INSIGHT ARTICLE
Calculating the ROI of sustainable commuting
By Jack Goddard, Senior Marketing Executive
The recent economic instability has impacted everyone, and employers have not been immune. Organisations are constantly seeking innovative ways to cut costs, improve employee wellbeing, and reduce their environmental impact. One often overlooked area that holds the potential for significant savings and benefits is sustainable commuting.
While it might not be immediately apparent, analysing the financial implications of greener commuting can pave the way for saving costs, drive employee engagement and boost productivity.
Need to build a business case? You can estimate the potential savings you and your employees can make from decarbonising the commute with just a few details using the Zero Carbon Commuting ROI Calculator.
How does it work?
There is no one-size-fits-all sustainable commuting initiative. The many variables that impact commuting behaviours mean that sustainable commuting policies have to be tailored to your organisation, serving your workforce and meeting your organisational objectives.
At first glance, many aspects of the commute may not seem like direct costs, but on closer inspection, you can see how these impact your bottom line. By inputting these variables into the Zero Carbon Commuting ROI Calculator, businesses can estimate their total emissions, projected reductions, and potential savings over the coming years. These calculations provide a clear picture of the financial and environmental advantages of implementing sustainable commuting practices.
By inputting variables into the Zero Carbon Commuting ROI Calculator, businesses can estimate their total emissions, projected reductions and potential savings over the coming years.
What information do I need?
You will be asked to input some information about your organisation and its environmental goals – it should only take a couple of minutes. These responses will be used to calculate the potential financial benefits associated with adopting sustainable commuting practices. Don’t worry if you don’t have all the exact data information, you can use or customise the assumptions provided.
How many employees do you have?
The larger the employer, the greater the number of commutes being made. Large employers arguably have the most responsibility and opportunity to support their workforce to make greener commutes. When calculating your sustainable commuting ROI, you may wish to consider your organisation as a whole, inputting your total number of employees, or calculate the ROI savings of each site.
How many employee car parking spaces are occupied on a typical working day?
Providing parking spaces for employees is a common practice in the corporate world, especially for employers in suburban areas where public transportation options may be limited or inconvenient. While some may consider them a benefit, on-site parking spaces are associated costs that can prove substantial in the long term.
• Maintenance costs: Maintaining parking facilities, whether owned or leased, comes with its own expenses. This includes routine maintenance such as cleaning, repainting, lighting, and security measures to ensure employee safety and the overall functionality of the parking area. Over time, these maintenance costs can accumulate, adding a considerable financial burden to the business.
• Infrastructure costs: For companies that own their parking facilities, there are initial construction or development costs to consider. Building and maintaining parking structures can be capital-intensive, involving expenses related to construction, insurance, security systems, and ongoing infrastructure maintenance.
• Opportunity costs: Parking facilities take up valuable real estate that could be used for other purposes. In prime locations, the opportunity cost of dedicating land to parking can be substantial. These spaces could be repurposed for income-generating activities, office expansion, or green spaces that enhance the work environment. This is a common problem faced by NHS Estates teams facing growing demand and limited space.
• Environmental Impact: Besides financial considerations, parking facilities also have environmental implications. They contribute to urban sprawl and increase traffic congestion, increasing greenhouse gas emissions. The environmental impact can have indirect financial costs, as businesses may face carbon taxes or regulatory requirements for sustainability and emissions reduction.
In prime locations, the opportunity cost of dedicating land to parking can be substantial. These spaces could be repurposed for income-generating activities, office expansion, or green spaces that enhance the work environment.Isabel Dedring, Deputy Mayor for Transport
How many of these employee car parking spaces are leased and not owned by the organisation?
Lease costs: Leasing parking spaces is a common arrangement for businesses that do not own dedicated parking facilities. Companies often enter into long-term contracts with parking providers or nearby parking facilities to secure spaces for their employees. The lease costs can be a significant recurring expense, especially in densely populated urban areas, where parking space is at a premium. Employers spend approximately £6 billion annually on workplace parking fees, excluding an additional £1 billion in annual business rates.
What is your annual staff churn?
Many factors may influence an employee to leave their role, yet research conducted by Totaljobs indicated that over half (54%) of workers reached a point where their daily commute became a significant factor in considering resigning from their job.
