Many companies rely on a fleet of cars, trucks, or vans to run their business. The way they use these vehicles can vary widely -- a drug company rep calls on doctors, a plumber visits a customer, an agribusiness company employee delivers seed to a farmer. Just as uses of vehicles differs, the number of vehicles in each fleet can also vary widely -- from 5 to 50,000 or more.
Despite the variety of vehicles used and products or services delivered, fleet management professionals are facing similar challenges around vehicles and climate change. In a recent survey of fleet managers conducted by
PHH GreenFleet, 77 percent said that they had been asked by someone in their organization about the environmental impact of the fleet. Anecdotally, we hear that this often starts as a question along the lines of: "Why don't we have any hybrids in our fleet?"
Although fleet managers are often frustrated by this question ("Do people think I am asleep on the job? Of course I've considered hybrids!"), this is a great opening to start a larger conversation on what creative opportunities are available to reduce the environmental impact of the fleet. In the best case scenarios, this first question leads to a strong partnership between Fleet and the Environmental Health and Safety departments.
After working with a number of companies on this issue and talking to dozens more, PHH and Environmental Defense have identified some best practices that can help companies find cost effective ways to reduce the greenhouse gas (GHG) emissions from their fleets and still meet the business needs of their fleet drivers.
- What gets measured gets managed
The first finding is a classic management axiom -- what gets measured gets managed. However, we find that many companies are not measuring the emissions from their fleets. If we are not actively measuring and reporting on the emissions, we probably aren't considering emissions when deciding which vehicles best meet our fleet needs.
Ideally, a company would measure all of the GHG emissions from their fleet using actual fuel use data. Vehicle use (city vs. highway driving, the vehicle's cargo load, etc.), maintenance and driving behavior (speeding, aggressive driving, idling) can all have a significant impact on a vehicle's fuel economy. By looking at actual fuel data, a company has precise information on how their vehicles are performing compared to the EPA estimates of vehicle fuel efficiency.
For companies that use a specific card for fleet fuel purchases, gathering this data is as easy as getting a report from your card provider. For companies that use a corporate credit card for all business expenses, sorting the data becomes more difficult, but is not impossible.
Once a company has established its fleet baseline, it can then set a goal to reduce the environmental impact of the fleet.
- Focus on the outcome, not the technology
When considering what goal to set for the fleet, it's important to keep in mind the outcome that we're trying to achieve -- real reductions in greenhouse gas emissions.
This is probably the most important thing we have 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. These goals can have unintended consequences:
- A large consumer products company instituted a policy that all leased vehicles for executives 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 whatever vehicle they wanted. The company had no way to track what vehicle they were driving. As a result, it was impossible to measure the environmental impact of this policy.
- A large conglomerate set a goal of putting as many E85 vehicles in their fleet as possible. In some cases they moved drivers out of fuel efficient vehicles that were not E85 compatible. Their drivers are not instructed to use E85 and often don't have access to the fuel. The environmental impact of this goal is questionable.
Our recommendation is that companies set a GHG reduction goal, not a goal around a specific technology. This has several benefits: First, it gives the company the flexibility to look at all technologies available to determine how best to meet that goal. For some companies, using a mix of technologies depending on the needs of different segments of the fleet is the best way to maximize reductions.
In addition, if a company sets a GHG goal instead of a technology goal, they will be able to measure the impact of anti-idling campaigns, more efficient routing, or better vehicle maintenance. Finally, by setting a GHG goal and regularly reporting on progress, companies can report on fleet emissions as part of their overall GHG reporting.
- 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 their fleet budgets to get environmental reductions. This is terrific, and we hope that it will continue for years to come. But business cycles being what they are, it is unrealistic to think companies will be willing to indefinitely pay a price premium for environmental reductions.
Fortunately, most companies don't have to. Every company that we have analyzed has opportunities to reduce emissions without increasing costs. Our recommendation is that companies 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.
- Reduce what you can, offset what you can't
Our final best practice is around the somewhat controversial topic of offsets. We have found that companies that are considered leaders in addressing environmental issues use offsets, but only after they have made reductions within their business.
There are no "climate neutral" vehicles on the road today (okay, bicycles, but they don't work for most business fleet applications). So, our recommendation is that companies look to make the most cost-effective reductions they can, and then, using some of the savings generated, offset the remaining emissions of their fleet. There are a number of viable offset opportunities, but it's best to get good advice on which have delivered proven value to the environment.
- What Applies to Fleets Applies to All Practices
For many companies, 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 still make good business sense.
The best practices described above don't only apply to fleet -- these are best practices for any environmental initiative that a company would undertake. By including fleet in these best practices, companies have an opportunity to make real, measurable, and cost effective reductions to the greenhouse gas emissions of their corporate cars and trucks.
Karen Healey is a Director of Product Management at fleet management services company PHH Arval. She is responsible for PHH's environmental product, PHH GreenFleet.
