Toyota, Honda, Nissan face greatest climate-change risks. Here's why
- The Japanese automakers will face challenges such as hurricanes and flooding, to high temperatures and water shortages, in the coming years.
Three of Japan's biggest carmakers - Toyota, Honda and Nissan are on the top of the list of carmakers that are facing the greatest risk from climate change among global auto companies. This is because much of their manufacturing activities remain concentrated in the island nation, as per a study by Greenpeace. These companies will face challenges such as hurricanes and flooding, to high temperatures and water shortages, in the coming years, depending on where they have their production bases located, as per the environmental-advocacy group, which analyzed data from Moody’s ESG Solutions on physical risks.
When it comes to environmental, social and governance issues, the spotlight is usually on the impact that manufacturers have on the climate, or society. Yet, as changes in the weather make the impact of natural disasters more frequent and intense, carmakers will face “a high level of physical risk" of damage and disruption at their operational facilities as well as supply-chain disruptions, Greenpeace said.
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The Japanese carmakers have their production facilities scattered across an archipelago that’s susceptible to typhoons. On the other hand, the carmakers who are least susceptible to climate risk are Volkswagen AG, Stellantis NV and other European automakers with manufacturing facilities in northern climates.
Greenpeace has recommended that Toyota should take more aggressive actions to reduce its carbon footprint. Also, more than 90% of the company's manufacturing sites are at high risk for at least one climate hazard. However, Toyota said that it has worked to build a “disaster-resilient supply chain," disclose its emissions and taken steps to secure water supplies. Almost 30% of the company's vehicle output came from Japan in the first half.
Meanwhile, Nissan is conducting long-term assessments of climate-change risks, and takes that into account when setting strategy for its supply chain.
(With inputs from Bloomberg)
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