extending the scope of environmental management: the case of company-assisted travel in britain

EXTENDING THE SCOPE OFENVIRONMENTALMANAGEMENT: THE CASE OFCOMPANY-ASSISTED TRAVELIN BRITAINAlan Neale, University of East London, Dagenham, UK

European initiatives such as eco-labellingand eco-management and audit haveencouraged a focus in companyenvironmental policies on theenvironmental impacts directly associatedwith the production, distribution, use anddisposal of products. Indirect effects, suchas business-related travel, have been givenmuch less attention. The environmentalconsequences of company policies toinclude company cars, and other forms ofassistance for car travel, in theremuneration packages of Britishmanagers are assessed. The need to targetthe travel miles generated by businessactivity is highlighted, and sources ofresistance to policies to cut back oncompany cars are identified. Success inbringing company-assisted travel withinthe orbit of company environmentalpolicy, it is suggested, would not onlybring immediate environmental benefits,but could also be significant in challengingaspects of organizational culture whichhold back the development of sustainablebusiness.

INTRODUCTION

Many businesses are now exploring how todevelop an environmental component totheir strategic planning, performance

monitoring and reporting. As company environ-mental policies are evolving away from the blandsuperficialities of the first, PR-oriented, environ-mental reports towards the installation of moresophisticated environmental management systems,the range of environmental impacts and solutionsunder consideration is being extended. A need tocomply with tougher regulations, to anticipatepossible changes and, increasingly, to determinethe best practicable environmental option, hasencouraged a shift away from end of pipe pollutioncontrols towards the development of clean pro-duction systems. Energy efficiency, with its capa-city to generate cost advantages for the company inaddition to environmental benefits, has become anobvious target, and notions of product stewardshipare encouraging the use of life-cycle assessment totrace environmental impacts from cradle to grave.

Although the quality of environmental analysishas increased, the focus has, on the whole,remained on environmental impacts directlycaused by the production, distribution, use anddisposal of products. Indirect impacts associatedwith business activities, and the effects of culturalvariables on environmental strategy and perfor-mance, have, as yet, received little attention. Insome cases a desire to secure employee commit-ment to corporate environmental goals has spot-lighted obvious, but relatively superficial, issuessuch as what type of cups to order for the coffeemachines, but generally the emphasis in environ-mental management systems on site issues and inlife-cycle assessment on product design has rein-

CCC 0964-4733/97/010009–09# 1997 by John Wiley & Sons, Ltd and ERP Environment.

Business Strategy and the Environment, Vol. 6, 9–17 (1997)

BUSINESS STRATEGY AND THE ENVIRONMENT

forced a reluctance to look too closely into lessimmediately visible aspects of organizational lifewhich might have a more profound environmentalimpact.

This paper explores the possibilities of extendingenvironmental policy to include impacts which arenot site- or product-specific. It concentrates onbusiness-related car travel as one example of takenfor granted corporate policies which can generatesignificant environmental impacts and reinforcecultural barriers to environmental improvement.The paper starts with an assessment of the envir-onmental significance of transport and why this isneglected in most company environmental reports.It then analyses the company car syndrome inBritain and its environmental impact. Possiblesources of resistance to targeting this in environ-mental policy are explored and opportunities thatmight arise from change are identified. The paperconcludes that businesses need to take moreaccount of environmental impacts embedded inorganizational culture if they are to respond crea-tively to the demands of sustainable development.

BUSINESS, TRANSPORT AND THEENVIRONMENT

The role of the transport sector, and road transportin particular, in generating significant amounts oflocal pollution is well known and it is becomingincreasingly clear that, of all the contributors toglobal warming, transport is one of the mostresistant to greenhouse gas abatement. In the UK,road transport in 1993 accounted for 91% of totalcarbon monoxide emissions, 52% of black smokeemissions, 51% of nitrogen oxide emissions and45% of volatile organic compound (VOC) emissions(Department of the Environment, 1995). Carbondioxide emissions from the transport sector areprojected to rise by 45–60% between 1990 and 2020,increasing its share of total UK emissions of thismajor greenhouse gas from 21 to 27% over the sameperiod (Department of Transport, 1995). New road-building projects, planned in response to trafficdemand, but themselves generating additionaltraffic, have become, in Britain as in many othercountries, a highly visible symbol of unsustainabledevelopment and the site of significant environ-mental protest.

Many businesses are directly involved in thetransport sector—constructing the infrastructure,manufacturing the vehicles, supplying the fuel andproviding the services. But all businesses areindirectly involved—their purchasing and dis-tribution policies affect the length and mode of

freight journeys and their location decisions haveincreasingly significant implications for the lengthand mode of personal journeys to work, to shopand for leisure. British companies have a particu-larly powerful influence on travel decisionsthrough high levels of provision of company carsand other forms of travel assistance. As yet, how-ever, transport issues have played little part in theiremerging environmental strategies.

