‘Corporate social responsibility’ mission statements: What do they mean for you?

Corporate social responsibilityIf you’re ever looking at annual corporate reports or high-ranking executive surveys, a few recurring themes tend to appear. While the global economy and fast-changing technologies are usually mentioned, another category is starting to stand out – corporate social responsibility.

Back in October, John Krafcik, then-president and CEO of Hyundai Motor America, spoke clearly about where most automakers and other Top 500 companies are headed. “We’re committed to being a leader in CSR (corporate social responsibility), and to being a leader for the environment. As an automaker, Hyundai has a strong position in CO2-reduction and personal safety systems in all the global markets in which we compete. Yet we see ourselves as more than a carmaker. We are committed to finding sustainable personal mobility solutions that ensure this great privilege is maintained for future generations. We’re absolutely committed to our philanthropic causes and corporate social responsibility.” 

Krafcik also shared details on the Hyundai Sonata Hybrid, the Hyundai Tucson Fuel Cell, and charitable organizations that the company is making donations to. If you read through annual reports issued by other automakers – and by tier-one suppliers – you’ll see similar messages. Many corporate executives say it’s understood these days that they be responsible citizens in their local and global communities (or at least that they’re being perceived this way). OEMs are also expecting these goals to be fulfilled by their supply chain partners, a good example being Johnson Controls just announcing recognition received from its Volvo Cars client.

Corporate ethics, community service, and sustainability are the themes typically being articulated and committed to in corporate mission statements. So what does that mean for alternative fuel vehicles and clean transportation? There are a few opportunities…….

  • Fleets and executive management are being told by their board of directors to take green issues more seriously – that comes through energy efficiency, vehicle emissions, and corporate sustainability campaigns.
  • Supply-chain relationships are being affected much more by expectations in carbon/GHG emissions reduction, using recyclable materials, and staying compliant to regulatory structures. Those relationships can take different forms – automakers, suppliers, and dealer networks; and transportation companies and their clients’ corporate policies, are two visible trends these days.
  • Sustainability tends to come from a sense of corporate responsibility and leaving the planet to future generations. As the giant GenY demographic youth group comes of age – and makes for an even larger number of people than Baby Boomers – that’s a message that’s given a lot more weight than 10 years ago.
  • Consumer surveys are showing a lot more interest in environmental responsibility in what they’re willing to purchase. This market trend has expanded beyond the niches that used to define it. Not long ago, upper income bi-coastal urban residents were buying hybrids and electric vehicles; but that’s started to change in the past couple of years.

As you’re putting together marketing and education campaigns for this year, these are important realities to keep in mind. When you view advertising for green vehicles, you’ll nearly always find messages related to reduced carbon emissions, clean air, and freedom from foreign oil imports. That fits well into corporate social responsibility themes.

Big Picture: 2013 was a good year for green machines, Ford powering C-Max Energi concept with solar

Tesla Model S fast chargerGreen vehicles saw strong sales numbers in 2013, led mainly by electric vehicles seeing an 84% leap at 96,000 units sold. Plug-in hybrids had slightly higher numbers (49,000) over battery electric (47,600) – but it was a giant leap for pure electrics – 241% over 2012 versus 27% for plug-in hybrid/extended range. Much of that came from the Tesla Model S rolling into 2013 at higher production and sales volumes than the year before – closing the year at 18,800 units sold. The Nissan Leaf also did very well with its price reduction. Leaf sales jumped 130% to 22,610 in 2013 and were up 70% in December. Dropping the base price 18% to $28,800 was smart, as was adding extra cargo room and an on-board charger that’s been cutting charging times in half.

The Chevy Volt did not have its top selling year – 23,094 sold, declining 9.2% in December and 1.6% down for 2013. However, it was the top selling EV for 2013. The Cadillac ELR plug-in hybrid just launched and sold only six units in December. The Chevrolet Spark EV sold 589 units for the year.

The Toyota Prius plug-in was down 5.2% for the year at 12,088 units sold.

Hybrids hit their own sales record – 489,413 units sold last year, a 15.3% increase over 2012. Diesel vehicles are right up there – climbing 10% to 450,000 sold in 2013. Toyota saw 60% of all hybrid sales. Ford said its hybrid sales topped 80,000 this year, nearly triple the 2012 total.

