Invest in car companies almost as much carbon per euro as oil firms

BERLIN Reuters - The lifetime carbon emissions of a car are so high that investing in car companies funds almost as much carbon per euro as investing in an oil firm, according to a study released by the environmental NGO Transport Environment on Wednesday.

A million dollars invested in oil giants Shell, BP and Exxon Mobil finance around 5,000 tonnes of carbon dioxide, while the same amount is spending on average 4,500 tons in the car sector, according to the NGO's calculations on 2020 data.

The data provided by the world's nine largest car companies shows the average tonnes of carbon emitted from their vehicles during their lifetimes, and the size and makeup of their fleets, compared to their market capitalisation.

The findings have important implications for financial institutions in the European Union, which will soon be expected to disclose the lifetime emissions of their investments under new EU rules coming into force in 2023.

Financial institutions are only required to disclose Scope 1 and 2 emissions of their investments, referring to those generated in the production process.

Carmakers' own calculations show that 98% of emissions are generated over the lifetime of the product, and 98% of emissions are generated by the fuel used to power the vehicle.

The researchers warn that adding Scope 3 will make car stocks look dirtier at a time when investors are coming under growing pressure to prove the environmental credential of their investments.