October 4, 2023

How Does Fleet Electrification Support ESG Goals?

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9 Min. Read

This article was originally published February 1, 2022 and was updated October 4, 2023.

Environmental, Social, and Governance (ESG) goals guide businesses by creating a sustainable path forward. Organizations that adopt ESG typically launch programs and initiatives that support business goals while allowing communities to thrive or protecting the environment.

As more companies, governments, organizations, and consumers value sustainability, more businesses focus on ESG. Given the current state of climate change, building a net-zero or even climate-positive organization is more critical than ever.

For companies operating a commercial fleet, electrification is a crucial step for building a more sustainable and environmentally-focused company, and using electric vehicles also results in significant cost savings that can support further ESG programs.

What is ESG?

Over the past decade, ESG has transformed investing. Modern investors have embraced this approach to build portfolios that generate returns while fostering sustainable growth.

More companies are adopting environmental and social programs to appeal to these investors and build a greener future for everyone.

Even if your business isn’t on the stock market, ESG still matters. These programs can shape your brand, attract talent and partners, and help you find sustainable growth.

There are many ways to foster ESG goals. Diversity programs, recycling, and lowering emissions are typical examples, but you can also offer free products or services to the community or donate money to non-profits.

For many organizations, rethinking energy usage is a relevant starting point:

  • Your business likely uses finite resources, produces waste, and contributes to greenhouse gas emissions. These things hurt your ESG efforts.
  • Every business needs energy and resources to operate. However, there are alternative sources that won’t harm the environment.
  • You can make a difference by choosing clean energy sources or replenishing your existing resources.

Fleets and Emissions

Transportation is among the most significant contributors to greenhouse gas (GHG) emissions. Experts predict emissions will drop by 9% over the next decade; however, change must be intentional.

Greenhouse gases stay in the atmosphere for over 100 years, forming a blanket around Earth and trapping energy in the atmosphere. This phenomenon contributes to global warming.

At a lower level, emissions can create haze. That smog can make breathing hard and lead to asthma and other health issues.

For businesses, fleet vehicles often represent the primary contribution to greenhouse gas emissions, making fleet electrification a priority.

On a broader scale, fleet electrification is the key to a more resilient and sustainable future, as our economy heavily relies on mobility:

  • The eCommerce sector continues to grow at a rapid pace. Global sales could reach $8 trillion by 2026. Due to the environmental impact of this sector, building cleaner delivery networks should be a priority.
  • Recent trends in the food industry have also witnessed a drastic increase in delivery-based models, and dark kitchens now make over $56 billion in revenues.
  • The car rental industry is also expected to grow by 5.6% in 2023, further saturating the roads with vehicles.
  • With an estimated $330 billion in revenues in 2023, the taxi and ride-sharing industry continues to shape mobility across the U.S. This industry has the potential to set the standard for a green future, and many companies in this industry have already made commitments to electrifying their fleets.

Change Is Here

While planes and trains have an environmental impact, cars and trucks remain the primary sources of transportation-generated emissions.

Changes in gas formulas, catalytic converters, and other innovations have helped. Today’s cars and trucks release fewer pollutants than older models. However, they still produce harmful GSGs.

What about light-duty and heavy-duty vehicles? Smog regulations for light-duty vehicles address those with up to an 8,500-pound gross vehicle weight rating (GVWR).

Besides the vehicle’s weight, GVWR includes the cargo, passengers, and accessories it can safely carry. Light-duty vehicles include sedans and compact SUVs. Larger pickup trucks and vans are considered heavy-duty vehicles. Manufacturers also offer a medium-duty weight class with compact pickup trucks and large SUVs.

With over 286 million vehicles in operation in the U.S., driving significantly contributes to greenhouse gas emissions.

The EPA is taking action by setting new standards for the next generation of vehicles. Model years 2023 to 2026 must follow emission standards that could prevent an estimated 3 billion tons of greenhouse gas emissions through 2050.

The Clean Air Act Is Coming

Stricter standards are paving the way for the Clean Air Act, which combines several proposals to reduce CO2 emissions by 10 billion tons by 2055.

These new standards would apply to vehicle models 2027 and beyond:

  • Manufacturers must use filters and other emission control technologies to limit GHG emissions.
  • Businesses will have to meet average fleet requirements. These rules would increase EV adoption to 67% for light-duty commercial vehicles and 53% for medium-duty vehicles.

The Rise of EV Adoption

EV adoption is rising, and by the end of 2023, experts predict over 14 million global EV sales. In the U.S., data already shows that EVs represent 7.2% of all automotive sales.

More than 800 EV and hybrid models are already available, and automakers are rising to the challenge and embracing the future of transportation.

Several factors are coming together to create conditions that favor EV adoption:

  • Public perception is changing. Consumers are aware of environmental issues and want to make a difference through their choices.
  • Rising energy costs prompt consumers and businesses to rethink resource consumption and seek more cost-effective and sustainable energy solutions.
  • Innovations in charging and battery technology address potential hurdles linked to range and range anxiety.
  • There are more models than ever, making it easy to find a clean vehicle for everyone.
  • The public and private charging infrastructure is actively growing. For individuals and businesses, installing charging stations is more accessible than ever.
  • Federal tax credits, state incentives, and utility company rebates support EV adoption.

