets
outperformed the companies by showing higher stock returns and resilience compared to the
companies without SBTi verified targets. External verification from SBTi can boost the investors
confidence in the companies which later on can impact a positive financial performance
(Ben-Amar et al. 2024).
2.5 Science based targets in the automotive industry
Before SBTI was established in 2015, a lot of the companies in the automotive industry did not
tailor their emissions target to the global climate crisis (Poligkeit, Fugger & Herrmann, 2023).
Instead, the companies focused on matching their objects with either their competitors or
national climate goals. The SBTi target has contributed to a shift in perspective into a more
global focus regarding the reduction of emission.
Bjørn, Lloyd and Matthwes (2021) has conducted a study that focuses on quantifying the climate
impact from one manufacturing factory. Using real-life data from a European factory in 2016, the
study follows the production of 100 000 vehicles annually over a 30 year factory life span. The
background to the study is to reduce emission in order to be in alignment with the Paris
Agreement. By examining various layers of the factory which include site, building, technical
infrastructure, manufacturing process and supply chains, the study aims to contribute to a better
planning process and a better overall environmental performance of a factory. The use stage is
the most greenhouse gas intensive phase.
1. To achieve full decarbonization it requires efficient improvements, substitution and
compensation strategies.
2. Mitigation efforts focused on the use stage are insufficient for achieving low-carbon
pathways.
8
3. Successful decarbonization requires collaboration among planners. Operators and
suppliers.
4. Production of electric vehicles increases the Global warming potential intensity of
manufacturing.
The results indicate 77 percent of the global warming potential occurs during the usage of the
factory, in fact 55 percent of the global warming potential is directly correlated to the energy
demand in using the factory (Bjørn, Lloyd & Matthews, 2021).
Poligkeit, Fugger and Herrmann (2023) highlights how SBTi targets play an important role in
decarbonization efforts in the automotive industry. To demonstrate commitment to measurable
carbon reduction the use of the SBTi target is essential. Decarbonization in the automotive
industry includes three major measures:
1. Electrification of the vehicle fleet
2. Green energy in production
3. Reducing emission across the supply chain.
Poligkeit, Fugger and Herrmann (2023) analyzed 29 automotive companies with a yearly sale
of 500 000 light vehicles, in which 21 of these companies were identified using carbon reduction
targets. 19 of the 21 targets had their carbocation targets verified by the SBTi organization.
While Poligkeit, Fugger and Herrmann, (2023) argue that SBTi is crucial for increasing
credibility of emission reduction targets and allows for better comparison between different
companies ambitions, there are still challenges in achieving industry wide harmonization. One of
the challenges is the difference in how carbon data is communicated. Thus, a need for greater
transparency and methodological alignment is necessary to improve comparison between
different companies (Poligkeit, Fugger & Herrmann, 2023).
By possessing a verification by the SBTi it will improve both the credibility of emission
reductions and also provide a framework for long-term sustainability performance. The
verification of SBTi targets will offer transparency to stakeholders. It is important for companies
in the automotive industry to find the right balance between racing the climate goals as well as
meeting expectations and consumer demand (Poligkeit, Fugger & Herrmann, 2023).
9
3. Empiry
Read the tables in the appendix before continuing reading this part of the report.
3.1 Volkswagen Sustainability Report 2020 vs 2023
Emission Category
2019 (tonnes CO2e/year)
2023 (tonnes CO2e/year)
Change (%)
Scope 1 Emissions
4,400,000
4,030,000
-8.41%
Scope 2 Emissions
3,360,000
1,960,000
-41.67%
Scope 3 Emissions
(Cat 11)
344,474,742 (77.0 % of
all scope 3 emissions)
299,195,581 (72.3% of all
scope 3 emissions)
-13.14%
(Table 1, Volkswagen Sustainability Report 2020, 2023)
Notable points about Volkswagens Sustainability Reports
In 2020, The Volkswagen Group wanted to reduce its vehicles CO2 emissions in production and
during the use phase by 30 percent between 2018 and 2030. The objective remains the same in
2023 and is also validated and confirmed by the SBTi (Volkswagen Sustainability Report 2020).
But compared to 2019, in 2023 the objective by the Volkswagen Group is to reduce Scope 1 and
Scope 2 emission by 70 percent and Scope 3 emission by 28. Volkswagen Group has also set a
objective of rescuing CO2 emissions from the production of passenger cars and light vehicles by
50,4 percent by 2030. SBTI have confirmed that the Group is fulfilling the conditions for
limiting global warming to 1,5 degrees. In 2020, Volkswagen reduced CO2 emission by making
improvements in their own production locations (scope 1-2). Regarding scope 3 emissions, 16,6
percent is related to “purchased goods and services, while 76,2 percent is related to “use phase”.
