How electric vehicle salary sacrifice helps achieve ESG goals

With an increased focus on companies’ environmental commitments from candidates, employees and customers, launching an EV salary sacrifice scheme can support them to meet these ESG goals. 

Companies’ environmental, social and governance (ESG) commitments are subject to greater scrutiny than ever.

Candidates increasingly look for employers that can demonstrate purpose and support sustainability goals – more than three in five employers have noticed an increase in sustainability-related questions from candidates during job interviews, according to research from Totaljobs.

Launching an electric vehicle salary sacrifice or car allowance scheme as part of a benefits package can be a tangible way to demonstrate how the business is moving towards these goals.

Many companies that offer such schemes allow customers to view their carbon emissions reductions on an individual and company-wide basis, or even project total reductions based on predictive models. Communicating this data to employees, senior leaders, shareholders and customers can not only be good for engagement but could lead to new customers who share these values.

“An EV salary sacrifice scheme is a valuable financial benefit for your staff and a strategic asset for your sustainability goals,” says Steve Tigar, CEO and founder of loveelectric.

“Employees participating in the scheme will feel appreciated for their efforts and proud to be part of a company that champions environmental responsibility. It’s a win-win, boosting their pride and strengthening their commitment to the company’s sustainability objectives.”

How do companies measure a reduction in carbon footprint?

Replacing one mid-sized combustion-engine car with a similar electric vehicle (EV) saves approximately 1.8 tonnes of CO2 per year, according to figures from the International Energy Agency. This means that for a company with 500 employees and a 20% uptake of the EV salary sacrifice scheme, 100 employees switching to EVs could lead to an annual reduction of 180 tonnes of CO2, he explains.

Some companies offer used electric vehicles, which can mean even more impactful reductions.

“Opting for an EV salary sacrifice partner that offers used alongside new electric cars can significantly cut down your company’s carbon emissions. Since most emissions in an electric car’s lifecycle are produced during manufacturing, choosing used EVs helps bypass this initial carbon footprint.”

“Our employee portal tells you your levels of carbon offsetting alongside practical information such as service dates,” says Oliver Boots, chief commercial officer at Octopus Electric Vehicles. “This is helpful for both attraction and retention, and employers can collate the data on carbon reductions to put in their ESG reports.”

What are our main sources of carbon emissions?

According to the UK government, Scope 3 emissions make up 80% of a company’s total greenhouse gas emissions. Scope 3 emissions result from indirect sources to an organisation’s supply chain (Scope 1 result from direct activities, such as manufacturing; Scope 2 come from indirect activities such as heating a building or remote workers’ use of energy in their homes).

Currently, Scope 1 and 2 reporting is mandatory for employers in the UK with more than 500 employees or any listed company. But given the increasing pressure to add Scope 3 emissions to reporting requirements, having greater transparency of employees’ carbon reduction contributions could prove useful.

“One of the easiest ways to tackle these emissions directly is through the categories of employee commuting and business travel and by replacing combustion engine cars with electric ones,” adds Tigar from LoveElectric.

How can we align our EV salary sacrifice scheme with our ESG strategy?

“An EV salary sacrifice scheme is not only a financial benefit but also a strategic tool for gaining buy-in for your sustainability strategy,” he continues. “Employees who participate in the scheme will feel rewarded for their hard work while also contributing to a company that prioritises environmental responsibility.”

This “dual benefit” will foster a sense of pride and ownership among employees, enhancing their commitment to the company’s wider ESG plan. On a practical level, if companies have committed to reducing carbon emissions altogether or by a certain amount by a particular deadline, joining an EV salary sacrifice scheme can help them achieve “significant” carbon savings in a relatively short time, Tigar adds.

“For companies dedicated to achieving carbon neutrality, transitioning to an electric fleet can directly cut emissions and avoid expensive carbon offsetting. Businesses can reduce their carbon offsetting spend by lowering the carbon emissions to offset, making their sustainability strategy more cost-effective,” he explains.

For example, Royal Mail Group recently partnered with Novuna Vehicle Solutions to provide its 120,000-strong workforce with access to electric vehicles, supporting both businesses to achieve their net-zero commitments over the next 10-15 years.

Jon Lawes, Managing Director at Novuna Vehicle Solutions, says a salary sacrifice offering at this scale will really make a difference. “As the urgency of the transition towards sustainable transportation grows, offering accessible options for employees is vital to accelerate the pathway to net zero,” he says.

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