Sustainability. It’s a word we’re all hearing more of, and an issue that’s becoming more urgent with each passing year. While large corporations around the world strive to reduce their carbon footprint and make their products and materials more eco-friendly, individual Reward teams might think that they can't make a significant impact within their remit. However, the HR function can do a lot to meet organisational sustainability goals, and a great place to start is by bringing electric and ultra-low emissions vehicles into your company car and employee benefits schemes.
The business case for EVs
Transport accounts for a quarter of the world’s CO2 emissions, and in the UK and US, it’s responsible for more greenhouse emissions than any other sector. Globally, three-quarters of the world’s transport emissions come from road traffic.[1] While 2020 saw a slump in total car sales, purchases of electric vehicles went up by 43% globally driven by consumer's desire to be greener as well as improved performance. As Viktor Irle of EV-volumes.com states, “electric cars are a better technology. There is no noise, no pollution, better acceleration, and cheaper running costs.”[2] Clearly, there’s a huge demand for eco-friendly driving, which is great news for your car salary sacrifice scheme, for employees’ wallets, and, most importantly, for the planet.The benefits of electric company cars
For employees, there are cost savings available when selecting an electric or ultra-low-emissions vehicle through a company car scheme. In July 2019, the UK Government announced that company car drivers who chose a pure electric vehicle would pay no Benefit-in-Kind (BiK) tax in 2020/21. Since 6th April 2020, all battery electric vehicles (BEVs) will have paid no company car tax, moving to just 1% in the coming year and 2% in 2022/23. Under those rules, electric cars are now cheaper to run than petrol or diesel. Plus, the choice of electric or low-emissions cars is increasing every year, and charging points are more commonplace. This means that, with employers’ sustainability practices under the microscope, it’s beneficial to encourage employees to ‘go electric’ when it comes to their company car choices.Car benefits: Spotlight on EDF
Energy giant EDF has actively put sustainability at the top of their people agenda to align with their external progress in this area. To support their Generation Electric initiative and reduce transport emissions, they launched an electric vehicle car scheme in February 2020, which lets employees get an electric vehicle and save on tax and National Insurance through salary sacrifice.In addition, they’re supporting their Zero Harm ambition by fitting these vehicles with a telematics device, as used across fleet vehicles, to give employees feedback on their driving style. It’s designed to help them stay safe on the roads and offer tips on economical driving.
Overall, with the electric vehicle scheme, EDF has taken over 400 petrol cars off the roads! In an average year, this equates to around 900 metric tonnes of CO2 emissions![3] Car Benefit company, Tusker, named it the “most successful launch [they’ve] ever seen.”
Bringing more sustainable options into your employee benefits isn’t just the right thing to do – it’s also great for business and for your employer brand. The figures make it clear; electric and ultra-low emissions vehicles are making a difference, and, in the not-too-distant future will become the norm, so why not be that employer who was *cough* driving this change from its early days?
Want more detail? The lowdown on company cars, HMRC, WLTP, and BiK..!
HMRC has changed its taxation process to align with the WLTP (Worldwide Harmonized Light-Duty Vehicles Test Procedure) way of assessing CO2 emissions of passenger and light commercial vehicles, which tests (on a more realistic level than the previous NEDC (New European Driving Cycle) system) a vehicle’s day-to-day fuel consumption using more dynamic testing parameters. This helps to ensure comparable testing results worldwide.Essentially, all-electric, petrol, or diesel company vehicles that emit less than 70 g/km CO2 saw a decrease in the BiK tax rate after 6th April 2020. All petrol or diesel company vehicles that emit over 74 g/km CO2 are seeing an increase. Plus, any diesel cars that are not certified to the Real Driving Emissions 2 (RDE2) standard are subject to a 4% increase to the above figures, up to a maximum of 37%. HMRC issued these particular tax changes to encourage drivers to take a more fuel-efficient, eco-friendly route when selecting their company car.
[1] https://www.bbc.com/future/article/20200317-climate-change-cut-carbon-emissions-from-your-commute
[2] https://www.theguardian.com/environment/2021/jan/19/global-sales-of-electric-cars-accelerate-fast-in-2020-despite-covid-pandemic
[3] Based on 2018 UK average emissions of 141.9g per km and car mileage of 10,000 miles (16,093.44km) per year. https://www.statista.com/statistics/464270/average-co2-emission-figures-for-all-licensed-cars-in-great-britain-uk/ / https://www.statista.com/statistics/513456/annual-mileage-of-motorists-in-the-united-kingdom-uk/#:~:text=The%20average%20motorist%20in%20the,compared%20to%20the%20year%20before.
