GreenFleet

Time to go green?

A sound business case is needed if senior management is to be convinced to adopt a green fleet strategy, says John Webb of the Institute of Car Fleet Management

The business case for reducing fleet emissions is well proven, isn’t it? Surely emission based tax changes, volatile fuel costs and environmental concerns make this an easy decision for any boardroom? Not if industry surveys are to be believed.

To those converts amongst us who have long since embraced the environmental and cost benefits of running a low emission fleet, it is sometimes hard to understand why many businesses have not followed suit. However, there are in fact many barriers that must be overcome if the business case for green fleet strategy is going to be adopted by senior management. So what are those barriers and how should organisations of different types and sizes approach them?

Why Green your fleet
This article will be of interest not just to fleet managers but those board directors and senior managers who have a stake in company car benefits, light commercial vehicles and business travel. This paper should also be of interest to those who formulate policy on the environment and health and safety across their organisation. There are many reasons why organisations need to consider green fleet/transport. Initially there are the pure environmental issues surrounding global warming, urban air quality and road congestion.

For public sector fleets there are long standing targets in place for reducing emissions from its travel as part of the Sustainable Development in Government (SDiG) programme. Carbon emissions from travel are captured as a specific target under the Sustainable Operations on the Government Estate (SOGE) target programme set by central government. The current SOGE carbon reduction from road vehicles target is to: ‘Reduce carbon emissions from road vehicles used for Government administrative operations by 15 per cent by 2010/11 relative to 2005/06 levels.’

The SOGE targets are currently under review for the period following 2010/11. However, for the public sector fleet manager this high level driver makes the business case for a green fleet mandatory rather than an optional business change.

The taxation regime has probably had the greatest impact in driving change in recent years with Graduated VED, Company Car Tax, Class 1A National Insurance Contributions and Fuel Scale Charge penalising inefficient and high emitting cars. In addition to these cost issues there is also the consideration of corporate image where investors, suppliers, lobbying groups, customers and the employees are becoming more demanding regarding companies’ environmental credentials. In addition to these cost issues there is also the consideration of corporate image where investors, suppliers, lobbying groups, customers and the employees are becoming more demanding regarding companies’ environmental credentials.

It should therefore be relatively simple to demonstrate the need to operate an environmentally ‘green’ fleet from a ‘good corporate citizen’ perspective, one of cost minimisation, and to ensure continued mobility of your employees and products.

The business case
Putting forward a business case for reducing fleet emissions to a board of directors or senior managers requires exactly the same steps as any other business change proposal. Because that’s what it is – a fundamental change in the way you manage car and LCV fleets, which if not managed properly, can have a negative impact on your core business activities. Managed well it will become part of the fabric of the organisation, an essential tool in cost management and a core element of your organisation’s corporate social responsibility strategy.

A badly thought out or presented business case for green fleet management has little chance of sustained success. Many large organisations have standard templates and procedures for managing business change, including project management methodologies. Usually the larger the organisation the more structured controls need to be in place but the key elements for a successful business case will nearly always include some if not all of the following:

What the change is? – the scope and a high-level description of what you want to achieve (e.g. percentage CO2 reduction)
Why the change needs to happen? – the business, organisational or economic drivers for change (e.g. government targets or Corporate Social Responsibility key performance indicators)
When the change should happen? – an outline of the key milestones and deliverables.
How the change will be achieved? (e.g. a project team, steering group)
Who will be involved? – the key stakeholders and how they will make a contribution.
Costs and benefits – the overall costs and benefits of change over the period of time from implementation. This should include tangible (e.g. financial/CO2 reduction) and intangible (e.g. reputation) costs and benefits.
Risk management – managing risks effectively will ensure successful implementation.
Communications – another key element of keeping stakeholders on board with the change.

A convincing proposal
These points are worth covering in more detail, starting with what the change is. In promoting a ‘green’ fleet this could include company cars (business need and perk), LCVs and privately owned vehicles bought by employees with a cash allowance or casual users. This could be percentage reduction in CO2, progressive CO2 ‘caps’ phased in over a period of time, or the introduction of alternatively fuelled vehicles. The list can be extensive. However, this must be based in fact with clearly defined outputs measured against a baseline. Percentage reductions measured against no baseline (or an incorrect one) are meaningless.

Why the change needs to happen? For public sector fleets there is a strong steer from central government targets. With private sector fleets the challenge can be more complex and requires careful consideration.

When the change should happen? This must not be just a wish list or a statement of when key events will happen. This must be realistic, evidence based and timelines must not be so ambitious as to make failure inevitable (thereby affecting the credibility of the rest of your business case) or so far in the future as to make them meaningless.

How the change will be achieved? Having hopefully got the board interested in this exciting new development they will need to know how this will be delivered. Does this require a project team to be set up? You need to identify the mechanism for making things happen and ensuring that results are achieved.

Who will be involved? This is critical. It’s easy to fall into the trap of trying to do it all yourself but this is rarely successful. The best way of identifying who should be involved is by carrying out some form of stakeholder analysis. Think of all of the people inside and outside your organisation who will be affected by the change or who can have an impact (positive and negative) on the change. Then decide how you want them to be involved.

A key stakeholder will be the project sponsor, which can be an individual or group (i.e. the board). High level support is essential here for ensuring that time and resources (human and financial) are allocated. This may also be the way that conflicting HR, financial and operational needs are brought together. You also need to consider if you need to invest in outside help from consultants?

Consultancy is not an insurance policy or somewhere to shift blame if all goes wrong. If you do need consultancy support think carefully what you need the consultant to do and for how long. If you have expertise from within use that and only use consultancy where you have knowledge or skills gaps.

Cost and benefits
Cost and benefits should map onto the key performance indicators. The complexity and level of sophistication of how this will be done will depend on the size and type of organisation. Smaller organisations may accept the business case costs and benefits to be expressed simply. Larger organisations may require benefits tracking systems and discounted cash flows to accompany the business case, in which case, the support of internal finance experts is essential.

Risks must be managed from the outset. Understanding and managing the risks to the successful implementation of your business case will be a key element of your strategy. Risks should be analysed in terms of probability and impact. This should then dictate how you are going to manage those risks. A good approach here is to speak to other organisations who have implemented a green fleet strategy. Understanding their experiences may give you an early warning of potential problems. Case studies on reputable websites and attendance at industry events such as the GreenFleet conference will give you an opportunity to network and tap into others’ experiences.

An effective communications strategy and plan will ensure that all stakeholder groups are well informed and can provide feedback. For company car and LCV drivers, the ‘green’ tag can generate negativity and in the absence of sound communications rumours can undo the good work that has been done. Newsletters, intranet updates and user groups can all play a useful role here.

Hopefully once the business case has been accepted you can get on with implementing the changes. You can then start wondering if you can apply for a GreenFleet Award. However, the business case should always be your reference point against which your success will be measured.