Although the death of the company car was predicted when the changes in business-in-kind taxes were announced in 2001, it remains a popular incentive and is still, to some extent, seen as a measure of success. The bigger and more glamorous the vehicle, the higher up the professional hierarchy the driver is deemed to be.

There are, however, plenty of ways that companies can continue to provide company cars, while putting out strong messages that those benefiting can, and should, pay heed to the havoc CO2 emissions wreak on the environment. Since fuel savings mean financial savings and oil prices look destined to remain unstable for the foreseeable future, it is in the interest of every company to take action.

The Energy Savings Trust (EST) was set up by the UK government after the 1992 Earth Summit in Rio de Janeiro to address the damaging affects of climate change. Nigel Underdown, its head of transport advice, has been actively canvassing businesses about how they can cut down on their fuel consumption.

'Reducing fuel emissions and doing a bit for the environment will almost always save money,' he says. 'We are not asking organisations to make sacrifices and hug trees. This is the most sensible and commercial case that will also do a bit for the environment.'

His department takes a three-pronged attack. 'We want organisations to buy cleaner cars, to encourage drivers to drive them more economically and to use them just a bit less,' he says. 'The latter is often ignored because it is difficult to manage whether or not people make journeys.'

Cleaner cars
The most successful change is always led from the top, so the chief executive of a large engineering consultancy, who has just taken a hybrid vehicle instead of the executive limo to which he is entitled, definitely has the right idea. The company is a client of fleet management company, Zenith.

'We have been doing a lot of work with that company to restrict CO2 emissions from their company cars, including broad discussions about introducing more eco-friendly operations,' says Andrew Cope, chief executive of Zenith. 'But that business has big recruitment issues with competitive professional firms.'

Since providing a good car is a compelling part of a recruitment package, this is a brave move. For companies running cars in central London, the savings made on the congestion charge will easily compensate for the additional cost of a hybrid car.

'Saving £8 a day by running a hybrid car can turn the tables completely,' says Underdown. 'It is an important policy issue because car choice is embodied in policy, but the cost of the congestion charge is probably put on expenses. Companies can save on the charge budget by having a hybrid and the savings can be acknowledged in a different department.'

Even without hybrid vehicles, there is plenty that fleet managers can do to encourage drivers into more fuel-efficient cars. Overcoming the car as a status symbol is one. A trade-down policy encourages the idea that drivers will be happy in a more modest vehicle and if everyone is following it, there will be little incentive to drive a trophy car.

Flexible benefits also remove some of the badge status of cars, but more than 60% of cars are user-chooser, so to encourage wiser choice of vehicles requires good communication laced with a reasonable incentive. For example, an organisation could offer to enhance by 5% the budget of anyone who chooses a car with CO2 emissions lower than, say, 160g/km.

The offer is modest in financial terms, but significant in the message it sends.
Cash for cars, however, is the thorn in the environment’s side.

'There is no incentive for individuals in most companies to choose an environmentally friendly car if they opt for cash, even if they are doing 20,000 miles a year,' says Cope.

'Companies should either apply the same standard to those taking a car allowance as to company cars, or reduce the allowance if the car does not match prescribed emission levels. It does not make sense to control one side and have a free for all on the other.'

Stuart Walker, head of marketing at LeasePlan, says: 'Some of our more leading-edge clients are trying to encourage cash takers back into company cars. It is a duty of care issue.'

Although there is still a lot that drivers can do to mitigate the effects of CO2 emissions, the overall picture is improving. 'Three years ago, the average emission was 185g/km, last year it was 163g/km,' says Cope. 'Legislation has provided an incentive for individuals to lease smaller cars and we are trying to get companies to change and encourage [the take up of] cars that are environmentally efficient.'

According to Underdown, many have been choosing diesel engines over petrol, giving around a 20% saving in CO2 emissions compared to the petrol equivalent. (Debates about the overall damage that diesel engines cause the environment continue, however, with the EU considering mandating particulate traps on diesel engines). But, Underdown thinks too much emphasis is put on choice of car. 'It is easy to see why,' he says. 'Technology is exciting and people like talking about cars.'

Economical driving
According to Underdown there are some simple steps that people can take to help reduce the damage fleets have on the environment ­ and they are not what most would expect. The biggest barrier is the conviction that driving economically automatically means driving more slowly ­ this is not, in fact, the case.

