12 oct 23

The Road to Real Sustainability - Episode 1: Get ready for greenhouse gas accounting

Corporate fleets need to start preparing today to comply with 2024 obligations to report greenhouse gas emissions. 

After a summer of floods, droughts, heat waves and wildfires, there is an abundance of evidence about the impact of man-made climate change. The warming of the Earth's average temperature has become a topic of scientific, political and business importance; with road transportation responsible for 19 percent of the European Union’s total greenhouse gas (GHG) emissions, fleets are increasingly in the crosshairs of policy makers.

The need for urgent action has seen 21 EU Member States introduce CO2-based initiatives to incentivise lower emission models, while many companies have set themselves ambitious targets to achieve carbon neutrality in line with the COP 21 Paris Agreement, recognising their responsibility to reduce their carbon footprints and operate in more environmentally sustainable ways.

Mandatory from 2024

Reporting GHG emissions will become compulsory next year as per the implementation of Europe’s Corporate Sustainability Reporting Directive (CSRD).

The CSRD aims to improve the transparency and accountability of corporate environmental performance by mandating 50,000 large companies (and listed SMEs) to disclose their GHG emissions in annual reports. The directive will help investors and other stakeholders make informed decisions, and consequently apply pressure on organisations to improve their environmental performance.

The Directive will create a baseline against which businesses (including their fleets) can measure their sustainability progress and provide a benchmark for company-to-company comparisons to determine whether their emissions are above or below the average for fleets of a similar size and composition.

Markus Deusing, CEO of Alphabet International, says: “Fleet operators will have to provide more detailed reporting on their emissions data as well as environmental and social indicators. The implementation of the CSRD will require fleets to have robust systems, like the Alphabet Carbon Manager, and processes in place to collect, measure, and report on their GHG emissions.”

To measure is to know

Being able to collect accurate and verifiable carbon emission data in a format that corresponds to the requirements of the internationally recognised Greenhouse Gas Protocol, represents a serious challenge for most fleets, which is why many are seeking the support of an expert partner. Historically, corporate fleets and their fleet managers could rely on average emission figures to estimate the size of their carbon footprints, but this approximate approach no longer satisfies the accuracy demanded by the new reporting regulations, which will expect similar levels of detail and accuracy as financial disclosures.

Moreover, the challenge does not stop with company-owned vehicles; the emissions of cars used by employees to commute to work will also have to be recorded for Scope 3 emissions.

“By using the Alphabet Carbon Manager tool, our customers have the possibility to examine their fleet, what it’s currently emitting, and identify what they can do to improve their performance,” says Markus Deusing. 

Improving operational efficiency

The good news is that compliance with the new regulatory requirements provides the foundation for corporate fleets to improve their operational efficiency. With a direct correlation between fuel use and carbon emissions, putting emission-reduction policies in place has the potential to kickstart a virtuous circle. Fleet decision makers will be able to identify areas of their operation where they can improve their fuel efficiency, and by burning less fuel their vehicles will not only generate less GHG but also save money. Further cost savings arise from the need to buy fewer buy carbon credits, if fleets are relying on offsetting to achieve carbon neutral status.

By analysing current emissions levels, fleet operators can spot trends, as well as rogue vehicles and drivers, highlighting opportunities where pro-active action can lead to instant improvements. Employers may need, for example, to tighten their car policies to ensure drivers of plug-in hybrid vehicles charge their cars to maximise the opportunity to run them on battery power, while commercial vehicle drivers may be guilty of needlessly burning fuel by leaving engines idling.

“An emissions reduction strategy can also help corporate fleet managers identify operational inefficiencies that contribute to high emissions levels. By optimising routes and driving behaviours, improving vehicle maintenance practices, reducing idling time, and optimising fuel consumption, they can reduce emissions,” says Markus Deusing.

Easier initiatives might be as simple as specifying tyres with low rolling resistance, removing any unnecessary loads that add weight to vehicles, and training drivers in eco-driving techniques.

Fleet decision makers can also maximise the GHG savings from the adoption of electric vehicles. 

“With the increasing availability and decreasing cost of renewable electricity sources such as wind and solar power, it is becoming more feasible and financially viable for fleets to transition to renewable energy sources,” says Markus Deusing.

He highlighted the pressing need for fleets to start putting strategies in place today to comply with their emissions reporting obligations for financial year 2024.

“Big pressures are coming, and we want to help fleet operators, educate them and give them the opportunity to manage their CO2 emissions with Alphabet Carbon Manager, a tool they can rely on,” Markus Deusing concludes.

Watch here the video with Markus Deusing about ‘Calculating Greenhouse Gas Emissions’


The data fleets need to report GHG emissions  

Real fuel and energy consumption
The more precise the data, the more accurate the calculation, allowing fleets to reflect their progress towards net zero goals more clearly. Consequently, fleets need to capture the type of fuel used (diesel, petrol, natural gas, electricity…), and the exact volumes of fuel consumed. When electric power is used, it is also necessary to know if green (renewable) or grey energy was used for charging. 
If fuel data is not available, companies need to capture the distance travelled on business and then apply the appropriate emission factor for car, van or truck travel. If neither fuel nor distance data is available, fleets can use the ‘spend-based’ method, recording the amount of money spent on each mode of business travel and applying secondary (EEIO) emission factors. 

For more details, see https://ghgprotocol.org/sites/default/files/2022-12/Chapter6.pdf

Average fuel consumption / real distance driven
This measures how much fuel a vehicle consumes per unit of measure, expressed in litres per 100 kilometres (L/100km) or miles per gallon (mpg). 
Purpose of use
The real distance driven refers to the actual distance travelled by a vehicle on business (private journeys do not count for GHG reporting, so fleets need a robust mechanism to separate business and private mileages  ). The calculation of average fuel consumption takes into account the real distance travelled and the amount of fuel used during that time. 
Total distance covered by a vehicle during a specific period, measured in kilometres or miles. 
Average distance
This is the total distance driven by all vehicles in the fleet over a certain period, divided by the number of vehicles in the fleet.
Vehicle information
This includes the type of vehicle (passenger car, light-duty truck, heavy-duty truck, etc.), make and model, weight, engine size, and any modifications that may impact fuel consumption.

Markus Deusing, CEO of Alphabet International, will share further insights about The Road to Fleet Sustainability at the 2023 Fleet Europe Days on 22 & 23 November in Lisbon. For more information and registration details, click here

Find more about the second episode here : The Road to Real Sustainability - Episode 2: Key scenarios to decarbonise your fleet

Authored by: Jonathan Manning