Why Are Organizations Focusing on Sustainability Now? | Utilimarc Fleet FYIs

Gretchen Reese (00:24):

Hey, there. Welcome to the Fleet FYIs podcast, the weekly podcast by Utilimarc that reveals how you can make the most of your data for smarter fleet management. My name is Gretchen and every week you'll hear from me, or some of the industry's finest, in candid conversations that will not only shed some light on over two decades worth of fleet data insights, but also some of the industry's hottest talking points and key metric analysis, with the aim to help you better understand your fleet from every angle. 

(00:52):

But before we begin, if this is the first time you've heard our show, thanks for stopping by. I'm so glad you decided to come along for the ride with us, but I've got a quick favor to ask you. Once you finish today's episode, if you could take a few minutes to leave us a review on your favorite podcasting platform, we would really appreciate it. Give us a rating, five stars I hope, or tell us what you liked, or leave us a comment or a question about what you've heard in today's episode. If we haven't yet covered a topic that you're interested in hearing more about, let us know. We would be happy to go over it in detail in a later show.

(01:35):

Hello everyone and welcome back to another episode of the Fleet FYIs podcast. We all know, especially if you're a frequent listener of this show, that I love chatting about sustainability by now. And again, my apologies if I sound like a broken record here. We know by now that when I refer to sustainability on this show, that it's not just surrounding electric vehicles and what they can do and what... you know, anything surrounding electric vehicles. It is sustainability from the root definition of the word itself, which basically means being able to sustain something over a long period of time.

(02:14):

We are talking about sustainability in every way possible, from cost reduction and vehicle life cycles to lowering greenhouse gas emissions and incorporating alternative energy sources to help clean up our environment. There's a lot of moving parts to this whole sustainability movement. I think we're aware by now, but that leads me into the topic for today's show quite nicely, I think. If you haven't already guessed by now, we are talking about sustainability again, or rather why organizations worldwide are choosing to focus on this right now, foot to the floor.

(02:48):

We all know that sustainability and climate change have become increasingly pressing issues for al types of businesses and all types of organizations all around the world. There is more internal and external pressure than ever before for organizations to make their practices not only sustainability, but also to find different ways of doing so. It's creating that balance that we've talked about a few times before on Fleet FYIs. 

(03:14):

Now for fleets, this pressure can be incredibly overwhelming, especially when you take into consideration that the transportation sector is considered to be the greatest contributor to greenhouse gas emissions in the United States, at around 29% in totality. And that's not even considering any other country's metrics of how much the transportation sector actually emits. But when we look at it a little bit deeper, where does this pressure come from exactly? Well, it can come directly from consumers demanding accountability, due to local legislation and mandates, or to meet the company's specific social responsibility goals. But regardless of the motive, more organizations are bringing on dedicated sustainability teams to push initiatives with immediate action. But anyways, before I get too far into it, let's dive into the show.

(04:22):

So what exactly is driving sustainability strategies? Well, sustainability can mean something different for each distinct organization, this, we already knew, especially when it comes to how they approach it. The 'how' is very important here. This can include assessing a fleet for electric vehicle readiness, considering alternative fuels for internal combustion engine vehicles, or evaluating how a fleet compares to others in the industry when it comes to greenhouse gas emissions and idle time.

(04:52):

If we take a look at some of the different reasons as to why organizations are tackling sustainability, as well as how they're doing it, it might give you a little bit of a clue as to why it's such a pertinent issue in this exact moment. Firstly on the list, it's increasing availability. While the promise of zero fleet related emissions is so tempting when it comes to sustainability reporting and corporate social responsibility, not to mention the substantial fuel cost savings. I mean, that's a pretty big piece of this too, right? But for a long time, electric vehicles simply didn't have the availability and the variety to meet the needs of fleets and individual consumers.

(05:33):

As of 2022, there will be nearly 100 different electric vehicle models available in North America alone, broadening the market in terms of price point, vehicle size and vehicle range. This will likely give fleet managers the final push to electrify wherever and whenever they can because, obviously, there's some budget constraints here, and also some regionality issues depending on what's available, where and when, and also if it actually suits the region.

(06:00):

But to give you a little bit of context here, we ran a survey and by 'we', I mean Utilimarc. We ran a survey in 2021 among some of the most influential utility companies in North America, and we found that nearly every single fleet had plans to electrify on some scale in the immediate future. Whilst the participants of this survey, their fleets averaged at only 3%, in terms of total electrified vehicles at the time of being surveyed, about 31% of fleets anticipated 10% to 25% of their fleet to become electric in the upcoming three years, with another 16% of participants expecting to electrify upwards of 25%. That's a really important number to hold on to there, upwards of 25%. That's a lot of vehicle replacement from 3% to 25%.

(06:48):

Now, these finding are, I think, pretty significant, because they show that whilst it might not have been as important in the past, going electric is on fleet managers' minds now more than ever. And the ready availability of class 1 and class 2 vehicles today makes this a lot easier to put into action.

(07:06):

Now, second on my list is accountability and transparency. I think this is probably one of the biggest things that we should take a look at, aside from cost reduction, which we'll talk about in just a second. But accountability and transparency, I think a sense of responsibility to the public and to the planet has become an imperative factor of modern day business models. I mean, consumers are demanding it. You know, just to put it into perspective here, today 81% of global consumers feel so strongly that companies have a responsibility to improve the environment. And a majority of consumers would even spend more for products from a sustainable brand, rather than one that does not participate in any sustainability initiatives.

