Improve your green cred
06 December 2006
Author: Guy Bird
As the debate on climate change hots up, there's never been a better time for fleets to position themselves as 'green' - for moral and profit reasons. Guy Bird reports
Just five years ago, over-dwelling on the environmental debate with a business colleague could have you consigned to the same 'loser' Venn diagram sub-segment as vegans and people who wear hemp. Fast-forward to late 2006 and after the Queen's Speech revealed a new Climate Change Bill to reduce the UK's CO2 emissions by 60% by 2050, it's fair to say that right now, global warming is no longer a topic that concerns hippie types.
From safe to green
Corporate duty of care has led most right-thinking firms to become better at putting in place policy and procedures to protect their staff adequately when 'at work' in recent years - be that in an office, company car or even in a private car on company business. Safety policy statements are written by directors, risks are assessed, training implemented and staff handbooks adjusted, redistributed and signed by staff. While there is still much work to be done in this arena, it is on the eco issue where many companies are really found find themselves wanting, and thus are adding the topic to their corporate social responsibility list.
Paul Roberts, director of Lex Momentum - the top leasing company's consultancy arm set up to address environmental concerns - has seen this mindset change first-hand in his role in advising clients on eco and safety best practice for the past three years. As he puts it: "The eco issue has been building by the month. It is now top, or close to the top of the agenda for most finance directors and MDs I talk to. A few years ago it was something we'd bring up and they'd say 'thanks but no thanks'."
Andrew Cope, chief exec of Zenith Vehicle Contracts agrees. Recently, Zenith held a well-attended Corporate Social Responsibility (CSR) seminar covering duty of care, risk management and environmental issues. When they tried the same thing four years ago, Cope admits they couldn't get anybody to come.
What's an EMS?
Despite the perceived change in business thinking, one in three UK companies still do not have an Environmental Management System (or EMS) according to a survey by the British Standards Institute. The report , which looked at the FTSE 250 firms, found that 70% were concerned about the rising cost of energy, nearly half worry about waste management and another third agonise over their carbon emissions.
The survey also found that more than half of those same firms believed an EMS can enhance corporate reputation, one in ten believe it increases competitive advantage and saves costs, and three-quarters believe customers will be more interested in companies with an EMS in the next ten years. Tellingly, almost all respondents - a whopping 94% - recognised they could improve their environmental performance.
So how can this thinking turn into positive change for fleets? Time was when an eco stance was all about buying up a bunch of LPG cars and vans and all too often suffering the business consequences of early adoption - not enough filling stations, plus vehicle conversion reliability and reselling issues. But technology has moved on and although LPG (and for that matter CNG for vans and bigger vehicles) can still play a role if managed correctly, the ability for fleets to reduce CO2 using mainstream petrol and diesel cars is actually easier than ever.
The likely proliferation of hybrids and biofuel vehicles in the near future will make the job easier still. But for now, those responsible for fleets no longer need to ask their drivers to don an 'eco hair shirt'.
In the last four years fleets have become experts on emissions due to company car tax in 2002 (and later VED) becoming CO2-linked, and diesel and smaller-engined petrol vehicles have been the winners. But the tax change also made Gordon Brown a loser as thousands of business drivers were given cash allowances by their employers to allow them to opt-out of company car schemes and become private motorists for tax purposes - to avoid getting stung by the higher CO2 tax on their (often) higher-emitting vehicles.
As more CO2 taxes are dreamt up for private motorists (VED hikes, future congestion charge scaling, Richmond parking permits and who knows what else from Mr Brown himself) the cash-for car move looks likely to become increasingly less beneficial.
With companies already realising that opt-out drivers can be problematic from a duty of care perspective (who insures their private car for business use, is the cover robust enough for the firm in third party liability cases and who ensures servicing is undertaken on time and to the correct quality?), good corporate responsibility is less likely to sit side-by-side with badly organised cash-for-car schemes.
Who's the greenest of them all?
Many forward-thinking fleet companies have been promoting environmental corporate social responsibility for years. Lex Vehicle Leasing - the UK's biggest and now 258,000-strong fleet - has almost ten years' of such experience, claiming to be the first contract hire company to set up a dedicated 'environment unit'. This unit covers areas from the impact of staff and company premises on the local environment to the CO2 emissions of its lease vehicles, and aims to save energy and promote recycling internally, while educating customers and the entire fleet industry about eco choices externally.
It was the first UK fleet company to gain environmental certification ISO14001 and is still only one of three leasing companies to hold the award in the UK. To keep that status, Lex completes an environment review of its business each year and sets new objectives for the future.
Will video kill the repmobile?
Introducing video conferencing has been one of the most successful ways Lex has reduced CO2. In 2005, 2111 people used the technology instead of driving to meetings saving 115 tonnes of CO2, 53,129 litres of petrol and £185,120. Lex argues that its clients benefit from this change, as its staff spends an extra 8914 hours (or 238 weeks) in the office helping customers rather than travelling between its three offices. In addition, fewer staff on the road for less time reduces corporate road risk too.
Car sharing has been another 'eco win' at Lex's Stockport offices with more than 25 previously solo drivers now sharing their car with up to two other people to and from work. Lex has even extended its priority parking spaces by 50% to make room for the scheme's growth. Part of this car share scheme includes an intranet-based travel diary to encourage colleagues to share car journeys between company site. Beyond lower fuel costs and emissions, an unexpected reported bonus was lower driver stress.
