One of the biggest environmental impacts on a business’s carbon footprint is likely to be its vehicle fleet. To reduce fleet emissions, and comply with the forthcoming ban on the sale of petrol and diesel vehicles, organisations need a strategy to move to more electric vehicles (EVs) across their fleet.
Tackling grey fleet carbon emissions
Vehicles used on business can usually be categorised across company cars, grey fleet (non-company car drivers using their own vehicles for business) and commercial fleet vehicles. Grey fleet vehicles, in particular, are usually older than company cars so it is important to look at ways of reducing their impact as part of a fleet decarbonisation strategy.
Introducing salary sacrifice - a solution for non-company car drivers
Electric vehicle salary sacrifice enables businesses to boost EV adoption beyond company car drivers and also provides agreat employee benefit. The scheme is growing fast - the number of cars on salary sacrifice has doubled in the last two years.
Salary sacrifice is in high demand by employees. A YouGov survey found that, once employees fully understood the benefits of salary sacrifice, 74% said they would like the scheme on offer at their workplace.
How does salary sacrifice work?
Salary sacrifice allows employees who are non-company car drivers to ‘sacrifice’ part of their gross salary in exchange for a fully maintained electric vehicle. Because the deduction is taken before tax, the employee makes significant tax savings and so does the employer. That means that employees are able to access a brand-new zero tailpipe emission EV more cost-effectively than compared with a private lease.
What are the benefits of salary sacrifice?
There's benefits for the employee and business alike, including:
- Tax savings for employee and employer
- Employee retention and attraction
- Reduction in company carbon footprint
- Lower ‘grey fleet’ risk - employees are in newer, maintained and correctly insured vehicles
- Decreased fuel costs
- Improved mobility in low emission zones
- Supports wider EV adoption
- No fee for a business to set up the scheme
How does salary sacrifice work in practice?
A good example is Elemental Energies, a leading well consultancy in the oil and gas sector. The business is on a mission to ensure it has a strong ESG strategy - including a focus on reducing its own carbon emissions.
Strong partnership
Elemental Energies partnered with Gofor in 2023 to offer electric vehicle salary sacrifice to employees. As a busy, growing company, it needed a partner who could support its drivers with the switch to EV and make the process simple.
Successful scheme implementation
- Make it easy for employees - Gofor introduced an easy-to-use online portal with functionality for employees to view available electric cars, conduct a simple tax deduction analysis and compare costs. The team also provided one-to-one driver support.
- A great launch - Gofor organised an onsite Tesla experience day at the Elemental Energies headquarters as part of the scheme launch. Employees were able to test drive a Tesla and the day even converted some EV-sceptic drivers.
- Demonstrate the cost savings - The scheme enables employees to switch to an EV cost effectively and it also makes savings for the business due to the tax efficiency of salary sacrifice.
- Alignment to the business ESG strategy - The salary sacrifice scheme is a core part of the company’s sustainability ethos. The scheme enables employees to actively contribute to reducing the company's carbon emissions.
‘Having a well-defined ESG strategy is absolutely fundamental to Elemental Energies. It showcases our core values and demonstrates how we operate as a company.
Introducing the EV salary sacrifice scheme is a key part of how we deliver on our environmental promises to reduce our carbon footprint. It is also a great employee benefit which is helping our business attract and retain the very best talent.’
Hannah Longhurst, HR Manager, Elemental Energies
Additional ways to reduce business fleet emissions
Salary sacrifice is a core part of a greener fleet strategy but it is important to consider additional areas which can make a measurable ESG impact:
- Evaluate fleet telematics to optimise routes, reduce fuel consumption and emissions
- Consider hybrids - where EVs may not be practical, consider plug-in hybrid or hybrid vehicles which will still make an impact on total emissions
- Look at car sharing schemes / alternative transport to work - review different ways to reduce emissions e.g. cycle to work schemes
- Optimise your maintenance policy - ensure business vehicles are keeping to maintenance schedules and drivers are incentivised to do routine tasks, such as regular tyre pressure checks
Next steps
Want to read more about decarbonising your fleet as part of an ESG strategy? Download our recent ESG whitepaper.
Looking to get started with fleet electrification? Gofor is here to help. Our friendly team of fleet experts can provide practical advice on getting started.