(07:47):

Well, due to the high impact of transportation on greenhouse gas emissions and climate change, this push for transparency evidently pertains to fleet management as well, whether you can do it or not. And again, for a little bit more context here, us over on the Utilimarc marketing team, we are a huge fan of surveys. So of course, we ran another survey that had to do, uh, with (laughs) greenhouse gas reporting, also at the end of 2021. And that survey actually revealed that nearly 40% of fleet surveyed felt customer demand is the largest driver for sustainability reporting. I don't know if you knew that, but I thought it was kind of interesting.

(08:22):

In addition to internal sustainability initiatives, which was also the leading driver for many fleets today, a lot of people are feeling the pressure to report their impact publicly and to do it now. Now, this is especially relevant for organizations that have announced major sustainability goals for the upcoming decades, as consumers are unlikely to be satisfied if progress towards these stated goals is not tracked and is not publicly released. Or say for example, if they feel like they can't meet the goal on time, they'd need to know when the next steps are to be able to make the goal by, you know, their next specific date in mind, right?

(09:00):

Now, if we move on to the last piece, which is that cost savings initiative that I was chatting about a little while ago, reduction of long-term feel and maintenance costs is another major benefits to making practices greener and many organizations now are catching on to this. Finally. Whilst change in any capacity can often be time intensive and cost intensive for companies, it is becoming more widely understood that the investment into sustainability can really pay off in a monetary form as well. The most obviously investment a fleet can make is into electric vehicles and charging infrastructure. That's kind of a no-brainer here. I mean, we've covered that in how many episodes? 5? 10? 15? I don't know. 100. Who knows? (laughs) Actually, not 100, we don't have 100 episodes of the show yet, but stay tuned for that one later one. (laughs)

(09:47):

Um, anyways, depending on the size of a fleet, this can be a massive financial undertaking, but over the life cycle of your electric vehicles and your internal combustion engine vehicles, it becomes pretty apparent that EVs generally have a lower total cost of ownership in the long run. This is largely due to fuel being one of the highest operating costs for fleet. And fleet also can save a substantial amount of money in preventative maintenance when they go electric, due to their being fewer moving parts in electric vehicles in total. I think when they were actually doing the comparison initially, I was talking to, um... someone that we've had on the show quite a few times, um, in the past. His name is Dave Meisel. He is the EVP for, um, operations at Quanta Services. And I you remember, this was episodes back, so if you haven't listened to those already, he had a sustainability series in the middle of season two, I believe. 

(10:38):

Um, but he was actually talking about the difference in maintenance cost for EVs versus internal combustion engines, saying that with an internal combustion engine, you have over 230 moving parts in that vehicle at one time. With an electric vehicle, it's somewhere around 16. So do the math in your mind if you can. If you can't, that's fine. Um, but still, think about it this way. If you have 16 moving parts versus over 230 in just any standard vehicle that you're operating, the numbers seem pretty clear, you're gonna have less maintenance cost for 16-part vehicle. Just my two cents.

(11:13):

But anyways, for fleets that are made up of heavier duty trucks that don't have electric alternatives because, obviously, that's a big part of this as well, it can be worth considering converting vehicle engines to be natural gas compatible. That's kind of a stop gap solution here, you know, in the meantime. Or actually, it could even be your final solution as well, until something else, um, comes along that's better down the line. Natural gas emits less than half of the amount of greenhouse gases as regular oil or coal and can cost as little as half the price per gallon compared with gasoline, whilst the cost of converting the vehicles in lower fuel performance must be taken into account, it's still a viable option for fleets that can't electrify.

(12:14):

There are countless explanations to why sustainability has become such a hot topic in recent years. Whilst much of the buzz has resulted from the increasingly urgent climate crisis, it appears that organizations are beginning to realize the multitude of ways in which sustainability can promise longevity, not only for the planet but for their own companies and organizations as well. Whether it be environmental, social, or economic sustainability, the true idea of sustainability, like we've talked about in many an episode on the Fleet FYIs podcast, the true idea of sustainability insures that what an organization puts forth is ever green and fruitful, not only today but for years to come.

(12:56):

But I'd love to hear what you think. Do you think it seems like companies worldwide are focusing on sustainability now more than ever? Let me know by sending me an email, tagging me on LinkedIn, or use the hashtag UtilimarcFleetFYIs. You can even send me a carrier pigeon if you feel like it. There's no judgment here. By now, you guys know where to find me, so really (laughs) I probably shouldn't even be repeating myself. But anyhow, you get all the information again. (laughs) But until next time, that is all from me. I will see you in the next episode. Ciao.

(13:52):

Hey there, I think this is the time that I should cue the virtual high five, because you've just finished listening to another episode of the Fleet FYIs podcast. If you're already wanting more content, head over to utilimarc.com, which is Utilimarc, with a C, U-T-I-L-I-M-A-R-C.com, for this episode's show notes and extra insights coming straight from our analysts to you. That's all from me this week, so until next time, I'll catch you later.