Environmental, social and governance (ESG) goals are increasingly becoming a factor in long-term corporate sustainability programs. Non-financial factors actively affect investing, prioritizing companies that use renewable energy and embrace socially conscious practices for incentives and financial support. One way many companies are dealing with ESG concerns now is through commercial fleet electrification.
Your light duty fleet, in particular, presents a unique opportunity to show investors, employees and customers two things. It shows that you are concerned about how a fleet can affect greenhouse emissions — and that you’re doing something about it. Transitioning fleets to EVs has enormous potential for global change.
Traditional investing is based on expected returns. Sustainable investing still looks at returns, but realizes that economic success has to be balanced with practices to improve long-term outcomes environmentally and socially. Forward-thinking firms improve ESG through diversity initiatives, an ethical focus and lower emissions.
The environmental aspect of ESG includes the energy your firm uses, the resources needed, waste and pollution, and other effects. Carbon emissions and actions you are taking to stem climate change are drawing more and more attention.
Accordingly, companies are using electric vehicles (EVs) to meet ESG goals as they move forward. EVs reduce emissions, support clean energy initiatives, and meet government mandates.
While your firm may not be publicly owned, ESG concerns and investor reporting could impact you. More companies are extending their ESG goals and expectations across their supply and distribution chains, which can have consequences for your company.
The transportation sector is one of the largest contributors to greenhouse gas (GHG) emissions. It caused 29% of total U.S. greenhouse gas emissions in 2019. These GHGs can stay in the atmosphere for over 100 years. They act as a blanket around Earth that traps energy in the atmosphere and causes it to warm. At a lower level, emissions can create a brown pollution haze. That smog can make it hard to breathe and lead to asthma and other health issues.
While the transportation sector also includes planes and trains, cars and trucks that use fossil fuel are notorious for smog-forming emissions. Changes in gas formulas, catalytic converters and other innovations have helped. Today’s cars and trucks are cleaner and release fewer pollutants than those from 50 years ago, but they still produce harmful GSGs.
What about light-duty and heavy-duty vehicles? Smog regulations for light-duty vehicles address those with up to a 10,000-pound gross vehicle weight rating (GVWR). Besides the weight of the vehicle, GVWR includes the cargo, passengers and accessories that it can safely carry. So, light-duty vehicles include sedans, small pickup trucks and large SUVs. Larger pickup trucks and vans are considered heavy-duty vehicles.
With emission declines, expectations have changed. The EPA has lowered light-duty vehicle pollution limits several times since it was founded in 1970. It holds nearly all vehicles now in use to either the current Tier 3 standards or the previous Tier 2 standards. Cars made in 2003 or earlier must meet Tier 1 standards.
In August 2021, the EPA proposed new light-duty fleet GHG standards for model years 2023-2026. It also outlined plans for future standards designed to speed the change to a zero-emissions future. Further, the EPA is updating standards for harmful air pollutants from heavy-duty vehicles. The agency expects to announce new rules in 2022 that will apply to heavy-duty vehicles starting in model year 2027.
Sales of cars that do not run on gas — particularly electric ones — are growing. New models of EVs, including trucks, are entering the market in increasing numbers thanks to growing public demand, changes in public perception and battery advances.
Some feel the tipping point in embracing EVs occurred along with the COVID-19 pandemic. EV sales sped up in major markets, partly spurred by new laws such as stricter emissions targets and buyer subsidies. Recent concern about climate change, particularly the COP26 United Nations Climate Change Conference this fall, focused worldwide attention on the need for a zero-emissions future. It has led consumers and investors to demand more environmentally conscious transportation options.
It’s no surprise that your business is likely to face increasing pressure — from ESG investors, customers, employees and regulators — to cut GHG emissions in the future. Electrifying your fleet is a strong first step toward decarbonizing and meeting environmental-impact expectations.
Besides the ESG benefits, companies have other economic reasons to electrify their fleets. EVs save money on fuel and maintenance and build a record of environmental friendliness. Companies like Amazon, Unilever and Walmart are adding EVs now and planning to completely electrify their fleets.
Replacing larger trucks and trailers takes a big capital commitment. The lead time for purchasing larger (and therefore more costly) equipment is already long. Although the heavy-duty truck market is still not ready, companies are making progress that should warrant future budgetary consideration. Firms are testing Class 8 electric-powered trucks, such as the Freightliner eCascadia, to show that heavy-duty fleet electrification can work.
Meanwhile, fleet managers should start their electrification initiatives with light-duty vehicles. There are more available at a lower cost. Further, with at-home charging and/or workplace charger installations, they can be deployed without the major infrastructure changes that heavy-duty vehicles require.
While China and Europe are ahead in EV use, there are multiple electric car models already here that are ideal for light-duty use. While many people first think of a Tesla when they think about EVs, you have plenty of options for your fleet. Many more models will hit showrooms in the next year, too. Additionally, last year, over 55% of announced models coming across the globe were SUVs and pickups.
Many fleet managers may find the growing number of EVs available daunting when making decisions about fleet electrification. Working with a firm that specializes in fleet electrification is critical to ensure you are making the right moves, budgeting accurately and developing a workable transition plan. Qmerit prides itself on making electrification easy for businesses throughout the U.S. and Canada.
Qmerit offers turnkey solutions to manage complex installations and driver expectations. With over a decade of experience working with EV infrastructure rollouts and a broad network of certified installers, we have developed @Home charging to help you meet your ESG goals.
To discuss your road to fleet electrification and a brighter ESG outlook, contact Qmerit today.