When employees face difficulties finding parking or dealing with long commutes, they may become disenchanted and seek job opportunities elsewhere. High employee turnover results in recruitment, training, and onboarding costs, which can be reduced by implementing sustainable commuting practices.
Based on findings from a study conducted by Oxford Economics and Unum, the typical cost of employee turnover for individuals earning an annual salary of £25,000 or more amounts to £30,614. If your employee turnover is high, examine exit interview data and consider where the commute sits in your attraction and retention strategies.
What is your ACEL (Average Commuter Emissions Level)?
ACEL stands for Average Commuter Emissions Level. It’s the only standardised methodology for benchmarking and comparing commuter emissions, empowering employers and communities to understand, benchmark and improve commuting emissions.
If you don’t know your organisation’s ACEL, you can use the 2023 national average of 581 or use our ACEL Estimator.
What is your Net Zero target date?
A key statement in Responsible Business and ESG reporting, your Net Zero commitment is the length of time your organisation has laid out to operate at zero emissions. For example, the NHS became the world’s first national health system to commit to become ‘carbon net zero’ by 2045. If you don’t know your Net Zero target, you can use the UK’s statutory 2050 target.
Your sustainable commuting ROI calculation
Based on the information you provided, your sustainable commuting ROI will provide you with a series of savings estimates your organisation could make through decarbonising your commutes. You’ll receive the results immediately and also be emailed a PDF you can share with your colleagues.
Sustainability targets
You will receive an estimate of the total greenhouse gas emissions produced by your employees’ daily commutes. This estimate will show you the amount of carbon dioxide equivalent (CO2e) emissions that must be reduced annually to meet your Net Zero target. It will also provide a five-year projection, illustrating the practical steps required to achieve this reduction.
For instance, if a 23% reduction in Scope 3 commuting emissions over the next five years corresponds to 264 tCO2e, this reduction can be achieved by either having 455 individual employees opt for zero-emission commutes in the next five years or by having 909 individual employees switch to carpooling during the same period.
Employee benefits
The ROI calculation will also illustrate the potential fuel cost savings for your employees, depending on the frequency, distance, and fuel cost estimates you input into the calculator. You’ll quickly notice that these savings can accumulate significantly. For instance, consider an employee with a daily round-trip commute of approximately 19.4 miles, coming to the workplace three days a week for 46 working weeks each year. Using sustainable commuting, this individual could save £480 in fuel costs annually. If you aim to achieve a net-zero commuting target over the next five years, primarily through car-sharing, this would require 909 employees to participate. In total, these 909 employees would collectively save £436,751 in annual fuel expenses.
It’s worth noting active travel offers benefits above and beyond fuel savings. Transitioning to cycling, walking, or running is not only the greenest way to commute but also the healthiest – physically and mentally.
If you aim to achieve a net-zero commuting target over the next five years, primarily through car-sharing, this would require 909 employees to participate. In total, these 909 employees would collectively save £436,751 in annual fuel expenses.
Mobilityways’ cost savings
The impact on your estates and facilities budgets due to the shift towards zero carbon commuting can differ depending on the nature of the change. For instance, if there is a substantial shift towards remote work, it might lead to the possible closure of entire physical workplace locations.
In our example, if 455 employees ceased driving to the workplace, significant operational cost savings could be realised, primarily stemming from a reduction in parking-related expense. This would result in £204,545 in annual savings on parking maintenance and lease costs.
If you could influence the 8% of your workforce contemplating changing jobs because of their commute, you could experience a substantial decrease in your annual staff turnover rate. This reduction would lead to significant cost savings in human resources and staffing.
Save costs and the planet
The accuracy of your ROI calculation relies heavily on the quality of the input data. Nevertheless, the report offers a promising glimpse into the substantial operational cost savings that zero-carbon commuting can generate. Your ROI calculation demonstrates the significant financial advantages of adopting zero-carbon commuting strategies, sparking valuable conversations with colleagues, and laying the foundations for building a successful business case for sustainable commuting policy and initiatives.
You might also enjoy:
Everything you need to know about ACEL
Analysis of half a million postcodes shows latent potential of the sustainable commute
Book your free demo of Mobilityways
Start your Zero Carbon Commuting journey with a free consultation with one of our Commutologists
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