Client demand, shareholder activism, and corporate citizenship are just a few reasons companies have been increasingly looking for ways to reduce greenhouse gas (GHG) emissions from their operations. For service companies, fleet is often a large emissions producer and a natural place to focus environmental efforts.
However, even manufacturing companies are looking at opportunities to reduce emissions in fleet. Retooling a plant or changing a manufacturing process can have a tremendous impact on the environment, but often takes years to achieve. Since a portion of fleet is replaced every year, a company can quickly see the benefits of changing fleet policies.
As corporate environmental managers turn their attention to fleet, more and more fleet managers are being asked about the environmental impact of their vehicles. A 2007 survey conducted by PHH Arval showed that fleet managers have already started to explore opportunities to green their fleets, but have faced several challenges. Most significantly, fleet managers report they struggle to find cost-effective ways to reduce emissions and have a hard time measuring the impact of changes they do make.
After working with a number of companies on this issue and talking with dozens more, PHH and the nonprofit group Environmental Defense Fund have identified best practices that can uncover cost-effective ways to reduce a fleet’s GHG emissions and still meet the business needs of fleet drivers.
Tip #1: What gets measured gets managed
The first finding is a classic management axiom — what gets measured gets managed. However, many companies are not measuring their fleet emissions. If you aren’t actively measuring and reporting the emissions, you probably aren’t factoring them into the decision when choosing the best vehicles for your fleet needs.
Ideally, you would measure all GHG emissions from your fleet using actual fuel usage data. Vehicle use (city versus highway driving, the vehicle’s cargo load, etc.), maintenance, and driving behavior (speeding, aggressive driving, and idling) can all significantly impact a vehicle’s fuel economy. Looking at actual fuel data provides precise information on how vehicles are performing compared to the EPA estimates of vehicle fuel efficiency.
If a specific fuel card is used for fleet fuel purchases, gathering this data is as easy as getting a report from the card provider. If a corporate credit card is used for all business expenses, sorting the data becomes more difficult, but is not impossible.
Once the fleet’s baseline has been established, a goal can be set to reduce the fleet’s environmental impact.
Tip #2: Focus on the outcome, not the technology
When considering what fleet goal to set, it’s important to keep in mind the desired outcome — real GHG reductions. This is probably the most important thing we’ve learned when talking to companies about their fleets. Many companies are understandably excited about hybrid technology or ethanol as a renewable fuel source, and they develop goals around the technology. Unfortunately, these goals may result in unintended consequences.
A large consumer products company instituted a policy that all leased executive vehicles had to be hybrids. If the executive did not want a hybrid, they would be given a car allowance. Although the lease was better financially for the executive, most did not want a hybrid and took the allowance to get the vehicle they desired. The company had no way to track what vehicle those executives were driving. As a result, it was impossible to measure the environmental impact of this policy.
Another large company set a goal of putting as many E-85 vehicles in its fleet as possible. In some cases, drivers were moved out of fuel-efficient vehicles that were not E-85 compatible. Company drivers are not instructed to use E-85 and often don’t have access to the fuel. The environmental impact of this goal is questionable.
Fleets should set a GHG reduction goal, not a goal around a specific technology. This has several benefits:
The flexibility to look at all available technologies to determine how best to meet that goal. For many companies, using a mix of technologies based on the needs of different fleet segments is the best way to maximize reductions.
The ability to measure the impact of anti-idling campaigns, more efficient routing, or better vehicle maintenance.
Setting a GHG goal and regularly reporting on progress allows inclusion of fleet emissions as part of overall GHG reporting.
Tip #3:Look for cost-effective ways to improve efficiency and reduce emissions
Environment is the hot topic in business today. As a result, some companies are willing to increase fleet budgets to achieve environmental reductions. This is terrific, and we hope it will continue for years to come. But business cycles being what they are, it is unrealistic to think companies will be willing indefinitely to pay a price premium for environmental reductions.
Fortunately, most companies don’t have to pay that premium. Every company PHH has analyzed has opportunities to reduce emissions without increasing costs. We recommend fleets start by looking for the most cost-effective ways to reduce emissions. Initiatives that have both business and environmental benefits will have more staying power and will continue even if a company’s interest in environmental issues wanes.
Tip #4:Reduce what you can, offset what you can’t
Our final best practice concerns the somewhat controversial topic of offsets. A carbon offset project counterbalances the impact of a company’s GHG emissions by avoiding or storing an equal amount of pollution, often at another site. We have found that companies considered environmental leaders use offsets only after they have made reductions within their business operations.
No “climate-neutral” vehicles travel on the road today. We recommend making the most cost-effective reductions possible and using some of the savings generated to offset the remaining fleet emissions. Several viable offset opportunities are available, but it’s best to get good advice on which have delivered proven environmental value. We recommend companies only consider independently audited projects that have been found to deliver the claimed reductions.
What Applies to Fleets Applies to All Practices
Fleet is a significant and visible part of a company’s GHG footprint, and it is important to look for ways to reduce emissions that make good business sense.The best practices described above don’t apply only to fleet — these are
best practices for any environmental initiative a company would undertake. By including fleet in these best practices, you have an opportunity to make real, measurable, and cost-effective reductions to the greenhouse gas emissions of your corporate cars and trucks.