In 2023, around 22 percent of all scope 3 emission is related to “purchased goods and services”
and 72 percent is related to “use phase” (Volkswagen Sustainability Report 2023).
3.2 Volvo group Sustainability Report 2020 vs 2024
Emission Category
2019 (report 2020)
(tonnes CO2e/year)
2023 (report 2024)
(tonnes CO2e/year)
Change (%)
10
Scope 1 - Direct
Emissions
97,000
73,000
-24.74%
Scope 2 - In direct
Emissions
132,000
7,000
-94.70%
Scope 3 - Use of Sold
Products
24,339,000
16,812,000
-30.92%
(Table 2, Volvo Cars Sustainability Report 2020, 2024)
Notable points about Volvo Cars Sustainability Reports
In the 2024 report, Volvo cars achieved their Scope 1 and Scope 2 SBTi target. The initial target
was to reduce scope 1 and 2 emissions by 60 percent, but in the 2024 report. Volvo Cars reached
65 percent. Volvo cars also progressed at their target to reduce emissions regarding Scope 3
category 11, use of sold products. The baseline in 2019 was 22 percent per vehicle kilometer by
2023 but the new baseline will be 52 percent per vehicle kilometer by 2030. The total amount of
climate impact amounted to 43 million tonnes of CO2 in 2023. 99,8 percent of these emissions is
related to Scope 3, while 0,2 percent is Scope 1 and Scope 2 emissions.This is an increase of half
a million tonnes compared to 2018. Their most significant impairs are within purchased goods
and use of sold products. But the solution to these impacts will be to apply three pillars of their
climate action strategy. These are a transformate to pure electrification, minimize emission from
materials and minimize operational emissions (Volvo Cars Sustainability Report 2024).
3.3 Nissan Sustainability Report 2019 vs 2024
Emission Category
2018 (report 2019)
(tonnes CO2e/year)
2023 (report 2024)
(tonnes CO2e/year)
Change (%)
Scope 1 - Direct
Emissions
889,444
462,000
-48.06%
Scope 2 - In direct
Emissions
2,339,883
1,266,000
-45.89%
11
Scope 3 - Use of Sold
Products
203,106,900
99,185,000
-51.17%
(Table 3, Nissan Sustainability Report 2019, 2024)
Notable points about Nissan Sustainability Reports
Nissan aims to reduce 52 percent in the manufacturing CO2 emission by 2030 in relation to 2018
as the baseline in Scope 1 emissions. They will focus on energy efficiency measures and also
promote the use of renewable energy in the manufacturing process. This is a part of the Nissan
Green Program 2030. To reduce emission in Scope 2, Nissan will also focus on energy efficiency
and transform their facilities to be driven by renewable energy sources. By investing in electric
vehicles and also improving fuel efficiency technology, Nissan has been able to reduce the “use
of sold products” by over 50 percent, leading to a decreased amount of emission coming from
Scope 3 (Nissan Sustainability Report 2024).
3.4 Tesla Sustainability Report 2021 vs 2023
Emission Category
2021 (tonnes
CO2e/year)
2023 (tonnes
CO2e/year)
Change (%)
Scope 1 - Direct
Emissions
185,000
211,000
+14.05%
(Increase)
Scope 2 - In direct
Emissions
403,000
466,000
+15.64%
(Increase)
Scope 3 - Use of Sold
Products
1,954,000
3,207,000
+64.15%
(Increase)
(Table 4, Tesla Sustainability Report 2021, 2023)
Notable points about Tesla Sustainability Reports
The reason for a higher amount of emission in Scope 1 and Scope 2 can be due to the increase in
production volume (Tesla Sustainability Report, 2023). In 2023, the production volume of
electric cars was estimated to be around 2 millions cars, in comparison to 900 000 cars in 2021.
The goal is to sell 20 million electric vehicles per year by year 2030 which indicates that the
emissions will increase. THe emissions increase can also be related to the new gigafactories
12
which require energy to function. The same argument can be said for the Scope 3 emission
because of the increase in sales. The number of sold vehicles in 2021 reached 936,222 units
while in 2023, the number of sold vehicles reached 1,808,581 units. (Tesla Sustainability Report,
2021; Tesla Sustainability Report, 2023). An increase in the use of sold products will mean an
increase in emissions. While the increase in all three Scopes might be seen as counterproductive
for a company, it is important to recognize that these changes depend on the growing demand for
Tesla's products and also the expanding manufacturing capability, but Teslas have the ambition to
offset these emissions in the future (Tesla Sustainability Report, 2023).
