New wave alchemists turn green into gold

There’s a serious financial case for adopting a green fleet strategy, and as journeys diminish cash savings pile up

Everybody knows that cutting carbon emissions is good for the planet. Figures from the Met Office show that the last five years have been the warmest on record in the UK, a fact put down to climate change. Each time a driver gets behind the wheel, they speed up the process by burning oil and pumping out the main greenhouse gas, carbon dioxide.

Cutting carbon emissions is not only good for the environment it also makes a positive contribution to an organisation’s bottom line. Some 61% of employers that have taken action to trim their CO2 emissions saved cash, according to the Energy Saving Trust’s 2007 report Behind the Wheel: Understanding the business case for greener company car fleets.

Mark Chessman, deputy managing director of Lloyds TSB Autolease, says there is a strong business case for green fleets. “Aside from making a positive impact on the environment, going green can save money, because the worst offending fleets cost more through increased taxation, running costs and penalties incurred in congestion-charging zones.”

While buying greener cars and persuading staff to drive more efficiently can slash CO2 emissions, it can also trim fuel bills. Robert Kingdom, head of marketing at lease-hire firm Masterlease, says: “Reduced cost through lower fuel consumption is an obvious benefit to running a greener fleet. If lower fuel consumption is a result of fewer miles on the road this can also increase productivity and reduce accident risk.”

Video conferencing

Employers that conduct meetings online using video conferencing can save on unnecessary travel and fuel costs. In addition, the less time people spend on the motorway, the more they can spend working. The Energy Saving Trust’s report estimates that if an employee decided to use video conferencing instead of driving from London to Manchester, once a month for a year, the organisation would save £3,500. Around 80% of this cost is the time the employee could spend working.

A key plank of any green fleet programme is driver training, which helps staff to drive more safely and efficiently, by breaking bad habits such as idling and speeding. Paul Harrop, sales and marketing director at DaimlerChrysler Fleet Management, says: “Encouraging a company-wide safe driving culture is highly effective in reducing fuel consumption. Driver training courses improve driving standards and may pay for themselves in the long run, both with reduced fuel consumption [and] fewer accidents.”

Then there is vehicle selection. The greener the car the more leniently it is treated from a tax perspective. Following the government’s introduction of a new company car tax regime in 2002, drivers of vehicles with high levels of carbon emissions have been hit with higher benefit-in-kind tax. Vehicle excise duty and employers’ national insurance contributions are also tied to carbon emissions.

David Rawlings, senior manager at accountancy firm Deloitte, says: “If the company gets its employees to drive the right type of cars it can save a great deal of money, enough to give the employees financial incentives to come on board.”

Aside from cutting costs, getting a handle on fleet emissions can enhance employers’ corporate social responsibility credentials. An ethical stance can also boost staff morale and build an organisation’s reputation externally. For example, Business in the Community’s (BITC) corporate responsibility index, cites BSkyB and Nationwide as companies with green company car policies.

Nick Sutton, chairman of Provecta Car Plan, advises organisations to accentuate the positive. “Companies are becoming more aware of their impact on the environment, and how this affects their public image. More and more companies are insisting that they only do business with other companies that have a similar green approach to business,” he says.

The business case for a green fleet

• Greener cars attract lower benefit-in-kind tax and employer national insurance contributions.†

• A company with a fleet of 100 vehicles could be saving up to £90,000 a year by implementing green policies, according to the Energy Saving Trust’s 2007 report Behind the Wheel: Understanding the business case for greener company car fleets.

• The same report found that almost two-thirds of employers that have cut emissions have saved cash.†

• Cutting carbon emissions can enhance an organisation’s environmental credentials, helping to attract green-minded consumers, investors and new staff.

Back to ‘How to manage a green fleet