Managing the Financial Side of Commercial Fleets

Defining ‘Green’ Metrics

Leading fleets track progress of green initiatives by measuring greenhouse gas emissions. A complete accounting of fleet emissions must include tracking CO2, methane, nitrogen oxide, and refrigerants.

November 2009, by Jason Mathers

 

The concept of "green" has been ill-defined for the fleet industry, making progress towards reduced environmental impact difficult to track. Thus far, benchmarking against internal goals or external baselines largely has been impossible. However, environmental performance doesn't have to be difficult to track.

Leading fleets track their "greening" progress by measuring greenhouse gas (GHG) emissions, the leading factor in human-caused climate change. Vehicles are responsible for about a quarter of U.S. greenhouse gas emissions.

Insuring Performance

The ACE Group, a leading global commercial property and casualty insurance and reinsurance organization, has worked at length to reduce its GHG footprint. A member of the U.S. EPA Climate Leaders program, ACE committed to reduce its GHG emissions by 8 percent per employee from 2006 to 2012. The ACE 175-vehicle fleet was included as part of this goal.

ACE uses metrics representing total GHG emissions and average vehicle mpg. ACE's fleet management company, PHH Arval, provides access to fuel consumption and total GHG emissions data through the PHH GreenFleet program.

ACE also tracks average observed vehicle fuel economy through vehicle mileage and fuel consumption data. The company has set a stretch goal of a 30 mpg average in 2012, representing a 40-percent improvement from its baseline.

"Our average vehicle mpg metric is a simple way to monitor our progress in providing ACE employees with the tools they need to reduce their environmental footprint," said Melissa DeGennaro, environmental analyst for ACE. "It's also a direct metric of something that we can control."

Tracking Progress

U.S. Foodservice (USF), a foodservice distributor, has also been leading the way in tracking and reducing environmental impacts from its fleet. From 2007 to 2008, USF reduced fleet emissions by more than 4 percent through such fleet efficiency improvements as reducing idle times through driver training and automatic idle shutoff, installing maximum speed controls on vehicles, and investing in technology solutions for more efficient delivery truck routing.

"Our drivers are on the road 365 days a year, delivering high-quality food and related products to over 250,000 customers, including restaurants, hospitals, hotels, schools, and governmental operations," said Mike Frank, SVP of operations at USF. "Quality and timeliness are critical to our customers. That's why we select fleet metrics that focus on efficiency and productivity."

USF measures gallons of fuel consumed per ton of product moved. Linking environmental performance to efficient product movement was key. With a good fuel data collection process, USF calculated gallons consumed, but the weight of product moved was more challenging. Like many companies, USF tracks cases of product moved. However, since the composition of product cases can change over time, this metric is not an ideal environmental performance measure.

"USF came up with an innovative solution to the vexing problem of tracking product weight. Weighing a representative sample of product annually and developing an annual average case weight allows for better year-over-year comparisons and benchmarking with other leading fleets," noted Tom Murray, managing director of corporate partnerships at Environmental Defense Fund, which worked with USF on its efforts.

It's All About the Data

Quality data is vital to track environmental performance. Both ACE and USF collected fuel consumption data, critical for calculating GHG emissions. The combustion of fuel produces emissions. Fleets can calculate CO2 emissions by multiplying gallons of fuel by the fuel-specific carbon dioxide co-efficient. For example, each gallon of gasoline directly emits 19.4 lbs. of CO2 when burned. Carbon dioxide accounts for about 95 percent of greenhouse gas emissions from passenger vehicles.

Translating product case data into tons, USF developed a stronger long-term metric. ACE tracked overall performance and performance related to its fleet mpg; both allow comparisons over time.

Using consistent and comparable units is key in tracking environmental performance. The most common unit used to measure GHG emissions is metric ton. It is also important to be clear about which emissions fleets track. While CO2 is the easiest GHG to quantify, full GHG accounting from vehicles requires tracking emissions of methane, nitrogen oxide, and refrigerants.

The following summary outlines seven fleet environmental benchmarking metrics. Given their multifaceted nature, an individual fleet may want track progress by following a series of metrics.

About the Author

Jason Mathers is corporate partnerships project manager for the Environmental Defense Fund. He can be reached at (617) 406-1806 or by e-mail: [email protected].

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