Inchcape Fleet Solutions is another leasing company with an established eco focus, already having won environmental awards for its own best practice and industry-facing advice. In fact, one informs the other. It's customer online fleet tool - developed out of its own internet-based company car driver benefit-in-kind tax assessment module - not only highlights the tax burden of their chosen vehicle but also now shows other models with lower CO2 emissions. Going further, drivers are incentivised to choose a lower CO2-emitting vehicle (than specified by their grade) with 10% cash off their monthly rental. Inchcape says this tool has enabled it to significantly reduce its own fleet's emissions.
Account managers are all trained in the art of lessening fleet environment impact, too, helping clients to set policy on journey planning, alternative transport, car sharing and better driving styles to improve fuel economy. Inchcape has also produced and distributed a 'Greener Driving' guide for all customers.
Inchcape's MD, Terry Bartlett, in charge of more than 53,000 vehicles, points out the business case for sound eco fleet policy when it comes to disposal: "In the future, when less environmentally efficient vehicles are de-fleeted, used car market demand could melt away. Vehicles subjected to the highest rate of VED may prove less popular than presently in the used car community. Consequently, residual values will fall and monthly rental rates will increase. As far as fleet operating costs are concerned as well as for the greater good of the planet, it is vital that businesses review their fleet strategies from an environmental standpoint."
ALD Automotive - a third leasing company firmly setting out its environmental agenda - is offering clients the chance to offset business mileage carbon emissions by paying a few pounds extra rental per month. For a VW Golf 1.9 TDI it adds £3.89 per month to pay for 35 trees planted by the UK's leading woodland conservation charity, the Woodland Trust. Even for a diesel Land Rover Discovery it still only costs £6.78 more a month, which equates to 61 trees.
ALD reckons the scheme should enable thousands of trees, which of course absorb CO2, to be planted and is aiming to gain the ISO14001 standard soon. Marketing director, David Yates, also sees the benefits of lowering emissions in all areas of its commerce, believing the Government will link future road pricing charges, also mentioned in the Queen's Speech, to favour low CO2 vehicles in time.
But what can we do?
You might be thinking this is all well and good for the big guys able to afford to set up 'departments of greenness', but I'm just the little guy, what can I do? Well the answer is, quite a lot.
Lex Momentum's Paul Roberts believes measurement of average CO2 is the starting point (vehicles' emissions are well documented). Multiply any car's grammes per kilometre emissions figure by its annual business mileage after doing the metric conversion, and you calculate a per person, per year, tonnes of CO2 figure. Do this across the whole fleet and set lower future target CO2 tonnage - possibly with the help of some fleet software to monitor the change - and then you need to positively communicate that change in company policy. The impetus and 'teeth' for which, like for duty of care safety initiatives before, must come from director level.
Setting a CO2 threshold for user-choosers, perk and opt-out drivers beyond which drivers will get a lesser cash allowance is one possible 'stick'. Giving cash back to those that take a car with lower CO2 than the threshold is the 'carrot'. Occupational drivers, like delivery van drivers, are obviously easier to control as vehicle choice is rarely up to them.
Roberts believes the number of business miles driven by user-chooser drivers is the key to the amount of company influence that can be reasonably leveraged on car choice without too much staff resistance. Traditionally this has been between 8000-10,000 business miles but Roberts argues that in the current increased demands placed on safety and eco corporate responsibility, there's a case for lowering this figure to 5000 miles.
I don't want a Prius.
With less than 10,000 vehicles, smaller fleet player Zenith is hoping to be one of the first 'carbon-neutral' leasing firms from an office and transport perspective. Many of its clients are fleets with 250-300 vehicles and are, reckons chief exec Andrew Cope, much more receptive to green chat than before.
Cope is about to ditch his diesel Range Rover Sport ("It's hard for me to spout all this stuff when I've got this car") and is thinking about a sub-200g/km CO2 diesel Volvo C70, but stopped short of a hybrid Prius ("I don't want to send the message out to all my customers that I'm holier than thou").
Cope believes the financial burden will not be too great. "With 90 staff and a small office I reckon it will cost us £4000-5000 per year as a business, which is not a big deal. The directors will pay to offset their own cars and we'll encourage our staff to do the same, which should cost between £3-5 extra a month for their business mileage."
Cope is realistic as to what this move will achieve, but believes doing something is preferable to doing nothing: "Quite what the validity of these off-set schemes are is hard to discern but we've go to start from somewhere. All we're doing as a business is putting the issue squarely on the agenda for clients. What they do is up to them."
So, business reasons not to go greener on some level seem few and far between. Although difficult to quantify in hard cash terms or indeed to scientifically qualify in better staff morale or business perception, Peter Cooke, professor of automotive industries management at Nottingham Business School, believes your instincts should tell you. "It may be hard to measure, but if you're in a business you can tell when it's working", says Cooke, "and your clients will sense that feeling too."
Company head of environmental management at Rolls-Royce, Nigel Marsh, believes a third-party EMS such as ISO14001 "can be a differentiator in winning new business. Many clients now see the long term benefits of working with companies that have a robust environmental management system in place."
Even if you really don't think time is running out to take action on the environment - counting yourself publicly or privately as one of the ever diminishing band of global warming sceptics - it has to be worth looking at eco responsibility policy as a great way to save fuel and tax while boosting internal company morale and external perception. And if you're wrong, but you took action anyway, your kids might even say thank you.