How to green the fleet

While lowering costs remains the single biggest target for most UK organisations in the prevailing tough economic climate, this strong focus does not have to be at the expense of greening the fleet

Indeed, a carefully formulated green fleet policy can deliver the levels of savings being sought by senior management in their drive for lower operating costs. The key to success is to be guided by fleet management best practice.  A carefully structured approach to fleet policy and vehicle selection can lay the foundations for a greener fleet which delivers lower costs over the short, medium and long-term.

Stakeholder buy-in
The starting point for greening the fleet is securing stakeholder buy-in for the business case to green the fleet.  Without senior management buy-in at the outset such a project is doomed to failure and buy-in does not stop there.  As will be demonstrated later, equally important is to gain buy-in from employees eligible for a company car or car salary sacrifice scheme.

Return on investment
Fleet is one of the highest overhead costs for any organisation, vying for a top three spot with salaries, facilities and IT.  As such, company vehicles can only be justified if they are essential to an organisation’s day-to-day operations or are supporting core business objectives.  These may range from meeting sales targets to acting as motivational tools for recruitment and retention in the war for talent.  Whatever, their purpose, at the end of the road, vehicles are costly assets, which must be carefully managed.

Fleet policy
In formulating a green fleet policy, care should be taken at the outset to ensure that it is not too restrictive.  The adverse consequence of a car policy that reduces choice is to demotivate employees at an economic time when it is critical to engage them.  It can also result in some company car drivers opting for the ‘cash-for-car’ option when that is available.  This can not only prove to be more expensive – where employees cover high business mileages – but also less safe and less environmentally friendly, as they tend to run older, less fuel efficient and higher CO2 emitting cars.  This in turn can prove counter-productive to organisations with clear corporate social responsibility targets which also involve lowering their carbon footprints.

A ‘technologically neutral’ approach
As previously alluded to, this is where employee stakeholder buy-in comes to the fore. The requirement of different business stakeholders needs to be taken into consideration if the end users, the company drivers, are to buy in to the change. And there is no single, fixed, green fleet approach that can be adopted as a fleet policy. Specifying that all vehicles are powered by a single energy source, be it petrol, diesel, bio-fuel, LPG, electric, hybrid, etc., can often create problems later on.  A radical overhaul involving the latest low emission vehicles can deliver significant reductions in emissions but at the expense of driver dissatisfaction, reduced operational performance and increased costs.

Fit for purpose
The secret to success in green fleet management is to ensure that fleet policy delivers the needs of the business efficiently and effectively.  As a consequence, the most successful fleet policies adopt a ‘technologically neutral’ approach aiming to provide the lowest CO2 emitting vehicles which are right for the job, i.e. ‘fit for purpose’.  This usually results in a mix of petrol and diesel plus, perhaps, some dual-fuel, hybrid and electric vehicles.

Choosing the right low CO2 emitting vehicles on the basis of ‘fitness for purpose’ will not only result in significant cost savings but also avoid having to radically review fleet policy every time a significant advance in technology is brought to market.

CO2 targets
The best approach by far is to set CO2 targets, which can be applied across all fuel sources, regardless of the technology.

While optimising vehicle choice to gain stakeholder buy-in, organisations should at the same time aim to influence driver behaviour to maximise fuel efficiency and reduce accident costs and downtime.

Millbrook Proving Ground have impressive evidence that average fuel consumption savings of 29 per cent can be achieved by reducing engine revs, coasting in gear and accelerating gently.

Policy should also seek to minimise non-productive business mileage and encourage use of public transport and car sharing where appropriate.

Vehicle assessment
Before finalising the vehicle list, it is important to undertake thorough research of available vehicles meeting your fleet policy criteria.

Best practice means setting clear cost, fuel economy, performance, technical and qualitative evaluation criteria.  And research should include speaking to businesses running vehicles that may be added to the company vehicle approved list to find out about their own experiences, good and bad.

Careful homework needs to be done when considering adopting innovative, new vehicle technology. The latter can prove appealing but consider the operational challenges in terms of refuelling, service, maintenance and repair (SMR).  For example, adopting electric vehicles for short city journeys may make sense but providing them for a national sales team probably would not given the lack of an adequate nationwide recharging infrastructure and low mileage range between recharges.

Enlist the support of drivers in the selection and evaluation process, especially those who will be driving the proposed vehicles on a daily basis.  Carefully brief them on the evaluation process so that they can make an objective assessment.  In particular, testers need to be shown the key features of vehicles under test to understand any special driving characteristics.  For example, hybrids require a different driving style to optimise their potential energy savings.

Driver buy-in
The buy-in of potential stakeholders to proposed new vehicles is also critical.  An employee who resents having a particular vehicle can quickly manage to make even a clean, efficient vehicle perform inefficiently.  A badly driven ‘green’ vehicle can prove a bigger polluter than a carefully driven petrol or diesel car.

Winning drivers’ early buy-in to a new green fleet policy will make the objectives easier to achieve. Ensure that employees are made aware of any financial savings available to them – low CO2 emitting cars will reduce Benefit-in-Kind (BIK) tax and private fuel costs.

Active and passive safety
While the prime objective of any new green fleet policy is to achieve fuel and CO2 emission savings, safety must not be ignored.

When assessing potential vehicles, Euro NCAP (European New Car Assessment Programme) ratings should be considered too. While all new vehicles must meet minimum safety standards, Euro NCAP tests are a more rigorous.  For example, Euro NCAP’s tougher criteria for cars achieving a five star rating were reflected in 2010’s ratings.  Of 29 cars crash tested, only 65 per cent gained a five star rating compared to 90 per cent in 2009.

Most fleet policies will specify front and side airbags but other safety features are available too, some as standard equipment, some as optional equipment.

While ABS has been a standard feature for years, helping maintain steering control under emergency braking, an enhanced aid is Electronic Stability Control (ESC).  ESC aims to help a driver maintain control and steer safely.  It works by critically detecting the differences between a driver’s steering input and the car’s actual trajectory.  Sensors detect when a driver is about to lose control and selectively apply the brakes to individual wheels. ESC has been shown to reduce fatalities by 25 per cent and now forms part of the overall Euro NCAP assessment.

Other factors to be taken into consideration include determining the size and kind of car needed for the job required, i.e. ‘fit for the purpose’, and then evaluating the best performers in that group.

Whole life costs
The best method of comparing fleet costs is Whole Life Costs.

The total cost of ownership, over the whole life of a vehicle, is a proven, robust method of cost comparison that works on many levels as WLC modelling involves complex forecasting, affected by numerous factors including company car policy, specification levels, lease rates, residual values, SMR, disposal arrangements, fuel policy, fleet insurance and supply terms plus the impact of employers’ NI and BIK tax liabilities for drivers.

WLC modelling will ensure fleet policies take account of the future and that the effects of any tax changes are reflected in the formulation of policy and therefore the choices drivers make.

WLC not only ensure that companies make better informed decisions when it comes to vehicle provision and thus avoid unnecessary cost but also influence the vehicle choice of ‘perk’ company car drivers where the imposition of a CO2 caps may negate reward and benefit objectives.

The final piece in the jigsaw is to monitor costs throughout the life of the vehicle and ensure that the objectives of the original business case have been met.

Without question, the extra time investment required to green the fleet is worthwhile in terms of the savings and benefits to be enjoyed over the years.  At the end of the day, it is but an extension of what should be done anyway in properly managing a fleet, namely employing a professional and planned approach.

By Roddy Graham - Chairman of the ICFM and Commercial Director of Leasedrive Group