How Can Fleet Electrification Support Your ESG Goals?

Recent ESG trends reveal changing expectations from customers and investors. If you use commercial vehicles as part of their business model, fleet electrification remains central to your ESG program.

Greenwashing and Transparency

An increasing number of companies turn to greenwashing to appeal to consumers and investors who value ESG. This practice involves making exaggerated or inaccurate claims to create a green image.

Consumers are becoming more discerning when evaluating these claims, and regulatory bodies are cracking down on this practice.

As a result, businesses are focusing on ESG data quality and experts predict that 30% of organizations will adopt ESG data management tools by 2024.

Using quality data supports better decisions from consumers and investors and also promotes continuous improvement for ESG programs and protects businesses from greenwashing accusations.

Fleet electrification is a concrete measure that is easy to document. Data points like the amount of GHG emissions avoided, the miles driven in EVs, or the number of daily deliveries completed without using gas can be powerful metrics for communication with your audience and regulatory bodies.

Complex Regulations

Governments are responding to growing environmental concerns and greenwashing by creating new rules. For businesses, this new regulatory environment can be challenging.

European businesses now have to follow a Corporate Sustainability Reporting Directive. American companies could also face new rules. The SEC is looking at a climate risk disclosure rule.

Following ESG rules is vital for different reasons:

  • Governments are stricter and are fining more businesses for greenwashing.
  • These standards help create reliable sustainability reports for communicating with investors and consumers.
  • The US SIF and similar organizations help people find eco-friendly businesses. Adopting one of these ESG frameworks to track your results can facilitate auditing from third parties if applicable.

Again, fleet electrification acts as a clear path forward. It provides you with quality ESG data for reporting and compliance purposes.

ESG and the Corporate Value Chain

Adopting the Corporate Value Chain or Scope 3 standard will help you build an ESG-friendly supply chain by selecting partners with ethical practices.

If other businesses rely on your fleet for deliveries or other services, electrification will make you the ideal partner. It signals your values strongly and helps your customers build a clean supply chain.

The Cost of Energy

Everyone is feeling the effects of the rising cost of energy. We’re also seeing inflation lead to low consumer confidence, reducing business profit margins.

Fleet electrification is a solution that can insulate your organization from the cost of energy. It also opens new possibilities for low-cost energy, including:

  • Relying on solar power to charge EVs.
  • Taking advantage of off-peak rates to optimize charging costs.
  • Using bi-directional charging to earn energy credits toward charging.

Avoiding high energy costs makes planning for the future more accessible and frees up money for your other ESG programs.

Beyond Net Zero

What happens once you reach your net-zero goals? You can continue with your efforts and focus on building a climate-positive business.

Net-zero businesses don’t produce carbon, but climate-positive firms go further by actively removing carbon from the environment.

Fleet electrification creates a strong foundation as a starting point for building a climate-positive organization.

What’s Next? Paving the Way for Heavy-Duty Fleet Electrification

Pressure will likely increase in the future. ESG investors, customers, lawmakers, and employees want you to reduce emissions. The best way to meet these expectations is to build an all-electric fleet.

Besides the ESG benefits, companies have other economic reasons to electrify their fleets. They save money on fuel and maintenance, and organizations like Amazon, Uber, and USPS already see these benefits.

Adopting EVs puts you in an excellent position to electrify larger vehicles, but replacing larger trucks and trailers is expensive. These purchases take time, but you can gain an edge by looking into fleet electrification now.

Although the heavy-duty truck market still needs more development time, companies are progressing. There are already 60,000 medium and heavy-duty EVs on the roads, and projects like the Peterbilt EV are in the pipeline. Electric heavy-duty vehicles could become a solution sooner than you might think.

The transportation sector is also driving the adoption of heavy-duty EVs. In 2022, $5 billion in funding helped 403 school districts buy over 2,500 buses powered by clean energy.

Meanwhile, fleet managers should start electrification initiatives with light-duty vehicles since the costs are lower than larger vans or trucks, and the buying process is more straightforward. Creating a charging infrastructure is also affordable with at-home charging and workplace charger installations.

Plus, the number of EV models will double by 2024. With so many options, now is the right time to plan your electrification project.

Develop a Winning Strategy for Fleet Electrification with Qmerit

Fleet electrification is a significant step in building a meaningful ESG program.

Experts can help. Working with a firm specializing in fleet electrification is the key to success. The right partner can create a transition plan while working with your budget and goals.

Charging is another crucial consideration. Your electrification partner can design a commercial charging infrastructure that will unlock the full power of a clean fleet.

Qmerit simplifies fleet electrification by helping fleets overcome the complexities of installation and is the leading expert for EV charging stations and other electrification solutions and installations in North America. Trusted by top brands and recognized by the White House, we provide a simple and seamless installation experience with top-quality service you can trust, assisting fleets in budgeting and controlling costs while tracking every step of the process.

See how Qmerit’s expert team is ready to simplify your EV charging installation with guaranteed satisfaction and support. If you want to help determine your EV ROI and want to switch to a distributed electric fleet, contact Qmerit today.

Author: Ken Sapp

Ken Sapp

Senior Vice President, Business Development and eMobility