THE SCOPE OF ENVIRONMENTALMANAGEMENT

One of the key choices to be made in any envir-onmental assessment concerns the scope of issuesto be addressed. With environmental impactassessment, developers are encouraged to consultwith the authorities, and in many cases withenvironmental groups and the general public aswell, in an explicit scoping process. This helps tofocus attention on the most significant impacts andto encourage more effective co-operation. When itcomes to evaluating the environmental impact of acompany’s existing operations, however, outsideinvolvement in scoping has been less well devel-oped.

Since Procter & Gamble used life-cycle assess-ment to suggest that disposable nappies are nomore harmful to the environment than re-usableones, once the energy and water use in launderingthe latter are taken into account, company interestin the technique has often been motivated by adesire to identify environmental advantages fortheir products which may not be perceived bycritics. The analysis has to be bounded if infiniteregress is to be avoided, but the lack of an agreedmethodology has given consultants opportunitiesto bias selection in such a way as to favour theirclients’ products. With the EU eco-labellingscheme, independence and neutrality are suppo-sedly guaranteed by including consumer andenvironmental groups alongside industry repre-sentatives on its boards, but there is, as yet, noagreed framework for consultation, and labellingcriteria are developed more by political bargainingthan by systematic assessment.

With environmental management systems andcompany environmental reports, corporations canchoose the scope of their assessments with littlereference to public concerns. The EnvironmentalIndex developed by the UK Chemical Industry’sResponsible Care programme, for example, asksmember company sites to select five outputs thatthey judge to be most critical and to weight themaccording to their assessment of relative environ-mental impacts, without any reference to external

COMPANY-ASSISTED TRAVEL IN BRITAIN

10 BUSINESS STRATEGY AND THE ENVIRONMENT

stakeholders. In the case of environmental reports,there is total freedom for the company to reportwhat it wishes to reveal, and to omit what it wouldprefer to ignore or conceal.

A few UK companies now publish separateenvironmental reports each year, but most preferinstead to incorporate some disclosure of theirenvironmental performance in their annual reportand accounts. A recent survey suggests that in1994–1995, a third of UK companies included somediscussion of environmental issues. Of these,however, only 28% provided any quantification oftheir environmental achievements (CompanyReporting, 1995). Although some firms report fail-ures (usually in the form of complaints or prose-cutions) as well as achievements, information isselected to present the company in the best possiblelight. Tesco, for example, presents the introductionof low benzene petrol in its filling stations as‘responding to concerns over air pollution’. Thereis no mention, however, of the effect on car use ofits strategy of developing superstores which com-bine one-stop shopping with free car parking andcheap fuel in out of town locations (Tesco, 1995).Similarly BAA, an airport operator which is unu-sual in identifying sustainability as a corporateobjective in its annual report, highlights its successin reducing its own carbon dioxide emissions,while ignoring the much more serious issue ofemissions from the aircraft movements on whichits business depends (BAA, 1995). Selective use ofinformation, even in the better quality environ-mental reports, makes it impossible to compare acompany’s environmental performance with thatof its competitors, or to identify its overall impacton the environment.

Third-party corroboration under the EU’s Eco-management and Audit Scheme (EMAS) bringsgreater rigour to environmental management andreporting by specifying certain issues that must becovered and requiring independent verificationand public reporting of results. Yet, even here,companies are free to choose what sites they wantto register, which of their environmental effectsthey deem to be ‘significant’, and what targets theywant to set, subject only to legal compliance and acommitment to continuous improvement. AsEMAS registration is site-based, specifically cor-porate effects are given little attention. Initialexperience in Britain suggests that most partici-pants concentrate almost exclusively on the processissues specified in Regulation 1836/93 and do notaddress sustainability issues.

In the first batch of five UK sites to win regis-tration under EMAS in 1995, for example, three(Akzo Nobel’s chemical manufacturing plant atGillingham, Ciba’s chemical manufacturing plant

at Clayton and National Power’s Drax electricitygenerating plant) made no mention of transport.One, D2D at Kidsgrove (which designs, manu-factures and distributes circuit boards) calculatedthe business miles saved by using its video-con-ferencing service, but did not relate this to totalmiles travelled (D2D, 1994). The other, Nor Systemsat Harwich (which manufactures labels and label-lers) identified exhaust emissions from companycars as a significant environmental issue, but aimedto tackle them by regular servicing and by intro-ducing more fuel-efficient vehicles, rather than byexploring possibilities of vehicle use reduction(Nor Systems, 1995).

