An analysis of automobile companies’ intensity targets for CO₂ reduction: implications for managing performance related to carbon dioxide emissions

The CO₂ intensity targets that companies disclose have come to play two roles in their environmental evaluation: (i) as an external index demonstrating companies’ commitment to environmental issues; (ii) as an internal measure for controlling and managing their environmental activities. We focus on the CO₂ emission intensity reduction targets of eight automobile manufacturers. Such targets have not yet been standardised, and so they are sometimes difficult to compare. We propose a new CO₂ emission efficiency index using data envelopment analysis (DEA) that can compare companies in the same industrial sector. We first research CO₂-related indices employed by the companies. Next, we collect economic data and CO₂ emission data for the 5 years from 2008 to 2012 and evaluate the companies using a DEA bad-output model. We then take Fiat’s case and found that the new index, based on several economic factors, offers better comparability than simple indicators, since it accounts for more of the CO₂ emissions’ economic background. The index will be useful for companies considering mid- to long-term CO₂ reduction targets, as it takes several economic aspects into account simultaneously, and will appeal to stakeholders who want to improve their companies’ positions in the industry.