3.5 Ferrari Sustainability Report 2022 vs 2023
Emission Category
2020 (report 2023)
(tonnes CO2e/year)
2023 (tonnes
CO2e/year)
Change (%)
Scope 1 - Direct
Emissions
88,242
75,409
+14.54%
(Reduction)
Scope 2 - In direct
Emissions
10,233
23,666
+131.27%
(Increase)
Scope 3 - Use of Sold
Products
No calculations
No calculations
(Table 5, Ferrari Sustainability Report 2022, 2023)
Notable points about Ferrari Sustainability Reports
Ferrari has stated their mission to reach carbon neutrality in 2030. The operation started in 2021
through high quality projects with climate and social contributions by decreasing at least 90
percent of Scope 1 and 2 emission by 2030 versus 2021 (Ferrari Sustainability Report 2022).
Ferrari aims to reduce 40 percent of their Scope 3 emission by 2030 vs 2021. In 2021, they
committed to the SBTi initiative but they have not been validated upon the publication of the
latest sustainability report. The Scope 3 target to reduce 40 percent of emission will be reached
by electrification in the vehicle use phase. They will also aim to use recycled materials in
production alone with developing sustainable battery modules (Ferrari Sustainability Report
2023).
13
4. Analysis
The Science Based Targets initiative provides a robust framework for companies to align their
climate goals with the global target set by the Paris Agreement (Gupta & Patel, 2022). SBTi
encourages the companies to focus on all of the three scope emissions even though Scope 1 and
Scope 2 are more easily controlled through internal measures, and scope 3 provides difficulties
due to their association with supply chain and end user behaviors (Poligkeit, Fugger &
Herrmann, 2023). The empirical data from the sustainability reports of major automotive
companies demonstrated both the potential and the challenges of applying this framework in
practice.
4.1 Volkswagen: Striving for progress amid Scope 3 emissions challenges
Volkswagen’s performance illustrates the challenges of managing Scope 3 emissions. While the
company made significant strides in reducing Scope 1 emission by 8,41 percent and Scope 2
emissions by 41.67 percent between 2019 and 2023, Scope 3 emission only decreased by 13,14
percent (Volkswagen Sustainability Report, 2023). According to Wang et al. (2024), the
difficulty in controlling Scope 3 emission lies in the need for comprehensive data across a
company’s supply chain and product life cycle, which is complex in industries like automotive
manufacturing. This theoretical challenge is confirmed by Volkswagen's results as the use phase
of vehicles depends heavily on consumer behavior, which automakers have limited control over
(SBTi Land Transport Guidance, 2024).
4.2 Volvo: Exemplary in Scope 1, 2, and 3 reductions
Volov has shown a significant success in reducing emission across all scopes. Between 2019 and
2023, Volvo reduced its Scope 1 emission by 24,74 percent, Scope 2 by an impressive 94.70
percent and Scope 3 by 30,92 percent (Volvo Cars Sustainability Report, 2024). The success
aligns with Bjørn, Lloyd and Matthews (2021), who emphasized the importance of addressing
emissions at every stage of the production process from the factory floor to the end user. Volvo’s
success is largely attributed to its strategy of vehicle electrification and supply chain
optimization, which have allowed it to make meaningful progress in reducing emission from the
use of sold products, a major contributor to Scope 3 emissions. This also confirms the literature's
14
view that electrification and the transformation of production processes are critical to achieving
substantial emission reductions (Poligkeit, Fugger & Herrmann, 2023).
The Absolute Contraction Approach, discussed by Wang et al. (2024), also plays a role in
Volvo's strategy. By focusing on absolute emissions reductions rather than intensity-based
targets, Volov ensures that its carbon footprint decreases even as production scales up. This can
be put into contrast with companies like Tesla, where absolute emissions have increased due to
the increase in production volume.
4.3 Nissan Driving change through technological innovation
Nissan has also demonstrated success in reducing Scope 1 emission by 40.06 percent, Scope 2 by
45.89 percent, and Scope 3 by 51.17 percent between 2018 and 2023 (Nissan Sustainability
Report, 2024). Nissan’s focus on energy efficiency measures and renewable energy in
manufacturing has enabled significant reductions in operational emissions. Nissan’s investment
in electric vehicles and improvements in fuel efficiency technology have directly contributed to
its large reduction in Scope 3 emissions. This supports Gupta and Patel’s (2022) argument that
technological advancements in vehicle design and manufacturing are essential for meeting
long-term climate goals. By targeting emission from the use phase of its products, Nissan has
effectively addressed one of the most difficult aspects of Scope 3 emissions, consistent with
theoretical challenges discussed by Poligkeit, Fugger & Herrmann (2023) and Bjørn, Lloyd and
Matthews (2021).