Experience to date suggests that although com-pany initiatives are not a substitute for externalregulation and accountability, they are having somepositive effects. There is, however, little sign thatmany businesses are making positive movestowards sustainability—The Body Shop is atypicalin aiming as a long-term environmental planningobjective ‘to replace as many of the planet’sresources as are utilized’ (Wheeler, 1993). AsRichard Welford has suggested, for businesses tomove in this direction they will need to go beyondsetting environmental targets which are only mar-ginally better than existing regulations, and tobecome much more proactive, incorporating eco-logical values into their corporate cultures anddecision-making (Welford, 1995). Company choiceis essential in this. At the same time, commitmentto sustainability implies a preparedness to identifythe overall impact of the company on the envir-onment, to involve employees, customers, suppli-ers and environmental groups in the decision-making process, and to accept the changes whichwould be needed to respect sustainability con-straints, going far beyond conventional notions ofenvironmental management.

In much the same way that Western managementaccounting practices, in focusing on direct labourcosts, have diverted attention from what is oftenthe much more significant category of indirect(overhead) costs (Johnson and Kaplan, 1987), theevolving methodologies of environmental man-agement systems and life-cycle assessment areencouraging a focus on environmental impactsdirectly associated with products and processes, tothe exclusion of indirect impacts associated withthe location and administration of business activ-ities. Yet indirect environmental impacts, such aspersonal travel, are significant for two reasons.Firstly, in many businesses they may swamp thedirect impacts that are more usually the main focusof environmental strategy. This is particularly trueof the service sector; BSO Origin, a Dutch computerservices company, have calculated that more than

A. NEALE

BUSINESS STRATEGY AND THE ENVIRONMENT 11

90% of their environmental impact was caused byroad traffic emissions, mainly associated with staffcommuting to work (Environmental Data Services,1992; Jack, 1994). Secondly, they often reflect anorganizational culture that discourages environ-mental innovation. This is especially true of thewidespread practice in Britain of allocating com-pany cars according to status, which not onlygenerates unnecessary travel, but symbolizes hier-archical relationships which conflict with thevalues of sustainable business.

THE COMPANY CAR SYNDROME

‘Status’ cars for executives and ‘need’ cars for salesrepresentatives and the like have been around forsome time, but it is only in the last two decades thatcompany cars have become a standard feature inthe remuneration packages of most levels of Britishmanagement. Back in the 1960s, company carswere so insignificant that they were not consideredworthy of separate mention in the major GlasgowUniversity study of fringe benefits (Reid andRobertson, 1965). In the early 1990s, however, acomprehensive survey of employee benefits foundthat 98% of companies provided company cars(Confederation of British Industry, 1992). This wasa higher proportion than any other benefit; crechefacilities, in contrast, were provided by only 4% ofcompanies.

Surveys by pay consultants suggest that,although there is considerable variability betweencompanies in the detail of their car allocationpolicies, they share a similar basic pattern. It iscommon, for example, for companies to provide‘need’ cars for employees whose job requires themto drive more than about 10,000 miles each year oncompany business. Status or ‘perk’ cars are typi-cally provided for managers earning more thanabout £25,000 a year, even if their job does notrequire much business travel. The type of carallocated varies with job status: executives canreceive three or four litre luxury cars worth £30,000or more, whereas senior managers might receivetwo litre models worth £23,000, middle managers1.8 litre models worth around £15,000 and salesrepresentatives 1.6 litre models worth around£13,000. Provision of fuel also varies with job sta-tus, with entitlement to fuel for private motoringincreasing with seniority. Typically, most execu-tives receive unlimited free fuel for private use(except for holidays abroad), whereas most middlemanagers and sales representatives receive no freefuel for private motoring, or only a restrictedamount (Income Data Services, 1994; Alan Jones &Associates, 1995; Monks Partnership, 1995).

The growth of ‘status’ car provision in the 1970sreflected widespread boardroom concern thatstatutory incomes policies and high marginal ratesof income tax were damaging management incen-tives. Taxation of company car benefits was parti-cularly lenient at this time as it depended not onlyon a low estimate of annual value (12½% of theoriginal cost), but on declared private mileage(which was difficult to verify). Providing managerswith company cars enabled businesses to maintainpost-tax differentials in remuneration withoutcontravening incomes policy and at little cost tothemselves. Most fleet managers at the time boughtonly British cars, so the growth in the company carsector was welcomed by many within the ailing UKcar industry as a cushion against the inroads thatEuropean and Japanese producers were beginningto make into private car sales.

