GreenFleet

Firstly, running vehicles cost a lot of money – and it’s unlikely that it’s going to get cheaper anytime soon. With fuel prices edging ever higher, it makes sense to limit the number of business miles that employees drive and if that’s not possible, to make sure they travel in the most cost-effective way.
    
Secondly, companies in the business-to-business sector won’t get far when tendering for big contracts unless they can produce their environmental credentials, which includes a robust fleet policy. If they want the business, they have to drive green.
    
Thirdly, customers increasingly demand that companies behave responsibly. A commitment to the environment is no longer an optional part of the business agenda. It’s a must-do, particularly for companies that are household names.

Drivers themselves have much incentive to favour low-emission vehicles. New tax breaks for those driving vehicles that produce 120g/km of CO2 or less, together with an increasing choice of cars below that barrier should improve the efficiency of Britain’s company car fleet.
    
Indeed, 2008 could see the tipping point in which offering – and choosing – low-emitting cars is seen to be the only sensible business option.
    
With around three million company vehicles on UK roads, emitting an estimated seven million tonnes of CO2 every year, these vehicles have a huge impact on the environment. Yet the ability to get around to meet customers, suppliers and partners oils the wheels of commerce and public life.
    
So if business travel is a fact of life, can it be better managed? The Energy Saving Trust (EST) thinks so and estimates that British businesses could save around £2.6 billion a year by switching to greener fleets.

The tax regime for company vehicles changed in 2002 when individual drivers began to pay tax based on a combination of the value of the vehicle and its CO2 emissions. New tax changes will have a further impact.
    
From April 2008, drivers of company cars that emit 120g/km of CO2 or less will enjoy a significant reduction in the tax they pay on that vehicle. If a driver currently driving an average fleet car opted for a car emitting 120g/km or less, they would see their tax burden halving. Similarly, employers’ class 1A National Insurance would also halve.
    
A few years ago, the choice of car that qualified for such a tax break would have been severely limited, especially for company executives concerned about status, with the only vehicles likely to feature on a fleet list being two high-profile hybrids, the Toyota Prius and the Honda Civic IMA.
    
However, the response to the announcement of the 120g/km watershed – and the reduction on the London congestion charge for such vehicles – has been a flurry of innovations from manufacturers resulting in new vehicles that could sit comfortably in any fleet.

Vehicle Excise Duty is now paid on a scale based on CO2 emissions. Though the increments between the seven bands are modest, from 2010 the system will change to 13 bands with a first year cost of £950 for the highest emitters, and £455 for subsequent years.
    
From April this year, vehicles of 110g/km or less qualify for 100 per cent first year capital allowances – this used to apply to 120g/km. However, from 2009, for vehicles above 160g/km, capital allowances will be reduced to just ten per cent per annum making these vehicles increasingly expensive for company fleets.
    
The £1 litre of petrol or diesel has become commonplace. As it seems unlikely that fuel prices will drop significantly in the short term, these additional operational costs can concentrate the corporate mind on fleet efficiency.

When The Netherlands tested a registration tax that favoured low carbon vehicles, sales of such cars doubled. The introduction of such a tax in the UK could have a significant impact.
    
An increase in VED on a vehicle can increase lease charges by a considerable amount – high enough to shift many fleets towards low emitting vehicles. After the announcement of a big increase in VED for the highest emitting cars, what now remains to be seen is the full impact on residual values as these cars come off company car fleets and are shunned by private buyers. Fleets should expect increases in cost well above the increase in VED on these vehicles.
    
Like most technological developments, costs of CO2 improvements are high in the early stages. The market for low carbon technologies is still in the innovation phase. Without further cost reduction, diesel and petrol will remain the main fuel for the British fleet until at least 2020.

Through funding from the DfT and the Scottish Government, the EST helps organisations develop more sustainable travel and transport options. Whatever the size of fleet the EST can help businesses assess the carbon dioxide emissions from their fleet and recommend a course of action to help reduce their emissions.

 
Behind the wheel II key findings 

Cash or car?

• A third (32 per cent) of company directors surveyed stated that their company offer a cash alternative.

What car?

• Almost three-quarters (73 per cent) of organisations restrict the type of vehicle that employees can use for work.
• Conversely, many companies give employees a free choice of vehicle within a given cost limit (29 per cent).
  

Who says?

• Company car policy is often decided at a very high level, especially in smaller companies.
• Managing directors are responsible for policy in 46 per cent of companies surveyed and another director in a further 25 per cent of organisations.
  

Put it in writing

• Most companies that offer vehicles (53 per cent) don’t have a written travel policy.
• Half of companies that provide cars don’t have a CSR or environmental policy (51 per cent).
• One in five respondents (19 per cent) didn’t know whether they had a CSR policy or not.
• A third of organisations (34 per cent) that have a CSR or environmental policy don’t consider the impact of vehicles as part of that policy.
  

Thinking green

• Very few companies (7 per cent) offer a financial reward to employees who choose a smaller, cheaper or low-carbon vehicle.
• Just over half of respondents (55 per cent) said they were encouraged by their companies to try and reduce their carbon emissions from business travel.
• Discouraging unnecessary meetings is the most common way of cutting carbon emissions.
• 28 per cent of companies still think it costs money to cut emissions.
  

For more information
Register for a free e-bulletin by visiting www.energysavingtrust.org.uk/fleet