4.4 Tesla expansion vs emission reduction
Tesla’s case highlights a significant limitation of the SBTi framework when applied to rapidly
growing companies. Despite its strong commitment to decarbonization, Tesla’s overall emissions
have increased across all scopes - Scope 1 by 14.05 percent, Scope 2 by 15.64 percent, and
Scope 3 by 64.15 percent between 2021 and 2023 (Tesla Sustainability Report, 2023). The
increase in Scope 3 emissions is especially notable, considering the aim to reduce consumer
emissions. However, the rise in Tesla’s emissions is linked to its massive expansion in
production. From 900,000 vehicles in 2021 to 1,8 million vehicles in 2023, and the opening of
15
new gigafactories have been the reason for the company's increase in energy consumption (Tesla
Sustainability Report, 2023).
This points to a critical gap in the SBTi’s capacity to manage emission during periods of rapid
growth. While Tesla’s production is aimed at reducing global emission in the long term, the short
term impact of scaling operations has led to significant increase in emissions. Tilsted et al.
(2023) warn that companies may sometimes achieve SBTi targets by focusing on emissions
intensity (emissions per unit of production) rather than absolute emissions, leading to misleading
perceptions of success. Tesla’s case underscores the need for the SBTi to account for the
trade-offs between business expansion and emission reductions more explicitly.
4.5 Ferrari: Challenges in Scope 2 and lack of Scope 3 data
The company reduced its Scope 1 emissions by 14.54 percent between 2020 and 2023 but saw a
substantial 131.27 percent increase in Scope 2 emissions during the same period (Ferrari
Sustainability Report, 2023). The rise in Scope 2 emission highlights the challenge of managing
indirect emissions from energy use, especially for companies relying on energy-intensive
processes. This aligns with Giesekam et al. (2020), who note that companies often struggle with
indirect emissions because they depend on external energy providers, which may not always
offer renewable or low-carbon options.
Ferrari’s lack of clear data on Scope 3 emission further illustrates the difficulties some
companies face in quantifying and reducing these emissions. Poligkeit, Fuggera and Herrmann
(2023) emphasized the need for greater transparency and methodological alignment in how
companies report carbon data, particularly in Scope 3 emissions. Ferrari’s situation highlights the
broader issue of inconsistent reporting across the automotive industry, which limits the ability to
compare progress between companies and assess the full impact of decarbonization efforts.
16
5. Conclusion
The effectiveness of Science-Based Targets set by major automotive companies in reducing
carbon emission in alignment with the Paris Agreement is a nuanced and complex issue. The
analysis of empirical data from companies like Volkswagen, Volvo, Nissan, Tesla, and Ferrari
reveals a mixed but generally positive trend in emissions reduction, indicating that SBTi has
assisted meaningful progress toward decarbonization within the automotive sector.
Many automotive companies have successfully leveraged SBTi frameworks to implement
emissions reduction targets. Volvo and Nissan have demonstrated substantial reductions across
all three scopes. But companies like Volkswsagen and Tesla have faced difficulties in managing
Scope 3 emissions, which represent a large portion of their overall carbon footprints. The results
indicate that while SBTi has been effective in driving reductions in Scope 1 and Scope 2
emissions, the challenge of achieving significant reduction in Scope 3 emissions remains a
critical area for improvement. The Paris Agreement emphasizes the importance of full reduction
across all sectors including those related to product lifecycle and consumption. Therefore to
enhance their effectiveness in meeting targets of the Paris Agreement, automotive companies
must adopt more strict strategies to monitor and manage Scope 3 emissions, ensuring that their
commitments translate into meaningful reductions across their entire value chains.
In conclusion, the Science-Based Targets set by major automotive companies have generally
proven effective in reducing carbon emissions in alignment with the objectives of the Paris
Agreement. However, the constant challenges associated with Scope 3 emissions require a
renewed focus on transparency, data collection, and innovative practices to enhance
accountability and achieve deeper decarbonization. As the industry continues to evolve, it is
crucial for companies to refine their strategies, invest in sustainable technologies, and collaborate
with stakeholders to ensure that their climate commitments contribute meaningfully to the global
effort against climate change. By addressing these challenges head-on, the automotive industry
can strengthen its role in the transition to a low-carbon economy and make significant strides
toward fulfilling the goals of the Paris Agreement.