From the late 1970s the tax advantages of com-pany car provision were progressively reduced, sothat by the mid-1990s company car benefits weretaxed at 35% of the price (with reductions accord-ing to the amount of business mileage and the ageof the car), with an additional tax on free fuel forprivate use. Over the same period, statutory payrestraint was abandoned and marginal tax rates onhigh incomes were dramatically reduced. Asmanagerial salaries soared, and the tax advantagesof company cars lessened, it was widely predictedthat company car benefits would fall back to pre-vious levels. In fact, the opposite occurred. Whenthe tax authorities started measuring company carprovision, in 1978–1979 there were just over ½million recipients. As Table 1 shows, the number ofrecipients has increased dramatically since then,peaking at almost two million in 1990–1991, withslightly more than half receiving free fuel for pri-

Table 1. UK recipients of company car and free fuelbenefits (thousands)

Tax year Company carsavailable for

private motoring

Free fuel forprivate motoring

1978/79 560 N/A1981/82 790 N/A1983/84 850 5001985/86 1070 6601987/88 1550 8101988/89 1750 9501989/90 1850 10301990/91 1950 10101991/92 1900 10101992/93 1810 9101993/94 1740 8901994/95 1700 820

Source: Inland Revenue Statistics (Inland Revenue, 1991 & 1996).Note: The table excludes private cars used by self-employedpeople in their business.



vate use. According to the National Travel Survey,three-quarters of company car recipients in 1992–1994 were either employers, managers or profes-sional staff (Department of Transport, 1995a).

Many businesses have, in recent years, changedtheir policies on company cars by offering flexiblebenefits packages (where employees can choosewhat form they want non-pay benefits to take), orby offering a cash alternative (where employees canchoose an addition to their salary instead of acompany car). Employee take-up of such alter-natives has been limited, however. Most pay con-sultants’ surveys suggest that only 10% of eligiblestaff choose a cash alternative when one is offered(The Wyatt Company, 1994; Alan Jones & Associ-ates, 1995; Monks Partnership, 1995). One studyfound that 27% of employees who opted for a cashalternative regretted it later (Lex Vehicle Leasing,1995) and another concluded that ‘the company carruns far too deep in the managerial psyche to beundermined by tax changes, cash alternatives orhigh administration charges’ (Income Data Services,1994).

Status cars, unrelated to business need, are nolonger a peculiarly British phenomenon. As mul-tinational firms have reluctantly had to respond todemands from their British subsidiaries for gener-ous company car allocations to conform to condi-tions in the local managerial labour market,pressures have grown for them to provide similarbenefits elsewhere in Europe. Yet the extent ofcompany car provision is still greater in Britainthan elsewhere in Europe, in many cases by asubstantial amount. The proportion of managers insubsidiaries of multinational companies receiving acompany car, for example, ranges from 87% in theUK to 28% in Spain (Monks Partnership, 1994).

A case is sometimes still made that the perpe-tuation of the company car syndrome is beneficialto what remains of the UK car industry. Garel Rhys,for example, points out that the UK has a similarGNP per head as Italy. There, the car market isdominated by small models, but in Britain, com-pany demand ensures that many medium-sizedcars are bought. This, he suggests, ‘adds to thevalue added in the British economy’, providing ‘alarger throughput in the UK car plants, componentsuppliers, and dealerships’ (Rhys, 1995). The dayshave long gone, however, when company cars inBritain came almost exclusively from British plants.Few companies now insist that their fleet cars mustbe British, and most now accept, not only Eur-opean, but also Japanese models, even if they areassembled outside Europe (Monks Partnership,1995). Mercedes and BMWs are now almost aspopular among British executives as Jaguars andRovers, while the Japanese car manufacturers are

making determined efforts to strengthen theirfoothold in the medium-sized fleet market.

ENVIRONMENTAL IMPACT OFCOMPANY-ASSISTED TRAVEL

According to the National Travel Survey, 10% ofhousehold cars in Britain in 1989–1991 were pro-vided by companies. The median age of companycars was one to two years, compared with six yearsfor their privately owned counterparts, and 40% ofcompany cars had engines larger than 1800cc,compared with 16% of their private counterparts(Department of Transport, 1993). Because companycars are, on the whole, newer than private cars,they are more likely to be fitted with catalyticconverters and to run on unleaded petrol, but theirlarger engines mean they have poorer fuel econ-omy. Company cars are also more likely than pri-vate cars to have diesel engines, which, althoughthey are more efficient than petrol engines, poseadditional health hazards from particulate emis-sions.

The main environmental damage from companycars, however, comes not from their specificationbut from their use. As Table 2 shows, the annualmileage of company cars is, on average, about 2½times that of private cars. The difference reflects notonly much greater business use, but also highermileages for commuting and other private uses(averaging 200 miles per week).

