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Print articleCompany cars are back in fashion, over 50% of new car sales in 2006 were destined for company car ownership, with 57% of businesses providing company cars. Although the company cars only account for 10% of the cars currently on the road, the Energy Savings Trust calculates that they account for more than 20% of emissions, because of the high mileage they do.
Although many companies are keen to show off their CSR (Corporate Social Responsibility) track-record, only 42% consider the impact of their vehicles should come under its policy, despite the environment being one the hottest topics.
The report suggests that for many companies ?CSR appears to be a box to tick, rather than a fundamental assessment of their impact on the environment and the implementation of positive action to reduce it.? It seems that the status a car conveys is such an important factor that if a prestigious car were to be taken away ?the risk is that key employees walk.?
Added to the status issue is the belief that green fleets are more expensive to implement than not doing anything at all. However, the Trust found that the companies that have taken steps to reduce emissions have actually saved money.
Indeed, the Trust believes company finance directors are missing a trick: there are now real fiscal incentives for moving to lower emission vehicles. Among them: Greener cars attract lower BIK liabilities and therefore attract lower class IA employer National Insurance Contributions; employees pay less tax; and there are accelerated writing-down capital allowances available for the lowest carbon-emitting vehicles.
The Trust estimates that ?a company with a fleet of 100 vehicles could be saving up to ?90,000 a year by implementing green fleet policies.?
Of concern in the report is the matter of the 'grey fleet'. The Trust found that 67% of companies offered money in place of a car. Grey fleet cars are owned by the employee but funded by the company, usually through an allowance. Even when a company does have a policy on car emissions in its CSR policy it often does not extend to the employee's car. Whereas a company's fleet tend to be new well maintained vehicles, grey fleet cars are often not so well maintained and not necessarily new.
The report found that ?only 25% of companies that have a CSR policy place an age restriction on the car that can be used for business and only 3% restrict the CO2 emissions such cars can make.? Companies with no CSR policy were even worse.
But the situation is even worse, even if an employee were prepared to drive a smaller car, the report found that 69% of companies in the South ?prohibit trading down.?
The Trust believes that there needs to be a change of mind-set: ?The reality, though, is that company cars are deeply embedded into the British way of business and whether they are workhorses or executive perks, they are status symbols that are part of the remuneration package.?
The act of 'trading down' is therefore seen negatively because it reflects on the employee's status and pay, and on the company's ability to hire the best. The trust contends that ?rather than the somewhat negative phrase 'trading down', businesses should see running smaller vehicles as an act of investment.?
