Daimler at the “Tipping Point”: The Group’s Future Success Hinges on Effective Climate Protection. When used in connection with the global climate, the term tipping point refers to the point in time when indicators of climate change suddenly give way to drastic negative events. From the perspective of the Institute for Applied Ecology (Öko-Institut) in Germany, Daimler’s executive management team has also reached a tipping point, as the priority assigned to climate protection in the transportation sector by both governments and businesses in the near future will have a decisive impact on the Group’s success over the long term.
The following report details Daimler’s climate protection achievements and outlines the challenges that remain. The report marks the fourth time that Daimler has asked the Institute for Applied Ecology to comment on the company’s progress in this area and identify the strategic changes that still need to be made. I Our institute has been pointing out for quite some time that sustainable mobility and climate protection are issues that need to be more closely monitored and coordinated by executive management bodies. We therefore expressly welcome Daimler’s establishment of a Sustainability Board. We also recognize that by restructuring its procurement system through a strategy committee, Daimler is seeking to enhance its systematic sustainability management and promote environmental protection in its relationships with its suppliers. Outfitting the Sustainability Board with all the necessary authority and incorporating social stakeholder groups into the process will also play a role in determining how successful the cooperation with established bodies will be for the achievement of ambitious goals, such as climate protection targets for production, logistics, and the supply chain, which we unfortunately once again find lacking this year.
Nevertheless, the “Roadmap” Daimler has presented for its product range, which includes the introduction of 19 new models for its high-volume series by 2011, does create the impression that the Group now realizes just how important climate protection is. The associated positive message being sent that many technologies – up to and including diesel hybrid drives – will be ready for market launch in the near future underscores Daimler’s determination to be a technology leader in this area as well. Whether or not the planned technology packages can actually enable Daimler to achieve its “best-in-class” objective remains questionable. The models presented to date still do not live up to this claim.
The current controversy regarding the proper strategy for increasing the share of biofuels in the fuel mix is putting additional pressure on the company to further enhance the fuel efficiency of its vehicles as its primary objective. The nature of this debate does, however, confirm that Daimler is on the right track with its activities involving second-generation biofuels, such as its cooperation with CHOREN and its joint efforts with the WWF to establish sustainability standards for both domestic and, above all, imported biofuels.
In 2007 the Institute for Applied Ecology suggested that Daimler should target an fleet average of 130 – 140 g CO2/km by 2012 for Mercedes-Benz and smart combined. According to independent studies, on the basis of the current EU draft directive Daimler’s target should be 136 g/km by 2012, which is 25 percent lower than today’s average. We welcome the fact that Daimler plans to achieve this EU fleet target in spite of uncertainties regarding the specifics of how this should be done. Still, it is difficult to believe that average fleet consumption for Mercedes Benz and smart can be reduced by more than 25 percent over the next few years, when only two of 13 engine variants of a new model series are offered as BlueEFFICIENCY versions, as is the case with the new C-Class sedan. This is particularly the case in view of the fact that the 11 other more powerful engine variants in the C-Class have emissions up to 80 percent higher than those of the C 200 CDI BlueEFFICIENCY.
It will not be possible to lower fleet consumption without the successful marketing of BlueEFFICIENCY models. Such successful marketing in turn requires the Group to focus its business model more strongly on fuel-efficient high-volume model series. The responsible and successful marketing of fuel-efficient vehicles will also require clearer advertising messages. In 2007, for example, Daimler promoted the E 320 BlueTEC in Germany with the slogan “climate protection as standard.” This highlighted the model’s contribution to climate protection, despite the fact that BLUETEC technology primarily aims to lower nitrogen oxide emissions. While we are very pleased by the successful transfer of BLUETEC technology from commercial vehicles to passenger cars, as this is an important contribution to improving air quality, we must nevertheless point out that marketing campaigns such as the one used for the E 320 BlueTEC can mislead customers.
We know very well that an automaker’s model policy is a sensitive issue that is frequently considered “untouchable.” However, the possibility of an approaching tipping point of the global climate leaves little room for taboos. Whether or not it will be possible in the future to continue defining premium-segment comfort and luxury solely in terms of engine output and vehicle size is a question Daimler also has to answer for itself as it seeks to develop a business model that will keep the Group successful over the long term.
Berlin, May 2008
Christian Hochfeld is Deputy
Director, Öko-Institut e.V.
Öko-Institut e.V. is one of Europe’s leading independent research and consultancy institutes for a sustainable future.