Where company car drivers are given free fuel,there is little incentive for them to drive economic-ally. Indeed, they are almost twice as likely to breakmotorway speed limits as private motorists (LexVehicle Leasing, 1994). They are also more likely todrive to work in congested conditions, where fuelconsumption per mile is high and local air qualitystandards are most likely to be breached. In Lon-don, even though only 12% of employed residentsin 1991 were company car drivers (LondonResearch Centre, 1994), 47% of all car commutersentering Central London during the morning peakin 1989 were in company cars, and a further 40%

Table 2. Average annual mileage of company cars, self-employed business cars and private cars in Britain byjourney purpose, 1992–1994

Companycars

Self-employe-d

business cars

Privatecars

Business 10360 5310 610Commuting 5160 3600 2390Other private use 5290 4030 5280

Total 20810 12940 8280

A. NEALE


received some other form of company assistance,such as free parking, with their trip (Kompfner etal., 1991).

Trends such as the relocation of jobs into busi-ness and retail parks which are poorly served bypublic transport have boosted the proportion ofBritish employees who travel to work by car from57% in 1985–1986 to 66% in 1992–1994 (Departmentof Transport, 1995a); few of these car commuterspay for their parking space at their place of work.Free parking, which benefits private car commutersas well as company car drivers, may be even moreof an encouragement to car use than the provisionof company cars (Hudson et al., 1993); its annualvalue can be up to £6000 a year in parts of CentralLondon (NEDC, 1991).

In part, the extent of company-assisted travelreflects quirks in the tax regime, which continue toencourage car use. Free parking at work, forexample, is a benefit which is completely untaxed.The annual benefit of a company car which theInland Revenue assumes for income tax purposes(35% of its price in the case of cars which are lessthan four years old) is reduced by a third if busi-ness miles travelled exceed 2500, and by two-thirdsif they exceed 18,000. Although the object of thesemileage thresholds is to tax company cars whichare provided as ‘perks’ at a higher rate than thosewhich are provided for genuine business use, theireffect is to encourage company car drivers to ‘cre-ate’ unnecessary business miles to lift them into ahigher mileage bracket so that their tax bill can bereduced. The tax on fuel provided by companiesfor private journeys also encourages car travelbecause it is charged at a fixed rate, irrespective ofthe number of private miles travelled. The breakeven point, where the actual benefit to theemployee after tax exceeds the cost of the fuel,ranges between 2000 and 4700 miles, depending onengine size, fuel consumption, fuel price and themarginal tax rate of the employee (Friedman andGarrett, 1993). Beyond this point, the marginal costof private travel to the user is zero.

Although the tax regime is partly responsible forexcessive company car use, companies share muchof the blame. If companies did not provide cars forstatus reasons as well as for genuine business use,the tax authorities would not need to reduce taxrelief in relation to business use. And if companiesdid not provide free car parking and free fuel forprivate use, their generous tax treatment would notbe an issue. The Royal Commission on Environ-mental Pollution (1994), in a comprehensive reporton transport and their environment, has called forfull compliance with World Health Organizationhealth-based air quality guidelines for transport-related pollutants by 2005, additional local air

quality standards based on critical levels to protectsensitive ecosystems, and a 20% reduction in car-bon dioxide emissions from surface transport by2020. Among its recommendations to achieve thesetargets, it suggests changes in fuel duty to doublethe real price of fuel by 2005 and, specifically inrelation to company cars, the taxation of the actualvalue of fuel benefits and the abolition of mileagethresholds for company car benefits. Withoutchanges in company policy, however, it seemsunlikely that such fiscal adjustments would, inthemselves, achieve the desired results.

BUSINESS RESPONSES TO TRANSPORTPOLLUTION

To obtain input from the business community intoenvironmental policy-making, the UK Governmentset up the Advisory Committee on Business andthe Environment (ACBE) in 1991. Soon after the1992 Earth Summit, this body proposed wide-ran-ging changes in policies on transport, affecting bothgovernment and business, as a contribution tomeeting national targets on climate change (ACBE,1992). The changes included fiscal measures topromote more fuel-efficient vehicles, the removal ofall company car subsidies and active discourage-ment by companies of unnecessary car use by theiremployees. The ACBE also published an environ-mental best practice guide for the management ofcompany transport fleets (ACBE, 1993). Since 1993it has adopted a much more cautious approach,stressing that ‘it is very concerned at the potentialscale of the extra costs to business’ of the RoyalCommission recommendations on fuel duty andcompany car tax rules (even though it had itselfmade similar recommendations in its 1992 report).It now prefers instead to focus attention on thepotential benefits of government encouragement ofalternative fuels and developments in transporttelematics (ACBE, 1995).

