When the polluters are cleaner than the government
President Trump wants to relax auto emission standards. Carmakers say, No thanks.
The New York Times editorial The Trump administration has expected corporations to cheer its efforts to lower environmental safeguards — to permit poisonous pesticides, to gut mine safety protections, to weaken rules on methane leaks in the energy industry.
It can be assumed, then, that administration officials thought they were offering the auto industry a gift with their continued pursuit to undo Obamaera rules on fuel economy intended to reduce greenhouse gases.
In a remarkable retort on Thursday, though, Ford Motor Company and three foreign automakers — which together represent roughly 30 percent of the American market — announced that their interests lie more with the planet, or at least with those who care about saving it, rather than with the president.
Following weeks of secret negotiations, Ford, BMW North America, Volkswagen Group of America and Honda agreed with California on a set of auto emissions standards that largely preserves the Obama-era rules, which set an average fleet mileage goal of 52.5 miles per gallon by 2025. The new regulations call for a fleet average of about 51 m.p.g. by 2026 and include other incentives. This is a reasonable revision. President Trump’s plan would lower the goal to 37 m.p.g.; the national average was 24.9 m.p.g. in 2017.
Granted, it’s not as if corporate leaders have suddenly developed a higher level of environmental consciousness. Car companies had initially instigated the lowering of standards. But when 17 car companies asked the administration in June to back off on weakening auto pollution rules, they hinted ever so loudly that undoing regulations was now unhelpful and unwarranted. The automakers did not want to make different models for different states or countries. Their business is global, with global supply chains, and a minimal number of models to maximize the efficiency of design and manufacturing.
An Environmental Protection Agency spokesman called the California agreement “a PR stunt that does nothing to further the one national standard that will provide certainty and relief for American consumers.”
But given the market influence wielded by California and the 13 others states — and Canada — that have indicated they will sign on, the automakers say the agreement itself would set one national standard.
“These terms will provide our companies muchneeded regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions,” the companies said in a statement.
Is some of this automotive environmental embrace driven as much by profit potential as by concern over climate change? Probably, and that would be a good thing. If sustainability produces a good return on investment — as it should — then corporations would be irrational to ignore it. The California deal also gives the automakers a hedge against a Democrat winning the presidency next year and reverting to more stringent rules.
Unlike the Trump administration, scientists and engineers at many corporations — even energy companies — accept the data about global warming. They are acting on those facts: utilities, by dumping coal-fired generating plants for more efficient renewables; car companies, by building more electric and hybrid vehicles. Ford is planning a full EV version of its best-selling F-150 pickup. Harley Davidson just introduced an all-electric hog.
Ford is also investing in sustainable transportation. The company’s Ford Smart Mobility division owns Spin, the shared electric scooter platform. Pressure is coming from within, too, as employees become more active in pushing their companies to become part of the solution to global issues.
Unlike America’s president, America’s corporations are preparing for the severe weather and higher sea levels associated with climate change that threaten their manufacturing and logistics operations.
Corporate leaders are realizing that they have to answer to constituencies other than Trump, and they can no longer ignore the economic, social and political consequences of environmental risks. Especially auto companies, which face what has been defined as carbon risk: financial threat as the world moves toward a lower-carbon economy.
The investment firm Morningstar recently established a Low Carbon Risk Index Family to address investors’ increasing interest in backing companies that value sustainability, or avoiding industries, such as oil and gas, overly exposed to carbon risk. These sustainable funds are still relatively small, but they had record inflows in the first half of the year.
“Governments are at loggerheads, so the focus is increasingly on the corporation: what are you going to step up and do,” says Jon Hale, Morningstar’s global head of sustainability research. “It’s becoming a solution-driven debate, rather than sitting on the sidelines.”
The automakers that were left out of the negotiations, including General Motors, Fiat Chrysler Automobiles and Toyota, should hop in and go along for this cleaner ride.