Among the more visible issues in fleet management, few — if any — have been more discussed in recent years than “greening.” Greening can have any number of specific definitions, but, in general, it describes reducing the fleet’s carbon footprint, the amount of carbon emitted by fleet vehicles.
There are a number of ways fleet managers can do this. Some are simple, some more complex, but, as with any other process, getting an endorsement from management is a key first step toward success. Here are some ideas to help understand what greening really entails, how fleet managers can achieve the goal, and what to tell management to get them on board.
Defining ‘Green’ in Fleet Terms
If one searches the archives of the fleet profession, “going green” has been a concern of the industry for decades. The NAFA Fleet Management Association, Automotive Fleet & Leasing Association (AFLA), and many other industry groups first lobbied for emissions standards and vehicle inspections decades ago. Indeed, a strong case can be made that the fleet profession is, almost by definition, a green endeavor.
Think for a moment about what it is fleet managers do, and what their focus generally is: cost (defining, reporting, managing, and reducing it). Managing the data that tells them what vehicles cost the company, and what can be done to control it.
That said, there are two overarching costs that vehicles produce: depreciation (fixed) and fuel (operating or variable). Tracking and managing the latter is one of the greenest things a fleet manager can do; the less fuel a fleet uses, the greener the company becomes. Further, properly maintained vehicles emit fewer emissions, and also use less fuel. The picture becomes clearer now: The better a fleet manager does the job, the greener the fleet (and the company) becomes.
Considering Different Avenues
There are a number of green activities and processes that fleet managers hear and read about, and most of them tend to be of the “be-all-and-end-all” variety. Here are several:
● Downsizing vehicles, powertrains,
the fleet itself, or all three.
● Implementing alternative-fuel vehicles
(AFVs): electrics, plug-in hybrids,
hybrid-electrics, propane autogas, and
● Using routing/GPS technology to
provide for more efficient driving and routing.
There are obviously different avenues fleet managers can take to green the fleet; however, sometimes they are viewed in isolation, rather than used as a menu from which choices can be made. Each has pluses and minuses, and, when going green, fleet managers must take both into consideration.
Reasons for Going Green
No fleet management initiative will succeed, regardless of the avenues taken, without the full support of management. There are a number of good reasons why a fleet manager and the company’s management should support the goal to green:
1. Environmental considerations.
2. To save money: If done right, greening will ultimately reduce costs (or, at least it should).
3. Public relations.
4. To satisfy investor or shareholder demands.
Company senior management tends to focus on No. 2 (cost savings), but the other reasons can be just as effective. Corporate “gadflies,” people who buy a share or two of a company’s stock and then bring their causes to shareholders’ meetings, can generate both headlines and headaches. This is where No. 3 and No. 4 come in. Having something, anything, that can be called “green” going on in the fleet helps show that the company hears the complaint, and has taken action. Indeed, one fleet manager noted to a manufacturer’s rep that they could buy an electric or hybrid-electric vehicle, put the company logo on the side, and drive it around town as a sort of green “billboard” showing the public that they’re concerned. Purely environmental concerns, absent the other three, tend to be at the bottom of the list of reasons management will agree to green the fleet.
It’s actually difficult for anyone in the corporate world to reject green initiatives, all the more so at the senior level; however, to implement the kinds of changes to a fleet that real greening would require, a fleet manager will need to make a solid business case.
Objections to the avenues described (downsizing, AFVs, GPS) may come from individuals other than senior managers. Drivers and their supervisors, for example, aren’t always amenable to changes in the types of vehicles they drive, particularly if they perceive them to reduce their options, or the size of the vehicles they are assigned. In the case of GPS, the fear that the company is “watching” them can be palpable.
So, how does a fleet manager overcome objections, present a solid business case, and get management on board for the greening of the fleet?
Taking the First Step
Before anything else, fleet managers must be confident the decision to green the fleet is, first and foremost, a business decision — not a crusade or an ideological goal. For this to be true, the first step is to review all of the vehicles currently selected, the mission these vehicles must perform, and determine where green policy and changes can be implemented.
It is also important to try to gauge senior managers’ feelings about greening. Have they considered it? Has the CEO been confronted at the shareholders’ meeting about it? Where are they coming from?
If they come from sales, they may be as resistant as the drivers, or if from accounting or finance, they’ll be interested primarily in cost savings. Don’t enter into such a dramatic change “cold” — know your audience. In addition, although it isn’t likely “C-level” executives will have time to do it, bring fleet stakeholders into the process. Don’t surprise them after the fact. For sales vehicles, bring in someone to represent the drivers and explain what you’re doing and why.