As business leaders in Britain fight a rearguardbattle to maintain their share of saturated andcyclical markets in the face of intensified competi-tion from low labour cost countries (Williams et al.,1995), it is perhaps not surprising that they shouldbecome particularly sensitive to any fiscal changesthey fear might reduce the competitiveness of theirproducts, and seek instead technical fixes thatmight enable them to deliver environmental bene-fits at minimal cost to themselves. The currentACBE position, however, exaggerates both theenvironmental advantages of alternative fuels/transport telematics and the financial costs ofchanges in transport taxation.



Natural gas, which ACBE favours as an alter-native fuel in the short term, does offer significantadvantages over petrol and diesel in terms of car-bon monoxide, VOC and particulate emissions.Nitrogen oxide emissions may, however, be greaterfrom natural gas than from diesel (depending ondriving conditions) and, although carbon dioxideemissions are significantly lower than from petrol,any global warming advantages of this are coun-terbalanced by methane emissions from the pro-duction and distribution of the fuel. Electricvehicles, which the ACBE favours in the longerterm, are zero emission at the point of use, butmuch of their pollution is merely displaced fromthe kerbside to the power station, and positiveeffects on global warming would depend on thefeasibility of power generators diversifying awayfrom fossil fuels. Like installing catalytic con-verters, switching to alternative fuels would pro-vide some short-term respite for local air quality,but would do little or nothing to reduce globalwarming impacts, traffic congestion or demand fornew roadspace (Neale, 1995a).

The claimed environmental advantages ofadvanced transport telematics (the application ofelectronics and telecommunications to transport)centre mainly on the possibilities they create forautomatically charging road users at a variable ratewhich reflects the amount of congestion. The linkbetween congestion charging and environmentalimprovement is, however, problematic, anddepends mainly on political decisions about howthe revenues are spent. There is even a questionmark about the expected positive effect on trafficflows in congested areas, if, as many company cardrivers anticipate, companies pick up the bill in thesame way that they do for fuel duties (Neale,1995b).

Fears about the costs to business of increased fuelduties are based on static assumptions that littlecan be done to improve fuel efficiency or to reducemiles travelled. Yet even in the UK, where trans-port users have historically been less responsive tomoderate fuel price rises than transport users inother countries, responsiveness to substantial pricerises has been surprisingly high (Dargay, 1993).Further reforms to company car taxation, such asremoving incentives to use fuel-inefficient vehiclesfor unnecessary travel, could only increase thelikelihood that the long-term effect of higher fuelduties would reduce fuel consumption more than itincreased business costs. In the longer term, it canalso be argued that continuous rises in fuel dutiesare needed to stimulate the technological innova-tions which will be required if fuel consumptionper mile is to be significantly reduced (Weizsacherand Jesinghaus, 1992).

What is perhaps most disappointing about theACBE’s current position is the way it has back-tracked from its clear understanding in 1992–1993that subsidies for company car use cannot be jus-tified, and that corporate environmental policyshould promote not only greater fuel efficiency, butalso traffic reduction.

AN ENVIRONMENTAL POLICY FORCOMPANY-RELATED TRAVEL

To respond adequately to the challenge of reducingtravel-related environmental impacts, businesseswould need to specifically target the travel milesthat are generated by their activities. Such targetshave recently been introduced in both the USA andthe Netherlands, where company cars play a muchless prominent part in management remunerationthan in the UK. In Boston, Massachusetts, all firmswith over 50 employees have to include a companytransport plan, with targets for public transportuse, with any planning application, and in south-ern California all employment sites with 100 ormore workers must prepare and implement ride-sharing programmes for car commuting. In theNetherlands, the Ministry of Transport hasencouraged firms to draw up company transportplans to implement a national objective of reducingbusiness-related traffic by 20%. Programmes toencourage teleworking form an integral part ofpolicies to reduce journeys to work in both theNetherlands and California.

Although much can be learnt by British compa-nies from experience in the Netherlands and theUSA, the most immediate returns in the Britishcontext are likely to be obtained from reducing orre-structuring company-assisted travel. The mostobvious target is the continued allocation of com-pany cars to reflect status rather than genuinebusiness need, which can have no place in a com-pany which is committed to real environmentalimprovement. For employees whose jobs requiresubstantial business travel, a review would beneeded to determine whether or not less envir-onmentally damaging alternatives could be used(teleconferencing, for example, or the greater use ofpublic transport coupled with access to a pool carwhere this is not feasible). For the remainingcompany car fleet, where there is at present norealistic alternative, greater priority would need tobe given to fuel efficiency in determining themodels purchased.

Continued provision of free fuel for private use isalso an obvious candidate for withdrawal, andcompanies would need to reconsider the practice ofoffering mileage allowances, for company or pri-

A. NEALE


vate cars, at scaled rates which increase with theengine capacity of the car. A fixed rate, based onthe running costs of the most fuel-efficient models,would be more appropriate, particularly if coupledwith encouragement to use public transportwhenever possible and mileage allowances forcyclists.

