Running a leaner and greener fleet

With the opportunity to counter rising fuel prices by opting for more fuel efficient and lower CO₂ vehicles, now is definitely the time to think about greening the fleet, writes
 Roddy Graham, chairman of the Institute of Car Fleet Management (ICFM)

A well thought through green fleet policy will not only tick all the right boxes in terms of corporate social responsibility (CSR) but also deliver significant savings to lower overall operating costs. All you need to do is follow best fleet management practice.

Gain stakeholder buy-in
Start by securing stakeholder buy-in for the business case to green the fleet. It won’t be truly successful unless senior management are convinced of the benefits and back the policy. Equally important is to achieve buy-in from employees eligible for a company car or car salary sacrifice scheme. Also beware a bad policy that drives eligible employees down the ‘cash-for-car’ route.
    
Employees who resent having a particular vehicle can also quickly manage to make even a clean, efficient vehicle perform inefficiently. And remember, a badly driven ‘green’ vehicle can prove a bigger polluter than a carefully driven petrol or diesel car.
    
Ensure eligible employees are made aware of any financial savings available to them – low CO2-emitting will reduce Benefit‑in‑Kind (BiK) tax and private fuel costs. The more information they are provided with, the more informed will be their decision.
    
Obtaining drivers’ early buy-in to your new green fleet policy will make the objectives much easier to achieve.

Calculate return on investment
Ensure from the outset that you can calculate a return on investment (ROI). Running a fleet is one of the highest overhead costs for any organisation after payroll and facilities. The business case for company vehicles can only be made if they are essential to an organisation’s day-to-day activities or are fulfilling some other purpose such as helping to recruit and retain the best employees in the war for talent or in achieving sales targets. Vehicles are costly assets that need to be professionally managed.

Formulate a sensible fleet policy
Care should be taken to not make the green fleet policy too restrictive. If you reduce car choice, you can end up demotivating employees at the very time that you are trying to engage them. Not offering a wide choice can also result in eligible drivers opting for the aforementioned ‘cash-for-car’ alternative. This will be counter-productive as ‘cash‑for‑car’ drivers tend to run older, less fuel efficient and higher CO2-emitting cars. These ‘grey fleet’ vehicles are less safe, less environmentally friendly and more difficult to manage from a ‘duty of care’ standpoint. Not only will this impact the CSR target of lowering the carbon footprint but could prove more expensive, where employees cover high business mileages.

Be technologically-neutral
Employee buy-in to the fleet choice is essential if you are to maximise the benefits of running a green fleet. No ‘one size fits all’ works. There is no single, green fleet off‑the‑shelf solution. Certainly, a green fleet policy reliant on a single energy source – petrol, diesel, electric, hybrid, biofuel, LPG – will create problems later on, especially given the pace of technological advances. Specifying the lowest CO2‑emitting vehicles is no answer either. This can result in driver dissatisfaction, a shift away from company cars towards ‘cash-for-car’, lower operational performance and increased costs.
    
Be particularly careful if considering adopting innovative, new vehicle technology. Electric vehicles may seem the obvious green choice but you need to consider the operational challenges in terms of recharging, service, maintenance and repair (SMR), not to mention depreciation.

Running a few electric vehicles in towns and cities may make sense and send out strong green messages but they are not right for salespersons covering high mileages due to a lack of an adequate nationwide recharging infrastructure and low mileage ranges between recharges.
    
The best fleet policies adopt a ‘technologically neutral’ approach, specifying 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 some hybrid and electric vehicles.
    
Specifying the right blend of low CO2-emitting vehicles will secure two objectives. First, you will be able to gain significant cost savings. Second, you will avoid having to radically review fleet policy every time a significant advance in technology is brought to market.
    
A successful green fleet policy will only be achieved if it delivers the needs of the business efficiently and effectively. Therefore, the requirements of different drivers need to be taken into consideration. What might be the right vehicle for a senior executive might not be the right one for a salesperson carrying around large product samples or a maintenance engineer.
    
Setting the lowest CO2 targets will not work as you will not get buy-in from everyone. The right approach is to set sensible CO2 targets. These should be capable of 
being applied across all fuel types, regardless of technology.

Assess vehicles properly
Set clear cost, fuel economy, performance, safety, technical and qualitative evaluation criteria before finalising the vehicle list and conduct a thorough assessment before settling on the final choice list.

When assessing potential vehicles, consider Euro NCAP (European New Car Assessment Programme) ratings. The higher, the better. And remember a model may gain 5 stars one year and receive a lower rating when a newer version comes out.
    
Other factors to be taken into consideration include determining the size and kind of car needed for the job required, i.e. ‘fitness for purpose’, and then evaluating the best performers in that group.
    
To maximise buy-in, enlist the support of drivers in the selection and evaluation process, especially those who will be driving the proposed vehicles on a daily basis. Make sure they are properly briefed on the evaluation process so that their assessment is objective. Testers need to be acquainted with the key features of vehicles under test to understand any special driving characteristics. Hybrids, for example, require a different driving style to optimise their potential energy savings.
    
Lastly, talk to other organisations that have had experience of running the vehicles you are considering adding to the fleet.

Feedback of practical experience can prove invaluable.

Compare costs
Avoid the mistake of simply comparing monthly rental costs. Fleet costs are far more complex than that and the best method is to compare whole life costs (WLC). While there is no agreed minimum standard, the least that should be included is depreciation, SMR, fuel, funding, insurance, NI, and VED costs.
    
While WLC will ensure that you make more informed decisions you should monitor costs throughout the life of the vehicle to ensure that the objectives of the original business case have been met.

Influence driver behaviour
Influencing how employees drive through education, tips, training and awareness can quickly achieve significant savings. Major fuel consumption savings can be achieved by reducing engine revs, coasting in gear and accelerating gently. Promoting a more economical driving style will reduce the risk of accident, the costs involved – both financial and human, and downtime. It can also reduce employee stress.

An effective green fleet policy should also insist on proper journey planning.

Promote driving alternatives
Never forget that the cheapest mile is the one never driven since the biggest fleet cost, after vehicle depreciation, is fuel.
At work drivers should always be challenged whether their journey is really necessary or could be covered by other means – an audio, video or web conference call, telephone or e-mail. Where sanctioned, consideration should be given to whether the journey could coincide with some other associated activity, or whether the car journey could be shared with other employees, or public transport used, to reduce costs.
    
If you haven’t already done so, adopting a green fleet policy now should be a top priority. The investment will prove worthwhile in the future. A green fleet policy will secure significant cost savings and underscore an organisation’s CSR credentials. All you need to do is adopt a professional approach to managing your fleet using best practice.

Further information
www.icfm.com