Four things bosses must do about vehicles this year
Branded petrol and diesel fleets will soon identify any business leader not bold enough to drive the necessary change in their business. 2021 is the year for the tough decisions.
Your house is on fire!
Clearly a large proportion of New Zealand’s business community hasn’t heard Greta Thunberg’s call to action: “Act like your house is on fire. Because it is.”
There is an apathy within Kiwi organisations to the role and responsibility they have in helping the country reduce emissions and meet its obligations under the Paris Agreement.
If we look at our vehicle fleet, it is our fastest growing emissions contributor. It’s usually around 40 percent of a company’s carbon footprint and businesses are responsible for purchasing 70 percent of new cars sold in New Zealand. These cars spend 20 years on our roads. So, the decisions a business makes this year will affect our country for the next two decades.
Even if we put carbon emissions aside for the moment, the New Zealand fleet is not slowing down at 4.5 million vehicles costing over $30 billion. Auckland alone has more than one million cars and this increases annually by 40,000.
Traffic is already crippling, and congestion is estimated to cost Aucklanders over $1.3 billion a year in lost productivity. Not to mention the health impacts with more than a thousand Kiwis dying each year from air pollution-related diseases. The answer is not building more roads – we need to be smarter than that.
So, what can our business leaders change?
1. Put fleet higher up on the agenda
I get it. Fleet is not something exciting to work on, and it’s also really complicated, so the thought of revisiting it again sends a shiver down the spine of most managers. There’s no sugar-coating it, if you are a business leader then it is your responsibility to change the dynamics of your fleet.
A mere change from Holden to Hyundai will get talked about from the water cooler to the board room, let alone changing from petrol to electric, or starting to remove cars and carparks from salary packages.
Tampering with the company fleet involves multiple internal stakeholders all with different agendas. Teams such as procurement, HR, property, marketing, sustainability, legal and finance. That’s why it takes resolute leadership and capable experienced partners.
2. Move away from personally assigned cars and carparks
Cars and carparks in salary packages blossomed in the 80s and to change it makes people most people squirm. It’s a measure of success, it’s ego, a rite of passage, convenience, a cultural expectation that is 100 years in the making, but … we have only 10 years to change.
The average utilisation of a car in New Zealand is less than 5 percent. Imagine if your employees sat around idle for 95 percent of the time? Added to this is fringe benefit tax and depreciation – is this the best use of capital for your business?
Offer a mobility allowance instead, move your organisation away from personally-assigned vehicles, don’t provide carparks for staff and encourage employees to widen their mobility perspective. Think about walking, public transport, rideshare, car share and micro-mobility like scooters and bikes.
Business leaders cannot on the one hand claim to be sustainability champions while on the other hand continuing to include personally-assigned cars and carparks in salary packages.
3. Dramatically reduce the size of your fleet
This is not something you’re likely to hear from your leasing provider but now, more than ever, we need to rationalise all our assets and use our capital wisely. Look at your GPS utilisation reports, carpark data or just look at your carpark during the day, how many cars are sitting idle?
We need fewer cars on the road and those cars need to be electric. EVs represent increased capital so to reduce the cost of EV introduction, reduce the number of cars in your fleet. This can make the change to EVs a cost neutral exercise.
4. The EVs you do have need to be optimised
Don’t think that when you put EVs in your fleet, your job is done. EVs typically are the least-utilised car in a fleet. If you have rationalised your fleet this will help, however you need to support your staff to transition to EVs with training and ongoing support. Including both the EVs and chargers. Too many businesses get fixated on the EVs and forget about the chargers, but both are equally important.
Thankfully to achieve the last two steps there are new technologies and specialist providers who can assist with this.
The good guys
It can be done.
Three years ago, Christchurch City Council rationalised their fleet and introduced EV car sharing. They have saved more than 300 tonnes of carbon. Genesis have cut their fleet size dramatically, introduced a central pool of EVs on a dynamic booking system, implemented no staff parking, subsidised public transport and introduced subsidised EV car share for employees. Datacom has provided discounted e-bikes and free servicing for staff.
When I spoke with Marc England, chief executive of Genesis, he felt that having a structure of no carparks for any staff aligned better with the Genesis company culture.
Branded petrol and diesel fleets will soon highlight the business leaders not bold enough to drive the necessary change within their business. 66 percent of Kiwi consumers believe companies aren’t doing enough to tackle climate change.
At present I agree with them – but strong leadership can change this statistic.