Let’s use a sample fleet, 500 units, of which the bulk are sales-type vehicles, with some service vehicles, a handful of local pool vehicles, and selected executive-level vehicles. The sales vehicles carry both people (drivers/customers) and product (company product, literature, and point-of-sale materials). Most of them are mid-sized, four-door sedans, with four-wheel drive needed in a few difficult territories.
First, determine whether these vehicles can be downsized — that is, either to a smaller car or a more fuel-efficient powertrain. Care should be taken here, as too small an engine will not increase fuel efficiency if it is not sufficient to drive the weight required. The same holds true for any of the four-wheel drive vehicles; where SUVs are used, perhaps crossovers could do the job and use less fuel.
Next, take a look at whether AFVs might be appropriate. There are hybrid-electric sedans that have all the space and power requirements of the gasoline-powered models used now; the same goes for crossovers. The issue? Price. Hybrids haven’t been mass marketed for very long, so residual values are scarce (which will drive depreciation).
Finally, there are the remaining AFVs, such as electric vehicles (EVs), compressed and liquefied natural gas (CNG and LNG), and propane autogas-powered vehicles. Price is again a serious issue, as is the lack of broad-based residual data. Then, there is the issue of infrastructure. Drivers need to be able to find fuel, or charge an EV, quickly and easily, and the infrastructure for EV charging or propane autogas and CNG/LNG fueling remains in its infancy at present. EVs can be a good substitute for local pool usage, if the price is right (fuel and maintenance/repair costs are roughly one-fifth of that of a gasoline-powered vehicle). Centrally garaged fleets, such as utilities and government fleets, are excellent avenues for greening if they are in a position to install fueling stations.
Building the Case
One mistake some fleet managers make is the “all-or-nothing” approach to greening. In the vast majority of cases, replacing an entire, or the majority, of a fleet with hybrids, electrics, propane autogas, or natural gas vehicles is not practical. Price, lack of residual data, and infrastructure can make a complete green makeover impractical. Going through the process of examining the range, space, and power requirements of the fleet, however, will help the fleet manager to build a practical business case to present to management:
● Using mileage and territory information, determine which vehicles can be replaced with AFVs.
● Calculate the projected savings.
● Incorporate depreciation and maintenance/repair in the analysis; the former may be a wash, at best, but the latter provides the ultimate savings.
● Calculate the reduction in the company’s carbon footprint. Burning one gallon of gasoline produces 19.4 lbs. of CO2; utility companies often provide online models, which include the carbon produced by burning alternative fuels.
● Include savings from core fleet management processes, such as downsizing (of both vehicles and the fleet itself).
Once all of the above savings (in both money and carbon emissions) have been determined, put the results into a simple, straightforward report. Focus on graphs and bullet points; have all the backup calculations at the ready, but most senior managers’ time is limited, so you’ll want to get the point across in the time allotted.
Presenting the Case
To make the case for a large project, it may likely be presented to more than one person, either at the same meeting or more than one. This is the most critical point in the entire process. Presumably, the fleet manager has done his or her homework as to who will be receptive, who is neutral, and who might resist. Tweak the presentation for each audience if there will be several meetings.
Don’t over-promise. Be realistic in your presentation, but don’t shy away from being an advocate. Greening the fleet can, and should, necessarily benefit both the company as a whole as well as the drivers. But, the bottom line is the bottom line. It is not likely that greening will be welcomed or approved if net-cost savings can’t honestly be shown, and will, at the same time, limit the impact on drivers.
Making it Worthwhile
If done for the right reasons, and the right way, greening the fleet will enable a fleet manager to show his or her expertise, experience, and focus on good change. Follow the right steps:
● Review carefully all of the vehicle selections, the mission of the vehicles, and the drivers.
● Determine where change can be made.
● Work with existing vehicles to wring every possible reduction in fuel usage.
● Know what AFVs are available, how much they cost, what their residual value will be (as best as you can), and consider
both positives (fuel/carbon savings and
cost savings) and negatives (infrastructure, vehicle cost, and driver convenience).
● Apply the right AFV to the right mission; don’t use them where they won’t be practical.
● Remember that this is a business decision, and carefully build the business case. Include savings in both money and emissions, but don’t ignore additional costs that might be incurred. In the net, however, if costs aren’t reduced, it will be a very difficult sell.
● Know the audience and tailor the message where possible.
● Keep it simple. Use graphics and bullet points, but have the details handy.
A company’s most senior managers’ primary responsibility is to the shareholders (if the company is public) or investors (if private). They depend on the fleet manager, at the departmental level, to have the same goal in mind. Cost savings trump environmental concerns; however, this does not mean that greening its fleet won’t save the company money. If it is done right, it will, in the net.
Working as a team, the fleet manager, drivers (or their representatives), and other stakeholders should be able to build a solid business case for greening. Senior management will be more receptive to approving, provided they understand what is being done and why.