The giant US multinational’s purchase of Custom Fleet points to a low-carbon future for savvy, responsible companies – and wealthy green consultants, Sarah Mills writes.
Progress towards greener global fleets has been slow, but many market pundits believe the pace is set to accelerate sharply as international power brokers become galvanised over the issue.
The principal at environment consultancy CarbonShift, Michael Molitar, says General Electric’s recent purchase of Custom Fleet from National Australia Bank is a huge signal.
“GE is for the fleet-management industry a bit like the spotted owl was for the ecosystem,” Molitar says. “When an industry such as vehicle leasing suddenly becomes super sexy to a company like GE, it’s a tremendous fundamental tipping indicator.
“GE has outperformed the market and has been AAA-rated [by Standard & Poor’s] since 1986. It’s the only original member of the Dow Jones Index. It is exceptionally good at identifying big changes and moving faster than others and it has a culture of innovation. It sees a low-carbon future and has been very active in buying assets with a carbon component. Its Ecomagination website provides a list of these investments and represents a phenomenal suite of resources.”
Many in the industry see climate change as a huge opportunity for external fleet managers, believing it will add enormously to the industry’s value proposition.
Custom Fleet’s manager for product and marketing, Paul Elliott, agrees that carbon does have a silver lining for fleet managers. “If businesses are not totally carbon neutral by 2020, they wont’ be sustainable,” he says. “Businesses will be expected to have a plan to reach this target.
“One of the major roles for fleet managers in the coming years will be to help customers reduce their footprint; to help them measure their carbon dioxide impact and give them the advice to help them reduce it.
“Considerable expertise is needed to measure a carbon dioxide footprint. It’s quite a science and involves the installation of systems and software and it’s not something that companies will be able to recruit for easily in the early stages. Not only that, the data will have to be verified by an independent market expert or financial company in order to quality for carbon offsets.”
Indeed, climate change is shaping up as a consultant’s ball. Major accounting firms have established carbon-emissions accounting functions, while fleet managers, software and systems providers, spin doctors and engineers are all finding a lucrative market for their wares.
Timing is great for fleet industry
Billions of dollars have been poured into generating the global intellectual and physical infrastructure needed to facilitate change and the time may be nigh for the fleet industry.
The general manager of StateFleet, Michael Wright, is responsible for about 25,000 vehicles, ranging from police cars to wildlife vehicles, ambulances and general government vehicles.
As part of the NSW government’s greenhouse emissions policy, StateFleet introduced a “cleaner fleet” initiative in July 2005.
While its aim was to drive changes in behaviour, including fuel efficiency, for the benefit of the environment, it has proved a windfall for the government in the face of sharply rising fuel prices.
“Certainly people are very focused on fuel costs at the moment,” Wright says.
“When you set targets in greenhouse gases, it means by definition that you use less fuel. Smaller cars drive down gas emissions and hence the fuel costs. To date, the cleaner fleet initiative has led to a 13 per cent fall in fuel usage in two years.
“Based on our first-year estimates, we’ve saved significant amounts of money in capital and operational costs.”
“We’re very happy with this as an early outcome. The savings are forecast to rise substantially each year. We now have a base and will be able to track it more effectively.”
The spectre of government regulation is also rattling the industry. Signals have been mixed. At the federal level, the Liberal government is taking a hands-off approach, but the state governments are already indicating a propensity to regulate, starting with NSW and Queensland mandates of E2 and E5 policies for fuel wholesalers.
There has also been talk of government-mandated fleet compositions, but at this stage, governments appear to be relying on market forces to guide businesses. The NSW government, however, is mandating its own fleet compositions.
“The NSW government is increasing its usage of E10 fuel and will be introducing a policy shortly that mandates the purchase of fuel-efficient vehicles,” Wright says.
Reader ROI
- Market leaders are investing in areas where a carbon-constrained economy offers business opportunities, such as more enlightened fleet management.
- The emphasis on adopting cleaner fleets and other green policies are creating a lucrative consulting market.
- The spectre of government regulation on carbon emissions probably won’t disappear, so change remains likely.