17
6. Reference list
Literature sources:
Ben, A. W, Comyns, B, Martinez, I. (2024). Firm commitments on climate change: Effects of
science‐based targets on financial outcomes during the COVID‐19 crisis. Business Strategy &
the Environment 20p, 2024. DOI 10.1002/bse.3890
Bjørn, A. Lloyd, S. Matthews, D. (2021) From the Paris Agreement to corporate climate
commitments: evaluation of seven methods for setting 'science-based' emission targets,
Environmental Research Letters, p.15. DOI 10.1088/1748-9326/abe57b
C. P. Gupta & A. R. Patel (2022), Sustainable Supply Chain for Automotive Industry,
Humanitarian Technology Conference, p.155-160, doi: 10.1109/R10-HTC54060.2022.9929503.
Dziwinski, P. (2024). The social responsibility strategies in time of the climate crisis in selected
car manufacturers. Scientific Papers of Silesian University of Technology. Organization &
Management, Issue 191, p.131-147. 17p. DOI: 10.29119/1641-3466.2024.191.9
Giesekam J, Norman J, Garvey A, Betts-Davies S. (2021). Science-Based Targets: On Target?
Sustainability. 2021 p.13,. https://doi.org/10.3390/su13041657
Poligkeit J, Fugger T, Herrmann C. (2023), Decarbonization in the Automotive Sector: A Holistic
Status Quo Analysis of Original Equipment Manufacturer Strategies and Carbon Management
Activities. Sustainability, p.21 DOI: 10.3390/su152215753
Tilsted, J. Palm, E. Bjørn, A, Lund, J. (2023). Corporate climate futures in the making: Why we
need research on the politics of Science-Based Targets,Energy Research & Social Science,
Volume 103, p.9. https://doi.org/10.1016/j.erss.2023.103229.
Wang, Y. Hao, Y. Hou, Y. Quan, Q. Li, Y. (2024). Optimizing scope 3 emissions in the
automotive manufacturing industry: a multidisciplinary approach, p.11.
https://doi.org/10.1007/s44246-024-00131-2
18
Digital sources:
SBTi (2024). About Us,
https://sciencebasedtargets.org/about-us (Downloaded 2024-10-02)
SBTi (2024). SBTi Land Transport Guidance,
https://sciencebasedtargets.org/resources/files/Land-Transport-Guidance.pdf (Downloaded
2024-10-03)
SBTi (2021). SBTi criteria and recommendations,
https://sciencebasedtargets.org/resources/files/SBTi-criteria-legacy.pdf (Downloaded
2024-10-04)
SBTi (2023). SBTi Monitoring Report :
https://sciencebasedtargets.org/resources/files/SBTiMonitoringReport2023.pdf (Downloaded
2024-10-04)
SBTi (2024) SBTI Dashboard
https://sciencebasedtargets.org/companies-taking-action#dashboard (Downloaded 2024-10-05)
IPCC (2023) CLimate Change Synthesis Report,
https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf (Downloaded
2024-10-01)
European Commission (2024) CO₂ emission performance standards for cars and vans
https://climate.ec.europa.eu/eu-action/transport/road-transport-reducing-co2-emissions-vehicles/
co2-emission-performance-standards-cars-and-vans_en (Downloaded 2024-10-01)
Sustainability reports:
Volkswagen Sustainability Reports
(2020) https://www.volkswagen-group.com/en/publications/corporate/sustainability-report
(2023) https://www.volkswagen-group.com/en/publications/more/group-sustainability-report
(Downloaded 2024-10-06)
19
Volvo Sustainability Reports
(2020) https://vp272.alertir.com/sites/default/files/report/volvocargroupannualreport2020.pdf
(2024) https://vp272.alertir.com/afw/files/press/volvocar/202403050374-1.pdf
(Downloaded 2024-10-07)
Nissan Sustainability Reports
(2019) https://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2019/SR19_E_All.pdf
(2024) https://www.nissan-global.com/EN/SUSTAINABILITY/LIBRARY/SR/2024/ASSETS/P
(Downloaded 2024-10-07)
Tesla Sustainability Reports
(2021) https://www.tesla.com/ns_videos/2021-tesla-impact-report.pdf
(2023) https://www.tesla.com/ns_videos/2023-tesla-impact-report.pdf
(Downloaded 2024-10-08)
Ferrari Sustainability Reports
(2020) https://cdn.ferrari.com/cms/network/media/pdf/2020-Sustainability-Report
(2023) https://cdn.ferrari.com/cms/network/media/pdf/Ferrari-2023-annual-report-april-17-2024
(Downloaded 2024-10-09)
20