Free parking for commuters is another aspect ofcompany-assisted travel which needs questioning.Regardless of whether or not car parking benefitsare taxed, consideration should be given to redu-cing the number of on-site parking places. Whereparking meters are in place in local streets, it mightbe appropriate to administer a charge and use therevenues to subsidize public transport seasontickets or introduce a company bus link to thenearest rail station and provide improved storageand changing facilities for cyclists. Where chargingis impractical because of spillover effects on thesurrounding area, then the reduced number of carparking spaces could be allocated by need, givingpriority to employees who require a car for essen-tial business use, to those whose mobility or accessis impaired, and to car-sharers.

POLICY IMPLEMENTATION ANDCULTURAL CHANGE

In implementing a policy of reforming companyassistance to reduce business-related travel, thenature of any resistance to such a change wouldneed to be explored and consideration given tohow this might be overcome. To avoid any financialsuffering for existing beneficiaries, and to reducepotential problems in recruiting new staff, com-pany travel benefits might need to be ‘bought out’with cash or alternative benefits of equivalentvalue. Although this would remove much of thedirect financial benefit for companies, indirectbenefits, in addition to environmental ones, wouldremain in the form of reduced waste fromemployees generating unnecessary business jour-neys to push their mileage over a tax threshold.

Even if cash allowances for company car buy-outs were set reasonably high, there might still besome managers who would resent losing theircompany car because of its role in symbolicallyrepresenting their status within the organization. Itis at this point that the threats, but also theopportunities, of challenging the company carculture are at their most intense. Managementthinkers such as Rosabeth Moss Kanter and TomPeters suggest that innovating behaviour dependsabove all on a long-term corporate vision whichguides all the activities of the business and a

remuneration system that rewards team perfor-mance rather than hierarchical status. If this is trueof new product development, it is equally true ofenvironmental management, where, as Porter andvan der Linde have stressed (1995), ‘environmentalprogress demands that companies innovate to raiseresource productivity’.

We already have evidence from the British paperindustry that a team approach to management anddecision-making is associated with both improvedenvironmental performance and improved eco-nomic performance (Wehrmeyer and Parker, 1995).Looking ahead, sustainable business implies, asShrivastava and Hall (1995) suggest, ‘fundamentalchanges in corporate mission’, which need ‘mea-surement and reward systems (which) includeevaluation of environmental and social perfor-mance’, and ‘the early and constructive involve-ment of key external stakeholders—environ-mentalists, community leaders, the media, reg-ulators—in the strategic process’. In all this, theyinsist ‘to speed the path to sustainability, it is cru-cial that the executive team and board set the tone’.

Two different case studies of the introduction of‘harmonization’ by British firms have pointed outhow the rhetoric of single-status working on theshop floor has been contradicted by the continueduse of company cars to reflect managerial status(Rowlinson et al., 1991; Watson, 1994). The retentionof company policies which associate cars with sta-tus is not only divisive in human resource man-agement terms, but it also conveys a powerfulmessage that environmental damage from car useis acceptable to the company. At a cultural level thiscan undermine operational policies designed tolimit environmental damage from site operationsand product portfolios. By the same token, how-ever, changes to company policy which discouragecar use not only produce immediate environmentalpayoffs in terms of reduced pollution from busi-ness-related travel, but can also contribute to thecultural change which will be necessary if busi-nesses are to make the transition to a strategy basedon sustainability.

CONCLUSIONS

The provision of ‘status’ cars for all levels ofmanagement in Britain is a comparatively recentphenomenon, but it has become an entrenched partof organizational culture, persisting long after theoriginal reasons for its growth have disappeared.The association of hierarchical status with size ofcar has combined with a tax regime which con-tinues to provide incentives for unnecessary travelto exert upward pressure on both car miles tra-



velled and fuel consumption per mile. There is astrong case for extending the scope of environ-mental management to cover business-related tra-vel as well as the process and product life-cycleissues prioritized in existing systems. There wouldbe direct environmental benefits, in the form ofimproved air quality, greenhouse gas abatement,reduced congestion and reduced demand for newroad-building. In addition, there would be indirectbenefits if managerial questioning of the value ofcompany cars contributed to changes in organiza-tional culture to make it more compatible with along-term vision of sustainable business.

This paper has highlighted the environmentalimpacts of one aspect of organizational culture,company cars, in one national economy, Britain.There are many other aspects of organizationalculture which impact on the environment, andteasing them out will be a challenging task. Busi-nesses can make marginal improvements in theenvironmental performance of their products andprocesses without questioning their cultural valuesand assumptions, but if they want to move towardsgreater sustainability it is a challenge they will haveto face.

