The Importance of ESG in Managing Reputation Risk for Fleets
In the past, reputational risk tended to be the preserve of very large organisations, aiming to avoid or mitigate negative publicity following major events involving their operations, products or employees. Today, the expectations placed on businesses go far beyond avoiding catastrophic incidents, to include all aspects of their impact on individuals, the environment and society in general.
Another significant change is that businesses of all sizes are now open to much greater public scrutiny than ever before. Even the sole trader is likely to have online reviews of their performance that can have a very significant impact on their future success.
With customers’ and other stakeholders’ expectations of organisations increasing all the time, ESG is becoming a key component in fleet risk management policies.
Priorities are shifting
Environmental, Social and Governance (ESG) commitments and climate change targets and goals are driving Australian organisations to plan for a radically changed future. Electric vehicle (EV) adoption is part of that ongoing journey and is set to bring about the most significant change to the motor vehicle sector in over 100 years.
From customers to employees and senior management, the reputation of an organisation is increasingly influenced by ESG factors. In fact, research by management consultant firm PwC states that 83% of consumers think companies should be actively shaping ESG best practices and 86% of employees prefer to support or work for companies that care about the same issues they do.1
Australians’ desire for action on climate change is clear with three-quarters of Australians (74%) saying ‘the benefits of taking further action on climate change will outweigh the costs’.2 However, when it comes to EVs consumer sentiment in Australia is influenced by ‘range anxiety’ - the fear that an EV will run out of power before completing a journey.
Although the average range of an EV is 400 km on a single charge, almost 80% of consumers believe it to be less or choose not to purchase an EV due to concerns the range is too low to meet their needs for weekend travel or longer distance trips.3
Incorporating ESG into fleet risk management policy
A fleet policy can only be effective if it meets the needs of the stakeholders within the business and is supported by them. In defining the objectives and scope of the policy, consultation with a range of stakeholders will be required including senior individuals with responsibility for operations, human resources, health and safety, finance and procurement.
Key questions to consider include:
- Does your organisation have an overall environmental policy? Does the fleet policy align with this?
- Does your organisation want to set a vehicle CO2 limit? If so, consider reviewing and reducing this limit on an annual basis.
- Should limits be set subject to driver grade or whether the car is a business need rather than perk vehicle?
- What is the organisation’s policy on encouraging the use of ultra-low CO2 vehicles such as electric or hybrid cars? Should they be added to the choice list?
- Does the organisation intend to use vehicle tracking and/or fuel card data to monitor the fuel consumption performance of individual drivers and vehicles? Should targets and incentives be set?
Getting employees onboard
It is also important to seek input from those who will be directly impacted by the policy, the organisation’s drivers. Like any big change, having valuable insights upfront can increase employee confidence and provide an opportunity to ensure plans and policies enhance, rather than detract, from an organisations reputation.
Interleasing facilitates employee research for clients, to help understand and monitor employee attitudes and requirements around EVs including considerations such as:
- What are employee perceptions of EVs?
- Will they be open to change?
- What are the key barriers to getting employees on board?
- What benefits will EVs bring and how will these impact employees?
A marathon not a sprint
Tackling the complexities of transitioning to EV doesn’t have to happen overnight. Nor does it have to be an all or nothing approach. For many fleet managers, a feasible transition might be taking some smaller steps first as a ‘test and learn’ to get one step closer to a full EV rollout.
In our discussion guide A roadmap for the transition to EVs, we share some ideas on how fleet managers might get moving. For most fleets, the transition to EVs will be a marathon and not a sprint. The important part is taking that first step.
Download the Interleasing EV discussion guide here.
2. Australia’s road to zero transport emissions, Lowy Institute, Climate Poll 2021
3. Australia’s road to zero transport emissions, PwC, November 2020