And in other clean transportation news…..

  • Ford Motor Co. is displaying its C-Max Solar Energi Concept at the 2014 International CES in Las Vegas on January 7-10. It harnesses the power of the sun by using a special concentrator that acts like a magnifying glass, directing intense rays to solar panels on the vehicle roof; a day’s worth of sunlight can deliver as much power as the conventional C-Max Energi plug-in hybrid, which powers its electric motor through its battery. Using solar power in a C-Max Energi could reduce annual greenhouse gas emissions generated by typical drivers by four metric tons.
  • Feedback from early adopters has been utilized by BMW and other electric vehicle makers more than other product lines typically do. Tom Moloughney, an owner of an Italian restaurant in Montclair, N.J., has participated in BMW’s test program, first driving the Mini E and then the BMW ActiveE more than 130,000 miles altogether.  Moloughney and other EV drivers have earned the title “electronauts” from BMW. One of his suggestions was adding an optional eco mode to the BMW i3; it now has the Eco and Eco-Plus modes, which minimize electrical use except for the drivetrain. He also emphasized offering a more robust quicker charging system with high wattage.
  • CleanFUEL USA has gained a top safety standard listing for publicly accessible and payment card compliant propane autogas refueling stations. The company has taken additional steps to meet the most rigorous standards for propane autogas refueling by gaining Underwriters Laboratories (UL) listing for the Gilbarco Encore S liquefied petroleum gas (LPG) retail fuel dispenser. The dispenser also holds National Conference on Weights and Measures (NCWM) approval. It’s typically installed at retail settings with public access and controlled clientele, and features full retail capabilities for Payment Card Industry (PCI) compliance. The fueling dispenser is also available as a single or dual-sided unit. While the dispenser is typically used in retail settings, it can be designed for a wide variety of fleets.
  • If Chinese investor Hybrid Technology LLC completes its acquisition offer on Fisker Automotive in US bankruptcy court, the Fisker factory could be shut down. Court papers indicated that it plans on buying and then reselling the shuttered Wilmington factory. It could be the same thing if Wanxiang closes its deal – that company has indicated it’s not interested in starting up production again at the plant. (See the next article on US and Chinese competition for more on the Fisker acquisition.)
  • Speaking of electric vehicle factories – Tesla Motors’ Fremont, Calif.-plant could become unionized. The United Auto Workers (UAW) has been in talks with Tesla CEO Elon Musk and other company executives. The union has set up an organizing committee at the Fremont, Calif., plant, which used to be the NUMMI plant that was run by Toyota and GM. There are about 2,000 workers at the Tesla plant in Silicon Valley. While Detroit area workers are unionized, it’s been very hard for the union to reach foreign “transplant” factories in the south; and the UAW has been viewing the Tesla possibility for nearly four years.
  • Mitsubishi has delayed the US launch of its Outlander plug-in hybrid until 2015 because of bottlenecks in battery production. The electrified crossover utility vehicle won’t be able to be launched this year as planned. The problem has been tight capacity at its main battery supplier, Lithium Energy Japan; that company is a joint venture between Mitsubishi Motors, battery maker GS Yuasa Corp. and trading house Mitsubishi Corp.
  • EVs sold in Europe are undergoing the noise factor scrutiny similar to what’s happening in the US. Regulators have safety concerns about pedestrians, especially those with limited vision, who may not hear the silent EV approaching. Daimler is adding artificial sound to its Mercedes-Benz EVs as the European Union fine tunes regulations.
  • Along with its readers, Consumer Reports’ editors are still in love with the Tesla Model S. After a year’s worth and 11,380 miles of driving, the magazine gave kudos to the Model S for several pluses, including its “rocket-like launch feel” and well-appointed interior.
  • As the biofuel and ethanol/E15 battle continues, more outrage has been sparked by the Corn Ethanol Mandate Elimination Act of 2013. The bill, sponsored by Senators Dianne Feinstein (D-CA) and Tom Coburn (R-OK), has been introduced to curb corn ethanol use and production. It would eliminate the corn ethanol mandate within the Renewable Fuel Standard (RFS), which would be even more severe than the US Environmental Protection Agency’s proposed revision on implementing the RFS and cutting back on the mandated use of ethanol as a gasoline blend.
  • Quantum Fuel Systems Technologies Worldwide, Inc. just received approval from the United Nations to sell its product to UN countries around the world. The UN, as part of its ECE Regulation No. 110, has allowed for Quantum’s Type-IV Q-Lite CNG tank technology to be sold. The company says this will allow it to bring its “highly successful large diameter CNG tank technology to Europe and Asia and will enable European and Asian trucking firms to realize substantial operating cost reductions that many US fleets have demonstrated through the use of CNG as a transportation fuel.”