REFERENCES

ACBE (1992). Recommendations on Global Warming, Sec-ond Progress Report, DTI/Department of the Envir-onment, London.

ACBE (1993). A Guide to Environmental Best Practice forCompany Transport, Department of the Environment,London.

ACBE (1995). Response to the Royal Commission on Envir-onmental Pollution’s Report ‘Transport and the Environ-ment’, Fifth Progress Report, DTI/Department of theEnvironment, London.

Alan Jones & Associates (1995). Company Car SurveyReport, Alan Jones & Associates, Monmouth.

BAA (1995). Taking Off for the 21st Century: 1995 Reportand Accounts, BAA plc, London.

Company Reporting (1995). Research Note: EnvironmentalReporting, Company Reporting, Edinburgh.

Confederation of British Industry, with Towers Perrin(1992). The Benefits Package of the Future: Survey Results,CBI/Towers Perrin, London.

Dargay, J. (1993). Demand elasticities, Journal of TransportEconomics & Policy, 27, 1.

Department of the Environment (1995). Digest of Envir-onmental Protection , HMSO, London.

Department of Transport (1993). Transport StatisticsReport: National Travel Survey 1989/91, HMSO, London.

Department of Transport (1995a). Transport StatisticsReport: National Travel Survey 1993/94, HMSO, London.

Department of Transport (1995b). Transport Statistics GreatBritain 1995, HMSO, London.

D2D (1994). Kidsgrove Facility Environmental Statement,Design to Distribution Ltd, Kidsgrove.

Environmental Data Services (1992). BSO/Origin: put-ting a price tag on environmental damage, ENDSReport, 210.

Friedman, B. and Garrett, S. (1993). Company Car Taxation.Butterworth, London.

Hudson, R., Shoarian-Sattari, K. and Kompfner, P. (1993).Car parking in central London, Traffic Engineering , 34,1.

Income Data Services (1994). Company car policies, IDSManagement Pay Review, Research File 31.

Inland Revenue (1991). Inland Revenue Statistics 1991,HMSO, London.

Inland Revenue (1996). Inland Revenue Statistics 1996,HMSO, London.

Jack, A. (1994). Technology: assessing the damage,Financial Times, 22 June.

Johnson, H.T. and Kaplan, R.S. (1987). Relevance Lost: theRise and Fall of Management Accounting, HarvardBusiness School Press, Boston.

Kompfner, P., Hudson, R., Shoarian-Sattari, K. and Todd,D. (1991). Company Travel Assistance in the London Area,Department of Transport, London.

London Research Centre/Department of Transport(1994). Travel in London: the 1991 London Area TransportSurvey, HMSO, London.

Lex Vehicle Leasing (1994). Lex Report on Motoring, LexVehicle Leasing, Marlow.

Lex Vehicle Leasing (1995). Lex Report on Motoring, LexVehicle Leasing, Marlow.

Monks Partnership (1994). Management Remuneration inEurope, 1993–94, Monks Partnership, Saffron Walden.

Monks Partnership (1995). Company Car Policy UK,Monks Partnership, Saffron Walden.

Neale, A. (1995a). ‘Take my breath away’: can technicalfixes make cars environmentally friendly?, Universityof East London Occasional Papers on Business, Economy &Society, 14.

Neale, A. (1995b). How green are congestion charges?Economic instruments and sustainable transport,International Journal of Urban and Regional Research, 19,3.

NEDC Traffic Management Systems Working Party(1991). Company Car Parking, National EconomicDevelopment Office, London.

Nor Systems (1995). Nor Systems Environmental Statement,Nor Systems, Harwich.

Porter, M. and van der Linde, C. (1995). Green andcompetitive: ending the stalemate, Harvard BusinessReview, 73(5).

Reid, G.L. and Robertson, D.J. (Eds) (1965). Fringe Bene-fits, Labour Costs, and Social Security, George Allen &Unwin, London.

Rhys, G. (1995). The future, in Institute of Directors/PHHCompany Car Management: a Director’s Guide, TheDirector Publications, London.

Rowlinson, M., Hassard, J. and Forrester, P. (1991). Whowants harmonisation? Image and reality in singlestatus working, Personnel Review, 20(5).

Royal Commission on Environmental Pollution (1994).18th Report: Transport and the Environment, HMSO,London.

Shrivastava, P. and Hall, S. (1995). Creating sustainablecorporations, Business Strategy & the Environment, 4(3).

Tesco plc (1995). Customer Driven Innovations: AnnualReport and Accounts 1995, Tesco plc, Cheshunt.

The Wyatt Company (1994). Company Cars and FlexibleBenefits, The Wyatt Company, London.

Watson, T. (1994). In Search of Management, Routledge,London.

A. NEALE


extending the scope of environmental management: the case of company-assisted travel in britain

Documents