'Eco driving techniques involve reading the road ahead, not accelerating or braking hard, not racing up to lights and braking,' he says. 'All these things have little impact on the journey time and significant impact on fuel economy ­ typically 10%.'

Even common sense measures such as careful route planning can save time and petrol. Underdown is a protagonist of on-board computers to monitor fuel consumption. 'If you don’t measure it, you can’t manage it and a digital read-out of fuel consumption prompts people to consider whether they could improve on it.'

He gives other tips that save fuel, such as not driving with under-inflated tyres, not using air conditioning throughout the winter and changing climate control from standard to economy, which can reduce fuel consumption by as much as 5%. In summer, having air conditioning on at full blast can increase fuel consumption by 15% to 20%. 'We are not suggesting people do not use air conditioning, but that they do so judiciously.'

One of the most contentious issues is telematics, technology with a sat-nav facility and a constant readout to a central station, showing where the driver is at any given moment. 'Fuel bills can be reduced by up to 20% simply by being able to control the use of a van and the speed at which it is driven,' says Underdown. 'It’s a sensitive issue because some people consider it a breach of privacy but it can have a great impact.'

Not surprisingly, the greenest car of all is one that does not move, and organisations can make considerable savings by questioning the need to make certain journeys. 'Video-conferencing can produce fantastic savings,' says Underdown.

'Companies like BT have achieved excellent reductions in mileage and emissions. And for most organisations, the savings in time and money outstrip the savings in fuel.' Are sales people driving to a conference each in their own car? Is rail travel a viable option?

LeasePlan is working with the EST to launch ‘Green Plan’, a five-part strategy to address environmental issues. Driver education, travel planning, vehicle care and vehicle and fuel efficiency are the more conventional elements and the fifth is tree planting. 'We are offering clients the opportunity to offset the CO2 emissions of their fleets with tree planting,' says LeasePlan’s Walker.

Fuelling the debate
Free fuel is hardly conducive to lowering emissions. 'A significant number of people are still given free fuel and it is an expensive perk,' says Underdown.

For example, a 40% tax payer driving a BMW 318i would need to drive around 11,000 private miles to break even with the tax payable on the benefit. 'For many employees, this would mean they are worse off, while the employer is paying about £1,500 per annum to provide fuel and meet National Insurance contributions on the fuel charge,' he says.

'One way for a company to apply pressure for employees to downsize is to start getting tougher on business mileage reimbursement. They can set a level that does not penalise people, provided they choose certain types of car.'

FUTURE FUELS
At one time the environmental buzzword in the fleet industry was LPG. But now this is in decline, with emissions savings modest compared to diesel and government grants discontinued.

The most exciting development is biodiesel, a mix of traditional diesel and fuel derived from crops. It is in its infancy and is not yet widely available, but Southwark Council is conducting widespread trials on its vehicles that range from vans to refuse dustcarts.

'We have trialled five vehicles on a 70:30 blend of biodiesel and, after successful implementation, moved around 70 out of 150 vehicles on to a lower blend of 80:20,' says business unit manager, fleet and passenger services, Matthew Trott. 'These are still in operation.'

All Southwark’s dustcarts qualify for reduced pollution certificates thanks to after-exhaust treatment and, in addition, two of them run on biodiesel. 'If the refuse vehicles are still working well by April, we will look to put the entire fleet on to an 80:20 blend and the remaining diesel vehicles will also be converted.

'In addition, we have 150 LPG light vans, where a cost saving of £8 per day in the congestion zone could equate to £312,000 a year,' he says. 'And in the near future, we will be converting five vehicles to run on 100% pure plant oil in association with DEFRA and will be monitoring use.'

Southwark is also acquiring an Eneco hybrid diesel powered transit van, which will run on biodiesel.

Citroën Peugeot is working on a hybrid diesel car. 'It is fantastic and will overcome some of the disadvantages of the petrol hybrid, which relies on a fairly small and relatively inefficient petrol engine,' says Underdown. But there is a downside – adding hybrid technology to a diesel engine, which is more expensive than a petrol unit, produces two levels of extra cost.

Free services
The Energy Savings Trust offers free consultancy services to organisations wanting to get their environmental ducks in a row. (The Trust also advises on making homes more energy efficient.)

To find out more, go to www.est.org.uk.

LeasePlan has produced a white paper, A bit in the green or a lot in the red: The dangers of not running an environmentally friendly fleet . It is available at www.leaseplan.co.uk/greenplan.