Who will win electric vehicle race – the US or China?

BYD EV charging stationThe future of Fisker Automotive might be viewed as a symbolic tale of where economic alliances – and competition – now stand between the US and China. Two Chinese investors are vying to take over the troubled US maker of the luxury, extended range Fisker Karma. A courtroom showdown will take place on January 10 where US Bankruptcy Court Judge Kevin Gross will likely decide whether investor Richard Li and Hybrid Tech Holdings LLC can close the deal with its proposed $25 million; or whether Wanxiang Group, a major Chinese auto parts company and new owner of the A123 Systems lithium battery company, should win the deal with its recently filed $24.725 million bid with assumption of some of Fisker’s liabilities. Either bid from these Chinese investors is much less than what Fisker has owed the US Department of Energy (DOE) for its original loan; but the federal government would like to wash its hands of it.

This symbolic tale goes back a few years – nearly five – and the story is much bigger than what’s taking place with Fisker. Starting in 2009, the Obama administration made available $2 billion in direct stimulus grants through the DOE and an additional $400 million for its ARPA-E funding program. The Chinese government has been offering about $16 billion in vehicle subsidies, R&D, and infrastructure spending for clean automotive technology. Lithium ion batteries and electric vehicles have been at the heart of these government investments.

The Obama administration policies came out of the collapse of the auto industry in Detroit and devastation of financial markets; China’s motives comes from its goal of dealing with thick air pollution in rapidly expanding cities and reducing its dependence on foreign oil. President Obama’s lofty goal of putting one million electric vehicles (EVs) on American roads by 2015 set off a race; Chinese officials said their country would do the same (which the Chinese government calls “new energy vehicles”). Overall, its goal has been even loftier – the government would like to see five million alternative energy vehicles on its roads by 2020.

While the actual EV sales figures in either country are highly unlikely to meet the million unit EV mark within the next two years, the race is still being run. Cultivating EV sales through government incentives and federal fleet acquisitions – and through capital investors with mergers and acquisitions – continues to be of high importance in the US and China, even though some of the government investments have failed.

China has been extremely important for global automakers and investors to see growth, especially as the European auto market has been shrinking. EVs have been a big part of that strategy and China has been the top selling market for overall new vehicle sales for a few years.  The investments have been impressive:

  • An electric version of the Saab 9-3 is critical for Saab a year out of its bankruptcy proceedings; Saab’s new owner, National Electric Vehicle Sweden, is targeting its home market of China.
  • Tesla Motors has been working hard to get its website domain name back in China; for now, Tesla is using the “Tousule” name for its website since the “Tesla.cn” domain was registered to a Chinese company in 2006. The website is taking pre-orders and reservation fees for the Model S and the upcoming Model X electric crossover model. Tesla is planning on beginning deliveries to China of the Model S in the first quarter of 2014. That website follows the recent opening of a Tesla Motors showroom in Beijing.
  • Ford will pursue the production and sale of hybrids and EVs in China. The global automaker will build more factories and expand in that growing market. Ford CEO Alan Mulally made the announcement during a television interview in China.
  • Warren Buffett and his Berkshire Hathaway firm have made a sizable investment in Chinese automaker BYD – and EVs play a big part of the gamble. The company plans to introduce four models for its US debut by the end of 2015. Its new Qin plug-in hybrid model will likely be the flagship model introduced in the US.
  • Geely Holding Group took over Volvo Cars from Ford in 2010 and joint EV projects play a role in that alliance – such as the Volvo C30 Electric and Geely’s Kandi brand offerings.
  • Last month, actor Leonardo DiCaprio announced he’s forming a team to participate in a new EV racing circuit that will launch its inaugural season in Beijing next September. There’s a lot of hope that enthusiasm for owning EVs will come from it; in 2012, there were only 11,000 EVs sold in China.

