A recent report highlights a troubling gap between the emissions declared by automakers and the actual pollution they produce. The study indicates that several brands report far lower emissions than what their fleets generate, with some cases showing discrepancies as high as 116 percent. This discrepancy means auto sector emissions are significantly higher in practice than the figures publicly presented.
Across the globe, emissions from car manufacturers appear to be, on average, roughly 50 percent higher than what is declared. With the 2023 introduction of mandatory reporting for Scope 3 emissions, which cover indirect emissions in the value chain, asset managers tied to carbon-intensive automakers face what the Transport and Environment group describes as a potential “carbon bomb.” The concern centers on the risk that investment portfolios may drastically undervalue the climate impact of holdings in vehicle manufacturers.
In the TEA documentation, particular attention is given to the Hyundai-Kia group, showing a 116 percent excess, followed by BMW at 81 percent and Toyota at 69 percent. Other brands cited include Mercedes-Benz at 62 percent, the Renault-Nissan-Mitsubishi alliance at 61 percent, and Volkswagen at 58 percent. The report emphasizes that in Europe, regulatory changes have required financial institutions to disclose Scope 3 emissions for 2023, placing emphasis on indirect emissions primarily driven by vehicle usage. In many cases, direct emissions from vehicle use dominate these figures, making up the lion’s share of overall automotive emissions.
The graph accompanying the TEA study illustrates the excess emissions detected across the sector:
Excess emissions above declared levels in the TEA assessment
Automakers often determine their reported totals using factors such as average vehicle size, typical driving patterns, and the expected useful life of the vehicles. The TEA argues that some data are selected or adjusted to produce lower overall numbers, which clouds the true climate impact of car manufacturers.
Impact on investment and climate accountability
From an investment standpoint, the report suggests that automobile companies exhibit a carbon intensity comparable to certain segments of the oil industry. Using Morningstar’s estimates, a euro invested in large oil firms such as Exxon Mobil, BP, and Shell tends to fund around 5,000 tonnes of CO2 equivalent, while the same investment in carmakers can finance more than 4,500 tonnes of CO2e. This comparison underscores the potential misalignment between financial risk assessments and actual environmental impact.
Morningstar, a United States-based financial services firm, projects that by year end a substantial portion of new ESG-related products will be marketed. But TEA criticizes ESG ratings for not fully capturing the real climate footprint of companies, urging regulators to harmonize rating methodologies to ensure consistent, transparent disclosures that better reflect environmental performance.
Consequently, TEA calls for an EU-wide standardization of ESG ratings to guarantee comparable data across sectors and geographies, making it easier for investors to understand true climate risk. The advocacy group argues that reliable, harmonized metrics are essential for informed decision making and for aligning financial flows with climate goals.
According to official data, the financial market’s perception of a euro invested in a car company often mirrors the carbon costs associated with investing in oil majors. This alignment should serve as a wake‑up call to the financial sector, highlighting the need for transparent, robust climate data in investment decisions.
The TEA report is available in English and offers a detailed look at the methodology and findings. While this summary notes the primary conclusions, readers are encouraged to consult official TEA materials for a complete understanding of the analysis and its implications for emissions accounting and investment governance.
Endnotes and citations follow the TEA framework and clearly attribute data to the published study. The organization emphasizes that the results reinforce the urgency for better measurement, reporting, and regulation to ensure the financial sector accurately reflects the climate risks associated with automobile manufacturing.