17 nov 22

IFMI: fleet managers debate the journey towards sustainability

The IFMI (International Fleet Managers’ Institute) met again, this time at the Fleet Europe Summit 2022, in Dublin on Wednesday. 

The event, which was a sell out this year, brought together over 70 fleet and vehicle procurement managers from across Europe and beyond, to hear expert presentations and debate troublesome issues that are currently afflicting their roles, such as supply delays, electrification and emissions reporting. 

Unsurprisingly, electrification writ large with most delegates in agreement that transitioning to EVs is a key element of their sustainability strategy. However, there was confusion from fleet managers as to how to approach GHG emissions accounting, particularly in light of the GHG Protocol, which establishes a global, standardised framework for measuring and managing greenhouse gas emissions. Simply put (although not so simple in practice), in scope 1 and 2 of the Protocol companies must account for emissions that are owned and controlled by them. Scope 3, however, involves reporting on emissions outside of the activities of the company from sources that it does not own or control. Currently, scope 1 and 2 reporting is mandatory and scope 3 optional but it may not always be that way. 

The difficulty of GHG reporting

The difficulty for fleet managers is that GHG reporting is not just about reporting tailpipe emissions, it involves many stakeholders such as finance managers, mobility and CSR managers, plus HR, and each often has competing agendas and obligations in terms of sustainability. 

Some obvious solutions to reducing tailpipe emissions include: reducing mileage, encouraging home working or co-working, optimising the fleet size, introducing alternative mobility solutions and optimising vehicle selections and the correct fleet mix. 

As to reporting the GHG values for those activities outside of your control, well that’s a whole other complex function (akin to a science) in its own right. Happily, however, there are sources of help and interest. 

The vehicle lifecycle assessment

Virginie Pochat, senior international consultant, business intelligence & consultancy at ALD Automotive, cited the LCA (Lifecycle Assessment) method used by Polestar and Volvo as the metric for assessing the carbon footprint of Polestar and Volvo’s cars. 

The carbon footprint includes emissions from upstream supplier activities, manufacturing and logistics, plus the use and the end-of-life phases of the vehicle. The functional unit chosen is: “The use of a specific Polestar vehicle driving 200,000 km”. LCA, which has been identified by the EU Commission as the best framework for assessing the environmental performance of products. LCA is well suited for assessing improvements in the whole supply chain and avoiding sub-optimisation, i.e. decreasing the environmental impact in one step while increasing it in another. Similarly, ALD has also researched and produced a paper on how energy is produced per country as not all countries use renewable sources to produce electricity for EVs and this also affects carbon accounting. 

Nicolas Michel, senior consultant at Arval echoed Pochat’s point by saying: “It’s not the CO2 that matters most but the total carbon footprint.” He posed the question: “Is it okay for the CEO to pollute more than the general workforce? If the CEO drives a gas-guzzling SUV 3,500 miles a year and his field service engineers drive low-emission vans 35,000 miles a year, is that okay? The audience largely agreed that the answer is both yes and no depending on mileage. 

Assessing risk - who is liable for home charging?

Interestingly, the question of EV home chargers and liability came up. Ricardo Koevoet, procurement team lead, fleet global at ABB (who was also awarded The European Green Fleet Manager of the Year in 2021) said that getting clear about liability between the wall box home charging provider and the driver is critical before installation. It’s not always clear to either party and finding out who is liable after the fact is never recommended. “It can be covered by an agreement between the driver and provider.” he said.  

Rising costs and TCO

Some fleet managers pointed out that focusing on TCO budgets has been a mistake as it’s not always lower as costs have risen. With increase in prices and energy cost, in some instances it is 10% more expensive. 

Alexander Schuh, Car Fleet Manager, Bristol-Myers Squibb, based in Munich, asked Koevoet how is he doing TCO calculation: depreciation and interest rates or is it based on leasing rates (mileage and contract duration)? Are they including government grants in TCO and reducing TCO manually?

Koevoet replied that ABB is taking them into account but monitoring the situation regularly: “In Germany, for example, we don’t include any grants because they are changing all the time and you get better leasing rates without including them. Also, because of long lead times the grant may not be available when you get delivery of the vehicles.” This happened to ABB in Sweden recently. 

Schuh pointed out: “If you compare RVs without any grants and including grants you can see leasing companies taking the grants into account so they get better RVs. Give me a leasing rate with a down payment equivalent to the government grant because if you leave it out, it is often the same.”

Unsurprisingly, the conversation soon settled on the thorny issue of lead times Daniel Schessler, key account management sales Europe at SEAT Cupra said that EVs are currently 30% of order bank. But the company is also working with a non-captive leasing company to provide chargers. 

All-in-all, it was an interesting event that produced much dialogue and debate. Other subjects that came up included car policy and how it should be localised: “70 countries, you need 70 car policies”. Also, how sustainability should be about reducing CO2, not transitioning to EV. This was a comment by Patrik Harranek - Head of Group Fleet Management, ISS World services and how hydrogen, which in truth has been around since the 1950s will have a future. In the end, it was agreed that the only way forward into a sustainable future is to take the challenge. 

Authored by: Alison Pittaway