How green fleet can boost your bottom line

“If something doesn’t stack up financially, you can’t expect organisations to run with it.” This is not a statement you’d necessarily expect from the director of transport at the Energy Saving Trust, but Andrew Benfield takes a pragmatic approach to green fleet management. “We’ve always had one eye on the FD,” he says. “You can have the best environmental argument in the world, but for businesses, fleet management has to be a rational decision.”

Is it easy being green?

Ethical issues aside, why should FDs be passionate about the environmental impact of their fleets? “One of the things I want to echo,” says Benfield, “is that this can be a win/win scenario. Organisations can have everything now. They can have a fleet that is desirable to the driver, but also good for the environment and ultimately, there is a financial case for that.”

How can green be cheaper? At first glance, the initial purchase of an electronic vehicle may appear more expensive. But there is a ‘whole of life’ cost analysis that FDs need to factor in. “One of the biggest issues we come across is the lack of visibility of costs and data surrounding green fleet and its management.” True, the initial cost of rental and purchases may be higher for a greener vehicle, but there are other cost benefits, which can boost the bottom line, including:

• reduced fuel costs

• reduced class 1A National Insurance contributions

• reduced vehicle excise duty

• reduced corporation tax

• employee benefit through reduced benefit-in-kind tax

“There are lots of other cost factors that are beneficial to ultra-low emissions, which finance needs to take into account when looking at the future cost of running a fleet,” says Benfield.

The hidden costs lurking in your fleet

Another factor to consider is the use of grey fleet – the employees across the UK who routinely drive their own vehicles for business purposes. “Nobody knows the total scale of grey fleet,” says Benfield. “The rule of thumb is that billions of miles are being driven every year in grey fleet and it just doesn’t stack up from a financial perspective

“When you times billions of miles by fuel reimbursement of 40, 50, 60 pence per mile, there is a huge cost to the economy and to business.” With grey fleet, for example, more efficient fleet management could cut costs by as much as 10 per cent.

And the financial risks of grey fleet don’t end there. Because these vehicles tend to be older, they also bring unknown financial risk – both in terms of safety and increased CO₂ emissions.

If your organisation does rely on grey fleet, it can be tempting to adopt a laissez-faire attitude, but Benfield identifies this as a major cause of financial loss. When grey fleet is commonplace, companies may not be carrying out basic (yet essential) security checks such as ensuring drivers have the requisite business insurance.

“One of the misconceptions is that the administrative burdens [of grey fleet] are much lighter than running a company car scheme,” says Benfield. “In reality, duty of care requirements for businesses suggest that, if you are running a grey fleet, there is actually a very long list of things to check.” From a legal perspective, shifting to grey fleet does not absolve a company of its duty of care and you will still need to carry out checks on driver licensing and car maintenance.

Getting drivers engaged

Whatever your company-wide strategy, and despite the best efforts to embed it across the organisation, it will inevitability fail without the co-operation of the drivers behind the wheel every day. “It’s one of the hardest things to do because it’s about culture and people’s behaviour,” says Benfield.

“Eco-driving and fuel-efficient driving is also safer driving. Primarily, it’s all about anticipation, reading the road well and using the gears in a very fuel-efficient way.”

Attitude is also key, he argues. “With the right type of training and motivation, you can drive savings across the route.” For many fleet managers, maintaining an element of fun can boost engagement from staff on the road. “It’s really important to keep things positive for drivers, rather than telling them you are going to monitor their every move.” In practical terms, this can mean offering incentives to those who perform well according to metrics such as miles per gallon.

“There is a cost involved in that, but it’s nothing in comparison with the savings,” says Benfield. “It can also create a sense of competitiveness among drivers to see who is the safest. If the savings are being made, then obviously, it’s better for the organisation.”

How Red Bull is going green

In the UK, energy drinks provider Red Bull is attempting to transform its fleet management strategy by reducing both costs and emissions (which have already fallen by approximately 10 per cent since 2012). One of the major initiatives has been to reduce its petrol-driven fleet with low-carbon alternatives.

Under its previous strategy, Red Bull had employed a fleet of 38 converted minis, refitted to resemble its drinks can. To date, nine have been replaced with diesel minis, which cut carbon emissions by more than 40 per cent. In terms of the bottom line, this improved miles-per-gallon performance is saving the business around £6,000 a year.

The UK campaign has been so successful that it is being rolled out across the company globally. “The journey towards minimum emissions never ends,” says procurement manager of Red Bull, David Oliver. “We’ve reorganised routes, provided driving training for our people, and introduced a reward scheme to recognise safe and  efficient drivers.”

The triple win

But what does this mean for companies looking to add a sprig of green to their fleets? For the first stage, companies can examine the journeys they undertake to see if these trips are all strictly necessary: in many cases, there could be an eco-friendlier option such as video conferencing.

So what is the bottom line? How can organisations ensure green fleet stacks up for FDs? For Benfield, the answer is clear. “It’s a triple win,” he says. “Green fleet is cheaper, but also cleaner and safer.”