CSRD's impact on fleet managers: redefining sustainability in business mobility
.svg)
Shaping instead of managing: The new role of fleet managers in 2024
Companies affected by sustainability directives should adapt to new requirements and reduce CO2 emissions in all areas of their business for long-term success. This includes operational mobility of the company and its employees, with the fleet manager taking center stage. While vehicle fleets will remain an important part of companies and be included in reports, alternative mobility solutions such as shared mobility, bicycles, and digital mobility budgets are becoming more prevalent. This shift results in the fleet manager's role expanding to that of a mobility manager, offering exciting possibilities and creative freedom for the future of mobility.
The role of fleet managers is evolving, just as their fleets are. With the approval of the Corporate Sustainability Reporting Directive (CSRD) by the EU, companies now have a responsibility to report on and contribute to efforts to reduce greenhouse gas emissions. Fleet managers play a crucial role in this effort.
Fleet managers possess the skills and expertise necessary to manage these fields effectively and serve as ambassadors for their company's sustainability. However, this new role presents challenges such as balancing sustainability goals with cost considerations and navigating through complex regulatory requirements. Fleet managers who successfully meet these challenges and become sustainability managers can reap significant benefits for their companies.
What is CSRD?
The Corporate Sustainability Reporting Directive (CSRD) mandates large and/or listed companies to regularly publish reports on the social and environmental risks they face, as well as how their activities impact the rights of people and the environment. The directive aims to allow investors, civil society organizations, consumers, and other stakeholders to assess the sustainability of these companies.
The CSRD sets broader and stricter standards than its predecessor, the Non-Financial Reporting Directive (NFRD). Particularly for greenhouse gas reporting. Additionally, auditing was voluntary under the NFRD, but it is now mandatory under the CSRD.
Sustainability reporting covers multiple areas and is multi-layered. The new CSRD is based on the established Environmental, Social, and Governance (ESG) framework, which considers environmental, social, and governance aspects. Future sustainability reporting will have a focus on CO2 reporting. However, the CSRD requires documentation of the following in addition to CO2 balancing regarding sustainability:
- Business model and strategy with respect to resilience, opportunities and risks, stakeholder plans and interests, and how the strategy was implemented in the past.
- Goals and progress made toward achieving them.
- Corporate policies related to sustainability issues.
- Measures taken and their results.
- Risks associated with sustainability issues and the company's dependencies on them.
Why does it matter for everyone?
Under the previous Non-Financial Reporting Directive (NFDR), only large listed companies, banks, and insurance companies (public interest entities) with over 500 employees were required to report their non-financial performance. The Corporate Sustainability Reporting Directive (CSRD) expands this criteria by making sustainability reporting mandatory for a larger number of companies. The CSRD expands the scope of the NFDR from around 11,700 to 50,000 EU companies.
EU companies that meet two of the following criteria, must comply with the CSRD:
- € 40 million or more in net turnover
- € 20 million or more in assets
- 250 or more employees
NB: Non-EU companies with more than € 150 million turnover and operations in the EU will also have to comply with the CSRD.
The new regulation applies on January 1st, 2024 (with reports due in 2025) for large companies that were already subject to non-financial reporting requirements. Other large companies subject to the CSRD must comply on January 1st, 2025, while requirements for smaller companies go into effect from 2026.
Large companies will require more and better data from their suppliers to support the new Scope 3 reporting requirements (upstream purchasing). Planning and systems to meet these requirements should be in place in 2023 to start gathering data in 2024. Your company's downstream products are someone else's upstream products. Even if the CSRD requirements do not cover SMEs, most companies, if not all, will feel the impact of this regulation.
How can Fleet managers embrace it?1
Sustainability has become an increasingly important consideration for European-based companies in their business strategies. Alphabet conducted a survey of over 700 fleet managers in Europe. The study found that companies may need to adopt a more comprehensive approach to achieve their sustainability goals. Specifically, a holistic tool is necessary to measure and reduce CO₂ emissions. While 51% of companies acknowledge the significance of sustainability in their business decisions, only 37% actively monitor their emissions, according to the survey's findings.
Fleet focus on ESRS E1-6 - Gross Scopes 1, 2, 3, and Total GHG emissions
The European Sustainability and Reporting Standards (ESRS) is the framework to be used under the CSRD. The E1 section is dedicated to climate change. When preparing information for reporting GHG emissions, the company should:
”(a) consider the principles, requirements, and guidance provided by the GHG Protocol Corporate Standard and GRI 305 (which is directly based on the requirements of the GHG Protocol).(b) disclose the methodologies and emissions factors used to calculate or measure GHG emissions and provide a reference or link to any calculation tools used.”
What should be measured and reported?
Greenhouse gas emissions that contribute to climate change are classified into three categories: Scope 1, 2, and 3.
- Scope 1: These are direct emissions that come from sources owned or controlled by an organization, including business kilometres driven by employees. It includes tailpipe emissions from fossil-fueled vehicles.
- Scope 2: These are indirect emissions from the generation of purchased energy, more specifically, the electricity consumed by an EV fleet during business kilometres.
- Scope 3: These are indirect emissions from sources not owned or controlled by the organization, such as employee commuting kilometres and business travel. It is the most difficult to measure and address.
NB: Private mileage are excluded from the reporting canvas
How to get started?
- As mentioned above, adopt internationally recognised sustainability standards to ensure that your sustainability reporting is consistent, credible, and comparable with industry peers. Examples of such standards include the GHG accounting principles.
- Establish data-driven insights by collecting the right data, such as mileage, fuel/electricity consumption (car performance & consumed litres), and the split between business, commuting, and private mileage.
- Engage stakeholders to build support and credibility for your sustainability initiatives.
- Leverage technology to collect data and automate your reporting deliverables.
How to Reduce Scope 3 Emissions
Environmentally-focused procurement and business travel decisions can significantly reduce Scope 3 emissions. Fleet and mobility managers can make the following decisions:
- Support eco-commuting: Promote lower carbon commuting, such as walking and cycling, by building bike infrastructures and offering cycle purchase schemes. Set up a carpool for commuters and provide support for public transport expenses.
- Decarbonize business travel: Business travel contributes to Scope 3 emissions, so consider if employees could replace trips with virtual meetings. Encourage employees to use the most GHG efficient mode of transport, such as taking the train instead of flying.
- Low carbon purchasing: Discuss GHG emissions with key suppliers, such as vehicle manufacturers, and challenge them to reduce their emissions. Some major companies include emission reduction targets in their supplier management KPIs. Choose vehicles with the lowest carbon footprint.
How can Mbrella help?
Our consulting services specialize in assisting mobility managers on their sustainability path. With our expertise, you can tackle reporting challenges and make significant progress towards your sustainability objectives. Connect with us to discover how Mbrella can be your trusted partner in sustainability : hello@mbrella.eu
Links & Docs
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464
FleetEurope, CO2 Benchmark e-book, April 2023