China’s air pollution problem is an example of the market opportunities that clean transportation has to offer. Beijing will be replacing its petroleum-powered buses with new models powered by electricity or natural gas by 2017. The Chinese government is looking at other possible solutions for reducing tailpipe emissions from its fast-growing pool of vehicles on its crowded roads. Gaining these contracts is very appealing to US investors, and to companies all over the world.

EVs – and other alternative fuel vehicles and cleantech ventures – play a significant role in the future of the US economy, according to the Obama administration and several other entities. China will continue to be a focal point for the US economy. These market dynamics have been taking on the form of both competition and cooperation. Trade agreements between the US and China have been a sore spot, but business deals continue to be made. As several economists and visionaries have been saying for a few years, the future of global economics is leaning toward cooperation. There’s not one single nation that has all of the supplies, labor, intellectual property, investment capital, and management leadership to give an industry such as automotive all that it needs to thrive.

Major Middle East oil reserve now home to Masdar renewable energy experiment

Masdar CityAbu Dhabi is home to the world’s fifth largest proven oil reserves and the sixth largest natural gas reserves. It’s also the home of what many consider to be the most significant renewable energy experiment in the world with its Masdar project. The Abu Dhabi government is investing $15 billion in Masdar’s university and its role as a renewable energy developer, investment arm, and cleantech center. Later this month, it will be hosting the seventh annual World Future Energy Summit; the summit promotes innovation, global collaboration and investment opportunities in renewable energy and clean technology.

The United Arab Emirates (UAR) and its capital city, Abu Dhabi, sit on the Persian Gulf next to neighbors Oman and Saudi Arabia. The Emirate of Abu Dhabi has enough hydrocarbon reserves to last beyond 100 years. Through Masdar (also called Masdar City), Abu Dhabi seeks to send the message that it’s a responsible oil producer that can help create a balance between hydrocarbons and renewable energy in addressing both climate change and energy security. While UAR is a member of OPEC, Masdar seems to be an attempt to break out of the assumptions made about the Middle East in other parts of the world; one of them being that oil completely dominates its politics and economics.

Masdar is a strategic government initiative – and a subsidiary of the UAR’s Mubadala Development Company – that was started up in 2006. Masdar will highlight its new solar and wind projects in the UAE, United Kingdom, Seychelles, and Mauritania at the World Future Energy Summit later this month. The company said it has installed more than 750 megawatts of renewable grid capacity in the past year. Along with other partners, Masdar has run the world’s largest off-shore wind farm, the world’s largest concentrated solar power plant, Africa’s largest solar PV plant, and has brought utility scale renewables to the Seychelles.

Masdar runs three integrated business units complemented by a graduate-level research university with the Massachusetts Institute of Technology (MIT). The MIT and Masdar Institute Cooperative Program is an ongoing collaborative program with Abu Dhabi to provide advice and guidance in the establishment of a graduate research university focused on alternative energy, sustainability, and advanced technology.

Transportation in Masdar takes place on foot or through electric vehicles (EVs). Personal Rapid Transit EVs are available at a parking station at the university. The four-passenger driverless pod vehicles are guided by a computer that charts direction tied into tiny magnets embedded in the road.

Masdar City is hosting the Middle East’s first fast charging EV station in collaboration with Mitsubishi Heavy Industries Ltd. The pilot project uses the CHAdeMO-certified Rapid Charger and aims to assess how efficiently the rapid charger technology will function in the region’s harsh climatic conditions. It offers an 80% charge in 30 minutes.

An EV pilot project launched was launched in mid-January 2011 and runs a fleet of 12 Mitsubishi i-MiEV electric cars. The test project has worked on addressing users’ concerns on battery life and dealing with skepticism about the EVs’ inability to withstand desert heat. They’re the first battery electric vehicles deployed into the UAE.